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also as to whether there is any further question connected with the defence of Colonial ports which should be referred for the consideration of the Committee.

No. 145.

I have, &c. (Signed) BURY.

Admiral Sir A. Milne, Bart., G.C.B., to Colonial Office.

(Secret and Confidential.) Sir,

Committee Room, Whitehall, May 29, 1878.

I AM requested by the Colonial Defence Committee to acknowledge the receipt of your letter of the 14th May,* inclosing a copy of a letter from Mr. Ussher, Governor of Labuan, with reference to the position, capabilities, and defence of that Colony.

I am to transmit, for the information of the Secretary of State, a report containing the opinion of the Committee on the various points raised in Mr. Ussher's letter.

I have, &c.

(Signed) ALEX. MILNE, President.

Inclosure in No. 145.

Labuan.

THE Committee have had before them Mr. Ussher's letter of the 7th May, and have subsequently had the advantage of hearing from him personally his views as to the advisability of defending Labuan.

The strategical importance of this Colony lies in its position, nearly mid-way between Singapore and Hong Kong, and in its natural resources in coal. The existence of coal- fields in the island has long been known, and attempts have been made at different times to work them, though these attempts have not hitherto been attended with commercial success. Until recently the operations were confined to working the surface coal, which is of inferior quality; but deeper seams have now been reached, from which, Mr. Ussher states, a different and very excellent description is now being produced, and that negotia- tions are in progress for the importation of skilled coalcutters from India, and that there is every prospect of a considerable production being shortly realized-from forty to sixty tons a-day.

The mines are confined to the northern end of the island, in the vicinity of Raffles Bay, and are distant ten miles from the harbour and town of Victoria, to which all the coal raised is conveyed by sea; but the anchorage at Raffles Bay is much exposed, and the traffic is interrupted during the prevalence of north-easterly winds.

The harbour of Victoria affords a secure and commodious anchorage at all times, and there would be no serious difficulty in making it safe against attack; but while fully admitting the importance of position and resources claimed for it by Mr. Ussher, the Committee are of opinion that its defence is scarcely a necessity of immediate importance, however desirable it may become hereafter, when large stores of coal may have been accumulated in convenient positions for shipment.

At the present time the production of the mines is so small, that there is at no time such a supply available for use as would be likely to invite attack, or warrant a large expenditure, and the maintenance of a permanent garrison of Imperial troops for its defence.

Mr. Ussher dwells upon the possibility of an enemy taking possession of the island, and working the mines by forced labour, but the Committee are unable to regard such apprehensions as well grounded, considering that so long as Great Britain retains command of the sea, it would be improbable that an enterprize of so hazardous a nature and of such questionable advantage would be undertaken; especially as the anchorage in such case would require works and guns for its protection, and any vessels going there for supplies would be liable to be blockaded.

Mr. Ussher also urges the importance of the supply of provisions, which, unless the island be protected, might be made available by an enemy's cruizers. On this point the Committee have to observe that the supply is limited, and that hostile ships could obtain supplies of this nature with equal facility from neutral ports, of which there are many in adjacent territories.

* No. 98 of Miscellaneous, 35 E.

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