per cent. in gold of its nominal value, and the Coupons on the other External Loans, including the Monopoly Loan, falling due after that date, were paid at the same rate. These payments were made "without prejudice to the Bondholders, and under reservation of all their rights, pending a final settlement of the Debt." The Council registered the claims of the Bondholders to the 70 per cent. unpaid on the Coupons dated 1st April, 1894, to 1st January, 1898, inclusive.

1894. Proposals for an Arrangement were submitted to the English Bondholders, but were not approved by the representatives of the French and German Committees. Their consideration was therefore postponed.

1895-6.-Negotiations were held in Paris between the Minister of the Government and the Delegates of the French, German and English Committees. An offer of settlement was made by the Committees, but was rejected by the Greek Government. 1897-8.--Through the intervention of the six Great Powers consequent on the war with Turkey, the finances of Greece were partially placed under the control of an International Commission. An issue of Bonds sufficient to

A

produce a maximum sum (exclusive of expenses) of
£6,800,000 was authorised, of which £6,000,000 was to
be appropriated to provide for the Indemnity payable to
Turkey, the uncovered deficit of 1897 and the Conversion
of the Gold Floating Debt. The balance of £800,000 was
reserved to cover the eventual deficits (if any) of 1898
and the following years, but the faculty of issuing these
Bonds cannot be exercised after the end of 1903.
first instalment of Bonds, to the amount of £4,980,000,
was issued by the Bank of England, the Bank of
France, and the Bank of Russia, in May, 1898, at 1001.
A further issue of £961,500 Bonds at 104 was sub-
sequently made, and Bonds to the amount of £82,200
have been appropriated for expenses. Total Bonds
issued to date, £6,023,700, producing about £6,000,000
nett cash. The Loan bears 2 per cent. interest, and
is guaranteed by Great Britain, France, and Russia.
It is redeemable by drawings at par, or by purchases,
if under par, by means of an Accumulative Sinking Fund of

I'I per cent., commencing 1st January, 1903. Th Sinking Fund is not to be increased before 1st April, 1918, after which date the Greek Government may, with the consent of the three guaranteeing Powers, or at their request must, effect the Conversion of the Loan.

[NOTE. On 31st July, 1903, the Bonds required to produce the additional £800,000 cash had not been issued.]

The settlement of the existing External Gold Loans was also made part of this Arrangement, the terms approved by the Powers being practically identical with those submitted by the Bondholders' Committees and rejected by the Greek Government in 1895-6. The following are the principal provisions of the settlement :

The Loans are classified in three groups, as follows:-
Group I.-

4 per Cent. 1887 (Monopoly) Loan

Fr.

Fr. 133,045,000

The initial interest on these Loans is fixed at 43 per cent. of the original interest in the case of the Monopoly Loan, and at 32 per cent. in that of the other Loans. The funds remitted for the service of the Funding Loan, but not applied, are, however, until exhaustion, to be devoted to increasing the interest on that Loan to not exceeding 40 per cent. of the original amount.

The ordinary Sinking Fund, limited for the first five years to I per cent., is fixed thereafter at 2 per cent. of the original interest.

The Revenues assigned for the service of the External Debt and controlled by the International Financial Commission, are those derived from the Monopolies (viz., Salt, Petroleum, Matches, Playing Cards, Cigarette Paper, and

:

Naxos Emery), the Stamp and Tobacco dues, and the Piræus
Customs duties.

The normal yield of the Monopolies and the Stamp and Tobacco dues is estimated at 28,900,000 drachmæ, and any excess over this amount-less 18 per cent. for expenses is to be treated as a plus-value, 60 per cent. of which, with a like proportion of the savings on remittances, due to a fall in the rate of exchange below 165 per cent., is to be devoted in equal proportions to the increase of interest and Sinking Fund. The plus-value is to be applied to the different groups in rotation by increments of 2 per cent. of the original interest, any balance being carried forward to the next account. The interest on Bonds redeemed is to be devoted to increase of interest.

The balance of the funds taken from the Monopoly Co., 2,529,611.07 dr., to be returned in five annual instalments of 500,000 dr., to be applied to increasing the interest of this Loan.

[NOTE. The last instalment was returned in 1902.]

Bonds drawn in June and November, 1893, not exchanged for Funding Bonds, to be paid off at 65 per cent. and 75 per cent. respectively, subsequent drawings being cancelled.

Claims registered in respect of the 70 per cent. interest unpaid from 1st April, 1894, to 1st January, 1898, inclusive, to be paid off four years after the date of the Coupons in respect of which they were issued at the rate of 1s. in the £. [NOTE. Payments ceased at the end of 1902.]

1902. Four per Cent. “Greek Railways Loan." Authorised amount, £1,750,000, of which £880,000 was offered at 83 by Messrs. C. J. Hambro & Son, Messrs. von Erlanger & Sons, and the National Bank of Greece, the balance not being issuable before 1903. This Loan, which was issued for the construction of the Piræus-Demerly Railway, is under the direct control of the International Financial Commission, and is secured by a prior lien on the surplus receipts from the assigned Revenues-after payment of all liabilities under the Law of Control-by a first mortgage on the Railway, and also by the surtax on Tobacco deposited at the National Bank. The Bonds are redeemable in 98 years by halfyearly drawings at par or by purchase if quoted below par.

REPORT.

During the past year the service of the Greek Debt has been regularly effected in accordance with the provisions of the Law of Control.

The total Receipts from all the assigned Revenues, collected by the Commission since it entered into office in May, 1898, are those in the annexed Table. For the sake of convenience the Receipts in gold from Naxos Emery have been converted into drachmæ at the mean rate of exchange for each year.

* In consequence of a change from the New to the Old Style, twelve intercalary days were added to the year 1899, making the financial period 377 days in all. The Receipts for the 377 days were as follows:

Gross Receipts from Stamps, Tobacco, and Monopolies..

all Revenues

Nett Receipts from Stamps, Tobacco, and Monopolies

all Revenues

Drachmæ.

32,897,347

51,461,668

29,960,757

48,458,731

The following Table shows the surpluses of nett Receipts in 1899, 1900, 1901, and 1902, over and above the approximate minimum sum required in each of these years for the service of the Debt, as fixed by the Law of Control :

* It should be borne in mind that out of the surplus of 18,780,717 dr. available in 1902 there had to be defrayed the charges for the service of the Greek Railways and PyrgosMeligala Loans, amounting in that year to 1,296,739 dr.

Under the minimum service of the Debt are not included the following payments provided by the Law of Control, which are only temporary, viz. :-(1) The payment of the Certificates representing the 70 per cent. unpaid on the coupons of the Debt-this payment ceased during 1902; (2) the repayment of Bonds drawn in 1893, funds for which were provided in 1898; (3) the 8 per cent. additional interest on the Funding Loan, which will cease in 1905; and (4) the additional interest of 500,000 drachmæ per annum on the Monopoly Loan, which ceased during the past year.

Under the Law for the settlement of the old External Loans, the annual product of the assigned Revenues (except the Piræus Customs) was estimated at 28,900,000 dr., and any excess over this sum was to be divided between the Greek Government and the Bondholders after deducting expenses. The Bondholders were also to benefit in the same way from any improvement in the rate of exchange below a fixed ratio of 165 per cent.