Befort Independence
Back in the 18th century, the British was becoming more aware of the vast trade potential in the Far East and vied with the Dutch and Portuguese for a share. The British, eager to expand their influence further in South-East Asia, set up a trading station under the East India Company on Balambangan Island in 1773. But due to mismanagement and insults to Suluk Datu' by the company's representative John Herbert, the site was overrun by Suluk pirates on March 5, 1775. The settlement was re-established in 1805 only to be abandoned again in the same year by orders from London. It was a bad decision to make Balambangan Island a trading port. It was a bad site, disease-ridden, short of water and had a very shallow harbour causing ships to drop anchor at least 500 metres from the shore.

Despite Sabah's reputation as a haunt for pirates, home to headhunters and rife with tropical diseases, there was no holding back the Europeans. Steadily, they began to extend their influence over South-East Asia.

The Dutch, having gained control over the greater part of Borneo, became interested in the north. The British, the Portuguese and the Americans were also interested in Sabah. Even the Italians in 1870 conceived the plan of establishing a penal colony on Balambangan Island. Northern Borneo was perhaps the last piece of available land in the area and thus competition was strong.

In 1850 the United States of America negotiated a commercial treaty with the Sultan of Brunei. This treaty had been forgotten until in 1864 when President Lincoln appointed C. Lee Moses as the American Consulate to Brunei. He arrived in Brunei in July 1865. Moses quickly succeeded in persuading the Sultan to cede a large tract of land to the north to him for a period of ten years in return for certain payments. But it appeared that Moses was more interested in lining his own pocket than representing his country for no sooner had he received the cessions then he went off to Hong Kong and sold them. The purchasers, Americans Joseph W. Torrey and Thomas B. Harris, set up a Colony at the mouth of the Kimanis River and called it Ellena. But the colony was badly managed. Disease, death and desertion by the immigrant labourers led to the collapse of Ellena towards the end of 1866. The only visible sign now remaining of the American Trading Company is the tombstone of Thomas B. Harris.

In January 1875, Baron Von Overbeck, the Austrian Consul at Hong Kong acquired the rights of the American Trading Company from Torrey. After failing to interest the Austrian Government who were at this time still without any 'colonies', he turned to Alfred Dent in London who showed great interest. With Dent's money in hand, Overbeck returned to Labuan. He secured a new treaty with the Sultan of Brunei on December 29, 1877 and proceeded to Jolo where he secured a similar treaty from the Sultan of Sulu on January 22, 1878. Overbeck sold out to Dent in 1880.

In July 1881, Alfred Dent and his brother formed the British North Borneo Provisional Association and transferred their deeds for the sum of 120,000 Pounds. It later became the British North Borneo Company and received a Royal Charter on November 1, 1881. The land was opened for development by the British Company and eventually became a British Protectorate in 1888, thus sealing it against occupation by other foreign powers.

The foundation was thus laid for economic growth in North Borneo. The company restored peace to the land where piracy and tribal feuds had grown rampant. It abolished slavery and set up transport, health and education services for the people. Chinese immigrants were wooed to boost the small population of less than 100,000 so that labour and capital could be obtained for development of the land. The combined effort of the locals and immigrants coaxed order out of the jungle land. Very soon, towns, a small timber industry, tobacco and rubber plantations began to thrive.

Despite two major rebellions against British insensitivity to local customs and feelings, the company fared very well in bringing progress to North Borneo. It must be remembered, however, the Company's primary responsibility remained to its shareholders, it was in business to make a profit. However, World War II brought an abrupt halt to that prosperous existence with the Japanese Army invasion on New Year's Day, 1942. With the aim af a "Greater East Asia" Japanese troops occupied Labuan followed by Beaufort, Jesselton (now Kota Kinabalu) and Sandakan. The meagre North Borneo Armed Constabulary with only 650 men, and the Volunteer Forces hardly provided any resistance to slow down the Japanese invasion.

The Europeans were interned, public services ceased to exist and there were widespread poverty, disease and malnutrition.

Liberation came in June 1945 when the Australian Ninth Division began to retake Sabah from the Japanese Army. What they saw when they entered the major towns were total devastation. The towns had been razed to the ground by allied bombing. Martial law was declared and order slowly returned.

The British North Borneo Company could not afford to rebuild the territory after the devastation of the war and decided to sell its interests to the British Government. On July 15, 1946 the British Protectorate of North Borneo became a Crown Colony. As a result of this change in status, North Borneo had access to British Government funds for reconstruction.

Under colonial rule, much of the Chartered Company's system of administration - the Residency and District structure started by the first governor, Sir William Hood Treacher and William Pryer - was retained. Initially, there were only two Residencies - the East Coast and West Coast - with their headquarters at Sandakan and Jesselton respectively.

Each Residency was divided into Provinces, later known as Districts, which were run by District Officers. By 1922, there were five Residencies to accommodate new areas that were opened up for development. These were the West Coast, Kudat, Tawau, Interior and East Coast Residencies. These Residencies were in turn divided into 17 Districts.

Under the Residency and District System, the British held top posts while native chiefs managed the people at grassroots level. This, however, was not a conscious attempt by the British to instil indirect rule but a convenient arrangement for the District Officers who were unfamiliar with local customs. After World War II, the British Military Administration administered the state until July 15, 1946, when civil government resumed. A Governor and Commander-in-Chief was appointed to administer the colony of North Borneo with the assistance of an Advisory Council consisting of three ex-officio members - the Chief Secretary, the Attorney-General and the Financial Secretary - together with other members both official and unofficial whom the Governor chose to appoint.

In 1950 the Advisory Council was replaced by the Executive and Legislative Councils. The Executive Council functioned as a form of 'Cabinet' headed by the Chief Secretary and in addition to the Attorney General and the Financial Secretary comprised two officials and four nominated members. The Governor presided at the Executive Council meetings and he alone was entitled to submit questions to the Council.

The Legislative Council consisted of the Governor as President, the usual three ex-officio members, nine official members and ten nominated members. The Legislative Council was the law making body.

The day-to-day running of the state was handled by a number of departments, some of which were revamped under colonial rule. The Agriculture Department, for instance, broke away from the Forest Department while the Posts Department was merged with the Telegraph Department. In addition, a separate Department of Civil Aviation was set up.

The high-ranking administrative posts were held by British officers and it took some time before local officers began to take on more responsible jobs. In fact, it was only in 1957 that the first Sabahan filled an administrative officer's post.

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