tinction--should have ensured its
success if anything could have done so. But from the very moment the
fleet reached Shanghai there were misunderstandings. Captain Osborne
found himself subject to local officials whose control he resented.

The truth was Lay had somewhat altered the regulations drawn up by
Robert Hart and approved by Prince Kung, and had then told Captain
Osborne that of course the Chinese would agree to anything he wished.
Subsequent events proved him wrong, and showed that he had made the
fatal mistake of committing his employers too far. Perhaps this was
not unnatural considering that he was just then receiving the most
flattering notice from the British press and a C.B. from the British
Government for his services--yet it was none the less disastrous.

In May 1863 Lay returned to Shanghai, and, Robert Hart's acting
appointment having come to an end, he was made Commissioner at
Shanghai, with charge of the Yangtsze ports, the position being
specially created for him by Prince Kung in order to give him more
authority than would belong to the simple Commissioner of a port. That
same autumn the Sherard Osborne affair came to a crisis. Returning
from a trip up the Yangtsze, Hart found Lay and Li Hung Chang at
daggers drawn. The former had just peremptorily demanded a large sum
of money to provision the fleet, and the latter had flatly refused to
put his hand in his pocket without official orders to do so,
Robert Hart, who very shrewdly guessed at the real cause of the
misunderstanding, offered to go and see Li and explain. Very tactfully
he told Li that all Lay and Captain Osborne wanted was his formal
sanction to present at the bank, as without this the transaction would
not have the necessary official character. Li agreed readily enough
when the matter was presented in this light; what he had objected to
was Lay's abrupt demand to pay so many thousand taels out of his own
pocket immediately.

But no small manoeuvre such as this, however successful, could arrange
the larger matter. The fleet had been an utter failure. Osborne
himself was disgusted; the Chinese were dissatisfied. They therefore
made the best of a bad bargain, and sent the ships back to be sold
in England in order to prevent their falling into the hands of the
independent and quarrelsome Daimios of Japan, or, as Mr. Burlingame,
the United States Minister, greatly feared, into the hands of the
Confederates.

Thus ended a very curious