“The situation is a very grave one,” Captain Rodgers said to the lads, after they were in the carriage and driving rapidly through the streets, illuminated in honor of their visit, on their way to the American Embassy. “When two nations mistrust each other’s actions, the seizing of the war-ships of a neutral and weak power like China is very certain to precipitate a condition which will be a step toward war.” Phil and Sydney nodded their heads in silent understanding. “And I am afraid that the ambassador and I are quite powerless to change the situation,” he continued thoughtfully. “The only way possible would be to induce the Japanese government to refrain from this seizure.” “Takishima said that was now impossible,” Phil exclaimed in much perturbation, for he had not believed the mere seizure of the Chinese ships by Japan would lead to war. Further conversation was cut short as their carriage rolled up through the smooth driveway to the door of the American Embassy. The lads caught glimpses of much gold lace as they followed their captain into the brightly lighted hallway, where their capes and hats were handed over to numerous attentive servants. Once in the large reception room, dazzled by the handsomely gowned women and the glitter of Japan’s chivalry, both military and naval, the situation dwindled in importance. Impey was there, and Phil caught his eye almost immediately upon entering the room. The lad’s face flushed and there was anger in his heart as the part Impey was playing came again into his mind. At dinner Phil was deeply gratified to find himself between Helen and Takishima. “Is what I heard about Mr. Impey true?” the former asked Phil in a low voice amid the loud hum of conversation about them. “Has he intentionally misrepresented the condition of affairs to father?” Phil nodded. “Worse than that,” the lad whispered impressively. “He is responsible for all those articles in the ‘Shimbunshi’ slandering Americans. He has fooled both the Japanese and ourselves, and has brought the two countries precious near to a war. “You wouldn’t think it by looking about this table, would you?” he added in grim humor. The entire Japanese cabinet and the highest of its naval and military officers, with the officers of the “Alaska,” were seated there in friendly conversation, as if no thought of the horrors that might come had entered their minds. Within a week, if Impey’s plans were successful, these same people might be pitted against each other in a terrible naval battle. “Does father know this?” the girl asked anxiously. “I thought of telling him what I had overheard at that unfortunate affair between you and Lieutenant Takishima, but I was afraid I had not heard aright, and I was too much agitated afterward to ask you to explain.” “I shall tell him to-night,” Phil replied, “unless Captain Rodgers does. I have told our captain everything except----” Phil stopped abruptly while Helen raised her eyes to his face in inquiry.