The negotiations then commenced were frustrated by the advent of the Nationalist Government and the formation of a new local government in 1927 under a mayor holding his authority from the Nanking Government. The establishment of the Chin-lose Municipality brought into existence a single Chinese Municipal authority for Shanghai, which claimed to administer the External Roads Area, together with the adjoining districts as part of its own territory.
To quote further from the Feetham report:—"The existence of the Council's roads, and the Council's administrative activities on the external roads and in the areas immediately adjoining, constituted an obstacle to the exercise of its authority by the new Chinese Municipal Government in the region concerned and appears to have been regarded as involving a standing challenge to its rights. As the Chinese Municipal Government extended the scope of its activities, difficulties ensued owing to the two authorities functioning side by side in the same areas. It must, I think, be recognized that friction between the two authorities, which might conceive ably have been avoided so far as the Settlement itself was concerned, if there had been frank recognition of the powers conferred on the Council under the Land Regulations, was practically inevitable in the External Roads Areas under the circumstances with which the officials of the new Chinese Municipal Government found themselves confronted.
"Political and party influences have aggravated the difficulties inherent in the situation, and complicated the task of those representatives of both authorities who have recognized the desirability of arriving at some reasonable modus vivendi."
Text read from the printed page and cleaned; old type leaves the occasional error.