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Company, the Emigration Commissioners and this Office, respecting the payment by that Company of rent and royalties due on account of the coal mines in Labuan. I also inclose a copy of a letter on the subject to Mr. Pope Hennessy, together with a copy of his reply.

I have to request you to furnish me with a report on the possibility of reducing the amount now charged to the Company for Police supervision and for convict labour.

I have, &c.

(Confidential.) Bir,

No. 9.

(Signed) KIMBERLEY,

The Earl of Kimberley to Governor Bulwer.

Downing Street, February 9, 1872. WITH reference to my public despatch of this date, I shall be glad to receive, confidentially, your opinion on the last paragraph of Mr. Hennessy's letter, and to be informed whether there would be a fair prospect of the mines being remunerative to the Colony, if worked directly by the Government, in the event of the failure of the Company, or their abandonment of the enterprise.

I have, &c.

(Signed)

No. 10.

KIMBERLEY.

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the works and the island till this pit be sunk, are now making vigorous efforts to raise an additional sum to accomplish this object.

If the Colonial Office insists upon the payment of 1,000, the Directors have no course left them but to stop all proceedings at the mines, and let the rent be paid by the sale of the property of the Company. If, on the other hand, the Office were to postpone the payment of the rent till the field is thoroughly opened up, which will take about twelve months yet, and the coals prove a failure, the Office will be in no worse position, because they will still have the whole of the property of the Company to fall back on for the rent.

If, on the contrary, the coals prove a success, the Directors are quite prepared to come under an obligation that no dividends shall be paid to the shareholders, till all arrears of rent shall have been paid to the Colonial Office.

It is not for me to point out to you the great advantage it will be to the Govern- ment of this country if a good supply of coal can be got at Labuan in future years, as the prospect of a scarcity and high price of coal are every day becoming more certain. Lately, the Government ships of war have been getting coals at Labuan at 17. per ton; for which they would have had to pay from 31. to 51. per ton in China and other places in the East. You will understand that 11. per ton is the price at which the Company is bound to sell the coals to the Government vessels.

I trust that Lord Kimberley will take the whole circumstances into his consideration, and show some indulgence in not exacting the rent at present excepting for such coals as are actually raised, on the understanding that all arrears of rent shall be paid before the profits, if any, shall be divided among the shareholders of the Company.

PETER MC LAGAN.

I am, &c.

(Signed)

No. 12.

PUBLIC RECORD OFFICE

Reference :-

TILTIC.O.8

882

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PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO

Gentlemen,

Mr. Herbert to the Emigration Commissioners.

Downing Street, February 9, 1872. I AM directed by the Earl of Kimberley to inform you that your letter of the 13th December.t respecting the rent payable by the Oriental Coal Company was referred to Mr. Pope Hennessy, late Governor of Labuan, a copy of whose report on the subject I am to inclose, as well as a copy of a despatch which will be addressed to Governor Bulwer.

You will inform the Company that, after consultation with Governor Hennessy, and careful consideration of the matter, his Lordship is unable to consent to the postponement of payment of rent now due, or to any reduction in the annual rent payable by them in respect of their lease of the coal mines in Labuan.

I have, &c.

Dear Sir,

(Signed)

No. 11.

R. G. W. HERBERT.

Mr. Mc Lagan to Mr. Hugessen.—(Received June 4.)

House of Commons, May 31, 1872. I HAVE received a letter from the Directors of the Oriental Coal Company, Limited, in which they give as a reason for not replying to the last letter of the Emigration Commissioners, that they have been expecting to have had from the late Governor of Labuan or the Emigration Commissioners, some explanation regarding the expenditure of certain sums of money at Labuan for police, convict labour, &c., which were not alluded to when they took a lease of the coals.

The payment of these sums by their late manager, without the consent of the Directors, seriously curtailed the amount which they had at their disposal for developing the coal fields; and they were therefore obliged to raise additional capital for carrying on the works.

The true position of the case is this: The sum originally raised for opening up the mines was spent some time ago. An attempt was made to raise a further sum; but only

a part of the amount required was subscribed for, which has also been spent-a great part of it to pay off debts incurred by the late manager, of which the Directors were quite ignorant till the present manager went out.

The Directors have been advised by competent parties that the coals can only be profitably worked by sinking a pit about 70 fathoms deep. It has been sunk about 50 fathoms, and the funds are again exhausted. The Directors, determined not to desert

↑ No. 5.

↑ No. 7.

• No. 8.

Governor Bulwer to the Earl of Kimberley.— Received June 7.)

(No. 15.) My Lord,

Government House, Labuan, March 28, 1872. BY the Crown Agent's monthly accounts current with this Government for 1871, which have been received here, inclusive of the account for the month ending the 31st December last, it would appear that, up to that date, no portion of the rent due by the Oriental Coal Company in respect of the past year had been received, or placed to the credit of this Colony.

2. I understand that, by the terms of the lease under which the Company hold the Labuan coal mines, and certain privileges therewith connected, the Company bound itself to pay, after the date of the 25th December, 1870, a minimum yearly sum of 1,000/ This sum, it was agreed, should be payable to the Colonial Land and Emigration Commissioners in London, or others appointed by the Secretary of State to receive it, in half-yearly payments to be made on the 24th of June and on the 25th of December in every year, the first payment commencing with the 24th of June, 1871.

3. No official communication has been received by me to explain why the two half- yearly payments, due for the past year, have not been made.

4. I am in all things desirous to do whatever lies in my power to meet the wishes of the Company, and to promote the success of its undertaking, upon which I am sensible the future of this Colony so much depends; and if it be that the Company has experienced some present difficulty in meeting the engagements which it is under to Her Majesty's Government in respect of this Colony, it would not be my wish, on behalf of the Govern ment of Labuan, to urge upon your Lordship the adoption of any measures calculated to add to its embarrassment.

5. At the same time, the financial circumstances of the Colony are such that I cannot do otherwise than advise your Lordship that the regular payment of the yearly rental referred to is a matter of exceeding importance to this Government, and I trust the Company will not find it inconvenient to conform to the terms of the lease which it has obtained from Her Majesty's Government.

I have, &c.

(Signed)

HENRY BULWER.

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