As is hereafter explained, the cession of coast line from the Sultan of Brunai was not a continuous one, there being breaks on the West Coast in the case of a few rivers which were not included. The annual tribute to be paid to the Sultan was fixed at $12,000, and to the Pangeran Tumonggong $3,000—extravagantly large sums when it is considered that His Highness' revenue per annum from the larger portion of the territory ceded was nil. In March, 1881, through negotiations conducted by Mr. A. H. Everett, these sums were reduced to more reasonable proportions, namely, $5,000 in the case of the Sultan, and $2,500 in that of the Tumonggong.
The intermediate rivers which were not included in the Sultan's cession belonged to Chiefs of the blood royal, and the Sultan was unwilling to order them to be ceded, but in 1883 Resident Davies procured the cession from one of these Chiefs of the Pangalat River for an annual payment of $300, and subsequently the Putalan River was acquired for $1,000 per annum, and the Kawang River and the Mantanani Islands for lump sums of $1,300 and $350 respectively. In 1884, after prolonged negotiations, I was also enabled to obtain the cession of an important Province on the West Coast, to the South of the original boundary, to which the name of Dent Province has been given, and which includes the Padas and Kalias Rivers, and in the same deed of cession were also included two rivers which had been excepted in the first grant—the Tawaran and the Bangawan. The annual tribute under this cession is $3,100. The principal rivers within the Company's boundaries still unleased are the Kwala Lama, Membakut, Inanam and Menkabong. For fiscal reasons, and for the better prevention of the smuggling of arms and ammunition for sale to head-hunting tribes, it is very desirable that the Government of these remaining independent rivers should be acquired by the Company.
On the completion of the negotiations with the two Sultans, Baron von Overbeck, who was shortly afterwards joined by Mr. Dent, hoisted his flag—the house flag of Mr. Dent's firm—at Sandakan, on the East Coast, and at Tampassuk and Pappar on the West, leaving at each a European, with a few so-called Police to represent the new Government, agents from the Sultans of Sulu and Brunai accompanying him to notify to the people that the supreme power had been transferred to Europeans. The common people heard the announcement with their usual apathy, but the officer left in charge had a difficult part to play with the headmen who, in the absence of any strong central Government, had practically usurped the functions of Government in many of the rivers. These Chiefs feared, and with reason, that not only would their importance vanish, but that trade with the inland tribes would be thrown open to all, and slave dealing be put a stop to under the new regime. At Sandakan, the Sultan's former Governor refused to recognise the changed position of affairs, but he had a resolute man to deal with in Mr. W. B. Pryer, and before he could do much harm, he lost his life by the capsizing of his prahu while on a trading voyage.
At Tampassuk, Mr. Pretyman, the Resident, had a very uncomfortable post, being in the midst of lawless, cattle-lifting and slave-dealing Bajaus and Illanuns. He, with the able assistance of Mr. F. X. Witti, an ex-Naval officer of the Austrian Service, who subsequently lost his life while exploring in the interior, and by balancing one tribe against another, managed to retain his position without coming to blows, and, on his relinquishing the service a few months afterwards, the arduous task of representing the Government without the command of any force to back up his authority developed on Mr. Witti. In the case of the Pappar River, the former Chief, Datu Bahar, declined to relinquish his position, and assumed a very defiant attitude. I was at that time in the Labuan service, and I remember proceeding to Pappar in an English man-of-war, in consequence of the disquieting rumours which had reached us, and finding the Resident, Mr. A. H. Everett, on one side of the small river with his house strongly blockaded and guns mounted in all available positions, and the Datu on the other side of the stream, immediately opposite to him, similarly armed to the teeth. But not a shot was fired, and Datu Bahar is now a peaceable subject of the Company.
The most difficult problem, however, which these officers had to solve was that of keeping order, or trying to do so, amongst a lawless people, with whom for years past might had been right, and who considered kidnapping and cattle-lifting the occupations of honourable and high spirited gentlemen. That they effected what they did, that they kept the new flag flying and prepared the way for the Government of the Company, reflects the highest credit upon their pluck and diplomatic ingenuity, for they had neither police nor steam launches, nor the prestige which would have attached to them had they been representatives of the British Government, and under the well known British flag. They commenced their work with none of the éclat which surrounded Sir James Brooke in Sarawak, where he found the people in successful rebellion against the Sultan of Brunai, and was himself recognised as an agent of the British Government, so powerful that he could get the Queen's ships to attack the head hunting pirates, killing such numbers of them that, as I have said, the Head money claimed and awarded by the British Government reached the sum of £20,000. On the other hand, it is but fair to add that the fame of Sir James' exploits and the action taken by Her Majesty's vessels, on his advice, in North-West Borneo years before, had inspired the natives with a feeling of respect for Englishmen which must have been a powerful factor in favour of the newly appointed officers. The native tribes, too, inhabiting North Borneo were more sub-divided, less warlike, and less powerful than those of Sarawak.
The promoters of the scheme were fortunate in obtaining the services, for the time being, as their chief representative in the East of Mr. W. H. Read, C.M.G., an old friend of Sir James Brooke, and who, as a Member of the Legislative Council of Singapore, and Consul-General for the Netherlands, had acquired an intimate knowledge of the Malay character and of the resources, capabilities and needs of Malayan countries.
On his return to England, Mr. Dent found that, owing to the opposition of the Dutch and Spanish Governments, and to the time required for a full consideration of the subject by Her Majesty's Ministers, there would be a considerable delay before a Royal Charter could be issued, meanwhile, the expenditure of the embryo Government in Borneo was not inconsiderable, and it was determined to form a "Provisional Association" to carry on till a Chartered Company could be formed.
Mr. Dent found an able supporter in Sir Rutherford Alcock, K.C.B., who energetically advocated the scheme from patriotic motives, recognising the strategic and commercial advantages of the splendid harbours of North Borneo and the probability of the country becoming in the near future a not unimportant outlet for English commerce, now so heavily weighted by prohibitive tariffs in Europe and America.
The British North Borneo Provisional Association Limited, was formed in 1881, with a capital of £300,000, the Directors being Sir Rutherford Alcock, Mr. A. Dent, Mr. R. B. Martin, Admiral Mayne, and Mr. W. H. Read. The Association acquired from the original lessees the grants and commissions from the Sultans, with the object of disposing of these territories, lands and property to a Company to be incorporated by Royal Charter. This Charter passed the Great Seal on the 1st November, 1881, and constituted and incorporated the gentlemen above-mentioned as "The British North Borneo Company."
The Provisional Association was dissolved, and the Chartered Company started on its career in May, 1882. The nominal capital was two million pounds, in £20 shares, but the number of shares issued, including 4,500 fully paid ones representing £90,000 to the vendors, was only 33,030, equal to £660,600, but on 23,449 of these shares only £12 have so far been called up. The actual cash, therefore, which the Company has had to work with and to carry on the development of the country from the point at which the original concessionaires and the Provisional Association had left it, is, including some £1,000 received for shares forfeited, about £384,000, and they have a right of call for £187,592 more. The Charter gave official recognition to the concessions from the Native Princes, conferred extensive powers on the Company as a corporate body, provided for the just government of the natives and for the gradual abolition of slavery, and reserved to the Crown the right of disapproving of the person selected by the Company to be their Governor in the East, and of controlling the Company's dealings with any Foreign Power.