in the town, except in one specified area to which such structures are confined. Most of the present houses are of plank, with tile, or corrugated iron roofs, and the majority of the shops are built over the sea, on substantial wooden piles, some of the principal "streets," including that to which the ambitious name of "The Praya" has been given, being similarly constructed on piles raised three or four feet above high water mark. The reason is that, owing to the steep hills at the back of the site, there is little available flat land for building on, and, moreover, the pushing Chinese trader always likes to get his shops as near as possible to the sea--the highway of the "prahus" which bring him the products of the neighbouring rivers and islands. In time, no doubt, the Sandakan hills will be used to reclaim more land from the sea, and the town will cease to be an amphibious one. In the East there are, from a sanitary point of view, some points of advantage in having a tide-way passing under the houses. I should add that Sandakan is a creation of the Company's and not a native town taken over by them. When Mr. PRYER first hoisted his flag, there was only one solitary Chinaman and no Europeans in the harbour, though at one time, during the Spanish blockade of Sulu, a Singapore firm had established a trading station, known as "Kampong German," using it as their head-quarters from which to run the blockade of Sulu, which they successfully did for some considerable time, to their no small gain and advantage. The success attending the Germans' venture excited the emulation of the Chinese traders of Labuan, who found their valuable Sulu trade cut off and, through the good offices of the Government of the Colony, they were enabled to charter the Sultan of Brunai's smart little yacht the _Sultana_, and engaging the services as Captain of an ex-member of the Labuan Legislative Council, they endeavoured to enact the roll of blockade runner. After a trip or two, however, the _Sultana_ was taken by the Spaniards, snugly at anchor in a Sulu harbour, the Captain and Crew having time to make their escape. As she was not under the British flag, the poor Sultan could obtain no redress, although the blockade was not recognised as effective by the European Powers and English and German vessels, similarly seized, had been restored to their owners. The _Sultana_ proved a convenient despatch boat for the Spanish authorities. The Sultan of Sulu to prove his friendship to the Labuan traders, had an unfortunate man cut to pieces with krisses, on the charge of having betrayed the vessel's position to the blockading cruisers.