The three hours' transit from Hongkong to Macao carries one into another world. The incessant scream of steam-launches which plough the harbour in all directions night and day gives place to the drowsy chime of church bells, and instead of the throng of busy men, one meets a solitary black mantilla walking demurely in the middle of a crooked and silent street. Perhaps nowhere is the modern world with its clamour thrown into such immediate contrast with that which belongs to the past.

The settlement of Macao is a monument of Chinese toleration and of Portuguese tenacity. The Portuguese learnt at an early stage of their intercourse the use of the master-key to good relations with the Chinese authorities. It was to minister freely to their cupidity, which the Portuguese could well afford to do out of the profits of their trading. To "maintain ourselves in this place we must spend much with the Chinese heathen," as they themselves said in 1593 in a letter to Philip I. Macao is, besides, an interesting relic of that heroic age when a new heaven and a new earth became the dream of European adventurers. The spot was excellently well suited for the purposes, commercial and propagandist, which it was destined to serve; for in spite of the crimes and cruelties of the sixteenth century argonauts, the religious element was strongly represented in all their enterprises.[36] Situated outside the river proper, though within its wide estuary, and open to the sea, the settlement yet communicates by an inner passage or branch of the Pearl river with the city of Canton. It possesses two sheltered harbours adequate to the nautical requirements of the Middle Ages.

The small peninsula of Macao combined business conveniences with salubrity of climate in a degree absolutely unrivalled in the torrid zone. Its picturesque scenery was always found refreshing to the eye wearied by long contemplation of brick walls, malarious swamps, or the monotonous glare of the melancholy ocean. From the Chinese point of view, also, it was an ideal location for strangers, since they could be thus kept out of sight, isolated like a ship in quarantine, and put under effective restraint. The situation lent itself to the traditional Chinese tactics of controlling barbarians by stopping their food-supply, a form of discipline of which the efficacy had been proved at an early period in the history of the colony. The Chinese adopted all the measures they could think of to confine traders to Macao, where certain indulgences were held out to them, subject to good behaviour.

The Portuguese adventurers of the early sixteenth century, to whom the modern world owes so much, did well in pitching on this "gem of the orient earth and open sea" as a link in their chain of trading stations, which extended from the coasts of Africa to the Japanese islands. To trade as such the Chinese Government never seem to have had any objection, nor, would it appear, to foreigners as such. So long as there was nought to fear from their presence, the ancient maxim of cherishing men from afar could be followed without reserve, for the Chinese are by nature not an unkindly people. Tradition, indeed, claims for the settlement of foreigners in the Cantonese archipelago a purely hospitable origin, a storm-beaten vessel having in the year 1517 received permission from the local authorities to repair damages and dry her cargo there. The Portuguese frequented several harbours before they settled at Macao, their principal station being the island of Sanchuan, where Xavier was buried. About the middle of the sixteenth century, the city of Canton being besieged by a large piratical force whose base of operations was Macao, the high provincial authorities in their extremity sought the aid of the Portuguese, who came promptly to the rescue of the city, defeated the pirates, and captured their stronghold. Moved by mixed feelings of gratitude and policy, the Canton authorities thereupon sanctioned the Portuguese occupation of Macao, not ill-pleased to set up at that strategic point so effective a counterpoise to the native pirates.

It said as much for the tact of the Portuguese as for the forbearance of the Chinese authorities that such an isolated position as that of Macao should have been held without force, and only on the prestige of past achievements, on terms of mutual amity, for nearly four hundred years. The Portuguese squatters paid to the Chinese Government a ground-rent of about £150 per annum, in consideration of which they enjoyed practical independence. "The merchants, fully aware that their settlement at Macao was due neither to any conquest, nor as a return for services by co-operating in destruction of pirates, bore in mind two principles—to be on good terms with the provincial authorities, and to improve as much as possible their exclusive trade with China." The forms of administrative authority were indeed maintained by the Chinese, their permission being required to reside and to build houses and so forth—regulations which were more vexatious, perhaps, in theory than in fact. The exercise of Chinese jurisdiction over the person was asserted with moderation as regards the Portuguese, though full authority was maintained over the native population. The Portuguese, however, became dissatisfied with the relationship which had worked smoothly for three hundred years, and when the treaty-making era arrived they sought means to improve their status. By persistent efforts they gradually freed themselves from the overlordship of China, this object being finally attained by good diplomacy in 1887, when the Imperial Government ceded to Portugal sovereign rights over Macao in consideration of assistance rendered by the colony in the collection of the Chinese opium revenue.

Macao did not escape the fortunes of the long war of commercial supremacy which was waged between Holland and Portugal, but the colony successfully resisted two attempts to reduce it in 1622 and 1627. Its resources at that period enabled the diminutive settlement even to play some part in the game of empire in China itself, for we are told that a force of 400 men from India, under the command of two Portuguese officers, proceeded by land to Peking to support the last Ming emperor in his struggle with the invading Manchus. These auxiliaries returned whence they came without seeing active service.

Although the Dutch failed to take military possession of Macao, they took other trading colonies, and succeeded eventually in wresting from the Portuguese their Asiatic commerce. They supplanted them entirely in Japan, whose "gold and spoils" had greatly enriched the colony. Being expelled, not without reason, in 1662, the Portuguese fugitives from Japan retired to Macao.

Other competitors also began to appear and to assert their right to participate in the trade of the Far East, and Macao became the hostelry for merchants of all nations, who carried on business with the great Chinese emporium, Canton. Chief among these guests were the Dutch and English East India Companies, both of which maintained establishments at Macao for some two hundred years.

The English Company had made use of the Macao anchorage first under a treaty with the viceroy of Goa, and subsequently under Cromwell's treaty with the Portuguese Government in 1654, which permitted English ships to enter all the ports in the Portuguese Indies. Before the close of the seventeenth century ships were despatched direct from England to Macao. The English adventurers were not satisfied with the privilege of anchoring so far from the great emporium, but direct trade with Canton had yet to be fought for. The energetic Captain Weddell, commanding the ship London, in 1655 met the obstructive tactics of the Cantonese authorities by bombarding the Bogue forts and forcing his way up the river, after which he was received in friendly audience by the viceroy, and was granted full participation in the Canton trade, much to the chagrin, it is said, of the jealous Macao merchants.

The loss of its own direct commerce was thus compensated for by the tribute which the Portuguese colony was able to levy upon the general trade of China, by whomsoever carried on. Massive houses, with immense verandahs running all round them, and spacious and cool interior recesses, attest to this day the ancient glory of Macao. Though now neglected, and perhaps converted to baser uses, they afford a glimpse of the easy life led by the Company's agents and the merchants in the days before the treaty. During the business season, which was in the cool months, the whole mercantile community repaired to the factories at Canton while the ships lay at the deep-water anchorage of Whampoa, and between these two points the work of the year was done—arduous enough, no doubt, while it lasted. In spite of some contemporary testimony to the contrary, one can hardly conceive the quasi-imprisonment within the Canton factories as a kind of life to be enjoyed, but only as one to be endured for an object. At any rate, when the last cargo of tea had been shipped off the scene was like the break-up of a school. The merchants and their whole establishment betook themselves to their sumptuous river barges, and glided down the stream to Macao, where the luxury of a long holiday awaited them. Once at least in every year the foreigners were in full accord with the Chinese authorities, who sternly forbade loitering, and kept up the form of peremptorily sending the merchants away as soon as their business had been done. Nevertheless, those who desired to remain found no difficulty.