MANCHESTER, says the Queen, is 'not such a nice place'. Standing on the Riverside Walk in Liverpool, she might not be too impressed with Merseyside, either. A telescope invites you to spend 20p and at low tide you peer in close-up at the murky mud, the muddy Mersey and the town of Birkenhead. A solitary gull is busily inspecting the temporary valleys carved into the grimy mudflats by trickling streams, and failing to find anything of interest.

But turn around and a beautiful, raw muddle of a city fills the field of vision. A lonely barge, moored in front of the stout red bricks of the Great Western Railway depot; a sturdy old ferry, drawing up beside the arrogant towers of the Royal Liver Building and the sleek lines of the Cunard Building; and behind portals of faded sandstone, the country's greatest concentration of museums and galleries outside South Kensington in London.

A swing bridge and flaking flagstones draw you in to the latest addition to Merseyside's cultural repertoire: the Transatlantic Slavery gallery. This new exhibition, opening on Tuesday at the Maritime Museum, makes no bones about the source of much of Liverpool's wealth. It begins with a glittering blaze of pre-Columbian gold jewellery, showing the achievements of the Americas before colonialism, but marches briskly on to the brutal and degrading business of slavery. Exhibit A is sugar cane (grown for the occasion in a Liverpool greenhouse), the crop for which slavery was originally established.

Forced labour was expensive. Slaves were bought along the coast of West Africa, sold by tribal chiefs in exchange for goods shipped from Liverpool.

By the time a boat had been packed with humanity and had sailed across the Atlantic (one in five died on the way), the price of a healthy slave matched a 'gentleman's salary' for the year.

The involuntary emigrants were not acquiescent; an account of a mutiny on the Amistad tells how, 'Out from Havana about four days, the African captives on board, in order to obtain their freedom and return to Africa, armed themselves with cane knives and rose upon the captain and crew of the vessel.' The slaves' story is related by Olaudah Equiano, an Ibo who was taken from Benin to the Caribbean. Visitors can study extracts from The Interesting Narrative of the Life of Olaudah Equiano, Written by Himself, in which he describes the horror of the voyage. Then you walk through a below-decks exhibit, dark, sinister and vibrating to create a sense of movement.

Despite fierce opposition from Liverpool Corporation, the slave trade was outlawed and freedom was finally granted in British colonies in 1838. Two years later, Samuel Cunard hit upon the idea of transporting passengers voluntarily to the New World. Another exhibition in the Maritime Museum tells the story of how almost all of northern Europe's emigrants were funnelled through Merseyside: Russians and Scandinavians travelled to Hull, took the new railway across the Pennines to Liverpool, and boarded the steamers (one- way to New York, steerage, pounds 4).

The trade in humanity brought enormous wealth to the city, as its wonderful collection of Georgian and Victorian architecture testifies. The prime site is the Albert Dock, home to both the Maritime Museum and the Tate Gallery.

Three floors of gracefully converted warehouse contain what is grandiosely entitled the National Collection of Modern Art in the North of England. The most forceful exhibits are on the ground floor, chilling depictions of the past decade called 'Moral Tales: Reading the Eighties'.

The Eighties were cruel to Liverpool. Venturing beyond the city centre you wonder where everyone has gone. In Toxteth, boarded-up and burnt-out hulks, interspersed with big, ugly voids, confirm common prejudices about Britain's cities. The heart, you suspect, was ripped out of Liverpool at the same time as the Cavern Club was demolished. But although the place where the Beatles played nearly 300 times between 1961 and 1963 has been replaced by a tacky shopping complex called the Cavern Walks, cheap and cheerful nightlife is thriving in Liverpool. Pubs routinely stay open until 2am, featuring excellent local bands and beer at pounds 1 a pint.

The club scene is livelier still: around midnight, a few blocks along Hope Street and Hardman Street are lined with black cabs, ferrying Liverpool's hardline clubbers to the Casablanca - the natural successor to the Cavern as the city's smokiest and best club. Knock once on the heavy oak door, and admission is free providing you satisfy the bouncers' arcane rulebook.

Whatever the mysteries of their trade, they seem to do the job: flirting, not fighting, is the most visible pastime.

Clubland is flanked by Liverpool's two cathedrals, each punctuating one end of Hope Street. Going north, you walk up to Mount Pleasant. At dawn, looking across the city from the highest natural viewpoint, it is easy to be seduced by Liverpool. The opulence which made it the finest city in Britain a century ago is still evident through the drizzle. The day's first shaft of sunlight flashes from a dome, gilded when Liverpool was the mercantile hub of the world. The best thing of all about this viewpoint, though, is that if you face in the right direction you cannot see the Metropolitan Cathedral of Christ the King - aka Paddy's Wigwam. Sir Frederick Gibberd's Catholic cathedral is a holy abomination, whose brutish buttresses struggle to take off, lending little support to the concrete crown slapped on a jaded and very off-white cone.

Do not be tempted to turn round; look the wrong way, and Liverpool is not so nice. Look the right way, though, and it could yet be England's greatest city.

FACTFILE Accommodation: Simon Calder stayed at the Britannia Adelphi Hotel, Ranelagh Place, Liverpool L3 5UL (051 709 7200), pounds 49.50 single/ pounds 87 double; and at the Embassie Youth Hostel, 1 Falkner Square, Liverpool L8 7NU (051 707 1089), where dormitory beds cost pounds 8.50 per night.

Opening times: Merseyside Maritime Museum, 10.30am- 5.30pm daily (adults pounds 3, concessions pounds 1.50); Tate Gallery, 10am-6pm daily except Mondays (admission free).

Further information: Merseyside Welcome Centre, Clayton Square, Liverpool L1 1QR (051 709 3631). The Transatlantic Slavery exhibition is featured on Radio 4's In Living Colour at 8.30pm on Tuesday.

(Photographs omitted)