He then fell back on his record, stating that he had pressed the Manchu Government to adopt a constitution. He also referred to the title chosen for his reign, "Hung Hsien," which means "great constitutional era."

A mandate of February 22nd announced the postponement of formal accession to the throne. Mr. C.C. Wu, who brought me information concerning certain state plans of Yuan Shih-kai, said that this mandate would put an end to the innumerable petitions sent to accelerate the formal coronation. He added that essentially the Government, so far as domestic matters were concerned, was already a monarchy, that only in its international aspects had it failed to assume this character.

Suddenly, on March 18th, the Province of Kuangsi demanded the cancellation of the monarchy; events were moving more rapidly.

At this juncture I had to decide whether to allow the Lee Higginson loan to be completed without a caution or warning, or to assume responsibility of virtually stopping that transaction. As soon as it became clear that open opposition to Yuan Shih-kai's government was no longer confined to one province and its immediate sphere of influence, it seemed no longer proper for any American institution to furnish money to the Chinese Government. Many appeals had been made by the Opposition based on the demand that, since the country was divided, no loans should be made to the Government. In ordinary circumstances the protests of factions would not have weight, but when several provinces expressed their disapproval of a basic governmental policy the case was different. To have to counsel delay in execution of the loan agreement was intensely disappointing to me, fervently as I had wished the American financiers to participate in Chinese finance, in order that credit and resources might be organized and developed for the benefit of all. Unfortunately, in the lull after the disposal of the twenty-one demands the Chinese had immediately embarked on this doubtful political enterprise, consuming precious energies and money. The sums spent on military expeditions, in favourably attuning doubtful military leaders, and in the creation of the alleged unanimous consent through a popular vote, had been thrown away. They merely added to the burdens carried by the Chinese people.

With the disaffection of yet more provinces the Government on March 22nd promulgated a decree cancelling the monarchy, and announcing that Yuan Shih-kai would retain the Presidency of the Republic.

This sudden and unilateral concession, without a guaranteed quid pro quo by way of submission to the Central Government by the revolting forces, came as a surprise. Doubtless the step was taken because the President feared that the Province of Kuangtung, whose military governor had urged him to compromise, would join the revolutionaries. Moreover, the former Secretary of State, Hsu Shih-chang, who had been in retirement, advised it. The Anhui Party in Peking saw an opportunity to regain control and oust the Cantonese leaders, in whose hands the monarchical movement had been since August. The President believed that the return of such men as Hsu Shih-chang and Tuan Chi-jui would strengthen him in the eyes of the revolutionists. Hsu Shih-chang personally had lived up to the canons of Confucian morality in failing to approve the action of Yuan Shih-kai when he tried to assume the rank of his former master, the Emperor. This gained him universal respect in China. But his impelling motive was personal loyalty to the old Imperial Family rather than attachment to its government.

Of course, the cancellation of the monarchy failed to satisfy the revolutionists. They interpreted it as a confession of weakness and defeat. Nor was it more welcome to the adherents of the President in the provinces, especially the military, who felt that he was surrendering without getting anything in return. Thus the President lost his friends and failed to placate his enemies. Had the southern leaders been content, the chastened Yuan might have been satisfied to be formal head of a constitutional government. But they were not. His authority and prestige had been too gravely compromised; revolutionists were appearing in various parts of China; Tsingtau was being used as a base for revolutionary activities in the Province of Shantung with connivance of the Japanese authorities. The Peking Government was thrown into confusion. The official world was apprehensive as to what the President would do, while the foreign community feared military riots.

The leaders of the so-called Anhui Party had evidently expected that it would be easy to proscribe the Cantonese leaders, Liang Shih-yi, Chow Tsu-chi, lately Minister of Agriculture and Commerce, and Chu Chi-chien, Minister of the Interior, and have them banished or executed. But contrary to their expectations these men did not at that critical time take to the woods. To the amusement of everyone, the leaders of the other party then became frightened and began to remove their families from Peking and to plan for places of safety for themselves. With somewhat grim humour, Minister Chu Chi-chien declared that as conditions in Peking were perfectly normal, and as any unwarranted show of nervousness by officials would tend unnecessarily to disturb the populace, officials would no longer be permitted to remove their families from the city.

It now became a question whether Yuan Shih-kai could remain even as President. I had a conversation with Mr. Hioki, the Japanese minister, who spoke at length about the shortcomings of Yuan, and his tendency to use all the functions of state, including particularly the financial, to satisfy his personal ambitions. Mr. Hioki did not believe that Yuan Shih-kai could possibly restore his authority. The month of April was a period of great depression in Peking. All constructive work, and even planning therefor, had been entirely suspended. The new ministry came in on April 24th, under General Tuan Chi-jui as Minister of War. This fact indicated shiftings of power, as General Tuan had never supported the President in his imperialist ambitions. The Cantonese leaders stepped out of the Government, maintaining their influence thereafter by the familiar methods of Liang Shih-yi. Mr. Tsao Ju-lin, who belonged to the Communications Party, but had been specializing in establishing closer relations with the Japanese, became Minister of Communications. The President agreed to turn over to the cabinet full governmental powers, and to make the ministers responsible to the national parliament, which was to be summoned forthwith. Yuan ceased his personal control over all important branches of the Administration. The control of the army was transferred from the President to the Board of War. He was stripped of all military forces but his Honanese bodyguard, which numbered about twenty thousand.