The first English connection with Borneo was in 1609, when trade was opened with Sukadana, diamonds being said to form the principal portion of it.
The East India Company, in 1702, established a Factory at Banjermassin, on the South Coast, but were expelled by the natives in 1706. Their rivals, the Dutch, also established Trading Stations on the South and South-West Coasts.
In 1761, the East India Company concluded a treaty with the Sultan of Sulu, and in the following year an English Fleet, under Admiral Drake and Sir William Draper captured Manila, the capital of the Spanish Colony of the Philippines. They found in confinement there a Sultan of Sulu who, in gratitude for his release, ceded to the Company, on the 12th September, 1762, the island of Balambangan, and in January of the following year Mr. Dalrymple was deputed to take possession of it and hoist the British flag. Towards the close of 1763, the Sultan of Sulu added to his cession the northern portion of Borneo and the southern half of Palawan, together with all the intermediate islands. Against all these cessions the Spanish entered their protest, as they claimed the suzerainty over the Sulu Archipelago and the Sulu Dependencies in Borneo and the islands. This claim the Spaniards always persisted in, until, on the 7th March, 1885, a Protocol was entered into by England and Germany and Spain, whereby Spanish supremacy over the Sulu Archipelago was recognised on condition of their abandoning all claim to the portions of Northern Borneo which are now included in the British North Borneo Company's concessions.
In November, 1768, the Court of Directors in London, with the approval of Her Majesty's Ministers, who promised to afford protection to the new Colony, issued orders to the authorities at Bombay for the establishment of a settlement at Balambangan with the intention of diverting to it the China trade, of drawing to it the produce of the adjoining countries, and of opening a port for the introduction of spices, etc. by the Bugis, and for the sale of Indian commodities. The actual date of the foundation of the settlement is not known, but Mr. F. C. Danvers states that in 1771 the Court ordered that
