The principal settlements of the North Borneo Company are Labuan, Padas, Kalias and Sandakan. To Labuan I have already referred. As a centre of native trade it is likely to become important, and Victoria Harbour is often crowded with steamers anxious to secure coal. Its unhealthy stage appears to have passed away; in fact, the whole of North Borneo may be looked upon as fairly healthy, for although on the north-east coast there are many districts where fever is prevalent (an incident common to every tropical country when the jungle is first cut down), yet this malaria disperses in time.

Next to Labuan lie the districts of Padas and Kalias, well filled with an agricultural population, quiet and fairly industrious. Their principal industry is the cultivation of the sago palm and pepper. Padas had been chosen as the starting point of the telegraph line, which has been carried across the country to Sandakan Bay, a distance of three hundred miles. It does not appear to work very successfully, as it is liable to constant interruption from the wires being broken by falling trees. My experience of Bornean forests is that trees seldom fall even during the fiercest storms if their supports are left untouched. The finest forest trees, except the Tapang, have most of their roots running along the surface of the ground, and have a very poor hold, but they are supported in their positions by innumerable creepers, which vary in size from those resembling a ship’s cable in diameter to the most delicate rattan. Cut these braces and the tree is liable to fall. This is so well known to the natives that, when clearing old forests, they only cut the principal trees partly through, except a line of the outermost ones, which are hacked until they give signs of falling. The whole line then comes down, dragging to the earth all the trees partially cut through, as if they were bound together by cords, instead of by Nature’s cables. It is probably the cutting of the telegraphic line through the forest which has weakened the natural supports, and so the trees fall. If any other telegraph line be run it would be worth while trying to make the forest trees serve instead of poles, as these appear to have rotted within the first year.

From the occasional notices in the Herald, the North Borneo official paper, it would appear that the line was cut most of the way through primeval forest, thus opening out millions of acres of virgin land for agriculturists to develop. When the existence of this line is thoroughly understood, and its working can be ensured, it will no doubt induce those ships which trade between Australia and China to call in at Sandakan. Had the line been reliable, no doubt the Spaniards of the Philippines would have used it, in order to telegraph to their Government, instead of going all the way round to Labuan.

But the great experiment in Borneo is the railway. It starts from what may be termed the Padas district, at a point on the coast called Bukau, and the first section is to the Penotal Gorge, about fifty miles in the interior on the way to the east coast. Its course, as traced on the map, will take it well south of east, and it will have its terminus in Santa Lucia Bay. I have seen no reason given why it should not be taken to Sandakan, the headquarters of the Company, and a first-class harbour. It appears a mistake to lessen the importance of the capital, unless there are strong commercial reasons, depending on the tobacco plantations, for diverting its course through an unknown country, close to the Dutch frontiers.

If this railway succeed it will open a new era in Bornean development; and it should succeed, as, with liberal land laws, foreigners and natives will settle along the line and form plantations. But who are the inhabitants beyond the Penotal Gorge? They are mentioned once or twice in the course of the reports as Muruts or Dusuns, who will no doubt work jungle produce as soon as they find a profitable market; in fact, they are doing so now to a small extent. If the promises made to the Company be kept, and sawmills be erected near the western terminus, then the timber trade will give profitable employment to the railway. Neither timber nor jungle produce, however, will make a railway pay, and therefore the Company must be prepared to support cultivators and planters all along the line, and the money will be well and profitably employed. They have themselves started an experimental plantation at Sapong, where tobacco and other products are cultivated with very fair success, and this will encourage others. I shall watch the progress of this railway with the greatest interest, and though there will be many complaints at its slow progress, yet if capital can be found to finish it, it must prove of great benefit to the Company. It is satisfactory to learn, from the latest reports, that the natives are flocking to its neighbourhood, and that they have already cleared the land for a width of three miles on either side of the line.

Gaya Bay has so lately come under the direct control of the Company that nothing has been done yet for its development, but only some of its smaller harbours can be expected to be touched at first. Nearly all the districts in its neighbourhood are, however, fairly populated, and there is considerable cultivation on the rivers Patatan, Ananam and Kabatuan.

Kudat, on Marudu Bay, appears at one time to have been chosen for the Governor’s headquarters, but it showed no promise of rapid development, and they have now been transferred to Sandakan. There is, however, a good deal of cultivation going on, and among the immigrants are several hundred Chinese Christians called Hakkas, who appear to have fled from the persecution of their heathen brethren. These are likely to be a permanent population and should be encouraged, as they are sure to support the Government.

The most important settlement on the mainland of Borneo, within the Company’s grants, is Sandakan. It is a fine bay, fairly healthy, with excellent sites for a town, and is connected by a water passage with the important river of Kina Batañgan, from which a short road leads to the gold workings of Sigama. Its inhabitants already muster, I understand, about three thousand, and it has the principal Government offices, a church, a club, an hotel and some rideable roads. It only wants coal to render it an important port of call, and this is said to have been found not far from the town, and is about to be worked.

The inhabitants of the districts under the sway of the Company are of many different races. The bulk of the population are Dusuns or Idaán, very much like the better class of the Land Dyaks of Sarawak. They are easily governed, and among them head hunting is a tradition rather than a practice, as only in one village that Sir Hugh Low and I visited did we find a head house, or any skulls hung up to the rafters, as is commonly the case in the communities south of the Baram. We stayed in their villages on several occasions, and formed a very favourable opinion of the people.

The above remarks are based upon our observations made in 1858, but, if Mr John Whitehead is not mistaken, these races must have greatly deteriorated, as he writes a good deal about the practice of head hunting among them in 1888. When we were there we heard like reports and met many parties of armed Dusuns, who were said to be on the war-path, but as at the same time we also met numerous parties of Dusun men, women and children carrying tobacco to the coast villages through what was said to be an enemy’s country, we did not pay much attention to such statements. We saw also small parties of women and children working in the fields miles away from their villages, which could not occur if there were any real danger from hostile tribes. Either Mr Whitehead was deceived by similar stories to those which were constantly dinned into our ears, or the Dusuns have sadly deteriorated. These stories of enemies were fabricated chiefly with the object of preventing our visiting neighbouring villages.