In November, 1768, the Court of Directors in London, with the approval of Her Majesty's Ministers, who promised to afford protection to the new Colony, issued orders to the authorities at Bombay for the establishment of a settlement at Balambangan with the intention of diverting to it the China trade, of drawing to it the produce of the adjoining countries, and of opening a port for the introduction of spices, etc. by the Bugis, and for the sale of Indian commodities. The actual date of the foundation of the settlement is not known, but Mr. F. C. Danvers states that in 1771 the Court ordered that the Government should be vested in "a chief and two other persons of Council," and that the earliest proceedings extant are dated Sulu, 1773, and relate to a broil in the streets between Mr. Alcock, the second in the Council, and the Surgeon of the Britannia.

This was a somewhat unpropitious commencement, and in 1774 the Court are found writing to Madras, to which Balambangan was subordinate, complaining of the "imprudent management and profuse conduct" of the Chief and Council.

In February, 1775, Sulu pirates surprised the stockade, and drove out the settlers, capturing booty valued at about a million dollars. The Company's officials then proceeded to the island of Labuan, now a British Crown Colony, and established a factory, which was maintained but for a short time, at Brunai itself. In 1803 Balambangan was again occupied, but as no commercial advantage accrued, it was abandoned in the following year, and so ended all attempts on the part of the East India Company to establish a Colony in Borneo.

While at Balambangan, the officers, in 1774, entered into negotiations with the Sultan of Brunai, and on undertaking to protect him against Sulu and Mindanau pirates, acquired the exclusive trade in all the pepper grown in his country.

The settlement of Singapore, the present capital of the Straits Settlements, by Sir Stamford Raffles, under the orders of the East India Company in 1819, again drew attention to Borneo, for that judiciously selected and free port soon attracted to itself the trade of the Celebes, Borneo and the surrounding countries, which was brought to it by numerous fleets of small native boats. These fleets were constantly harassed and attacked and their crews carried off into slavery by the Balinini, Illanun, and Dyak pirates infesting the Borneo and Celebes coasts, and the interference of the British Cruisers was urgently called for and at length granted, and was followed, in the natural course of events, by political intervention, resulting in the brilliant and exciting episode whereby the modern successor of the olden heroes—Sir James Brooke—obtained for his family, in 1840, the kingdom of Sarawak, on the west coast of the island, which he in time purged of its two plague spots—head-hunting on shore, and piracy and slave-dealing afloat—and left to his heir, who has worthily taken up and carried on his work, the unique inheritance of a settled Eastern Kingdom, inhabited by the once dreaded head-hunting Dyaks and piratical Mahomedan Malays, the government of whom now rests absolutely in the hands of its one paternally despotic white ruler, or Raja. Sarawak, although not yet formally proclaimed a British Protectorate,[2] may thus be deemed the first permanent British possession in Borneo. Sir James Brooke was also employed by the British Government to conclude, on 27th May, 1847, a treaty with the Sultan of Brunai, whereby the cession to us of the small island of Labuan, which had been occupied as a British Colony in December, 1846, was confirmed, and the Sultan engaged that no territorial cession of any portion of his country should ever be made to any Foreign Power without the sanction of Great Britain.

These proceedings naturally excited some little feeling of jealousy in our Colonial neighbours—the Dutch—who ineffectually protested against a British subject becoming the ruler of Sarawak, as a breach of the tenor of the treaty of London of 1824, and they took steps to define more accurately the boundaries of their own dependencies in such other parts of Borneo as were still open to them. What we now call British North Borneo, they appear at that time to have regarded as outside the sphere of their influence, recognising the Spanish claim to it through their suzerainty, already alluded to, over the Sulu Sultan.

With this exception, and that of the Brunai Sultanate, already secured by the British Treaty, and Sarawak, now the property of the Brooke family, the Dutch have acquired a nominal suzerainty over the whole of the rest of Borneo, by treaties with the independent rulers—an area comprising about two-thirds of the whole island, probably not a tenth part of which is under their actual direct administrative control.

They appear to have been so pre-occupied with the affairs of their important Colony of Java and its dependencies, and the prolonged, exhausting and ruinously expensive war with the Achinese in Sumatra, that beyond posting Government Residents at some of the more important points, they have hitherto done nothing to attract European capital and enterprise to Borneo, but it would now seem that the example set by the British Company in the North is having its effect, and I hear of a Tobacco Planting Company and of a Coal Company being formed to operate on the East Coast of Dutch Borneo.

The Spanish claim to North Borneo was a purely theoretical one, and not only their claim, but that also of the Sulus through whom they claimed, was vigorously disputed by the Sultans of Brunai, who denied that, as asserted by the Sulus, any portion of Borneo had been ceded to them by a former Sultan of Brunai, who had by their help defeated rival claimants and been seated on the throne. The Sulus, on their side, would own no allegiance to the Spaniards, with whom they had been more or less at war for almost three centuries, and their actual hold over any portion of North Borneo was of the slightest. Matters were in this position when Mr. Alfred Dent, now Sir Alfred Dent, K.C.M.G., fitted out an expedition, and in December, 1877, and January, 1878, obtained from the Sultans of Brunai and Sulu, in the manner hereafter detailed, the sovereign control over the North portion of Borneo, from the Kimanis river on the West to the Siboku river on the East, concessions which were confirmed by Her Majesty's Royal Charter in November, 1881.

I have now traced, in brief outline, the political history of Borneo from the time when the country first became generally known to Europeans—in 1518—down to its final division between Great Britain and the Netherlands in 1881.