For a considerable period the foreign residents had to be contentto 1ive in native houses in Nantao， outside the city walls， on the shoresof the Whangpoo. The conditions of life were not very pleasant. Oneof the early residents， Mr. Fortune， gives the following description ofthe state of affairs in 1843 ， “Often in the mornings we would findourselves drenched with rain; and if snow fell， it was blown throughthe windows and formed wreaths on the floor.“ The foreign populationwas then something over a hundred， of whom seven were ladies. Therewere twenty-five mercantile firms engaged in business. It was not until1849 that the residents generally moved into the Settlement.
Arrangements for TradeThe Taotai appointed six “partners” in the shroff shop to grantreceipts for export and import duties and tonnage dues， and therewas consider-able danger lest trade should fall into the hands of a fewmonopolists， as at Canton. Consul Balfour protested vigorously againstsuch a development， as contrary to the Treaty. An early attempt wasmade to introduce a bonding system by which goods could remain inbond without paying custom duties until sold， but this was opposed bythe Imperial commissioners.
Although it was a day of small things， it is interesting to note thatduring the first six weeks after the port was opened， from November14th to December 31st， seven vessels entered the harbor. Their importstotalled in value Tls. 433， 729 and the exports Tls. 147，172. As importduty they paid Tls. 16，564.80， and for export fees Tls. 7，537.19. Theirtonnage dues amounted to Tls. 985 ， a marked contrast to the large“squeezes” formerly en-forced on vessels at Canton.
Legal Status of Foreign ResidentsBefore the signing of the Treaty of Nan-king， there was constantfriction between foreigners who came to Canton and the local Chineseauthorities. The Chinese refused to recognize the rights accorded byInternational Law（ for example， in regard to the status of ships ofwar in foreign ports）， and the foreigners refused to recognize the dueauthority of the local law courts.
The Treaty of Nanking marks the 1egalization of extraterritorialrights as well as the formal treaty relations in regard to commerce.
Extraterritoriality was not expressly granted in the Treaty， but provisionwas made for the functioning of British consular officials， with theunderstanding that extraterritorial rights should be enjoyed by Britishtraders.
Article XIII of the General Resolutions issued in connection withthe Treaty reads as follows：“Whenever a British subject has to complain of a Chinese hemust first proceed to the Consulate and state his grievance. The Consulwill there-upon enquire into the merits of the case and do his utmostto arrange it amicably. In like manner， if a Chinese have reason tocomplain of a British subject， he shall no less listen to his complaint，and endeavour to settle it in a friendly manner. 。 。 。
If unfortunately， any disputes take place of such a nature thatthe Consul cannot arrange them amicably， then he shall request theassistance of a Chinese Officer that they may together examine into themerits of the case， and decide it equitably. Regarding the punishmentof English criminals， the English Government will enact the lawsnecessary to attain that end， and the Consul will be empowered to putthem into force：and regarding the punishment of Chinese criminals.
these will be tried and punished by their own laws， in the wayprovided for by correspondence which took place at Nanking， after theconcluding of the peace.“The exercise of extraterritorial rights received a still more explicitstatement in the Treaty made between the United States and China in1844.
Article XXI of that Treaty reads as follows：“Subjects of China who may be guilty of any criminal act towardscitizens of the United States shall be arrested and punished by theChinese authorities according to the laws of China， and citizens of theUnited States who may commit any crime in China shall be subject tobe tried and punished only by the Consul or other public functionaryof the United States thereto authorized according to the laws of theUnited States; and in order to secure the prevention of all controversyand disaffection， justice Shall be equitably and impartially administeredon both sides. “Another article of the same Treaty applies this arrangement to civilcases.
In Article X XV it was declared：“All questions in regard to rights， whether of property or person，arising between citizens of the United States in China， shall be subjectto the jurisdiction of， and regulated by the authorities of their ownGovernment， and all controversies occurring in China between citizensof the United States and subjects of any other Government shallberegulated by the treaties existing between the United States and suchGovernments， respectively， without interference on the part of China.“According to what is known as the “most favoured nation” clause，these extraterritorial rights could be claimed by all nations enteringinto treaty relations with China. By the phrase “most favoured nation”
is meant that China undertakes to extend to all the Treaty Powers thosespecial rights which from time to time she has granted to particularPowers. In other words， it is agreed that no one Power shall enjoyprivileges to the exclusion of other Powers.
The Chinese authorities appear to have entered into thisarrangement in regard to extraterritoriality without protest. They wereglad to be freed of the responsibility of controlling those who appearedto be turbulent foreigners， and to hand them over to their ownauthorities.