The geological formation of the great mountain of Kina Balu, and its surrounding ranges, would appear to offer a grand field for geologists, but it is a difficult country to explore, except where the sandstones check vegetation, but these last-named strata are never prolific in minerals.

Since the North Borneo Company has had a business man at their head, and there is a better knowledge of Borneo among the directors, it appears to be going the right way to work to develop the country. It has made some necessary roads; the electric telegraph, though not at present very important in itself, has opened up the interior and shown what may be expected from pushing on the railway through this as yet undeveloped country.

The territory of the State of North Borneo is under the rule of a governor, Mr Beaufort, chosen by the Court of Directors, and under him are many Residents and sub-officers who administer the affairs in the various districts. As the Herald appears to publish only résumés of the reports from the different stations, it is difficult to form any idea of the capacity of the officials or the manner in which they perform their work, but, on the whole, I should say it was satisfactory. However, there is nothing more difficult than to find men to manage natives so as to gain their confidence. As a rule the higher the class from which they are chosen, the greater chance there is of their success.

The State of North Borneo has an armed police, which only numbers four hundred, for their very extensive territory, and it proves how amenable the natives must be to authority that they can keep comparative order. The few outbreaks which have occurred have been easily suppressed, though as yet it is uncertain what will be the future conduct of the last rebel, Mat Sali, and his gang. If terms have been made with him which will in the future keep him quiet, so much the better for all. A portion of the North Borneo armed police consists of Sikhs. It is difficult to exaggerate the admirable conduct of these men during the difficult operations against Mat Sali. In the attacks on his fort their behaviour was simply splendid, and their English officers, both civil and military, were indeed well worthy to lead such men. It is to be regretted that their brave commandant, Jones, was killed. It is easy to criticise the desperate onslaught, and say it was foolhardy, but it is by such gallant contempt of odds that the Empire has been won, and that we can record with pride ‘the Deeds which made the Empire.’ And all this goes on in an almost forgotten part of the world, as a mere matter of duty, without any idea on the part of these brave fellows that their countrymen will ever hear of their noble conduct. Wherever the Sikhs and their English officers may be, we may feel assured of good work being done, as, for instance, in East Africa, with the late Lieutenant Alston and his dashing followers.

The revenue is raised in British North Borneo generally on the lines adopted in other Eastern possessions. The principal source of income is derived from ‘farms.’ The most important are those of opium and spirits. They are the easiest and best methods of raising revenue, as they only touch the weaknesses or the vices of the Chinese, and are generally highly productive; and, where the authorities are not amenable to the influence of ignorant but well-meaning fanatics, the gambling farm is not only productive but has a good moral effect, as experience has proved that the evil is lessened by being concentrated at spots under the surveillance of the police. The farms of pork and fish, and in a lesser degree, perhaps, the pawnbroking, are liable to great objections. The pork farm might be suppressed and public slaughter-houses established, as is done now in Sarawak; and pawnbroker’s licenses might be substituted for that farm, which, in practice, proves so onerous to the poor. The fish farm should be suppressed and an open market substituted. As there is no clear financial statement published, I am aware that I may be criticising in the dark.

Duties on imports are often necessary, and export duties on timber and jungle produce are very defensible, as someone aptly remarked that the collectors only reap the harvest without having been put to the trouble or expense of sowing or planting, and someone must pay for the protection they all enjoy. As a rule, however, duties on agricultural products should be avoided. The tax on nibongs and attaps is something quite original, can produce but a trifle, and must be excessively annoying to the natives, as these are the building materials of their houses.

I will now give the receipts and expenditure in North Borneo for the five years 1893-7, as the receipts are now normal, and not affected by the speculative rush of planters and others, who disbursed money without a thought of the morrow:—

Income.Expenditure.
1893,£31,345£30,338
1894,31,55928,818
1895,37,07533,266
1896,42,84133,015
1897,43,778

As far as it goes this is a satisfactory increase in the revenue, but is a mere bagatelle if we consider the vast territory from which it is produced. But no striking increase can take place until the Chinese feel thoroughly at home there. That North Borneo was once very popular with them is attested by all the accounts we gather from travellers and from native tradition. The very names show how they influenced the country. We have Kina Benua, the Chinese land; Kina Balu, the Chinese widow, the name of the great mountain; Kina Batañgan, the Chinese river (in the written annals of the Court of Brunei, it is mentioned that a Chinese kingdom was established on that river); then we have Kina Taki and Kina Bañgun, the names of small streams in the north. This shows how numerous the Chinese must have been in this territory. The causes of their disappearance are obscure, but may be readily imagined. Bad government in Brunei, the increase of piracy, the cutting off of the junks, the risings against oppression by this unwarlike race led to massacres; in fact, these causes are clear from the accounts of the natives. But where the Chinese have once been, they will come again.

It must be uphill work trying to extract taxes from natives, who, though they are accustomed to be robbed and plundered by their own rulers, are very unwilling to pay even the smallest regular impost. The Sarawak Malays do so readily with their capitation tax, as that payment frees them from the liability of being called out for military service, and the more civilised and industrious they become, the more they appreciate this freedom from liability. The capitation tax is a just one, though often it requires great caution in its collection to avoid discontent. As a rule it should not be collected in those districts in which the Company have no permanent officers located. Flying visits often do more harm than good. It is difficult to see how any addition can be made to the taxation. The State of Borneo must trust to the gradual development of the country and to the increase of its population, but all trammels on the free circulation of traders should be removed.