During the Taiping Rebellion and the years immediately followingthere was considerable development in municipal affairs.
Establishment of the French Municipality， 1862
In the Beijing there had been a fair prospect of municipal affairsbeing carried on under one administration. The French， however，fearing lest their interests might be overlooked， determined to set up aseparate municipal government. They held they were free to do this， foralthough the Land Regulations of 1854 had been signed by the FrenchConsul， they had never been ratified by the French Government.
Accordingly on May 13th， the Municipal Council of the ConcessionFrancaise was formed. It differed from the English Municipal Councilin that all its decisions were subject to the approval or veto of theFrench Consul.
Inasmuch as for some time after this the foreign trade ofShanghai was largely carried on in the English Settlement， the FrenchMunicipality found it difficult to raise a revenue， and dependedlargely on income derived from licenses to opium divans， brothels andgambling houses.
Amalgamation of the American Settlement with the EnglishIn the American Settlement which had been founded in Hongkew，across the Soochow Creek， were the premises of the AmericanEpiscopal Church Mission， the Shanghai Dock， some wharves， andsome establishments for the entertainment of sailors. It was justlycalled “the Cinderella among the settlements.” It had the disadvantageof becoming a refuge for the criminal class， driven out of the Englishsettlement by its more efficent police force， and the authorities foundit difficult to control the large Chinese population which flowed intoit during the Taiping Rebellion， The Hongkew Municipal committeewas obliged to come to an arrangement by which the Hongkew police（consisting of a body of six men） were amalgamated with the police ofthe English Settlement， so as to gain the co-operation of the latter.
A movement for one municipal government for both Settlementswas put forward by Mr. Edward Cunningham of Russell and companyand Mr. George F. Seward， the American Consul. On September 21st，1863， a union was effected， and the International Settlement， north ofthe Yangkingpang， came into existence.
At the same time， Consul Seward and Huang Taotai agreed to thefollowing boundary line of the American Settlement. Starting froma point opposite the Defence Creek it extended down the SoochowCreek and the Whang-poo to three miles up the Yangtszepoo Creekand then in a straignt line back to the point facing the Defence Creek.
Proposal to Make Shanghai a Free CityThe Shanghai Municipal Council （the Municipal Council ofthe International Settlement）realizing the burden of providing agovernment for hundreds of thousands of Chinese， as well as forthe foreign residents， seriously contemplated the practicability ofconverting the International Settlement into a free city—or， in otherwords， into an independent republic.
The British Consul， Mr. W. H. Medhurst， son of Dr. W. H.
Medhurst， pointed out that such a step would be a violation of theTreaties， as “the territory belongs to the Emperor of China， who merelyaccords to the Foreign Powers， that have entered into treaties withhimself， an extraterritorial jurisdiction over their own citizens residentat this port， but retains for himself all authority over his own territoryand subjects.“The British Envoy， Sir Frederick Bruce， was even more emphaticin his opposition to the proposal and declared that the “EnglishConcession at Shanghai was neither a transfer nor a lease of the land inquestion to the British Crown， the land so acquired remaining Chineseterritory.“It can readily be seen that the scheme proposed was impracticable.
It would not have been possible to obtain the consent of the ChineseGovernment， and if the plan had been attempted， in face of Chineseopposition， it would have been easy to wreck the new republic byplacing round it a cordon of Custom barriers preventing trade with theinterior.
Proposal of the EnvoysThe Envoys， especially Sir Frederick Bruce， made counterproposals in regard to the administration of the Settlements.
“It was proposed that a municipality should be created， to includeif possible the English， French， and American settlements; that eachresident should be subject， in both criminal and civil suits， to thejurisdiction of his own authorities but that arrests for the Chineseauthorities should be made only by the Municipal police; that aChinese element should be introduced into the Municipal Council，and that no measure affecting the Chinese residents should be takenwithout its consent， but this proposal was contingent on the extensionof the scheme to all three settlements; that territorial jurisdictionshould rest solely on grants from the Emperor or his representatives;and that if necessary to obtain such grants， certain revenues， or apercentage of revenues， should be paid to the Imperial authority.“An important part of the proposal was not carried out. Thethree Settlements did not come under one administration， the Frenchpreferring to have a separate Municipality and as a consequence， theadmission of a Chinese element into the Council was not effected， andthe Chinese ratepayers were left without representation.
Taxation of the Chinese within the SettlementIn July， 1862， the Taotai called attention to the expense to whichhis government was put in protecting Shanghai， and asked Permissionto impose a poll tax on the Chinese residents of the Settlements similarto that which had been paid in the native city.