Ninth: The First Meeting with Yuan Shikai

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  Liu Kunyi, the Governor-General of Liangjiang, passed away in the autumn of Guangxu 29. Zhang Zhidong, the Governor-General of Huguang, was temporarily transferred to Liangjiang, while the Governor-General of Huguang had just been temporarily taken over by Duanfang, the Governor of Hubei. Lin Sheng received a telegram from Duanfang, informing him that Yuan Shikai, the Beiyang Minister, would be passing through Wuchang on his way back from mourning his mother and wanted to visit the Hanyang Ironworks.

  Lin Shuo handed the telegram to Zhang Zhidong, who had previously served as a staff member under Wu Changqing and had a teacher-student relationship with Yuan. In his letter to Zhang, Yuan always addressed him as "Fuzi Daren". However, they had different goals and did not collaborate. Later, Zhang gained recognition from Weng Tonghe and became the top scholar in the imperial examination, becoming a key figure in the Emperor's party, while Yuan belonged to the Beiyang clique.

  Zhang Zhidong's career was difficult, and he eventually returned to his hometown to start a business. Yuan Shikai, on the other hand, had a smooth official career, and after Li Hongzhang fell out of favor, he gained the trust of Wang Wenshao, Ronglu, and others, becoming the Governor of Shandong in just a few years. During the Boxer Rebellion, Yuan Shikai protected himself and actively participated in the "Southeastern Mutual Protection" movement. Before his death, Li Hongzhang inexplicably recommended Yuan Shikai to succeed him as the Viceroy of Zhili.

  Now Yuan Shikai has become the leader of the border officials and also controls Beiyang, which was something Zhang Jian had never anticipated.

  Zhang Ji knew that Lin Xiong wanted him to go with him to see Yuan Shikai, and he looked embarrassed: "I have had no contact with Yuan Weiting for a long time, and occasionally there are letters, but they are just general words. If I meet him so rashly, it seems like I'm trying to curry favor."

  "It's not that we're trying to curry favor with him, it's that he insisted on coming to our place. He should feel honored, not us," Lin Xiao said, "If I didn't want to get in good with Old Yuan, why would I have looked for you?"

  With a mix of coaxing and deception, Ji Zhi finally agreed to go to Wuchang with him.

  Yuan Shikai returned home to mourn his mother after taking leave of absence, and actually took a detour from Xinyang to Jiangnan, coming prepared.

  After he took office as the Governor of Zhili, Yang Shixun, a trusted advisor to Li Hongzhang and the Provincial Judge of Zhili, presented him with a plan: Those who can hold high positions in the officialdom for a long time, from Zeng Guofan to Zuo Zongtang, and then to Li Hongzhang later, are all powerful ministers who have military power in their hands. Now that you can dominate the Beiyang government, it is also because you have a newly built army that has been preserved intact. If you can exert your utmost efforts to expand and train the new army in your hands, use your own people to control this army, then you will have the ability to influence the imperial court, and you will be revered by all under heaven!

  Yang Shixiang's words hit the nail on the head for Yuan Shikai, who decided to take advantage of the imperial court's reorganization and training of new troops to expand his own military power and secure his position.

  But expanding the new army costs a huge amount, apart from the military expenses allocated by the imperial court, according to Yuan Shikai's plan, hundreds of millions of funds still need to be raised on their own. Moreover, in order to really keep the military power, they have to constantly curry favor with the powerful and wealthy people in Beijing. All these require money, and Yuan Shikai also wants to implement "new policies", build railways, open industries, set up new schools, etc., all of which need a lot of silver.

  How to expand financial resources has become a major factor in whether Yuan Shikai can succeed.

  After completing his mother's funeral, Yuan Shikai deliberately took a detour from Jiangnan to Shanghai. On the one hand, he wanted to inspect the situation of foreign affairs and industries in southern China; on the other hand, he wanted to seize control of the China Merchants Steam Navigation Company and the Great Qing Telegraph Agency from Sheng Xuanhuai, both of which were profitable enterprises under the Beiyang government.

  Yuan Shikai traveled light, bringing only over thirty people. After arriving in Wuchang, he was accompanied by Hubei Governor Zhang Fang to visit the gun and cannon factory and the cotton, hemp, silk and woolen mills founded by Zhang Zhidong. The next day, he came to the massive Hanyang Iron Works with great enthusiasm.

  After Lin Xiang took over the Hanyang Ironworks, he began to reform it. The four steel furnaces that had been reordered had not yet arrived, but one of the original Martin furnaces had already gone into production and was able to roll out rails that met quality standards. The ironworks resumed partial normal production, although output was limited, and basically broke even.

  Yuan Shikai was overjoyed, and what made him even happier was that Zhang Jizhi also appeared here. This old master, who had always looked down on him, unexpectedly praised him a few words, making him feel very satisfied in his heart. With a keen sense of smell, Yuan Shikai knew from Duan Fang's words that the young general in front of him was the real head of the Hanyang Iron Works. He didn't care much about Lin Xiang's age; it wasn't uncommon for rich family sons to inherit their families' businesses. Liu Jinzao, a scholar he knew who served as an imperial reader-in-waiting, was said to have assets worth tens or even hundreds of millions.

  In this era, most of the young masters from wealthy families were content with preserving their family's legacy and did not strive for progress. Some bought houses, collected antiques and paintings, while others engaged in commerce, such as being a purchasing agent or running a money house. Few were willing to work hard to establish real industries. Another thing that caught Yuan Shikai's attention was that Lin Xiang was dressed as a military officer. In this era, civil officials were valued over military officers, and a third-rank general like Lin would have to show deference to fifth- or sixth-rank county officials, which piqued Yuan's curiosity.

  Zhang Zhidong's Hanyang Ironworks was the largest in Asia, with six major factories: pig iron factory, Bessemer steel factory, Siemens-Martin steel factory, iron goods factory, steel rail factory and wrought iron factory, as well as four smaller ones: machine shop, foundry, forge and fishplate hook factory. From a distance, the buildings seemed to be connected, with smokestacks standing in rows.

  The pig iron plant has two blast furnaces made in Belgium, each producing 200 tons of iron per day. The Bessemer steel plant is equipped with two acid Bessemer converters purchased from the UK. Due to the high sulfur and phosphorus content in the iron ore produced in Daye, the acid steelmaking furnace cannot remove the sulfur and phosphorus impurities inside the furnace, so these two steelmaking furnaces can't produce qualified steel at all, they can only be used as decorations. Fortunately, when the Hanyang Iron Plant was built, Xue Fucheng, the Chinese envoy to the UK and Germany, had a foresight and also purchased an alkaline "Martin furnace" from Siemens in Germany, which made it possible for the iron plant not to produce unqualified steel.

  The Hanyang Ironworks was barely maintaining production with the help of the Siemens-Martin steel plant, which had a small open-hearth furnace that produced 50 tons per day. However, the insufficient operation also affected the efficiency of the ironworks.

  Lin Zong has been in charge of the iron factory for nearly half a year, but the four steel furnaces ordered from Germany have not yet been built. Although he is anxious, there is nothing he can do about it. Manufacturing one steel furnace takes at least a year, and shipping it by sea takes almost three months. After installation and testing, the new steel plant will not be operational until next year at the earliest.

  It is still now and Europe has telegraph, if it were a bit earlier, building a large steel plant would not take five or six years.

  Lin Shuo accompanied Yuan Shikai to visit the iron smelting factory, coinciding with the No. 1 blast furnace about to produce iron. The group stood on the iron frame of the iron discharge platform not far from the blast furnace, waiting to watch the scene of molten iron coming out of the furnace. At this time, Lin Shuo explained the structure and simple process of the blast furnace to everyone, and carefully explained the difference between smelting iron and steel to Yuan Shikai. Yuan Shikai's eyes kept staring at the iron discharge port, but in his heart, he secretly praised Lin Shuo for being calm and composed, with a demeanor that was quite like that of a great general.

  As the four workers operating the furnace turned the long handle in their hands, a dazzling red light suddenly burst out from the furnace mouth, and then the scorching hot molten iron poured out of the furnace like lava, flowing rapidly along the iron ditch on the site, shining brightly towards the nearby ladle, splashing everywhere like fireworks.

  Everyone present couldn't help but marvel at such a spectacular scene, and in their mouths they marveled at the magic created by modern industry.

  Yuan Shikai was in his prime, and he spent a whole day visiting the iron factory with great interest. He asked Lin Xiang about all the new things he saw. This change of plans caused trouble for the officials from Hubei who had accompanied him. By 4 pm, Acting Governor-General of Huguang Duan Fang suggested that they go to Qingchuan Pavilion first, where a banquet was already prepared.

  Qingchuan Pavilion is located at the eastern end of Guishan, about five miles away from Tiechang, close to the riverbank. At the foot of the mountain, there are huge rocks that protrude into the Yangtze River waves, which is Yu Gong Jia, and Qingchuan Pavilion was built on it. On a sunny day, when you climb up to Qingchuan Pavilion, you can see the majestic Yellow Crane Tower on the opposite bank, with vast river waters in your eyes, ... , white sails fluttering on the wind-driven waves, seagulls dotting the sky, making people feel carefree and joyful, with heroic sentiments arising suddenly.

  Yuan Shikai, after changing into casual clothes, appeared very approachable. When entering the banquet, he specifically pulled Zhang Jian and Lin Xiang to sit beside him, making Lin feel a bit unaccustomed.

  Yuan Shikai did not drink, but after the initial commotion had passed, he began to eat voraciously on his own. Duan Fang was helpless and could only join Zhang Zhidong and other scholars in making a toast.

  "Anhua, my young friend, indeed a promising youth. Today, I feel a great affinity with you." Yuan Shikai ate quickly, and Lin Chong stared at him in amazement as he devoured a roasted duck like a whirlwind, then picked up his napkin to wipe his oily hands, and said with a smile, "When I was your age, I was still helping with camp duties in the Qing army, and knew nothing."

  "Sir, you're being too polite. When you led the troops to quell the Imo Incident in Korea, you were even younger than I am now." Lin Chong smiled and said, "If it weren't for the fact that Korea was ceded to Japan after the First Sino-Japanese War, your achievement would be just like Ban Gu's conquest of the Western Regions during the Han Dynasty, a feat that would go down in history!"

  Everyone wore a high hat, and Yuan Shikai's smile grew even more brilliant. "An Hua, now that the imperial court is about to implement new policies to enrich the country and strengthen its military, I also want to establish industries in Zhili. Do you have any good ideas?"

  "The prosperity of industry and commerce is the foundation of a rich country and strong military. Speaking to this point, I have some insights. To strengthen industry and commerce, the first thing to do is to repair roads and build ships. Why are coastal and riverine areas prosperous? It's because they occupy convenient transportation routes. I once heard a merchant from Hongjiang say: 'Ten people can't compare to one porter, ten porters can't compare to one cart, and ten carts can't compare to one ship.' This saying is true for business. I also have tea shops in Tianjin, Zhangjiakou, and Guihua in the north. Let's take the sale of brick tea as an example. My tea factory in Wuhu produces three-nine brick tea at a cost of about 1.2 silver coins per block. If I sell 100,000 blocks to Tianjin, the ex-factory price would be 12,000 taels. The shipping cost from Wuhu to Tianjin is less than 200 taels, and miscellaneous fees and taxes are around 600 taels, making the total cost around 13,000 taels. If I sell it in Guihua for 3 silver coins per block, I can get 30,000 taels of silver for these 100,000 blocks. How much do you think I would make?"

  Yuan Shikai thought for a moment, the difference in between is seventeen thousand taels, after deducting the corresponding expenses, there should still be a lot, so he said: "Can we make a profit of ten thousand here?"

  Lin Xiao smiled and continued: "I've analyzed the costs for you, sir. From Tianjin to Beijing, whether by rail or canal, labor and transportation costs combined are roughly under 1,000 taels. Once in Beijing, we can only use camels, with each camel costing around 15 taels from Beijing to Guihua. Since my tea shop frequently does business in Guihua and Zhang Heng, we're considered a large customer, so familiar camel teams usually charge us around 12 taels. However, each camel can only carry 200 bricks of tea at most, meaning this shipment will require 500 camels, which is around 8,000 taels. Adding the costs of tolls and hiring guards along the way, that's another 7-8,000 taels. If I can make a profit of 2,000 taels on this shipment, it'll already be quite good."

  Seeing Yuan Shikai's complex expression, Lin Chong continued to burn fire. "To prosper industry and commerce, one must first fix transportation. This means that most of the profits that should have been earned were consumed on the road due to inconvenient transportation, which is also the reason why industry and commerce flourish in places with convenient transportation. In the era of agricultural economy, this impact was not obvious, but in the industrial era, it greatly hindered economic development. Domestic industry and commerce found it difficult to compete with foreigners, unequal taxation being one aspect, while another was the obstruction caused by transportation, making it hard for merchants to gather surplus capital to invest in mining and manufacturing.

  For example, when purchasing wool in the northwest, each load is only two or three taels of silver, but selling it to foreign firms in Tianjin can fetch sixteen or seventeen taels, and sometimes even exceed twenty taels. However, the profit from selling wool is not great, and most of the price difference is consumed by transportation costs. The people are not wealthy and have no power to pay taxes, so where does national prosperity come from? Another example is the coal and iron in Shanxi. I've heard that the coal on the right side of the mountain only costs two or three taels per ton, and the iron ore, if extracted using machinery, also only costs around three taels. Refining one ton of iron consumes one to two tons of coal, and the raw materials cost no more than twelve to thirteen taels, plus labor costs of sixteen to seventeen taels. Why am I unwilling to set up an iron factory in Shanxi? It's because there is no convenient railway transportation. If we use horse-drawn carriages, transporting one ton of steel to Tianjin would require ten or more taels of silver, so where is the profit? If there were a railway from Shanxi to Tianjin, the transportation cost for one ton of iron would be less than one tael, and even foreign iron could not compete with us. At this price, it's not impossible to export it abroad! People say that merchants are greedy for profit, but actually, it's the capital that is greedy for profit. If there is enough profit to attract investment, it's easy to raise funds of tens of millions or even hundreds of millions.

  Yuan Shikai was a clever man, and after some thought, he immediately understood the reasoning. He became excited and said: "An Hua is talented, listening to your words, I suddenly understand! This opening of mines and factories must first consider the issue of profit. If there is profit to be made, capital will automatically come to invest. As the saying goes, 'the world is full of people seeking profit', 'everyone is rushing to seek profit'. I understand now. From now on, please visit Beiyang more often, I still have much to ask for your advice!"

  "It's too kind of you, sir, but if there's anything I can do for you in the future, please just give me an order and I'll be happy to serve. Lin Chuo was also hesitant, as Yuan Shikai's intention to win him over was already quite clear, but if he were to easily surrender to his command, wouldn't that make it seem too easy, and not worthy of much consideration?"

  Yuan Shikai also knew that things should not be rushed too much, so he smiled slightly and changed the subject.

  Lin Xiao made him open his eyes again with a long talk.