CO882-(2-3) — Page 60

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received from the Oriental Coal Company, protesting against being required for the present to pay the rent which became due on their lease of the coal-mines in Labuan from the 30th June last.

2. As this is the third Company which, after expending a large amount of capital, has been unable to obtain any remunerative return from the Labuan Coal Mines, it is, I think, very probable that, if they abandon the attempt to work those mines, no other Company will renew it. The question, therefore, of granting them some indulgence as to the payment of their rent becomes a matter of policy on which we feel it is beyond our province to express an opinion; but, in respect to the allegation that to call on them for this rent is "unreasonable and unjust," I think it right to point out that the amount of rent, and the time at which it should commence were settled on the proposal of the Company themselves, and that, if the rent is practically higher than the profits of the mines will enable them to pay, the miscalculation is theirs not ours.

(Extract.)

I have, &c.

(Signed) T. W. C. MURDOCH.

Inclosure in No. 5.

Mr. Wood to Mr. Walcott.

The Oriental Coal Company (Limited),

55, Bernard Street, Leith, December 7, 1871. AS to the money-rent the Directors regret that they cannot pay it, and if it is to be seriously insisted on, the Directors will be obliged to take the instructions of a full meeting of the shareholders to decide what is to be done in the circumstances.

The Directors certainly considered from the the terms of your communication of 14th July last that nothing was to be done in regard to the money rent until Lord Kimberley had an opportunity of consulting the late Governor of Labuan who was then shortly expected in this country, and the explanation now given in your communication of 24th ultimo takes the Directors by surprise, and the demand for instant payment of the rent, without reference to the circumstances of the case, the Directors think is unreasonable and unjust.

The Directors beg to refer to what is stated in my letter to you of 31st October last, viz., that "they feel confident that, in the present state of matters, the Emigration Com- missioners will, on a full consideration of the facts, not insist on payment of the money- rent, but will postpone the same until the miners are capable of producing rent, and in the meantime exact the royalty of 6d. per ton as provided for in the lease on the coals actually produced." This statement they respectfully adhere to, but to do justice in this whole matter the Directors think that it should lie over until the late Governor returns to this country which cannot now be long, when the Directors would be prepared to send a deputation either to wait on the Emigration Commissioners or on the Secretary of State for the Colonies. Another reason for this is that the Directors themselves require to see the late Governor to receive from him explanations as to his reports on the state of the mines and as to the Government charges for police and convict labour, all which enter deeply into the future working of the Company's property and without which explanation the Directors cannot determine whether they should go on raising additional capital, which from time to time they have done, and expended in the working of the mines. One thing is certain at present, viz., that the reports of the prosperity of the mines which have been made public are the very reverse of the actual state of matters. This Company has not only expended all its original capital but also the additional capital that was raised and paid for in March 1871, and the preference stock also raised is already being rapidly exhausted, and yet the mines at this time are not producing more than from 200 to 300 tons of coal a month. The pits from the heavy rains have been flooded and the Directors are advised that unless new pits are sunk in a better situation it is useless to prosecute the mines. Now this is what the Directors have begun to do but it will take time before anything practical is accomplished, and it is for this work that additional capital will be required. It is therefore most reasonable that the Company should have time to develop the enterprise, and the Directors consider it is most unreasonable after all the capital and enterprise that have been expended, which have as yet turned to no good account, that they should be called on to pay a money-rent which the mines cannot produce, instead of a royalty which the Directors have all along been willing to pay.

Were this Limited Liability Company to come to an end the Government would not get any money-rent from any other source for years, even supposing that another Company were to be formed, and no body of shareholders it is quite certain could be got

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