PUBLIC RECORD OFFICE
C.O.
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2 PUBLIC RECORD OFFICE. LONDON
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gain time. He had reported that Captain Racchia, on behalf of the Italian Government, was negotiating with the Sultan for a tract of territory containing valuable coal, and it seemed the Directors were ready to make any statement to the Sultan that might induce him not to disturb the monopoly of the Borneo coal that they had obtained under their agreement.
65. Before leaving Labuan I represented this matter to my successor, and I presume some steps have been taken to get this just debt paid.
Four-fifths of the Malay labourers employed in the mines are subjects of the Sultan. Any attempt of the Company to shirk this payment would be as impolitic as it would be unlawful.
66. Lord John Russell, when Secretary for Foreign Affairs, wrote to the former Coal Company pointing out the necessity for making these stipulated payments; and, at that time the Sultan was paid.
C7. The Labuan Government has a very faithful and useful friend in the Sultan, and I beg leave respectfully to suggest to your Lordship that if these debts had not been paid before this, some representation should be made by Her Majesty's Government to the Oriental Coal Company on the subject,
68. My immediate object, however, in touching on the financial mistakes of the Company is to indicate the direct loss of capital consequent on compelling the manager to borrow money at a ruinous rate of interest, and to the still greater indirect loss which followed the breaking up of the native labour market, which Mr. Lumsden and the Local Government had with such pains created at the colliery.
69. What I have said will enable your Lordship to see that the greater part of the 40,000l. was spent in non-mining work out of Labuan and in excessive interest for borrowed money.
70. There remains the question whether the Company, with its present capital and management can succeed in developing the mines? As to the capital, the Directors admit they have less than 9,000, being the residue of the preference stock left, and that from this must be deducted the rent due to the Government, and other claims not specified. If the claim of the Sultan of Borneo has not been paid, it must amount to about 20,000 dols. up to this date. Under such circumstances, their available capital must be under 2,0001.
71. The Directors, in their letter of the 27th of July, 1872,* say "the Company must husband this fund as much as possible, to complete the new pit, which it is expected will But the estimate for this new pit is 2,2001. make the Company a very profitable concern."
They say it cannot be ready "for two years, or thereby."
72. But even if this did not swallow up all the residue of their capital, the railway, for which they were so justly anxious two years ago, and without which the Company cannot possibly do work on such a scale as would enable them to pay one-half of the interest on their preference stock, is estimated to cost 10,0001.
73. As to the present management alone, I say nothing; but I can truly say that the present capital combined with the present management is a poor guarantee of future
success.
74. There is therefore a possibility that the Government may have to deal with that which most of your Lordship's predecessors since the time of Lord Grey have encountered, a bankrupt Coal Company at Labuan. In that contingency the Directors can blame no one but themselves. The Land and Emigration Commissioners on the one hand, and the Governor of Labuan (I may presume to say) on the other, certainly spared no effort to make the present Company successful. When the lease was framed the Duke of Buckingham sent me the correspondence, and I observed that the utmost pains were taken by the Commissioners to meet the views of the Directors on every point. When, in October 1868, I was striving to put the Labuan finances in order, and preparing estimates for doing away with the Parliamentary grant, I did not grumble at the arrangement, by which no rent was to be received from the new Coal Company till the year 1871. I said I should look for no help of any kind from the Company till the year 1871. I was very glad the Emigration Commissioners recommended a lease so favourable to the Company; and in every act of mine in Labuan I treated them in the same spirit.
75. Though the financial resources of Labuan, which I did not by any means entirely develop, are amply sufficient to pay the whole cost of the Colony and its defence, whatever may happen to the coal trade, yet one great object in the establishment of the Colony would not be gained unless the mines were worked. The question therefore remains,
an the mines be worked if the present Company should fail?
• No. 14.
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76. On this question, I adhere to the opinion I expressed to Mr. Meade on the 25th of last January. If the present Company and all their people left Labuan, the mines could soon be worked at a profit to the Government by Mr. Howard with his Singapore convicts.
77. I have discussed the question with him on the spot, and gone into all the details. I believe he would be able to turn out the coal so that the Royal Navy might get it at 108. a ton, leaving to the Labuan Government a reimbursement for the convict labour, as valuable to the Treasury chest as the revenue from the opium farm.
78. In concluding the observations which your Lordship's kindness has enabled me to make on the Directors' letters of the 27th of July and 3rd of August, I have some hesitation in touching on the vague and general charge they make against Mr. Lumsden and myself that we "acted towards the Company in a manner calculated unjustly and injuriously to affect its pecuniary interests." As to myself, I make no observation on this statement, being content with a different opinion expressed on the same subject by the Duke of Buckingham, Lord Granville, and your Lordship. But Mr. Lumsden's position in the matter is not the same as mine, and, without some authoritative statement of the truth, the good character which enables him to earn his bread may be taken from him. Therefore, as his late employers have so described him in their official letter to the Government, it is my duty, as a simple act of justice, to assure your Lordship that they are entirely wrong. He is an honourable man, highly intelligent and hard-working at his business, zealous for his employers, and with the gift of easily controlling the workmen under him. These good qualities he devoted day and night, I may truly say, for three years and a half to the Labuan coal mines.
Sir,
I have, &c.
(Signed) J. POPE HENNESSY.
No. 34.
Mr. Holland to the Secretary to the Oriental Coal Company.
Downing Street, November 2, 1872. I AM directed by the Earl of Kimberley to request that you will inform the Directors of the Oriental Coal Company that his Lordship has had under his consideration
■ despatch from Governor Bulwer, on the subject of the charges for convict labour and police made against the Coal Company by the Local Government.
With respect to the amount paid for the hire of convict labour, I am to transmit to you a copy of Mr. Bulwer's observations,† and I am to state that, in Lord Kimberley's opinion, the Company have had the advantage of a regular supply of labour for their coaling operations on very reasonable terms, and that there are no grounds for reducing
the rates.
With respect to the charge of 25 cents per day for works other than coaling, Lord Kimberley proposes to express his approval of the arrangement suggested by Mr. Bulwer that in future such works should, as far as possible, be done by contract.
With reference to the contribution towards the cost of the police, I am to observe that, in 1866, the China Steam-ship and Labuan Coal Company agreed to pay half the estimated expenses of an addition to the force, provided that half the additional force were stationed at Coal Point; this arrangement was carried into effect, and the number of men stationed at the colliery was increased from six to thirteen; the Oriental Coal Company continued to make payments on this account in accordance with the terms agreed upon with the preceding company. In 1870, the police were recognised, and an arrangement was made between the Manager and Mr. Hennessy, that the Company should defray half the cost of the police actually stationed at the colliery. About this time a fresh body of convicts were imported from the Straits Settlements, and the gangs working at the colliery increased; these changes appear to have raised the contribution paid by the Company from 1947. per annum to about 2301.
As the strength of the police force has been determined on the understanding that this contribution was to be made, and the Colonial estimates adjusted accordingly, Lord Kimberley is of opinion that the existing arrangements should continue in force till the end of this year, nor can he entertain any suggestions for disturbing any of the past payments on this account.
Mr. Bulwer proposes that a different arrangement should now be made, and I am to inclose for the consideration of the Directors his proposals on this point, which are based
↑ No. 20.
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No 14 and 15.