nd
Australia, as a base of operations for the British protecting fleet
would at once become manifest. It is somewhat unfortunate that a bar has
formed just outside the entrance of the harbour, with a depth of water
of four fathoms at low water, spring tides, so that ironclads of the
largest size would be denied admittance.

There are at present, no steamers sailing direct from Borneo to England,
and nearly all the commerce from British North Borneo ports is carried
by local steamers to that great emporium of the trade of the Malayan
countries, Singapore, distant from Sandakan a thousand miles, and it is
a curious fact, that though many of the exports are ultimately intended
for the China market, _e.g._, edible birds'-nests, the Chinese traders
find it pays them better to send their produce to Singapore in the first
instance, instead of direct to Hongkong. This is partly accounted for by
the further fact that, though the Government has spent considerable sum
in endeavouring to attract Chinamen from China, the large proportion of
our Chinese traders and of the Chinese population generally has come to
us _via_ Singapore, after as it were having undergone there an education
in the knowledge of Malayan affairs.

As further illustrating the commercial and strategical advantages of the
harbours of British North Borneo, it should be noted that the course
recommended by the Admiralty instructions for vessels proceeding to
China from the Straits, _via_ the Palawan passage, brings them within
ninety miles of the harbours of the West Coast.

As to postal matters, British North Borneo, though not in the Postal
Union, has entered into arrangements for the exchange of direct closed
mails with the English Post Office, London, with which latter also, as
well as with Singapore and India, a system of Parcel Post and of Post
Office Orders has been established.

The postal and inland revenue stamps, distinguished by the lion, which
has been adopted as the Company's badge, are well executed and in
considerable demand with stamp collectors, owing to their rarity.

The Government also issues its own copper coinage, one cent and
half-cent pieces, manufactured in Birmingham and of the same intrinsic
value as those of Hongkong and the Straits Settlements.

The revenue derived from its issue is an important item to the Colony's
finances, and considerable quantities have been put into circulation,
not only within the limits of the Company's t