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Self-Strengthening, episode 5

Merchants and Students

With Zeng Guofan dead in 1872, Li Hongzhang is the man the court turns to for anything modern, and he looks for ways to make the foreigners' wealth Chinese, starting with steamships. The episode follows Li's China Merchants company, run by merchants under an official's eye, and Rong Hong, the first Chinese graduate of Yale, who takes thirty boys to New England to learn the West from inside, while the young Tongzhi Emperor receives the foreign envoys without the kowtow, and asks whether the merchants and students were a beginning or a dead end. It leans on scholars, with Li's side heard a little and the students' story told mostly through foreign observers.

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Transcript

Li Hongzhang
Li Hongzhang. Russell & Sons, Public domain, via Wikimedia Commons

Last time, we went to the far western edge of the empire, where an officer from the khanate of Kokand named Yaqub Beg had made himself the ruler of a kingdom at Kashgar. Alarmed by Yaqub Beg's moves and worried for its trade route there, Russia had marched into the territory of Ili in 1871, promising that the occupation was only temporary and that it would hand Ili back once China was in a position to maintain order there itself. In 1872 the Russians recognised Yaqub Beg's authority with a commercial treaty, and on the fourth of December 1873 a British mission from India rode into his capital, the first English envoy ever to do so. They brought him a letter from Queen Victoria, and he took it with unconcealed satisfaction, several times repeating, "God be praised." In February he set his seal to a British treaty as well. Meanwhile, on the other side of the desert, Zuo Zongtang had spent the years since 1867 grinding down the Muslim risings of the northwest, and in October 1873 he took a rebel city at the western end of Gansu after a siege of nearly three years, and left it a heap of ruins. In that decade Beijing was pouring more than a fifth of its customs revenue into the wars in the west. So that is where we left the far west: a kingdom the powers were starting to treat as a real state, and a Qing general at the edge of the sand, wondering how to pay for crossing it. This time we leave the deserts behind and come back east, to the coast, to the rivers, and to the money. Because while Zuo was fighting his way west, the man at the center of this season was trying something quite different: not winning back the empire's lost ground, but winning back its trade. And it starts with a death. In 1872, at Nanjing, Zeng Guofan died. He died in March, at the age of sixty, still serving as the viceroy who governed the lower Yangtze provinces from Nanjing. The court gave him the posthumous name Wenzheng, the highest honour it could give a scholar official. Zeng was the Hunanese scholar whose army had ended the Taiping war, the man who had sent most of his soldiers home rather than become the general the throne feared, and who had been sent to settle the killings at Tianjin only two years before his death. For a decade he had been the empire's great steadying figure, the general who saved the dynasty and then went out of his way to show that he did not want it. One man who mourned him in writing was Rong Hong, whom Zeng had once sent abroad to buy machinery, and who brought the first machines for what became the Jiangnan Arsenal, near Shanghai, all the way from Fitchburg, Massachusetts. We are going to spend a good part of this episode with Rong Hong, so file him away for now. Rong Hong wrote that Zeng, as a statesman, a patriot and a man, "towered above his contemporaries" the way Mount Everest rises above the rest of the Himalayas. He also wrote that Zeng had died just too soon. Had he lived even a year longer, Rong Hong wrote, Zeng would have seen the first group of thirty students leave for the United States, which he called "the first fruit of his own planting." Hold on to those students, because they are half of this story. Before he died, Rong Hong was told, Zeng had asked that his successor and protege, Li Hongzhang, take up his mantle and carry the work on. Li Hongzhang was by now the most powerful provincial official in China. He held Zeng's old place in the north, as viceroy of Zhili, the province around Beijing, and as the court's commissioner for the northern ports, with his seat at Tianjin, and he would hold those posts for most of the next quarter century. He had his own army, the Huai Army, raised in his home province of Anhui during the Taiping war and kept under arms when Zeng sent his own men home. And by 1873 Li had already begun to hold the predominating influence over China's dealings with the foreign powers. Rong Hong, who knew both men, did not think Li was cut from the same cloth. Li, he wrote, "was of an altogether different make-up from his distinguished predecessor and patron." He was "of an excitable and nervous temperament, capricious and impulsive, susceptible to flattery and praise," or, as Rong Hong said the Chinese put it, "he was fond of wearing tall hats." "His outward manners were brusque," Rong Hong allowed, but inwardly, he said, Li was kind hearted. And then he delivered his verdict: as a statesman, Li was far inferior to Zeng. But it is a good portrait of the man the court now had to rely on: proud, quick, ambitious, impatient with fools, and willing to try almost anything that worked. And Li's answer to the question of what China should do next was, in a word, ships.

To see why, picture the waterways of China at the time. The treaties China had signed with the Western powers over the past thirty years had opened ports along the coast and up the Yangtze to foreign shipping, and foreign steamers had taken over more and more of the carrying trade between the treaty ports. A treaty port was a city opened to foreign trade by treaty, where foreign merchants could live and do business under their own consuls and their own laws. Steamers were faster than sailing junks, they kept to schedules, and insurers trusted them, so merchants of every nationality, Chinese included, shipped their goods on them. The biggest line on the Yangtze belonged to an American trading house, Russell & Company, whose Shanghai Steam Navigation Company had dominated the river since the early 1860s. British houses like Jardine Matheson and Swire were building steamer fleets of their own along the coast and up the river. And many Chinese merchants in the treaty ports had put their own money into those foreign lines, because that was where the profits were. So the cargoes were Chinese, much of the capital was Chinese, the passengers were Chinese, and the profits went to foreign firms. And the court was arguing about whether to stay in the steamship business at all. Early in 1872 an official in Beijing argued that the government shipyards at Fuzhou and Shanghai were wasting money on warships that could not match the foreigners', and should be shut down. Li Hongzhang answered him with one of the most famous memorials of the age, warning that China faced the greatest change it had seen in three thousand years, and that it could not go back to the way things had been. Part of his answer was practical: the shipyards could build merchant steamers too, and Chinese merchants could hire them and run them on the coast. The shipyards stayed open, and from that argument came something new. Rong Hong had seen the problem years before, and he had put a solution on paper. An old friend of his, whom Rong Hong called "a man of progressive tendencies" and alive to all practical measures of reform, had become governor of Jiangsu. The governor told him that if he wrote his ideas down, they could be forwarded to Beijing, to a senior Manchu minister who might take them to the throne. The news, Rong Hong said, "came like a clap of thunder" and nearly lifted him off his feet. He rushed to Shanghai and, with the help of a friend, drew up four proposals. The first was for a steamship company on a joint stock basis. In his words, "No foreigner was to be allowed to be a stockholder in the company. It was to be a purely Chinese company, managed and worked by Chinese exclusively." And to keep it afloat, he proposed that the government pay it to carry part of the rice that was sent north to Beijing every year as taxes. Hold on to that rice; we will come back to it. At that point it was still only an idea on paper. But some years later the man with the power to make it happen picked it up. In 1872, Li Hongzhang asked a group of junior officials and treaty port merchants to organise a Chinese steamship company, owned by shareholders on joint stock lines. He was quite open about why. Li wrote later that he had done it "in order to counterbalance Western merchants and in the hope of gradually recovering the right to profits". The Chinese word he used was liquan, the right to the profits of one's own country's trade, and it would become a watchword for the rest of the century: the idea that the wealth moving through China's ports and rivers ought to stay in Chinese hands. There was a second reason, and it was about safety rather than money. One official warned that if by chance there were an incident on the maritime frontiers, the foreigners "will withdraw their steamships", and moving the army's provisions and the people's goods would become hard. In other words, a country that relied on foreign ships to move its own food could be starved by a quarrel. So the company was meant to do two jobs at once: earn money in a market the foreigners owned, and make sure the empire could feed its capital without them. Those two jobs did not always pull the same way, and that tension will follow the company for the rest of its life. The company was called the China Merchants Steam Navigation Company, and unlike a Western firm, it put final control not in the hands of its shareholders but in those of an official patron. Li's formula for enterprises like this had a name, guandu shangban, which means official supervision and merchant management. The merchants put up the money and ran the ships; officials stood over them, answered to the throne for the company, and could step in when they chose. It was a way to raise private capital without letting go of control, and it would be the model for most of the big modern enterprises of the next twenty years. Li put his own money in, a personal investment of fifty thousand taels of silver. A tael was the Chinese ounce of silver, the unit in which large sums were reckoned, a little over an English ounce in weight. To draw in other investors, the company's charter promised them a guaranteed dividend of ten percent a year. The China Merchants Steam Navigation Company opened for business on the fourth of January 1873. It did not begin well. The first man Li put in charge was an official from Zhejiang who was waiting for a post, and within six months the company had lost heavily. In June 1873 Li dismissed him. In his place, Li turned to men who knew the shipping trade from the inside: Chinese merchants who had spent their careers as compradors for the big British houses. A comprador was the Chinese manager of a foreign firm, who handled its dealings with Chinese merchants, guaranteed their credit and usually got rich doing it. So the men who had built the foreign lines' Chinese business now came over to build a Chinese line against them, bringing their money, their contacts and their customers with them. And the fight was on. As early as March 1874, the company cut its freight rates on the Yangtze by thirty percent. The foreign lines cut theirs in turn, and for a few years the rivers and the coast saw a full price war, with freight cheaper than it had ever been. That is the kind of war a company backed by the state can survive longer than its rivals. And it did survive. In the decades after 1872 the company broke the Western monopoly on modern shipping in China, steadied the food supply of Beijing, and became a main link between the north and the south of the country. By 1879, an official in the company, Sheng Xuanhuai, could call it China's pioneering business enterprise, the one that paved the way for the drive for wealth and power. Sheng Xuanhuai would go on to run more of China's modern enterprises than any other official, right up to the end of the dynasty. But we need to look more closely at how the company paid its way, because the answer is in a sack of rice.

Tribute rice was the grain that the rich provinces of the lower Yangtze paid to the throne as tax in kind, rather than in money, and shipped north every year to feed the capital. It fed the officials of Beijing and, above all, the banner garrisons, the hereditary soldiers of the dynasty and their families, who had been living on state grain since the Qing conquest. For centuries it had gone north on the Grand Canal, the man made waterway that runs from the Yangtze to the north China plain. Rong Hong described how it worked. Thousands of flat bottomed boats had been built just to carry the rice up the canal, and a large population all along the route lived on that traffic. But it was slow, and a great share of the rice was lost along the way, to theft, and to fermentation, "which made the rice unfit for food". So part of the rice had been sent by sea in junks from Ningbo as far as Tianjin, and then loaded again into flat bottomed boats for Beijing, which was not much better. And by now the canal itself was broken. In 1855 the Yellow River had changed its course and cut across the canal in Shandong, and the Taiping war had wrecked much of the rest. Rong Hong's idea was simple: let steam do the work, and the millions who depended on that rice would get it sound. There were losers in that idea, of course. Every load of rice moved onto a steamer was a load taken away from a boatman on the canal or a junk owner on the coast, and those men had lived on the grain trade for generations. Li Hongzhang took up that idea and made it the company's lifeline. In the fall of 1872, an official order set aside two hundred thousand piculs of tribute grain to be carried north by sea in the company's steamships. A picul was a load a man could carry on a shoulder pole, about a hundred and thirty English pounds. Li went further, and asked that forty to fifty percent of all the tribute grain sent by sea be reserved for the company's ships. And the price the state paid was generous. The freight rate was set at a little over half a tael per picul, which may have been thirty percent or more above what the market would have charged. In other words, the state was not just giving the company a cargo; it was quietly paying it a subsidy every time a ship went north. By the middle of the 1870s, the company's ships were carrying a fifth of the tribute rice of Jiangsu and Zhejiang to the north. Between 1873 and 1883, they shipped more than four point eight million piculs of rice, and earned two million seven hundred and ten thousand taels for it. That money came in every year, whatever the price war on the Yangtze was doing. So here is the bargain at the heart of Li's company. A guaranteed cargo, at a generous price, paid by the state, kept it alive through the lean years when the foreign lines were trying to sink it. But a company that lived on the state's rice could never quite say no to the state's officials. It was a merchant company in name, and in its everyday work, and its merchants made real money. It was also a branch of Li Hongzhang's government, and everyone involved knew it. For now, that looked like strength. Keep it in mind, because later in this episode, and later in the season, it will look like something else.

Six boys from the First Detachment after arriving at San Francisco, September 1872
Six boys from the First Detachment after arriving at San Francisco, September 1872. Unknown author, Public domain, via Wikimedia Commons

Now let's go back to Rong Hong, and to his second proposal. Rong Hong was born in 1828 in a village near Macau, in the district of Xiangshan, to a family too poor to give him the classical education that led to office. Instead he went to a mission school, and in 1847, still a teenager, he sailed for America with one of his teachers, an American missionary. He went to school in Massachusetts, worked his way into Yale, and in 1854 became the first Chinese graduate of an American college. Then he came home, to a country where his degree counted for nothing, and spent years as an interpreter, a clerk and a tea trader, looking for a way to put what he had learned to use. He found it through Zeng Guofan, and that is how he came to be buying machinery in Massachusetts for the Jiangnan Arsenal. What he had told Zeng was that China did not just need rifles; it needed a machine shop that could turn out the machinery for making rifles, cannons, cartridges, or anything else. For that errand Zeng gave him the fifth official rank, a nominal civil rank, with the right to wear the blue feather. He had become a Christian in America, and in 1852, while still a student, he had become an American citizen. So the man who would take China's boys to America was, on paper, an American himself. Now he had his foothold, and he meant to use it for the thing he really cared about. His second proposal was the one closest to his heart. The government should send picked Chinese boys abroad, to be thoroughly educated for the public service. He wanted a hundred and twenty of them, as an experiment, in four groups of thirty, one group to sail each year. They would be twelve to fourteen years old when they left, and they would have fifteen years to finish their education. Chinese teachers would go with them to keep up their Chinese, and if the first two groups did well, the scheme would go on indefinitely. Notice what this was. Not a handful of interpreters, and not a few officials on a tour of inspection. It was a plan to take boys young enough to really learn a foreign language, and to give them the whole of a foreign education, from grammar school to college, and then bring them home to serve. Zeng Guofan backed it, and so did Li Hongzhang, and on their initiative an imperial decree approved the Educational Mission to the United States. Rong Hong would be one of its two commissioners. The other, the senior commissioner, was Chen Lanbin, a scholar official of the classical type, there to keep the mission Chinese. And over all of it, after Zeng's death, stood Li Hongzhang, whom Rong Hong had found so unlike his old patron. It was under such a man, Rong Hong wrote, that the mission was launched. Then came the problem of finding the boys. A preparatory school opened in the summer of 1871, to get the first group ready. And almost nobody applied. In the north, Rong Hong wrote, people did not even know the government had such a scheme, since there were no Chinese newspapers then to spread the news. The applications that did come in were nearly all from people around Guangzhou, and especially from Rong Hong's own home district of Xiangshan. To fill the first group, he had to go down to Hong Kong himself, to the English government schools there, and pick out a few bright boys who already had some English and some Chinese. That is why, in the end, nine tenths of the hundred and twenty students came from the south. Think about what that tells you. The families willing to send a young boy across the Pacific for most of his youth were mostly families who already lived alongside the foreigners, on the south China coast. The families of the north, and the families aiming at the old examinations, mostly were not. The government chose the boys with great care, and a hundred and twenty were selected in all. In the late summer of 1872, the first thirty were ready to cross the Pacific. Rong Hong went a month ahead of them, to find them homes to go to when they landed. Chen Lanbin followed with the boys, two Chinese teachers and an interpreter, on a later mail steamer. They sailed from Shanghai in August, landed at San Francisco, and crossed the continent on the new railroad to New England. The other groups followed, a fourth of the students each year, the last of them in 1875. It was the first time the Qing court had sent its own children abroad to learn. And Li Hongzhang, the man in charge, had signed off on the whole thing.

The Chinese College at Hartford, Connecticut, in a wood engraving in Harper's Weekly, 1878
The Chinese College at Hartford, Connecticut, in a wood engraving in Harper's Weekly, 1878. unidentified artist, CC0, via Wikimedia Commons

The mission made its headquarters at Hartford, in Connecticut. The boys were placed, two or three at a time, with American families in towns across Connecticut and western Massachusetts, to learn English the way children do, by living in it. Then they went to the local schools, and then, the older ones, on to the high schools and colleges of New England, Yale among them. They arrived in Chinese gowns, with their hair in the queue, the long braid that every male Qing subject wore as a sign of loyalty to the dynasty. They kept the queues, mostly; the gowns did not last long. They took to American sports, and some of them formed a baseball team. And Rong Hong, their commissioner, was living the same life a generation earlier; in 1875 he married an American woman, Mary Kellogg, in Connecticut. That same year the mission moved into a large building of its own in Hartford, with classrooms and rooms for the commissioners and the Chinese teachers. The boys came there in turns for lessons in Chinese, reading and writing the classics, so that they would not lose the language they were meant one day to serve in. Many of them grew close to the families they lived with, and some kept writing to them for the rest of their lives. And Rong Hong made friends in Hartford, among them a minister named Joseph Twichell, whose closest friend was Mark Twain. Keep those two in mind; they will try to help. It all looked, from Hartford, like a success. From Beijing, it looked rather different. In the fall of 1876, a new commissioner was installed at the mission. He had been recommended by Chen, and almost as soon as he arrived, Rong Hong wrote, he began to find fault with everything. Instead of bringing his complaints to Rong Hong, he sent them quietly to Beijing, and to Li Hongzhang. The boys, he reported, had been indulged and petted by Commissioner Rong, and allowed more privileges than were good for them. They imitated American students in athletics, and played more than they studied. They had formed themselves into secret societies, both religious and political. They ignored their teachers and would not listen to the new commissioner. Most of them went to church and to Sunday school, and had become Christians. And if they were allowed to go on like this, he warned, "they would soon lose their love of their own country," and come home "good for nothing or worse than nothing". The sooner the whole enterprise was broken up and the students recalled, he said, the better it would be for China. These reports kept coming, year after year. Li Hongzhang passed the accusations on to Rong Hong, and asked him to answer them. Rong Hong did not hold back. He wrote that the charges were malicious fabrications by a man known to have been a crank all his life, that it had been a grand mistake to give such a man any responsibility, and that he really belonged in an asylum. He blamed Chen Lanbin, too, as a timid man who trembled at the smallest responsibility, and who had recommended the new commissioner in the first place. I don't think you need to be a diplomat to see that this was not the letter that would save the mission. Because the complaint landed on a nerve. The government's conservative instincts were stirred by persistent reports that the students were losing their Chinese character. And the boys were losing something. They spoke English better than Chinese by now; they had American friends and American habits, and some of them had cut off their queues. That was exactly what Rong Hong had hoped for, a generation that could live inside the West, and exactly what the court had been afraid of. Other things went wrong at the same time. The court had hoped that some of the boys would go on to the American military and naval academies, and the United States government refused to admit them. And in America itself, feeling against Chinese immigrants was rising fast, especially in California; in 1882 Congress would bar Chinese laborers from entering the country. Rong Hong's friends in Hartford tried to save the mission. Twichell and Mark Twain went to see Ulysses S. Grant, the former American president, who had met Li Hongzhang at Tianjin on a tour of the world, and Grant wrote to Li urging him to keep the boys in America. It was not enough. In 1881, the mission was broken up and all the students were called home. Many of them were in college by then, and only a couple had finished their degrees. They went back across the continent and across the Pacific, and in China they were met with suspicion, as boys who had become foreigners. So was the Educational Mission a dead end? It was cut off halfway, which is not the same thing. The boys who came home were sent to the telegraph service, the mines, the arsenals and the navy, the new branches of the state that needed exactly what they knew. Some of them would die in China's sea battles in the next two decades. One of them, Zhan Tianyou, would become China's great railway engineer, and build the line from Beijing to Zhangjiakou with no foreign engineers at all. Another, Tang Shaoyi, would rise to be the first prime minister of the Chinese Republic. Of the hundred and twenty who had gone to America, eighty were still alive in 1907. So the experiment was ended by the court that had started it, and then the court spent decades needing the men it produced. But that was a long way off. Now let's leave the boys in Hartford and go back to Beijing, where the court had a test of its own to face.

Prince Gong
Prince Gong. John Thomson, Public domain, via Wikimedia Commons

The Tongzhi Emperor was Cixi's son, and he had come to the throne as a child of five in 1861. The autumn before his majority, he had been married in one of the grandest ceremonies the court had staged in years, and in Qing eyes a married emperor was a grown one. For eleven years he had reigned under a regency, with the two empresses dowager ruling for him from behind a screen. In February 1873 the regency ended, and the young emperor began to rule in his own name. And that set off a problem that had been waiting since the last war with the West. Under the treaties signed at the end of the last war with Britain and France, the foreign powers had kept ministers in Beijing since 1861. None of them had ever seen the emperor, because he had been a child, and the court had used that as its reason to put off an audience. Now he was of age, and the ministers asked to present their letters of credence to him in person. That meant a ceremony, and a ceremony meant the kowtow. The kowtow was the full ritual of submission before the emperor: kneeling three times, and each time touching the forehead to the ground three times. Every envoy from a tributary state performed it, and the court held that every foreigner must perform it too, because the emperor had no equals. In the Qing view the world was not a family of equal states but a ladder, with the emperor at the top and other rulers below him, sending tribute and receiving his gifts and his favour. Korea sent tribute that way, and Vietnam, and the little island kingdom of Ryukyu, and their envoys knelt and knocked their heads on the floor like everyone else. The Western ministers would not, because to them it meant admitting that their own kings and presidents were the emperor's vassals. It was an argument as old as the first British embassy to China, eighty years before, and it had never been settled. The man who had to make it work was Prince Gong, the emperor's uncle, who had run the court's dealings with foreigners since 1861 as head of its foreign office, the Zongli Yamen. He and his colleagues spent months on it. The head of the court's college for interpreters watched the bargaining from close up. A senior minister of the foreign office sent for him and asked him to suggest a foreign minister to invite to his own house for a private talk, a thing, the missionary wrote, never thought of until this critical question came up. He named Wade, the British minister, because his was the nation that had always taken the lead in China's affairs, and because Wade was the only one who could speak without an interpreter. Another member of the foreign office met the American minister at the missionary's house to talk over the same question. What the court wanted most of all, the missionary wrote, was to talk the foreign ministers out of the audience altogether. When that failed, the next move was to persuade them to accept, as the place for the audience, a spacious summer house in a park outside the palace proper. And in place of kneeling, it was agreed that the emperor would be content with three low bows. The foreign community in Beijing found all this very entertaining. A rumour went round that the envoys would appear before the emperor in their stocking feet. Some wag said they would see the emperor with Butzow, a Russian minister who had just arrived in time for the occasion, and whose name, said aloud, sounds like boots off. There is your diplomatic humour of the age. In June, the emperor issued his decree. The foreign envoys in the capital "who have letters to present," it said, were to "be admitted to an audience." The ceremony was rehearsed in advance under the instruction of officers of the court. Li Hongzhang had a hand in this too: his advice, along with the high rank of one of the envoys, helped smooth away the difficulties. That envoy was not a European at all. He was Soejima Taneomi, who had come to Beijing with the rank of ambassador. At home he was Japan's foreign minister, and he had come to exchange the ratifications of the first treaty between Japan and the Qing. The Western ministers were only ministers; Soejima outranked them all. The audience took place on the twenty ninth of June 1873. The foreign envoys met at half past five in the morning at the North Church, and at six they were led by Chonghou to a gate of the Imperial City. The Imperial City was the walled enclosure of parks, lakes and offices around the Forbidden City, the emperor's palace itself. From there they went on foot to the pavilion where the emperor would receive them. Soejima, as the only ambassador, was received first, and alone, and then it was the others' turn. The Russian minister, as the senior envoy in Beijing, read a speech of congratulation, and each envoy in turn laid his letter of credence on the table in front of the emperor. The emperor answered through Prince Gong, who conveyed his friendly feelings toward the rulers the envoys represented. The whole thing was over in half an hour. And the American minister, the missionary noted, came in plain black, "without a star or spangle", while the other ministers glittered in gold and lace. The Chinese, he wrote, "were somewhat disgusted with our republican simplicity". Nobody was quite happy. There had been no degrading ceremonies, but the general feeling among the envoys was one of discontent. Wade was so afraid the Chinese would report that he had kowtowed after all that he wrote out a minute account in Chinese of everything that had happened, and had it published in a magazine read by the court's ministers. Since nobody challenged it, it came to carry the weight of undisputed authority. And yet, the missionary wrote, the Chinese people went on believing that the kowtow had been performed. And they would cling, he thought, to the tale that Wade had been struck by a "wrath-beam" from the dragon throne. And then the diplomats made an embarrassing discovery. The pavilion where they had been received, the Hall of Purple Light, outside the palace proper, was the hall the court used to receive envoys from its vassal states. In that hall alone were audiences granted to foreign envoys until 1894, after Japan's victories. So the court had given up the kowtow, and kept the meaning. The foreign powers had made no change in the court's view of itself, and the Chinese court was left more sure than ever that it stood above every other court in the world. Prince Gong had done exactly what he was asked to do: he had made the ceremony work. Whether that was good for the empire is another question. And keep an eye on that Japanese ambassador, who outranked everyone in the room. His country had business in this part of the world that it had not yet mentioned.

Now back to the river, and forward a few years, to the moment when Li's steamship company had its finest hour. In 1877, the managers of Russell & Company, the American house that had lost its dominant place in the shipping trade to the newcomer, opened talks in Shanghai to sell their steamship line to the China Merchants company. The price war had worn them down, and they wanted out. The company's managers saw both an opportunity and a threat. If they let the chance go, they warned, and Swire, Jardine Matheson or some other Western firm bought Russell's fleet instead, those rivals would have a powerful new force to use against them. An official backing the purchase called it a pivotal moment in China's whole relationship with the foreigners, a chance that could not be lost. The court agreed, and approved the purchase of Russell & Company for two point two million taels of silver, nearly half of it borrowed. In the spring of 1877, the China Merchants company bought the entire plant and goodwill of the American corporation, the Shanghai Steam Navigation Company. Sixteen ships were added to its fleet at a stroke. Russell & Company had been the greatest American house on the China coast since the days when all foreign trade ran through Guangzhou, and now its steamers, running up the Yangtze from Shanghai to the great river port of Hankou, flew a Chinese flag. Think about what that meant. A few years earlier, the Yangtze had belonged to foreign steamers, and the biggest of them flew the American flag. Now the biggest line on China's greatest river was owned by Chinese shareholders and run under the eye of a Chinese viceroy. American shipping in China lost by the sale, and fell from close rivalry with the British to a small share of the trade. And within five years, the China Merchants company controlled more than a third of all the steamer tonnage in Chinese waters. This was liquan, the right to the profits, actually won back. It was the high point of Li Hongzhang's merchant enterprise, and one of the real triumphs of the whole self strengthening effort. So were the merchants and the students a beginning or a dead end? On the evidence of that purchase, the merchants look like a beginning. But remember the bargain in that sack of rice. The company had been built with merchants' money and kept alive by the state's cargo, and it was run by men who answered to officials. A company like that can be fed by the state, and it can also be bled by the state, by the officials who sit over it and treat it as theirs. We will watch that happen. And the students, the other half of the story, had been called home before they could finish what they had gone for. So by the end of this period one experiment was flourishing and the other had been cut off, and both had depended on the same man, Li Hongzhang, deciding they were worth his support. That is the pattern of self strengthening: a few governors pushing, a court that sometimes helped and sometimes pulled back, and no plan for the whole empire. But in the very years when the China Merchants ships were taking the coast back from the foreigners, a much nearer neighbour was showing what a modernizing country could do with ships of its own. Next time, a Japanese army lands on Taiwan, the Qing find they have nothing that can make it leave, and Li Hongzhang starts arguing that the empire's real danger now comes from the sea. And in Beijing, the young emperor who received the envoys is about to run out of time.

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