Our next port of call is Shanghai, a most important centre of (1) British trade and influence and in close connexion with British stations in the East, though not one of them itself. Hongkong is the great exchange station for shipping and trade in the Far East; Shanghai is the market and business centre for the great basin of the Yangtse river and for much of North China as well. Its importance may be measured by the fact that over half the total trade of China passes through the hands of its merchants. There are two Shanghais, and the contrast between them is great; on the one hand we have the old native walled 40 city, dirty and decaying and purely Chinese, and on the other the new Foreign Settlement, where all the business is done. 41 This part has grown steadily in size and prosperity. The French still have entire control of their own section, but in the International Settlement, which was at one time purely British, Germans and Americans have now a considerable share. We have here a very curious system: a foreign municipality established on Chinese soil and governing itself, subject only to the control of the foreign Consuls and the Ministers at Peking. It is responsible for a few thousand Europeans and over half a million Chinese. At Hongkong we are supreme in everything; but at Shanghai, though the citizens of foreign nations are subject to their own laws, the city is still legally part of China, so that the natives are under the jurisdiction of Chinese officials. This has been the cause of great trouble in the past, as Chinese and Western ideas of law are widely different. It is a very strange position. Here is a small body of foreign merchants, practically unprotected, in the midst of a vast native population, yet responsible for the well-being of one of the greatest commercial cities in the world.