CLERKSHIPS, the debt; and I have reason to believe that the present Grand Vizier, CLASS I. although he has never intimated anything of the kind to me, has made June 1876. up his mind to deal with it. The measure which seems the most probable is the summary reduction of the interest upon the debt from 5 to 3 per cent. ; and I have heard it keenly argued by persons far from indifferent to the interests of the bondholders that it is what would be most to their ultimate advantage. It is maintained that, after such reduction, the bondholders would still receive 6 or 7 per cent. for their money, instead of 10 or 11 per cent. as at present; and that they would be in a safer position by the greater prospect of avoiding a complete bankruptcy, since the saving to the Porte would be sufficient to establish an equilibrium between the revenue and expenditure; but any security which this could afford must be set off against the uncertainty that when such a simple mode of escaping from financial difficulties had once been tried, it might not be again repeated, if a similar necessity were to occur. I have, &c. (Telegraphic.) SIR H. ELLIOT to the EARL OF DERBY. Therapia, October 9, 1875, 3 p.m. The following explanatory notice about the reduction of the rate of interest has been issued: (Translation.) Constantinople, October 7, 1875. From this day's date, that is to say, from the 6th October 1875, and during a period of five years, the half of the interest and sinking fund of the internal and foreign debts, of which the annual amount comes to about 14,000,0007., is and remains suppressed. As compensation for the non-payment of these 7,000,000l., a sum shall be paid calculated at a rate of 5 per cent., of which sum the quota shall be 350,000l. yearly. The provisional bonds, which shall be delivered for this object, shall hold good during five years only, and will be the security for the payment during each of these five years of the said sum exclusively of 350,000l. (Telegraphic.) No. 4. SIR H. ELLIOT to the EARL OF DERBY. Therapia, October 10, 1875, 4 p.m. The following further official explanation has been issued respecting the reduction of the interest. It differs very materially from the last : (Translation.) 1. From this day's date the interest and sinking fund of the internal and external debts of the Ottoman Empire are reduced to one half during a term of five years. 2. The payment of these coupons will be made in the following manner :-The first half in cash integrally, and the second half in new bonds bearing 5 per cent. interest, payable likewise in cash, at the same time that the payment of the first half becomes due. 3. The securities assigned, as well for the entire payment in cash of the first half, as for the payment of the said 5 per cent. interest, consist in the total revenues of the customs, in those of tobacco and salt, as well as the tribute of Egypt, and, in case of insufficiency, it will be completed from the tax on sheep. 4. If at the expiration of the said five years the above-mentioned second half of the coupon, transformed into capital bearing 5 per cent. interest, should not be reimbursed, there will be a fresh extension of delay till the total extinction of the first foreign loan to be redeemed, the securities of which being then freed will serve for the integral repayment of the 5 per cent., including interest and sinking fund. CLERKSHIPS; June 1876. MY LORD, No. 5. SIR H. ELLIOT to the EARL OF DERBY. Therapia, October 7, 1875. I RECEIVED last night the inclosed note from Safvet Pasha, transmitting the "Iradé " for the reduction of the interest on the debt. A modification has been introduced into the first project of entire repudiation of half the interest. According to the "Iradé," half the interest is to be paid in money, and the other half in bonds bearing interest at 5 per cent. The revenues which are to be paid as security into the hands of the Syndicates to be appointed are those derived from the Customs, salt, and tobacco, the Egyptian tribute, and if these are found insufficient, the sheep tax. It is to be remarked that every one of these sources of revenue had already been assigned as securities for different foreign loans, and in some cases with the engagement that they should be paid to Syndicates. I pointed out both these circumstances when the project was first mentioned to me. Whatever may have been the necessity or propriety of this act of repudiation, and, although opinion is divided, the majority of the local financial public appears to recognise it, little is to be said in favour of the manner in which the decision has been come to, for it has been taken without any consultation with those who would have been competent to suggest the least injurious mode of making the declaration of insolvency. Amongst other difficulties which may be expected, the appointment of the Syndicates to receive the revenues will probable be one of the first. It is stated that the rights of the Imperial Ottoman Bank are to be maintained, but an essential part of the arrangement under which it was recently erected into a State Bank, was that all the revenues of the Empire were to be paid direct to it, and how this is to be reconciled with the payment of important branches of income to the proposed Syndicates, it is not at present easy to see. Some of those who are most indignant at the act of repudiation, hope that the Governments of the countries of which the subjects will be the heaviest losers may yet force the Porte to retract it. I confess that I cannot think the interest of the bondholders would be advanced if this could be effected. CLERKSHIPS, It is undeniable that the Porte has not, at this moment, the money required for the ordinary service of the State. The advance for the payment of the October dividend was not obtained at less than 18 per cent., and after the shake now given to Turkish credit, an advance for the January and subsequent coupons could hardly be got upon any terms. The inclosed note from Safvet Pasha, containing a further explanation of the measures, has just reached me. I have, &c. M. L'AMBASSADEUR, (Translation.) Sublime Porte, Foreign Office, My telegraphic despatch of the 6th of October has made known to you the promulgation of the radical and indispensable reforms which the Sublime Porte has decided to put henceforth into execution in the Empire. Experience has in fact proved the inefficiency of the impost of a quarter of the tithes levied in addition to the tithe proper, and of the collection in the lump of the arrears, which was attempted since last year. The relative slenderness of the actual agricultural resources destined to be gradually developed in the near future, has not allowed the maintenance of this duty of a quarter of the tithe, which, instead of bringing profit to the Treasury to the extent which it was considered might be expected, has on the contrary only brought about a more decided inconvenience than in the past, and it tends to exhaust more and more the agricultural resources to the injury of the interests of the people. This is also applicable to the arrears, of which the collection required by the law has not only not been able to meet the wants of the Treasury, but has also been of a kind to provoke certain vexatious measures which have necessarily escaped legal repression, and has caused a still greater inconvenience to the taxpayers already in a difficult position with regard to the payment of the other taxes. His Imperial Majesty our august Master, justly moved at this state of things, has wished in his sentiments of magnanimity and high solicitude for his subjects to alleviate the heavier charges imposed on the country; and in virtue of his Sovereign orders, the Sublime Porte has just decided, in imitation of what was done in the Isle of Crete, to abolish the quarter of the tithe in question as well as to remit entirely the whole of the arrears due up to the year 1873, without any restriction in all parts of the Empire. This remarkable and spontaneous proof of the generous sentiments of His Imperial Majesty is above all comment, and will be, we feel sure, duly and highly appreciated by the Government of Her Britannic Majesty. But all this is only the forerunner of other important ameliorations which are recognised as necessary, such as the transformation of the system of the tithe into a land tax, the sending of the missi dominici into the provinces, a more equitable manner of electing the members of the Provincial Councils, &c., all things the successive introduction of which CLERKSHIPS, into every branch of the administration will not be delayed. Thus, the faithful and loyal subjects of the Sultan, relieved at once from the heavier of the dues which weighed on them, and freed henceforth from the hindrances which may have paralysed agricultural production, will find in the future a vast field for the extension of their resources, and for the consequent development of the general prosperity of the Empire. But, on the other hand, the considerable sums destined for the payment of the coupon of our foreign and internal debts not being at all in harmony with the financial equilibrium, and the accumulation of the interest of the different loans contracted up to this date having increased the items of expenditure beyond all power of foresight, all these circumstances, joined to the diminution of a part of the receipts in consequence of the abolition of the aforesaid restrictive measures, cannot but affect in a very sensible manner the economy of the Budget from a fiscal point of view. As an inevitable consequence of these new improvements, the general receipts will necessarily follow an ascending scale, in proportion to the future development of the resources of the Empire. But it is not less true that the difficulties which existed from the beginning, and which have increased from day to day, will press in a very heavy manner on the Treasury, which finds itself placed, on the one hand, in view of the seductive prospect of the increase of its revenues in consequence of the reforms accomplished and to be decreed, but, on the other, in that of the imperious necessity of satisfying the engagements of the Government and the necessities of the existing situation. The traditional loyalty of the Sublime Porte in that which concerns specially the punctual execution of its obligations towards the creditors of the State, will have more than ever weight on all its actions, and on all its decisions, with reference to these sacred engagements. The Imperial Government would prefer, we do not hesitate to declare it here, to succumb under the weight of the most crushing sacrifices, rather than do anything calculated to forfeit its dignity and its high reputation. Moved by these sentiments, and taking into consideration also the primordial considerations which should guide us in the question of establishing a serious equilibrium in the Budget of the State, in view above all of the absolute impossibility, so to speak, of creating new resources to fill up the gaps, under penalty of gratuitously, and without any practical utility, aggravating the situation, already painful, of all the taxpayers in the Empire; in presence, lastly, of the length of time which the adoption and execution, as has been said above, of all the measures of administration and of public utility, having as their object the increase of the revenues of the Treasury, necessarily demand, we have not been able, after mature deliberation, and after having weighed all the consequences which might result from so doing, to find any other plan than frankly to explain our situation, as we have just done, and to take a radical step, which may, it is true, irritate for the moment certain interests, and produce even a certain disturbance into the market price of our stock, but which, in presence of the urgent considerations of the public safety of the Ottoman Empire, and of the maintenance even of the European balance of power, which, according to our idea is essentially involved therewith, is destined to assure, once for all, the credit of the State and the regular carrying on of the Government. The Budget published this year displays, as is matter of public notoriety, a deficit of 5,000,000l. In the present state of things this deficit, one cannot deny, will go on increasing, for it is found necessary, each CLASS I. June 1876. CLERKSHIPS, time that payment is due, to have recourse to loans, more or less onerous, CLASS I. to pay the interest and the sinking fund, and this will certainly, some June 1876. day or other, seriously shake the confidence of the holders and other capitalists, who find themselves already injured in their interests by the sudden fluctuations of the funds and the risky speculations of the money market. Such an abnormal state will evidently not disappear until serious and incontestible guarantees are assured to the holders of our public stock, as well as to the contractors of our loans. The radical measure to which we have just alluded, and which has been brought to your knowledge by my telegram of the 6th instant, consists, as you have seen, in the reduction from this time forth to half of the payments of the said coupons as they fall due, which payment will be guaranteed by the total revenues of the Custom House, of the salt and tobacco taxes, as well as by the Egyptian Tribute. This payment, as you are aware, will extend over five years, half in cash and half in bonds, bearing interest at 5 per cent. In the event of these guarantees proving insufficient, the Government will not fail to make them up out of the tax on sheep. All these receipts will be henceforth put at the disposition of the Syndicates which will be instituted for this object, on the condition, of course, of the maintenance of the rights and privileges of the Imperial Ottoman Bank. By these means credit will be assured, the Budget balanced by solid guarantees, and mistrust and the general uneasiness will disappear for ever. We have the firm hope that these considerations, and the measures cogently dictated by our present situation, will meet with efficient moral support from Her Britannic Majesty's Government. The sentiments of sincere friendship for us, and the lively interest which it has unceasingly evinced for everything which affects the prosperity and the progress of the Ottoman Empire, are a sure guarantee to us that our frank and loyal appeal will be listened to by it, with the friendliness and high impartiality which characterise it. I leave to your tact and your savoir-faire the choice of language which you should hold in the sense of this despatch, so as to alleviate erroneous impressions which may arise. You will be good enough also to read this document to his Excellency the Principal Secretary of State of Her Britannic Majesty, and leave him a copy of it if he wishes it. No. 7. I have, &c. (Signed) SAFVET. MY LORD, MR. W. H. CLARK to the EARL of DERBY. 6, Leinster Gardens, Hyde Park, October 22, 1875. As a holder of Turkish Bonds of 1854, I submit to your Lordship the inclosed statement, which, for greater convenience of perusal, I have had printed, in the hope that the account therein of the circumstances under which the Loan was raised, the encouragement given thereto by the Queen's Government, through one of your Lordship's most eminent predecessors, and the considerations I have ventured to add, will induce the present Government to insist, at Constantinople and Cairo, on the |