It had become evident that， whatever may have been the originalpurpose， the Chinese Government was unable at that time to provideadequate protection for the Settlements; and that some more efficientform of government must be devised.
The Consuls for the three Treaty Powers， Rutherford Alcock forGreat Britain， R. C. Murphy for the U. S. A.， and B. Edan for France，conferred together and drew up a new set of Land Regulations whichafterwards received the approval of the Taotai.
Meeting of Land Renters， July 11th， 1854
These Regulations were placed before a public meeting of theLand Renters on July 11th， 1854， at the British Consulate， held underthe auspices of the three Consuls， and were adopted.
The committee on Roads and Jetties appointed by the Consulwas dissolved and a Municipal Council for the Settlements was elected.
Thus for a time the three separate Settlements were united and placedunder one municipal administration， exercising control over all foreignresidents.
Of the Land Regulations some merely re-enacted the provisionsof the Regulations of 1845. It was， however， clearly stated that for theacquisition and registration of land， the land renter “must first apply tothe Consul of his nation， or， if none be appointed， to the Consul of anyfriendly Power，“ and this implied that the original claim of the Britishauthorities for complete jurisdiction had been waived and would nolonger be assert.
Article X of Land RegulationsArticle X was of great importance. It reads in part as follows： “Itbeing expedient and necessary that some provision should be madefor the making of roads， building public jetties and keeping them inrepair; cleaning， lighting， and draining the Settlement generally， andestablishing a watch or police force; the foreign consuls aforesaid shallat the beginning of each year convene a meeting of the renters of landwithin the said limits， to devise means of raising the requisite fundsfor these purposes： and at such meeting it shall be competent to thesaid renters to declare an assessment in the form of a rate to be madeon land and buildings， and in the form of wharfage dues on all goodslanded at any place within the said limits： and to appoint a committeeof three or more persons to levy the said rates and dues and apply thefunds so realised to the purposes aforesaid… The committee shall beempowered to sue all defaulters in the consular courts under whosejurisdiction they may be… “Thus was delegated to the governing body of the Settlement thehighest Powers in all government， those of taxing and policing thecommunity. The authority of the Municipal Council and its legal statuswas not acknowledged by the legal authorities of Hongkong untiltwenty years later， on the ground that the Diplomatic Body had notbeen consulted when the Land Regulations were amended in 1854.
One significant feature of the Regulations was the definiteacknowledgment of Chinese sovereign rights to the land. The ChineseGovernment was to receive an annual land tax， and land deeds were tobe sealed by the Chinese authorities.
Taxation of Chinese
Nothing was said in the Regulations about the legality of lettinghouses or selling land in the Settlement to Chinese.
There was already a large number of Chinese living within theSettlement， most of whom had come in as refugees， and it was decidedthat they were to pay a house tax of 8 per cent. in return for theprotection afforded them. The foreign population numbered about300 residents with their families. The Chinese， barely 500 before thetaking of the Shanghai city by the “Small Sword” rebels， now exceeded20，000， including many wealthy families.
The First Council
The first Council consisted of Messrs. W. Kay， E. Cunningham， D.
O. King， C. A. Fearon， and the Rev. Dr. Medhurst.
The early experiences of the Council are full of interest. Thefirst Municipal Budget amounted to a total of S25，000， Of whichS14，000 was to be expended upon the Police， leaving but little for theconstruction of roads and municipal improvements.
The services of Mr. S. Clifton， an ex-army man who had servedas Inspector of Police in Hongkong， were secured， at a salary of S150 amonth， as Superintendent of Police.
The estimate for 1ighting the streets with oil lamps was S12 amonth and a similar amount was appropriated for sanitation.
Small as the amount appears to us now， it is interesting to remember， as Mr. Langpointed out in a lecture in 1871， that the budget of the original committee of threeappointed by the Consul was ＄2，000 and that after paying all necessary expenses areasonable balance was left in hand.
In October a special Land Renters‘ meeting was held to obtainpermission for borrowing S12，500 for the erection of police barracks.
The Land Renters were generally opposed to the raising of loans orto increase in taxation but this proposal was sanctioned by a smallmajority， 18-15.
In November of the same year at a meeting of the Land Renters aresolution was passed “That the Municipal Council be not empoweredto assess the Foreign Residents and Foreign Trade of the Port to agreater amount than ＄6，000.00 in all without express sanction.“All through these early days there is no indication that the LandRenters were able to take a large view of the future possibilities of theSettlement，Another serious difficulty arose in regard to police matters.