Origin of the Maritime CustomsWhile Shanghai was in the hands of the “Small Swords，” allImperial authority broke down. The Custom House was plundered anddemolished and the Taotai was unsuccessful in his attempts to establishanother place for the receipt of customs dues.
Many residents considered that as there was no longer anyImperial authority， it was not necessary to observe the Treaty. Neitherthe British nor the American officials concurred in this view， and heldthat the mere fact that the city had fallen into the hands of rebels wasno just excuse for robbing the Chinese Government Of its rights. It wasarranged that both British and American Consuls should request theirnationals to give guarantees for the payment of 1egal duties. This， ofcourse， was not welcome to many of the merchants who were anxiousto evade paying the regular charges. The French Consul， on the otherhand， intimated that he would clear ships of his nationality withoutcalling on them to pay duties， and the Consuls of other nations， whowere all merchants， took the same line.
The Customs authorities themselves were largely responsible forthe confusion that arose， for they allowed vessels to enter and leave theport after making partial or no payment at all.
Wu Taotai made an attempt to set up a floating Custom Housein the Whangpoo opposite what is now the Public Gardens， but thisdid not work well. He had not been allowed to re-establish the formerCustom House in the Settlement， as it would have been subject toattacks from the rebels， and would have had to be defended. Claimingneutrality， the foreign merchants were unwilling to guard it and at thesame time were equally unwilling to permit the Imperialists to protectit.
In January， 1854， the U.S. Vice-Consul gave notice that he wouldallow American ships to sail without requiring the payment of duties，so long as ships of other nations were allowed to do so. Mr. Alcock，however， held out until the Taotai， being pressed for money， allowed aBremen ship to clear on payment of only part of the duties.
On February 14th， 1854 ， it was agreed that a Custom Houseshould be placed on the Hongkew side of the Soochow Creek. As，however， it was discovered that certain ships managed to get in orto clear without paying dues， there was a determination on the partof many to regard Shanghai as a free port and to evade entirely thepayment of duties.
Consul Alcock conceived the idea of bringlng order out of chaosby placing the Chinese Customs under foreign supervision， so as toensure integrity in administration. After consultation with the Taotai，the Consuls of the three Treaty Powers nominated delegates for theproposed Foreign Inspectorate. The nominees were： Mr. T. F. Wadeof the British consular staff， Mr. L. Carr of the American diplomaticservice， and Monsieur A. Smith of the French consular service.
The Custom House was re-established on July 12th，1854 ， in agodown at the corner of Nanking and Kiangsi Roads. The new planwas successful beyond expectation and was a great improvement on thepast corrupt native administration.
Mr. （afterwards Sir） Thomas Wade was later succeeded by Mr. H.
A. Lay， who received from the Chinese Government the appointmentof Inspector-General. The Imperial Maritime Customs， beginuing thusat Shanghai， was， after the Taiping Rebellion， extended throughoutChina.
The promissory notes and securities for duties given by British andAmerican merchants during the period when the Chinese Governmentwas unable to make regular collections were eventually returned in 1855.