These hopes have not so far been realized, but on the other hand North Borneo is rapidly becoming a second Sumatra, Dutchmen, Germans and some English having discovered the suitability of its soil and climate for producing tobacco of a quality fully equal to the famed Deli leaf of that island.

The coast line of the territory is about one thousand miles, and a glance at the map will shew that it is furnished with capital harbours, of which the principal are Gaya Bay on the West, Kudat in Marudu Bay on the North, and Sandakan Harbour on the East. There are several others, but at those enumerated the Company have opened their principal stations.

Of the three mentioned, the more striking is that of Sandakan, which is 15 miles in length, with a width varying from 11 miles, at its entrance, to 5 miles at the broadest part. It is here that the present capital is situated—Sandakan, a town containing a population of not more than 5,000 people, of whom perhaps thirty are Europeans and a thousand Chinese., For its age, Sandakan has suffered serious vicissitudes. It was founded by Mr. Pryer, in 1878, well up the bay, but was soon afterwards burnt to the ground. It was then transferred to its present position, nearer the mouth of the harbour, but in May, 1886, the whole of what was known as the "Old Town" was utterly consumed by fire; in about a couple of hours there being nothing left of the atap-built shops and houses but the charred piles and posts on which they had been raised above the ground. When a fire has once laid hold of an atap town, probably no exertions would much avail to check it; certainly our Chinese held this opinion, and it was impossible to get them to move hand or foot in assisting the Europeans and Police in their efforts to confine its ravages to as limited an area as possible. They entertain the idea that such futile efforts tend only to aggravate the evil spirits and increase their fury. The Hindu shopkeepers were successful in saving their quarter of the town by means of looking glasses, long prayers and chants. It is now forbidden to any one to erect atap houses in the town, except in one specified area to which such structures are confined. Most of the present houses are of plank, with tile, or corrugated iron roofs, and the majority of the shops are built over the sea, on substantial wooden piles, some of the principal "streets," including that to which the ambitious name of "The Praya" has been given, being similarly constructed on piles raised three or four feet above high water mark. The reason is that, owing to the steep hills at the back of the site, there is little available flat land for building on, and, moreover, the pushing Chinese trader always likes to get his shops as near as possible to the sea—the highway of the "prahus" which bring him the products of the neighbouring rivers and islands. In time, no doubt, the Sandakan hills will be used to reclaim more land from the sea, and the town will cease to be an amphibious one. In the East there are, from a sanitary point of view, some points of advantage in having a tide-way passing under the houses. I should add that Sandakan is a creation of the Company's and not a native town taken over by them. When Mr. Pryer first hoisted his flag, there was only one solitary Chinaman and no Europeans in the harbour, though at one time, during the Spanish blockade of Sulu, a Singapore firm had established a trading station, known as "Kampong German," using it as their head-quarters from which to run the blockade of Sulu, which they successfully did for some considerable time, to their no small gain and advantage. The success attending the Germans' venture excited the emulation of the Chinese traders of Labuan, who found their valuable Sulu trade cut off and, through the good offices of the Government of the Colony, they were enabled to charter the Sultan of Brunai's smart little yacht the Sultana, and engaging the services as Captain of an ex-member of the Labuan Legislative Council, they endeavoured to enact the roll of blockade runner. After a trip or two, however, the Sultana was taken by the Spaniards, snugly at anchor in a Sulu harbour, the Captain and Crew having time to make their escape. As she was not under the British flag, the poor Sultan could obtain no redress, although the blockade was not recognised as effective by the European Powers and English and German vessels, similarly seized, had been restored to their owners. The Sultana proved a convenient despatch boat for the Spanish authorities. The Sultan of Sulu to prove his friendship to the Labuan traders, had an unfortunate man cut to pieces with krisses, on the charge of having betrayed the vessel's position to the blockading cruisers.

Sandakan is one of the few places in Borneo which has been opened and settled without much fever and sickness ensuing, and this was due chiefly to the soil being poor and sandy and to there being an abundance of good, fresh, spring water. It may be stated, as a general rule, that the richer the soil the more deadly will be the fever the pioneers will have to encounter when the primeval jungle is first felled and the sun's rays admitted to the virgin soil.

Sandakan is the principal trading station in the Company's territory, but with Hongkong only 1,200 miles distant in one direction, Manila 600 miles in another, and Singapore 1,000 miles in a third, North Borneo can never become an emporium for the trade of the surrounding countries and islands, and the Court of Directors must rest content with developing their own local trade and pushing forward, by wise and encouraging regulations, the planting interest, which seems to have already taken firm root in the country and which will prove to be the foundation of its future prosperity. Gold and other minerals, including coal, are known to exist, but the mineralogical exploration of a country covered with forest and destitute of roads is a work requiring time, and we are not yet in a position to pronounce on North Borneo's expectations in regard to its mineral wealth.

The gold on the Segama River, on the East coast, has been several times reported on, and has been proved to exist in sufficient quantities to, at any rate, well repay the labours of Chinese gold diggers, but the district is difficult of access by water, and the Chinese are deferring operations on a large scale until the Government has constructed a road into the district. A European Company has obtained mineral concessions on the river, but has not yet decided on its mode of operation, and individual European diggers have tried their luck on the fields, hitherto without meeting with much success, owing to heavy rains, sickness and the difficulty of getting up stores. The Company will probably find that Chinese diggers will not only stand the climate better, but will be more easily governed, be satisfied with smaller returns, and contribute as much or more than the Europeans to the Government Treasury, by their consumption of opium, tobacco and other excisable articles, by fees for gold licenses, and so forth.

Another source of natural wealth lies in the virgin forest with which the greater portion of the country is clothed, down to the water's edge. Many of the trees are valuable as timber, especially the Billian, or Borneo iron-wood tree, which is impervious to the attacks of white-ants ashore and almost equally so to those of the teredo navalis afloat, and is wonderfully enduring of exposure to the tropical sun and the tropical downpours of rain. I do not remember having ever come across a bit of billian that showed signs of decay during a residence of seventeen years in the East. The wood is very heavy and sinks in water, so that, in order to be shipped, it has to be floated on rafts of soft wood, of which there is an abundance of excellent quality, of which one kind—the red serayah—is likely to come into demand by builders in England. Other of the woods, such as mirabau, penagah and rengas, have good grain and take a fine polish, causing them to be suitable for the manufacture of furniture. The large tree which yields the Camphor barus of commerce also affords good timber. It is a Dryobalanops, and is not to be confused with the Cinnamomum camphora, from which the ordinary "camphor" is obtained and the wood of which retains the camphor smell and is largely used by the Chinese in the manufacture of boxes, the scented wood keeping off ants and other insects which are a pest in the Far East. The Borneo camphor tree is found only in Borneo and Sumatra. The camphor which is collected for export, principally to China and India, by the natives, is found in a solid state in the trunk, but only in a small percentage of the trees, which are felled by the collectors. The price of this camphor barus as it is termed, is said to be nearly a hundred times as much as that of the ordinary camphor, and it is used by the Chinese and Indians principally for embalming purposes. Billian and other woods enumerated are all found near the coast and, generally, in convenient proximity to some stream, and so easily available for export. Sandakan harbour has some thirteen rivers and streams running into it, and, as the native population is very small, the jungle has been scarcely touched, and no better locality could, therefore, be desired by a timber merchant. Two European Timber Companies are now doing a good business there, and the Chinese also take their share of the trade. China affords a ready and large market for Borneo timber, being itself almost forestless, and for many years past it has received iron-wood from Sarawak. Borneo timber has also been exported to the Straits Settlements, Australia and Mauritius, and I hear that an order has been given for England. Iron wood is only found in certain districts, notably in Sandakan Bay and on the East coast, being rarely met with on the West coast. I have seen a private letter from an officer in command of a British man-of-war who had some samples of it on board which came in very usefully when certain bearings of the screw shaft were giving out on a long voyage, and were found to last three times as long as lignum vitæ.

In process of time, as the country is opened up by roads and railways, doubtless many other valuable kinds of timber trees will be brought to light in the interior.

A notice of Borneo Forests would be incomplete without a reference to the mangroves, which are such a prominent feature of the country as one approaches it by sea, lining much of the coast and forming, for mile after mile, the actual banks of most of the rivers. Its thick, dark-green, never changing foliage helps to give the new comer that general impression of dull monotony in tropical scenery, which, perhaps, no one, except the professed botanist, whose trained and practical eye never misses the smallest detail, ever quite shakes off.

The wood of the mangrove forms most excellent firewood, and is often used by small steamers as an economical fuel in lieu of coal, and is exported to China in the timber ships. The bark is also a separate article of export, being used as a dye and for tanning, and is said to contain nearly 42% of tannin.