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PUBLIC RECORD OFFICE

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2 PUBLIC RECORD OFFICE, LONDON

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Labuan, they simply used the mines for their own wants; whatever profit the general trading voyages made, was not given to the shareholders of the Coal Company. The heavy freights they charged for, occasionally taking a cargo of coal to Bingapore, were put down as a part of the 40,0001. spent in Labuan by Mr. Lumsden.

47. From the many opportunities I have had officially of inspecting Mr. Lumsden's books, and his work generally at Labuan, I am of opinion that, over and above the value of the coal he raised, the Directors did not send him 1,0001. a year out of the 40,0001. they lost in four years.

48. The money went, not through Mr. Lumsden's hands, nor for coal mining purposes some persons connected with the Company were interested in the steamers, others were interested in the expensive and useless road locomotives; others were interested solely in the raising of coal, as a legitimate mining business. If your Lordship should call for the detailed accounts from the Leith office, and compare them with the accounts I have often gone through at the Labuan mines, it will be evident that a mass of extraneous expenses have been thrown upon the latter: that is, upon the real mining shareholders.

49. As long as the Labuan mines were not saddled with paying for the Directors' hobbies (against the remonstrances of the Governor, and the local managers), so long the mines were able to pay their own way.

In my despatch No. 31 of the 7th of July, 1868, I transmitted to the Duke of Buckingham an abstract of the same pay sheets Mr. Lumsden sent to the Directors, showing a small balance of profit after paying all colliery expenses, being the first profit obtained at the mines for nearly twenty years.

50. In my despatch No. 57 of the 18th November, 1868, I reported that the pay sheets of the colliery contrasted with the coal actually produced, showed an increasing profit every month. The last month's yield up to that date was 723 tons, and the working expenses in Labuan absorbed only 60 per cent. of its value. On the 15th of January 1869, the manager sent me a statement of his output, and cost of labour, showing that the surplus had increased to 2,000 dollars a month.

51. This was before the Directors began sending out enormous and expensive waggons from Scotland, made of wood, so bad that I was able to drive an ordinary cedar-wood lead pencil through them, and the iron springs pushed themselves through the floor of the waggons, Mr. Lumsden pointed out to me, how hard it was to charge their cost and transit from Europe to the Labuan mines, when, if such things were really needed, the Directors had an abundance of good wood growing on the colliery property, which they could use for nothing, and with which at a trifling cost they could construct much better waggons.

52. If I may presume to compare the action of the Government in such matters with the conduct of the Board of Directors, I would remind your Lordship of Mr. Howard's reports on the way he utilized convict labour. Instead of importing buffalo carts from Singapore or purchasing them elsewhere, I approved of his endeavouring to make them in Labuan. He was able to select first class timbers for which he paid nothing. It was cut down and properly shaped by convict carpenters. The iron work was all made from rough iron by the convict blacksmiths, The Labuan carts that he thus turned out were strong, lasting, and cheap. Calculating the cost of the unwrought iron, and estimating the labour of the convicts at the same rate of wages we charged the Coal Company, the carts cost only one third of the price formerly paid by the Government for similar articles.

53. It was thus by looking after every detail, and availing myself of the many natural resources of the colony, that I was able, with the zealous aid and co-operation of Mr. Howard, to make Labuan pay for itself.

54. If the Directors had treated their servant, Mr. Lumsden, with the same confidence that I treated my friend Mr. Howard, the shareholders' money would not have been lost.

I never authorized the expenditure of a penny in the Public Works Department against Mr. Howard's views; whereas, over and over again, the Directors sent expensive articles to Labuan from Scotland either without the knowledge or against the protests of Mr. Lumsden.

55. No doubt the Directors must have had reasons for sending all the way from Scotland to Labuan an expensive machine called a "coal-getter"—though Mr. Lumsden told them it was entirely unsuited to the Labuan mines the immense waggons made of rotten wood, the costly road locomotives, which tore up the roads, and would not draw a load of coal, and the steamers which left fresh cut coal lying in the sun and rain for six months whilst they were making money with other freight: but whatever reasons they

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had for doing these things they were certainly not done to benefit the real mining shareholders.

56. But whilst money was thus wasted out of Labuan, the Directors failed to send money to the Colony to pay the wages of the workmen. The consequence of this was most serious. The permanent staff of native coal-hewers that Mr. Lumsden, with great labour, had instructed, was broken up. Even the miners from Scotland refused to work without money. When Mr. Lumsden was summoned to Scotland about the proposed railway, the Scotch miners came to me and said, "We are starving, the paper tickets Mr. White gives us are not valued by the shopkeepers here. Now that Mr. Lumsden has gone we have no confidence in his successors." Before this, Mr. White, the temporary manager, wrote to tell me the workmen had struck, saying they would not work without being paid, he said he had “no money and he begged me earnestly to do something for the Company." I wrote to tell him that I could not lend the Directors money from the Treasury chest, but that to mark my sense of the honourable character of the Directors, and to uphold their credit at such a crisis, I would let him have my own salary to pay the native coal hewers; and I authorized him to read my letter to a meeting of the workmen. On Mr. White's representation and entreaty I told them money was coming

in a vessel from Singapore in which Mr. Gray another manager was arriving,

up

57. Unfortunately, when the vessel came, though Mr. Gray arrived, he brought no money. His first experience of a manager's work at Labuan was to go about amongst the Chinese shopkeepers trying to borrow money at 25, 30, and even 40 per cent. His next experience was as a defendant in the General Court in the case of Baird versus the Oriental Coal Company. This was an action brought by one of the best of the Scotch miners for wages, for compensation for the suffering endured by the nonpayment of wages, and for a declaration of the Court that the contract of service was broken by the misconduct of the Directors. Many similar actions of workmen against the Company were decided according to this case.

58. If your Lordship will ask Governor Bulwer for a copy of the court proceedings in Baird's case, it will be seen that Mr. Gray admitted that, owing to the nonsending of money by the directors, long arrears of wages were due, no settlement had been made in many cases for twelve months, and much suffering to the workman was the consequence.

59. I believe the late Mr. Brassey was of opinion that, for a workman to forego his wages for one month, was a severe test of his character and credit. But when this occurred in a strange place like Labuan, and the poor Scotchmen found that four, five, and six months passed without seeing a penny of their hard earned wages, your Lordship can easily imagine the state of the colliery.

60. When I last visited the mines, in the autumn of 1871, I saw the aspect of the whole place changed. The old 'native hands were gone. Most of the Scotch miners were on strike. The labour market of the colliery was spoilt; and the new manager was looking on whilst the mines were full of water and the mining gear was going to decay for want of use.

61. More than twelve months before this took place the Directors had been warned by Mr. Lumsden. He gave them ample notice of the consequence of not paying their workmen. Unfortunately, the Directors were spending the money out of the Colony, and they preferred that he should work on credit or borrow cash from the Chinese traders at high interest. From time to time I let Mr. Lumsden take my salary (of course, without interest) and some other gentlemen who had confidence in his integrity and were anxious to support the Company, followed my example.

62. Though unwilling to interfere beyond my special province in these business matters, yet, as Mr. William Miller invited my opinion, I wrote strongly to him on this subject in 1870 pointing out that the Directors were jeopardizing the valuable labours of Mr. Lumsden by not sending him money to pay their workmen.

63. Mr. Lumsden also reported to the Directors that they were ruining their credit, and therefore the labour market of the colliery, by their treatment of the Sultan of Borneo. The Directors had signed an agreement which, as Consul General, I duly notified to the Sultan, undertaking to pay the arrears of rent for the mines at Moirra (on the mainland) due by the former Company and also to pay regularly the annual rent of 3,000 dol.

64. Mr. Lumsden placed in my hands a letter from the Company stating that they were actually sending out 12,000 dol. to Singapore on account of the debt they owed the Sultan. As His Highness was urging me to complain of the Directors to Her Majesty's Government, I told him of this letter and got him to give the Company six months more credit before doing anything. A short time, however, before Mr. Lumsden was recalled he told me he feared the Directors had written the letter about the 19,000 dol, merely to

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