The war has proved a disaster for…

The Fourth Anglo-Dutch War had left the Dutch East India Company (VOC) a financial wreck.

After vain attempts at reorganization by the provincial States of Holland and Zeeland, the company is nationalized by the new Batavian Republic on March 1, 1796.

The VOC charter has been renewed several times, but is allowed to expire on December 31, 1799.

Most of the possessions of the former VOC will subsequently be occupied by Great Britain during the Napoleonic wars, but after the creation of the new United Kingdom of the Netherlands by the Congress of Vienna, some of these will be restored to this successor state of the Dutch Republic by the Anglo-Dutch Treaty of 1814.

Raffles and Farquhar anchor near the mouth of the Singapore River on January 28, 1819.

The following day the two men go ashore to meet Temenggong Abdu'r Rahman, who grants provisional permission for the British East India Company to establish a trading post on the island, subject to the approval of Hussein.

Raffles, noting the protected harbor, the abundance of drinking water, and the absence of the Dutch, begins immediately to unload troops, clear the land on the northeast side of the river, set up tents, and hoist the British flag.

Meanwhile, the temenggong sends to Riau for Hussein, who arrives within a few days.

Acknowledging Hussein as the rightful sultan of Johore, on February 6 Raffles signs a treaty with him and the temenggong confirming the right of the British East India Company to establish a trading post in return for an annual payment (in Spanish dollars, the common currency of the region at this time) of Sp$5,000 to Hussein and Sp$3,000 to the temenggong.

Raffles now departs for Bencoolen, leaving Farquhar in charge, with instructions to clear the land, construct a simple fortification, and inform all passing ships that there are no duties on trade at the new settlement.

The immediate reaction to Raffles' new venture is mixed.

Officials of the British East India Company in London fear that their negotiations with the Dutch will be upset by Raffles' action.

The Dutch are furious because they consider Singapore within their sphere of influence.

Although they could easily have overcome Farquhar's tiny force, the Dutch do not attack the small settlement because the angry Bannerman assures them that the British officials in Calcutta will disavow the whole scheme.

In Calcutta, meanwhile, both the commercial community and the Calcutta Journal welcome the news and urge full government support for the undertaking.

Lord Hastings orders the unhappy Bannerman to provide Farquhar with troops and money.

Britain's foreign minister Lord Castlereagh, reluctant to relinquish to the Dutch "all the military and naval keys of the Strait of Malacca," has the question of Singapore added to the list of topics to be negotiated with the Dutch, thus buying time for the new settlement.

The opportunity to sell supplies at high prices to Singapore quickly attracts many Malacca traders to the new settlement.

Word of the island's free trade policy also spreadz southeastward through the archipelago, and within six weeks more than one hundred Indonesian inter-island craft are anchored in the harbor, as well as one Siamese and two European ships.

Raffles returns in late May to find that the population of the settlement had grown to nearly five thousand, including Malays, Chinese, Bugis, Arabs, Indians, and Europeans.

During his four-week stay, he draws up a plan for the town and signs another agreement with Hussein and the temenggong establishing the boundaries of the settlement.

He writes to a friend that Singapore "is by far the most important station in the East; and, as far as naval superiority and commercial interests are concerned, of much higher value than whole continents of territory."

The India-China trade is partly responsible for the overnight success of Singapore, but even more important is the well-established entrepôt trade of the East Indies that the new port has captured from Riau and other trade centers.

The news of the free port brings not only traders and merchants but also permanent settlers.

Malays come from Penang, Malacca, Riau, and Sumatra.

Several hundred boatloads of Hussein's followers come from Riau, and the new sultan has built for himself an istana (palace in Malay), thus making Singapore his headquarters.

The growing power of the Dutch in Riau also spurs several hundred Bugis traders and their families to migrate to the new settlement.

Singapore is also a magnet for the Nanyang Chinese who have lived in the region for generations as merchants, miners, or gambier farmers.

They come from Penang, Malacca, Riau, Manila, Bangkok, and Batavia to escape the tariffs and restrictions of those places and to seek their fortunes.

Many intermarry with Malay women, giving rise to the group known as the Baba Chinese.

The small Indian population includes both soldiers and merchants.

A few Armenian merchants from Brunei and Manila are also attracted to the settlement, as are some leading Arab families from Sumatra.

Most Europeans in the early days of Singapore are officials of the British East India Company or retired merchant sea captains.

The British had begun to expand their commerce with China from their bases in India through both private traders and the British East India Company in the late eighteenth century.

The company has occupied a small settlement at Bencoolen (Bengkulu) on the western coast of Sumatra since 1684; from there it had engaged in the pepper trade after being forced out of Java by the Dutch.

Acutely aware of the need for a base somewhere midway between Calcutta and Guangzhou (Canton), the company had leased the island of Penang, on the western coast of the Malay Peninsula, from the sultan of Kedah in 1791.

From these posts at Penang and Bencoolen, the British had begun in 1795 to occupy the Dutch possessions placed temporarily in their care by the Kew Letters, including Malacca and Java.

After war in Europe ended in 1814, however, the British had agreed to return Java and Malacca to the Dutch.

By 1818 the Dutch have returned to the East Indies and had reimposed their restrictive trade policies.

In that same year, the Dutch negotiated a treaty with the Bugis-controlled sultan of Johore granting them permission to station a garrison at Riau, thereby giving them control over the main passage through the Strait of Malacca.

British trading ships are heavily taxed at Dutch ports and suffer harassment by the Dutch navy.

Meanwhile, the British government and the British East India Company officials in London, who are concerned with maintaining peace with the Dutch, consolidating British control in India, and reducing their commitments in the East Indies, consider relinquishing Bencoolen and perhaps Penang to the Dutch in exchange for Dutch territories in India.

On returning to Singapore from Bencoolen in October 1822, Raffles immediately begins drawing up plans for a new town.

An area along the coast about five kilometers long and one kilometer deep is designated the government and commercial quarter.

A hill is 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 is the goal of Raffles, who believes that Singapore would one day be "a place of considerable magnitude and importance."

Under Raffles' plan, commercial buildings are to be constructed of brick with tiled roofs, each with a two-meter covered walkway to provide shelter from sun and rain.

Spaces are set aside for shipyards, markets, churches, theaters, police stations, and a botanical garden.

Raffles has a wooden bungalow built for himself on Government Hill.

Each immigrant group is assigned an area of the settlement under the new plan.

The Chinese, who are the fastest growing group, are given the whole area west of the Singapore River adjoining the commercial district; Chinatown is further divided among the various dialect groups.

The temenggong and his followers are 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 are allotted larger plots, and affluent Asians and Europeans are encouraged to live together in a residential area adjacent to the government quarter.

In the absence of any legal code, Raffles promulgates a series of administrative regulations in early 1823.

The first requires that land be conveyed on permanent lease at a public auction and that it must be registered.

The second reiterates Singapore's status as a free port, a popular point with the merchants.

In his farewell remarks, Raffles assures 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 makes English common law the standard, although Muslim law is to be used in matters of religion, marriage, and inheritance involving Malays.