It is evident from the trade returns of North Borneo that the country is progressing. Take the statistics for the same five years:—

Imports.Exports.
1893,$1,116,714$1,780,593
1894,1,329,0661,698,543
1895,1,663,9062,130,600
1896,1,882,1882,473,753
1897,1,887,4982,942,293

The dollar is now only worth two shillings. I do not know if these returns include those of our Colony of Labuan. I believe not, as no mention is made of the export of coal in the detailed lists.

Tobacco is the most important article of export. There are several companies busily engaged in developing this industry, as the Bornean leaf has now taken a high position in the markets, and its quality is excellent. It not only furnishes the leaves used as wrappers, but as a smoking tobacco it has met with much favour. The principal plantations are in the north-eastern coast, near the river Kina Batañgan and Darvel Bay. The Government are also trying an experiment on the Sapong line, which will be followed by the railway. The tobacco which was so sought after by the natives in old days was, however, a product principally of the north-west coast. It would probably be advantageous to find out the exact spots where the Saba plants were grown. There is very little likelihood of there being a glut of tobacco on the market, as many of the old sources of supply are drying up, as in Cuba, and, to a lesser extent, in Manila, and the recent judicious reduction of duty in England will increase its consumption. I have no sympathy with those who would instead have lowered or abolished the duty on tea, as if tea drinkers should not contribute to the support of our navy, which secures the arrival of their favourite leaf.

The production of coffee, cotton, gambier and pepper are as yet on a very small scale, as most of the plantations are in their infancy. Pepper used to be grown to a considerable extent in the districts opposite, and a little north of Labuan, but here, as elsewhere, no doubt, the exceedingly low prices may have induced the natives to neglect the cultivation of this vine. Sarawak now produces about 15,000 tons of gambier, worth $700,000. This should encourage planters in North Borneo.

Cutch, manufactured from the bark of the mangrove tree, has became a very important export, and the development of this industry can only be limited by the demand. Gutta and rubber are of some importance, and rattans are taking an important place in the list of exports, and so are sago flour and timber. Although as a rule export duties on cultivated products are to be avoided, there are many good reasons why the Government should put a duty on tobacco, which, however, is so very light, only one per cent., as scarcely to affect its price, whilst the sum so raised is of importance to the Treasury. The police and other expenses connected with the protection of this industry are considerable.

In reading over the reports in the North Borneo Herald, I have noticed the tendency of the officers in charge of districts to interfere with the movements of traders. One will only allow certain men to go into the interior to collect jungle products, but they must not take with them merchandise to barter with the natives; another objects to traders going into the interior to buy produce there, as it prevents the aborigines coming down to have ‘a glimpse of civilisation’; a third charges for permits, which induces people to get into the Company’s interior districts from the Brunei territory, and to return that way, thus depriving the Government of its export duties (to this I notice Mr Maxwell objected); a fourth is afraid that the Chinaman will cheat the innocent Dusun, but after a very short time the latter becomes a very good match for the trader. I remember certain natives bringing hundreds of pikuls of worthless gutta, carefully coated over with the genuine article, to the bazaar in Sarawak. The Chinaman tested it, and finding no stones concealed inside the lumps, bought it at rather a high price, but was surprised to find on its being sent to Singapore that it was unsaleable. I do not think, therefore, that the officers of the State of North Borneo need trouble themselves about the trading incapacity of the Dusuns. But the scales and weights of the Chinese should be periodically tested, as this is their favourite method of cheating the unwary.

I have always objected to these restrictions on trade, and to the free movements of traders, as they existed in Sarawak. They owed their origin there, as in North Borneo, to the jealousy of the native chiefs, who do their utmost to monopolise the trade themselves, and therefore counsel the English officers not to allow Chinamen to penetrate into the interior. I would give perfect liberty to everyone, and this would not only increase the number of traders, but add considerably to the exports.

I have considered with great attention the negotiations which took place between the directors of the British North Borneo Company and the present Rajah of Sarawak, Sir Charles Brooke, and I have come to the conclusion that the shareholders were perfectly right not to part with their territory or resign its management. The Rajah would have found this great increase of dominion very burdensome, and I should be inclined to doubt whether Sarawak possesses either the capital or the staff to enable her thus to increase her responsibilities. Sarawak, as I have observed, has generally failed to attract English capital, and although the Rajah has governed his own territories with eminent success, it does not follow that he would have succeeded in so developing North Borneo as ever to have been able to pay the shareholders a dividend. They have already waited seventeen years, with an occasional trifling return, and probably they may have to wait some time yet, as the country has been but very partially opened out, but that there is a great future before North Borneo, I have full confidence.

When the State of North Borneo has advanced sufficiently, it might follow the example of the old East India Company—convert the capital of the association into stock at high interest to compensate for past losses, and then, under a Court of Directors, devote the whole of the revenue of the State to the advancement of the interests and welfare of the country. This solution would no doubt be satisfactory to everyone connected with the enterprise.