Dr. Sun Yat-sen， who had been the head of the movement againstthe Manchus for many years， and in consequence had been exiled fromhis country， returned to assume the leadership of the Revolution at thepsychological moment. He arrived in Shanghai in company with hismilitary adviser， General Homer Lea， and his staff， on December 24th，and on January 1st， 1912， was inaugurated in Nanking as the firstPresident of the Provisional Government of the new Republic.
Political Importance of ShanghaiShanghai， as we have pointed out， began as a commercial city andthen became a manufacturing centre， and at the time of the Revolutionincreased in importance from the political point of view.
Owing to the fact that it was governed by the representatives offoreign Powers， and during internal troubles adopted the policy ofstrict neutrality， it became a place of safety for political refugees， andalso neutral ground where representatives of different factions couldmeet for conferences. The Chinese sometimes bring forward as anargument for the return of the Settlement to the Chinese Governmentthe fact that it affords an asylum for political refugees， but they fail tobear in mind that it has also been a harbour of safety for a multitude ofpeace-1oving people during times of disorder and confusion.
Among the reasons for the growing political importance ofShanghai are the great wealth of its Chinese merchants， who can betaxed to contribute to government funds; the location of the arsenalon its outskirts， and the revenue that can be derived from the illicitsmuggling of opium into China， through Shanghai as a doorway.
The Effects of the Revolution on ShanghaiIn attempting to measure the effects of the Revolution onShanghai， we must bear in mind that while it indicated a spirit ofprogress among the Chinese， at the same time it made possible theoutbreak of a spirit of lawlessness. All authority for a time broke down，and the disorderly elements of society took advantage of this state ofaffairs.
Later on， in order to bring about union between the North and the South， heresigned in favour of Yuan Shih-kai.
As might have been expected， the leaders of the Revolution，filled with the ambition to restore the rights of China， adopted a moreobstructive policy towards the extension of the Settlements than theirpredecessors.
Dispute between S. M. C. and Chapei AuthoritiesThere was further friction in regard to the Municipal policing ofthe roads outside the Settlement， and the numbering of the houses，and several conflicts took place between the Municipal and the Chapeipolice.
The Chapei Water and Electricity Works company， which hadbeen established by the Chinese in October， 1911， made application forpermission to lay mains across North Szechuen Road Extension， bothsides of the road being Chinese territory. Inasmuch as the Council hadentered into an agreement with the Shanghai Waterworks company forthe water throughout “all the roads and other lands under the controlof the Council within and without the Settlement，“ the Council wasobliged to comply with the request. The Council was sued in the Courtof Consuls， and the following judgment was given. “In the opinionof the Court， the furtherance of monopoly is directly contrary to theprovisions of the treaties between China and the Powers and could notbe legally countenanced by the Court， nor should be by the Chineseauthorities. On these grounds the judgment was entered against theCouncil， which was bound by the Court to issue the necessary permit，while the Chapei Water and Electricity Works company was orderedto enter into an undertaking with the Council， not to prevent， hinder，or interfere with in any way， except by legitimate competition， theoperation of the Shanghai Waterworks company， to the east of NorthSzechuen Road.“Reorganization of Mixed CourtAnother very important result of the Revolution was in regard tothe administration and reorganization of the Mixed Court.
When the Revolution broke out in Shanghai， the Mixed Courtwas closed. Two of the Magistrates fled， taking with them all the fundsdeposited by the litigants with the Court， and leaving the Mixed Courtorganization in a chaotic condition. It was necessary that somethingshould be done promptly to re-establish the Court， and it was decidedthat it should be taken over by the Consular Body， and a notificationto that effect was issued on November 10th， 1911. In regard to thefinancial support of the Court， the Consular Body requested theCouncil to pay all Mixed Court expenses， wages， and salaries， exclusiveof the Magistrates‘ salaries; to receive all fines for the above Purpose; tocreate a separate financial office at the Mixed Court under the directionof a special officer of the Council"s staff.
Further it was determined that Assessors should sit in Civil as wellas in Criminal Cases， inasmuch as it was felt that the former， as well asthe latter， had a bearing on the welfare of the Settlement.
The powers of the Court were extended， and jurisdiction wasasserted over the roads owned by the Municipal Council.
Naturally the Republican authorities were not pleased with thisarrangement. Exception was taken especially to the sitting of AssessorsThe Council in refusing to grant the permit was moved by another consideration，namely， the taxation of the house beyond the limit of the Settlement was effected bymeans of the terms of the Waterworks Concession agreement.
In regard to the contention that the strip of land across the Municipal roadbelonged to the Chinese authorities， the following judgament was given， “neitherparty having satisfied the court of absolute ownership or right to exercise the sameover the crossing of the two rodas， the dispute must be decided on broad grounds ofequity.“ See Shanghai—Its Municipality and the Chinese： A. M. Kotenev， p. 66.