If this railway succeed it will open a new era in Bornean development; and it should succeed, as, with liberal land laws, foreigners and natives will settle along the line and form plantations. But who are the inhabitants beyond the Penotal Gorge? They are mentioned once or twice in the course of the reports as Muruts or Dusuns, who will no doubt work jungle produce as soon as they find a profitable market; in fact, they are doing so now to a small extent. If the promises made to the Company be kept, and sawmills be erected near the western terminus, then the timber trade will give profitable employment to the railway. Neither timber nor jungle produce, however, will make a railway pay, and therefore the Company must be prepared to support cultivators and planters all along the line, and the money will be well and profitably employed. They have themselves started an experimental plantation at Sapong, where tobacco and other products are cultivated with very fair success, and this will encourage others. I shall watch the progress of this railway with the greatest interest, and though there will be many complaints at its slow progress, yet if capital can be found to finish it, it must prove of great benefit to the Company. It is satisfactory to learn, from the latest reports, that the natives are flocking to its neighbourhood, and that they have already cleared the land for a width of three miles on either side of the line. Gaya Bay has so lately come under the direct control of the Company that nothing has been done yet for its development, but only some of its smaller harbours can be expected to be touched at first. Nearly all the districts in its neighbourhood are, however, fairly populated, and there is considerable cultivation on the rivers Patatan, Ananam and Kabatuan. Kudat, on Marudu Bay, appears at one time to have been chosen for the Governor’s headquarters, but it showed no promise of rapid development, and they have now been transferred to Sandakan. There is, however, a good deal of cultivation going on, and among the immigrants are several hundred Chinese Christians called Hakkas, who appear to have fled from the persecution of their heathen brethren. These are likely to be a permanent population and should be encouraged, as they are sure to support the Government. The most important settlement on the mainland of Borneo, within the Company’s grants, is Sandakan. It is a fine bay, fairly healthy, with excellent sites for a town, and is connected by a water passage with the important river of Kina Batañgan, from which a short road leads to the gold workings of Sigama. Its inhabitants already muster, I understand, about three thousand, and it has the principal Government offices, a church, a club, an hotel and some rideable roads. It only wants coal to render it an important port of call, and this is said to have been found not far from the town, and is about to be worked.