As far as it goes this is a satisfactory increase in the revenue, but is a mere bagatelle if we consider the vast territory from which it is produced. But no striking increase can take place until the Chinese feel thoroughly at home there. That North Borneo was once very popular with them is attested by all the accounts we gather from travellers and from native tradition. The very names show how they influenced the country. We have Kina Benua, the Chinese land; Kina Balu, the Chinese widow, the name of the great mountain; Kina Batañgan, the Chinese river (in the written annals of the Court of Brunei, it is mentioned that a Chinese kingdom was established on that river); then we have Kina Taki and Kina Bañgun, the names of small streams in the north. This shows how numerous the Chinese must have been in this territory. The causes of their disappearance are obscure, but may be readily imagined. Bad government in Brunei, the increase of piracy, the cutting off of the junks, the risings against oppression by this unwarlike race led to massacres; in fact, these causes are clear from the accounts of the natives. But where the Chinese have once been, they will come again. It must be uphill work trying to extract taxes from natives, who, though they are accustomed to be robbed and plundered by their own rulers, are very unwilling to pay even the smallest regular impost. The Sarawak Malays do so readily with their capitation tax, as that payment frees them from the liability of being called out for military service, and the more civilised and industrious they become, the more they appreciate this freedom from liability. The capitation tax is a just one, though often it requires great caution in its collection to avoid discontent. As a rule it should not be collected in those districts in which the Company have no permanent officers located. Flying visits often do more harm than good. It is difficult to see how any addition can be made to the taxation. The State of Borneo must trust to the gradual development of the country and to the increase of its population, but all trammels on the free circulation of traders should be removed. It is evident from the trade returns of North Borneo that the country is progressing. Take the statistics for the same five years:— Imports. Exports. 1893, $1,116,714 $1,780,593 1894, 1,329,066 1,698,543 1895, 1,663,906 2,130,600 1896, 1,882,188 2,473,753 1897, 1,887,498 2,942,293 The dollar is now only worth two shillings. I do not know if these returns include those of our Colony of Labuan. I believe not, as no mention is made of the export of coal in the detailed lists.