Shanghai International Settlement

1884 map of Shanghai with foreign concessions: the British Concession in blue, the French Concession to the south in faded red and American Concession to the north in faded orange; Chinese part of the city to the south of the French Concession in faded yellow.

Although Europeans had shown more interest in Canton than Shanghai early on for commercial advantages, the port's strategic position was key to British interests as the island nation declared war against China in 1839, starting the first Anglo-Chinese Opium War. The first settlement in Shanghai for foreigners was the British settlement, opened in 1843 under the terms of the Treaty of Nanking.[1] This treaty forced the Qing Dynasty to make punitive territorial and economic concessions and would become the first of the unequal treaties imposed upon China by its fellow great powers.[2] To the north, the settlement was bordered by the right bank of the Suzhou River before its inflow into the Huangpu River, which delineated the concession's eastern boundaries. To the south, the Yang-King-Pang channel marked the concession's southern limits which would later become the boundary between the British and French concessions.

On the orders of Sir Henry Pottinger, first Governor of Hong Kong, Captain George Balfour of the East India Company's Madras Artillery arrived as Britain's first consul in Shanghai on 8 November 1843 aboard the steamer Medusa.[3] The next morning Balfour sent word to the circuit intendant of Shanghai, Gong Mujiu (then romanized Kung Moo-yun), requesting a meeting, at which he indicated his desire to find a house to live in. Initially Balfour was told no such properties were available, but on leaving the meeting, he received an offer from a pro-British Cantonese named Yao to rent a large house within the city walls for four hundred dollars per annum. Balfour, his interpreter Walter Henry Medhurst, surgeon Dr. Hale and clerk A. F. Strachan moved into the luxuriously furnished 52-room house immediately.[4]

It served as the consulate during construction of a Western-style building within the official Settlement boundaries just to the south of Suzhou Creek. This was completed within a year. This soon became the epicenter of the British settlement. Afterward both the French and the Americans signed treaties with China that gave their citizens extraterritorial rights similar to those granted to the British, but initially their respective nationals accepted that the foreign settlement came under British consular jurisdiction. However, it must be clearly understood that Shanghai has been from the beginning a settlement, not a possession. The British Government annexed Hong Kong, which became British territory, and subject to British law. The land on which the Foreign Settlement of Shanghai was created was, on the other hand, only leased to the British Government. That is proved by the fact that all the landowners still pay ground rent to the Chinese Government.[1]

Pre-World War I Flag

The Sino-American Treaty of Wanghia was signed in July 1844 by Chinese Qing government official Qiying, the Viceroy of Liangguang, who held responsibility for the provinces of Guangdong and Guangxi, and Massachusetts politician Caleb Cushing (1800–1879), who was dispatched with orders to "save the Chinese from the condition of being an exclusive monopoly in the hands of England" as a consequence of the 1842 Nanking treaty. Under the Treaty of Wanghia, Americans gained the same rights as those enjoyed by the British in China's treaty ports. It also contained a clause that effectively carved out Shanghai as an extraterritorial zone within Imperial China, though it did not actually give the American government a true legal concession.[5]

It was only in 1845 that Britain followed in America's footsteps and signed a land-deal to allow Britons to rent land in Shanghai in perpetuity. The American consular presence did not create a problem for the British because it was never intended to have a post in person. Since American traders in China were prohibited from engaging in the opium trade, their business transactions were conducted under the auspices of British firms. The only serious incident of political complaint against the Americans was in 1845, when the Stars and Stripes was raised by the acting US Consul, Henry G. Wolcott, who had just arrived in the city. Neither the British nor the Chinese governor approved of the display. In 1848, France established its own French concession under French consular jurisdiction, squeezed between the British settlement to the north and the Chinese walled city to the south.

During the Taiping Rebellion, with the Concessions effectively landlocked by both the Manchu government and Small Swords Society rebels, the Western residents of the Shanghai International Settlement, known as "Shanghailanders", refused to pay taxes to the Chinese government except for land and maritime rates (nominally because Shanghai's customs house had been burnt down). They also claimed the right to exclude Chinese troops from the concession areas. While the Settlement had at first disallowed non-foreigners from living inside its boundaries, a large number of Chinese were allowed to move into the International Settlement to escape the Taipings or seek better economic opportunities. Chinese entry was subsequently legalised and continued to grow.

Shanghai tram, 1920s.

On 11 July 1854 a committee of Western businessmen met and held the first annual meeting of the Shanghai Municipal Council (SMC, formally the Council for the Foreign Settlement North of the Yang-king-pang), ignoring protests of consular officials, and laid down the Land Regulations which established the principles of self-government. The aims of this first Council were simply to assist in the formation of roads, refuse collection, and taxation across the disparate Concessions.

In 1863 the American concession—land fronting the Huangpu River to the north-east of Soochow Creek (Suzhou Creek)—officially joined the British Settlement (stretching from Yang-ching-pang Creek to Suzhou Creek) to become the Shanghai International Settlement. The French concession remained independent and the Chinese retained control over the original walled city and the area surrounding the foreign enclaves. This would later result in sometimes absurd administrative outcomes, such as needing three drivers' licenses to travel through the complete city.

Boundary Stone of the Shanghai International Settlement.

By the late-1860s Shanghai's official governing body had been practically transferred from the individual concessions to the Shanghai Municipal Council (工部局, literally "Works Department", from the standard English local government title of 'Board of works'). The British Consul was the de jure authority in the Settlement, but he had no actual power unless the ratepayers (who voted for the Council) agreed. Instead, he and the other consulates deferred to the Council.

The Bund, 1928.

The Council had become a practical monopoly over the city's businesses by the mid-1880s. It bought up all the local gas-suppliers, electricity producers and water-companies, then — during the 20th-century — took control over all non-private rickshaws and the Settlement tramways. It also regulated opium sales and prostitution until their banning in 1918 and 1920 respectively.

The Bund, 2018

Until the late-1920s, therefore, the SMC and its subsidiaries, including the police, power station, and public works, were British dominated (though not controlled, since Britain itself had no authority over the Council). Some of the Settlement's actions during this period, such as the May 30th Movement, in which Chinese demonstrators were shot by members of the Shanghai Municipal Police, did embarrass and threaten the British Empire's position in China even though they were not carried out by "Britain" itself.

A caricature of Stirling Fessenden, one of the longest serving chairmen of the SMC, as the "Lord Mayor of Shanghai"

No Chinese residing in the International Settlement were permitted to join the council until 1928. Amongst the many members who served on the council, its chairman during the 1920s, Stirling Fessenden, is possibly the most notable. An American, he served as the settlement's main administrator during Shanghai's most turbulent era, and was considered more "British" than the council's British members. He oversaw many of the major incidents of the decade, including the May 30th Movement and the White Terror that came with the Shanghai massacre of 1927.

By the early 1930s, the British and the Chinese each had five members on the Council, the Japanese two and the Americans and others two.[6] At the 1936 Council election, because of their increasing interests in the Settlement, the Japanese nominated three candidates. Only two were elected, which led to a Japanese protest after 323 uncounted votes were discovered. As a result, the election was declared invalid and a new poll held on April 20-21, 1936, at which the Japanese nominated only two candidates.[7] In the case of the Chinese members, in 1926 the Ratepayers' Meeting adopted a resolution approving the addition of three Chinese members to the Council and they took their seats for the first time in April, 1928; while in May, 1930, their number was increased to five.[8]

The International Settlement was wholly foreign-controlled, with staff of all nationalities, including British, Americans, Danes, Italians and Germans. In reality, the British held the largest number of seats on the Council and headed all the Municipal departments (British included Australians, New Zealanders, Canadians, Newfoundlanders, and South Africans whose extraterritorial rights were established by the United Kingdom treaty).

The only department not chaired by a Briton was the Municipal Orchestra, which was controlled by an Italian.

The Settlement maintained its own fire-service, police force (the Shanghai Municipal Police), and even possessed its own military reserve in the Shanghai Volunteer Corps (萬國商團). Following some disturbances at the British concession in Hankow in 1927, the defences at Shanghai were augmented by a permanent battalion of the British Army, which was referred to as the Shanghai Defence Force (SDF or SHAF),[9] and a contingent of US Marines. Other armed forces would arrive in Shanghai; the French Concession had a defensive force of Troupes de marine and Annamite suppletive troops from French Indochina, the Italians also introduced their own marines, as did the Japanese (whose troops eventually outnumbered the other countries' many times over).

From the 1860s, the Municipal Council began building roads beyond the concession boundaries, ostensibly to connect the concession with other properties or facilities which required the protection of Britain and other treaty powers during the unrest of the Taiping Rebellion. The Municipal Council obtained limited administrative powers over the areas adjacent to these "extra-settlement roads", making the area a "quasi-concession". The expansion of the International Settlement in 1899 took in most of the extra-settlement roads area, but from 1901 the Municipal Council began building further roads beyond the new boundary with a view to expanding the concession to cover those areas as well. However, a request to further expand the concession (inspired by a similar expansion of the French concession in 1914) was turned down by the Chinese government due to anti-imperialist sentiments. Britain, pre-occupied with World War I, did not press the issue and the extra-settlement roads area retained the "quasi-concession" status until the demise of the concession. Parts of the northern extra-settlement roads area was allocated to Japan for defence purposes in 1927, which the Japanese used as a base for military operations during the 1932 January 28th Incident and the 1937 Battle of Shanghai. After that battle, Japan took full control over the northern extra-settlement roads area and expelled International Settlement police. The neutrality of the western extra-settlement roads area survived in some form until the withdrawal of British troops in 1940.

Article 28 of the International Settlement's Land Regulations stated unequivocally that "the land encompassed in the territory remains Chinese territory, subject to China's sovereign rights." As expressed by legal experts, "the self-governing International Settlement possesses no more power than the mere delegation of purely local and municipal powers and functions. Control of police, sanitation, roads, and other problems of local administration are granted to the Municipal Council simply because that body happens to be the one best equipped to deal with these matters in an area where the large majority of foreigners dwell. But the Municipal Council is in no sense a political body. Its powers, being delegated and hence limited, are subject to strict construction. What foreigners acquire is simply the delegated power of municipal administration, while the reserve powers remain in the sovereign grantor, the Chinese Government. Although under the control of the Consular Council, the area is still Chinese territory, over which China's sovereignty remains unsurrendered".[10][11]

Hongkew Japantown

In the 19th century, Europeans possessed treaty ports in Japan in the same way they held those in China. However, Japan rapidly developed into a modern nation, and by the turn of the 20th century the Japanese had successfully negotiated with all powers to abrogate all unequal treaties with it. Japan stood alongside the European powers as part of the Eight-Nation Alliance during the infamous fifty five-day siege of the foreign embassy compound in Peking. Japan entered the 20th century as a rising world power, and with its unequal treaties with the European powers now abrogated, it actually joined in, obtaining an unequal treaty with China granting extraterritorial rights under the Treaty of Shimonoseki signed in 1895.

In 1915, during the First World War, Japan overtook Britain as the country with the largest number of foreign residents in Shanghai. In 1914 they sided with Britain and France in the war and conquered all German possessions in China. By the beginning of the 1930s, Japan was swiftly becoming the most powerful national group in Shanghai and accounted for some 80% of all extraterritorial foreigners in China. Much of Hongkew, which had become an unofficial Japanese settlement, was known as Little Tokyo.

In 1931, supposed "protection of Japanese colonists from Chinese aggression" in Hongkew was used as a pretext for the Shanghai Incident, when Japanese troops invaded Shanghai. From then until the Second Sino-Japanese War (1937–1945) Hongkew was almost entirely outside of the SMC's hands, with law and protection enforced to varying degrees by the Japanese Consular Police and Japanese members of the Shanghai Municipal Police.

Japanese soldiers in Shanghai, 1937.

In 1932 there were 1,040,780 Chinese living within the International Settlement, with another 400,000 fleeing into the area after the Second Sino-Japanese War broke out in 1937. For the next five years, the International Settlement and the French Concession were surrounded by Japanese occupiers and Chinese revolutionaries, with conflict often spilling into the Settlement's borders. In 1941, the Japanese launched an abortive political bid to take over the SMC: during a mass meeting of ratepayers at the Settlement Race Grounds, a Japanese official leaped up and shot William Keswick, then Chairman of the Council. While Keswick was only wounded, a near riot broke out.[12]

Britain evacuated its garrisons from mainland Chinese cities, particularly Shanghai, in August 1940.[13]^:299

currency issued inside the settlement for use by the British Armed Forces inside the city - circa 1940.

Anglo-American influence effectively ended after 8 December 1941, when the Imperial Japanese Army entered and occupied the British and American controlled parts of the city in the wake of the attack on Pearl Harbor. The British and Americans troops taken by surprise surrendered without a shot, with the exception of the only British riverboat in Shanghai, HMS Peterel, which refused to surrender: six of the 18 British crew who were on board at the time were killed when the ship was sunk when the Japanese opened fire at almost point-blank range.[14] The French troops did not move from the preserved French Concession, as the French Vichy government considered itself neutral.

European residents of the International Settlement were forced to wear armbands to differentiate them, were evicted from their homes, and — just like Chinese citizens — were liable to maltreatment. All were liable for punitive punishments, torture and even death during the period of Japanese occupation. The Japanese sent European and American citizens to be interned at the Lunghua Civilian Assembly Center, a work camp on what was then the outskirts of Shanghai. Survivors of Lunghua were released in August 1945.[15]

Shanghai was notable for a long period as the only place in the world that unconditionally offered refuge for Jews escaping from the Nazis.[16] These refugees often lived in squalid conditions in an area known as the Shanghai Ghetto in Hongkew. On 21 August 1941 the Japanese government closed Hongkew to Jewish immigration.[17]

In February 1943, the International Settlement was de jure returned to the Chinese as part of the British–Chinese Treaty for the Relinquishment of Extra-Territorial Rights in China and American–Chinese Treaty for Relinquishment of Extraterritorial Rights in China with the Nationalist Government of the Republic of China under Chiang Kai-shek. However, because Shanghai was under Japanese control, this was unenforceable. In reply, in July 1943, the Japanese retroceded the SMC to the City Government of Shanghai, which was then in the hands of the pro-Japanese Wang Jingwei Government.

After the war and the liberation of the city from the Japanese, a Liquidation Commission fitfully met to discuss the remaining details of the handover. By the end of 1945, most westerners not actively involved in the Chinese Civil War (such as intelligence agents, soldiers, journalists etc.) or in Shanghai's remaining foreign businesses, had left the city. With the defeat of the Kuomintang in 1949, the city was occupied by Communist PLA and came under the control of Mayor of Shanghai.

The foreign architecture of the International Settlement era can still be seen today along the Bund and in many locations around the city.