During the early 1870s, the east coast of Sabah was under control of the Sultan of Sulu, who also ruled what is now the southern Philippines. The first European settlement in the area was founded by Captain William Schuck, a Scot, but when Schuck got himself an island around the controlled coast of Sultan of Sulu, William Clarke Cowie, a gun smuggler from Glasgow, replacing himself over Schuck, who then received permission from the Sultan to establish a small trading base. Cowie called his settlement as Sandakan, which in (Sulu) language means "the place that was pawned", but it soon came to be known as "Kampung German" after the large number of Germans who also set up posts there. The settlement was part of the lease Austro-Hungarian consul Baron von Overbeck acquired from the Sultan of Sulu, Sultan Jamal Ui Alam in 1878, which according to the lease, the width upon the concession that von Overbeck acquired were starting from Sungai Sibuco (or known as Sg. Sibuga nowadays) up until the Sungai Padasan's province. During and according to the concession made, von Overbeck will paid $5000 per year towards the Sultan of Sulu and was declared as the Dato Bendahara as well as The King of Sandakan. Baron von Overdeck decided to entrust a number of English officers that he certainly trusted to administrate and took control of his areas of province. One of the trusted officer was the new British Resident, William Burges Pryer. Pryer was most acknowledge as the administrator in which introduced a law known as The Law of Trading's Taxes as a way to avoid any excessive exploitation of trading activities being made. Pryer came to manage and solved a lot of problems such as pirates' attacks, which subsequently attracted the foreign traders to visited the new town. While the Kampung German made a fast development, its actually encountered in a fire due to a carelessness of a resident named, Sabtu. The whole area of Kampung German are burnt down including Pryer own house. The
