1，012，450，404 which was an increase of Hk. Tls. 14，246，043 over thetrade of 1916.
Municipal Affairs
Turning to municipal affairs we find special attention paid tohealth matters. This was partly due to the fact that in the early partof the year Shanghai was again threatened with an invasion of plague.
This was the pneumonic plague， which had spread from Manchuriaas far south as Nanking on March 18th. Its further advance was onlystayed by the suspension of train and steamer traffic between Shanghaiand Nanking until the end of the month.
Considerable work was done in further culverting of the creeks，which were the breeding ground for mosquitoes， and thus a cause ofdisease.
At the Ratepayers‘ meeting held on March 28th the freedomof the city was conferred on Mr. （afterwards Sir） Edward C. Pearcein recognition of his long and valuable services as Chairman of theShanghai Municipal Council.
Ricsha Riot
The peace of the Settlement was disturbed by two riots.
The first on April 17th was in connection with a strike of thericsha men， who objected to the traffic regulations put out by theCouncil， which confined the ricsha men to stands， and forbad themwandering about the streets touting for hire. This seemed to them tointerfere with their earnings. One of their grievances was the takingaway by the police of the licences of those who refused to obey theorders in regard to waiting for hire at the stands.
In some way the rumour spread that the Shanghai Tramways，a rival concern in the eyes of the coolies， had been instrumental inbringing the new regulations into force， and this still further rousedtheir ire.
The trouble began early in the morning at a bout half-past eight.
Inspector Aiers noticed a large crowd at the junction of Avenue andCarter Roads attacking a stationary tram with stones， sticks and ironbars， and when he endeavoured to interfere， he was handled roughlyand received a severe blow on the back of the head. While he wastrying to escape from the crowd， Chief Inspector Aiers appeared on thescene， and gave chase to those who were pursuing Inspector Aiers. Atabout the same time another car， containing passengers， was attacked，while passing over the Avenue-Carter Road junction， by 200 rioterswith cross-bars， sticks and bamboos， and similar attack took place inSinza Road.
The number of rioters increased to a bout 700， but with thearrival of the police in sufficiently large numbers， the trouble subsided.
Only a few arrests were made， it being difficult to distinguish betweenrioters and spectators. In the evening some of the Volunteers weremobilized and held in readiness at the Town Hall and elsewhere， butno further trouble arose. Fortunately the loss of life was slight， only oneman being killed.
Japanese Riot in HongkewAnother serious riot broke out in Hongkew. At this time therewas bitter feeling between Chinese and Japanese， owing largely to thepresentation of the Twenty-one Demands by the Japanese Government.
The beginning of the trouble was the arrest by Chinese constables of aJapanese sailor who was making trouble at a watchmaker"s shop. SomeJapanese compatriots came to his assistance and a free fight ensued.
A few days later， on the morning of Friday， July 19th， a large body ofJapanese， armed with daggers and swordstick， gathered in Woosungand Quinsan Roads. They were much excited and obsessed with theidea that the Chinese were about to make a general attack on theJapanese community. When the police tried to disperse the crowd， twoChinese constables were injured. On the night of the same day troublebroke out again near the Hongkew Market， and two Japanese werekilled， one a Japanese constable and the other a Japanese shopkeeperwho was watching the fray from a verandah. The Chinese police hadbeen stirred up against the Japanese， by receiving threatening letters，and had been on the point of mutiny， owing to the fact that the policeauthorities wished to send them out on duty unarmed. The issue sooncrystallized into open warfare between the Japanese rowdy element andthe Chinese police. It became necessary to withdraw the Chinese policefor a time from the disturbed area， and to substitute others， and tocall out some of the Volunteer companies. Feeling ran high for severaldays， but the display of force by the Volunteers had the desired effect，and by Tuesday of the following week all was quiet.
The Japanese pressed some demands， asking for an indemnity forthe Japanese killed， an increase in the number of Japanese police， andthe disarming of the Chinese police in the Settlement. The Chinese ontheir part threatened to institute a boycott on the Japanese shops.
When it was decided to introduce Japanese police into theMunicipal force， some had anticipated the danger of serious frictionwith the Chinese， and this riot shows that these fears were notaltogether unfounded. The riot had a serious aspect， as it might haveled to a racial conflict， and might have aroused feelings in the interior，leading to disastrous consequences. It also manifested the unwis-domof having one district policed exclusively， or nearly so， by men of thesame nationality as that of the majority of residents， as tending tosuggest undesirable distinctions.
