Although the India-China trade was partly responsible for the overnight success of Singapore, even more important was the wellestablished entrepôt trade of the East Indies that the new port captured from Riau and other trade centers. The news of the free port brought not only traders and merchants but also permanent settlers. Malays came from Penang, Malacca, Riau, and Sumatra. Several hundred boatloads of Hussein's followers came from Riau, and the new sultan had built for himself an istana (palace in Malay), thus making Singapore his headquarters. The growing power of the Dutch in Riau also spurred several hundred Bugis traders and their families to migrate to the new settlement. Singapore was also a magnet for the Nanyang Chinese who had lived in the region for generations as merchants, miners, or gambier farmers. They came from Penang, Malacca, Riau, Manila, Bangkok, and Batavia to escape the tariffs and restrictions of those places and to seek their fortunes. Many intermarried with Malay women, giving rise to the group known as the Baba Chinese (see Glossary). The small Indian population included both soldiers and merchants. A few Armenian merchants from Brunei and Manila were also attracted to the settlement, as were some leading Arab families from Sumatra. Most Europeans in the early days of Singapore were officials of the British East India Company or retired merchant sea captains.

Not wanting the British East India Company to view Singapore as an economic liability, Raffles left Farquhar a shoestring budget with which to administer the new settlement. Prevented from either imposing trade tariffs or selling land titles to raise revenue, Farquhar legalized gambling and the sale of opium and arak, an alcoholic drink. The government auctioned off monopoly rights to sell opium and spirits and to run gambling dens under a system known as tax farming, and the revenue thus raised was used for public works projects. Maintenance of law and order in the wideopen seaport was among the most serious problems Farquhar faced. There was constant friction among the various immigrant groups, particularly between the more settled Malays and Chinese from Malacca and the rough and ready followers of the temenggong and the sultan. The settlement's merchants eventually funded night watchmen to augment the tiny police force.

When Raffles returned to Singapore from Bencoolen in October 1822, he immediately began drawing up plans for a new town (see fig. 3). An area along the coast about five kilometers long and one kilometer deep was designated the government and commercial quarter. A hill was leveled and the dirt used to fill a nearby swamp in order to provide a place for the heart of the commercial area, now Raffles Place. An orderly and scientifically laid out town was the goal of Raffles, who believed that Singapore would one day be "a place of considerable magnitude and importance." Under Raffles' plan, commercial buildings were to be constructed of brick with tiled roofs, each with a two-meter covered walkway to provide shelter from sun and rain. Spaces were set aside for shipyards, markets, churches, theaters, police stations, and a botanical garden. Raffles had a wooden bungalow built for himself on Government Hill.

Each immigrant group was assigned an area of the settlement under the new plan. The Chinese, who were the fastest growing group, were given the whole area west of the Singapore River adjoining the commercial district; Chinatown was further divided among the various dialect groups. The temenggong and his followers were moved several kilometers west of the commercial district, mainly in an effort to curtail their influence in that area. The headmen or kapitans of the various groups were allotted larger plots, and affluent Asians and Europeans were encouraged to live together in a residential area adjacent to the government quarter.

In the absence of any legal code, Raffles in early 1823 promulgated a series of administrative regulations. The first required that land be sold on permanent lease at a public auction and that it must be registered. The second reiterated Singapore's status as a free port, a popular point with the merchants. In his farewell remarks, Raffles assured them that "Singapore will long and always remain a free port and no taxes on trade or industry will be established to check its future rise and prosperity." The third regulation made English common law the standard, although Muslim law was to be used in matters of religion, marriage, and inheritance involving Malays.

Raffles was an enlightened administrator for his time. He believed in the prevention of crime and the reform, rather than the mere punishment, of criminals. Payment of compensation to the injured by the offender was to be considered as important as punishment. Only murder was to be considered a capital offense, and various work and training programs were used to turn prisoners into useful settlers. Raffles shut down all gambling dens and heavily taxed the sale of liquor and opium. He abolished outright slavery in 1823, but was unable to eradicate debt bondage, by which immigrants often were forced to work years at hard labor to pay for their passage.

Raffles felt that under Farquhar the temenggong and the sultan had wielded too much power, receiving one-third of the proceeds from the opium, liquor, and gambling revenues, and demanding presents from the captains of the Asian ships that dropped anchor there. Hussein and the temenggong, however, viewed Singapore as a thriving entrepôt in the mold of the great port cities of the Malay maritime empires of Srivijaya, Malacca, and Johore. As rulers of the island, they considered themselves entitled to a share of the power and proceeds of the settlement. In June 1823, Raffles managed to persuade Hussein and the temenggong to give up their rights to port duties and their share in the other tax revenues in exchange for a pension of Sp$1,500 and Sp$800 per month, respectively. Because the Dutch still contested the British presence in Singapore, Raffles did not dare push the issue further. On March 17, 1824, however, the AngloDutch Treaty of London was signed, dividing the East Indies into two spheres of influence. The British would have hegemony north of a line drawn through the Strait of Malacca, and the Dutch would control the area south of the line. As a result, the Dutch recognized the British claim to Singapore and relinquished power over Malacca in exchange for the British post at Bencoolen. On August 3, with their claim to Singapore secure, the British negotiated a new treaty with the sultan and the temenggong, by which the Malay rulers were forced to cede Singapore and the neighboring islands to the British East India Company for cash payments and increased pensions. Under the treaty, the Malay chiefs also agreed to help suppress piracy, but the problem was not to be solved for several more decades.

In October 1823, Raffles left Singapore for Britain, never to return. Before leaving, he replaced Farquhar with the Scotsman John Crawfurd, an efficient and frugal administrator who guided the settlement through three years of vigorous growth. Crawford continued Raffles' struggles against slavery and piracy, but he permitted the gambling houses to reopen, taxed them, and used the revenue for street widening, bridge building, and other civic projects. He failed to support, however, Raffles' dream of higher education for the settlement. As his last public act, Raffles had contributed Sp$2,000 toward the establishment of a Singapore Institution, which he had envisioned as a training ground for Asian teachers and civil servants and a place where European officials could gain an appreciation of the rich cultural heritage of the region as Raffles himself had. He had hoped that the institution would attract the sons of rulers and chiefs of all the region. Crawfurd, however, advised the company officials in Calcutta that it would be preferable to support primary education. In fact, education at all levels was neglected until much later.

Data as of December 1989