Chinese immigrants to Penang brought their traditions with them, including secret societies, which provided mutual aid and protection for the Chinese community – bolstered in Georgetown by alliances with similar Malay religious groups.
As the societies grew in wealth and power, gang warfare and extortion rackets became commonplace. Matters came to a head in the Penang Riots of 1867: for nine days Georgetown was shaken by fighting between the Tua Peh Kong society, supported by the Malay Red Flag, and the Ghee Hin, allied with the Malay White Flag. Police intervention resulted in a temporary truce, but on August 1, 1867, the headman of the Tua Peh Kong falsely charged the Ghee Hin and White Flag societies with stealing cloth belonging to Tua Peh Kong dyers. All hell broke loose, and fighting raged around Lebuhs Armenian Church and Chulia. Barricades were erected around the Khoo Kongsi, where some of the fiercest skirmishes occurred – you can still find bullet holes in the surrounding shops and houses.
The fighting was eventually quelled by sepoys (Indian troops) brought in from Singapore by the Governor-General, but by then hundreds had been killed and scores of houses burned. A penalty of RM5000 was levied on each of the secret societies, some of which was later used to finance the building of four police stations to deal with any future trouble.