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and the low rate of exchange which prevailed in 1903, the Commission were able to set aside a larger sum for increase of interest and amortisation than in any preceding year. The fall in the exchange has been continued in a marked degree during the present year, and fears have been expressed as to a reaction from so rapid a decline in the gold premium.

During the past year the balance of the Greek Railways Loan has been issued. The issue was a complete success which shows how greatly confidence in Greek credit has been increased of late years. The market price of the old External Loans has also recently shown a considerable improvement. These favourable results are undoubtedly a matter for congratulation, but it is much to be desired that their continuance should be assured by means of the legislative and administrative improvements advocated by the International Financial Commission. It is satisfactory to note that the present Government recently laid before the Legislature certain Bills dealing with some of the most urgent reforms, and it is to be hoped that although these measures were not carried in the recent Session, every effort will be made to pass them during the ensuing winter.

The Government also introduced a Bill authorising the liquidation of the long outstanding claims on account of the expenditure incurred by the bodies who represented the Greek Bondholders during the lengthy negotiations which took place from 1894 to 1896. These negotiations involved much labour and expense, notably in connection with the sending of Delegates, at the invitation of the Greek Government, to Athens and Paris. The payment of the small amount asked for is a matter of elementary


justice, and it is to be regretted that the session of Parliament has closed without the Bill being passed.

The financial year 1903-4 marked a period of transition as regards matters connected with the Turkish Debt, the first half being under the old régime instituted by the Decree of Mouharrem, and the second half under the new conditions prescribed by the Decret-Annexe of 1/14 September, 1903, which provided for the Unification of the old De' t. In view of this circumstance separate accounts were published by the Debt Council for each of the half-years, but, taking the results of the year as a whole, the Receipts from the Revenues administered by the Debt Council and from the Tobacco Régie showed a very substantial and satisfactory increase of £T. 238,999 as compared with 1902-3. Owing, however, to the fact that in 1902-3 the Bulgarian Government paid two years' arrears of the Eastern Roumelian Annuity in addition to the annuity for that period, there was a decrease in 1903-4 under this head of LT. 228,039. The total increase in the Receipts for 1903-4 was thus reduced to £T. 10,960. The Council are also glad to report that throughout the whole year the monthly payments by the Bulgarian Government on account of the Eastern Roumelian Annuity have been regularly maintained.


It will be remembered that under Lord Alverstone's award the coupon on the Series Debt due 1,14 September, 1903, became payable at instead of per cent. At the last moment the Turkish Government raised difficulties with regard to the payment being effected at the increased rate, on the ground that owing to the Unification having been arranged the award became ineffective.

In these circumstances the only recourse left to the Debt Council was to pay the coupon at per cent. and give certificates of claim for the remaining per cent. The Council of Foreign Bondholders were of opinion that the position taken up by the Government was entirely untenable, and they therefore addressed a strong protest to the Debt Council, with the result that the point at issue was settled in a satisfactory manner, and the additional distribution made after a slight delay.

With regard to the Unification Scheme it may be recalled that the English Committee demanded the following modifications in the Draft Decree :-(1) The Turkish Government to guarantee the Debt Service; (2) the rate of exchange for Series C to be raised to 42; (3) the repayment of sums taken from the Reserve Fund to form a first charge on subsequent surplus receipts; (4) the period of prescription for Series Bonds not presented for conversion to be extended to fifteen years. After lengthy negotiations the Turkish Government accepted the fourth condition in full and consented to the raising of the rate for Series C to 42, whilst a satisfactory compromise was effected concerning the repayments to the Reserve Fund. As regards the question of a guarantee, which the Committee were most reluctant to forego, it was ultimately arranged that they should abandon their demand on the Government undertaking to introduce a revised Stamp Law. A detailed account of the negotiations, together with the text of the Decree in its final form, will be found in the Appendix.

There can be little doubt that but for the action of the Council and Committee, who were ably seconded by Mr. Babington Smith, the Unification would have been carried

out on the terms originally proposed in the Draft Decree of 2nd June, 1903. The nature and value of the amendments which they were able to procure are fully dealt with in the Appendix. It need only, therefore, be pointed out here that they not only brought about a considerable improvement in the rate of exchange for Series C, but also succeeded in obtaining modifications calculated to afford the Bondholders far more ample security than that offered by the Scheme when first put forward.

The promulgation of the new Stamp Law has been somewhat delayed in spite of the continuous pressure maintained on the Porte by the Debt Council, but the Law was put in operation in the case of Ottoman subjects on the 1/14 July of the present year. The Porte has now promised to withdraw two clauses to which the Foreign Embassies at Constantinople objected as infringing the Treaty rights of foreigners residing in Turkey, and there is every probability that the Law will shortly be put in force as regards foreigners also. Whilst the results of the new Law may possibly not reach their full development at once, it seems probable that it will, in a comparatively short time, add a considerable sum to the product of the assigned Revenues. Moreover, the direct interest which the Turkish Government now possesses in the yield of all the Revenues will doubtless tend to facilitate its enforcement.

Mr. Babington Smith having, as stated in the Council's last Report, resigned his post on the Council of Administration, the Council of Foreign Bondholders, in virtue of the powers conferred upon them by the Decree of Mouharrem, appointed Mr. Adam Block, C.M.G., Secretary of Legation at the British Embassy at Constantinople, to

succeed him as representative of the British and Dutch holders of Turkish Bonds. Mr. Block's long experience of Turkey and Turkish affairs was felt to qualify him in an exceptional manner for the important office which he has been called upon to fill.

At the end of June last the Council had reason to expect that they would shortly receive an offer from the Government of


Colombia with regard to the payment of the interest in arrear on the External Debt. Negotiations are understood to be proceeding, but up to the date of this Report (30th July) no news has reached the Council that anything definite has been settled.

It is to be hoped that General Reyes, the new President, will signalise his accession to office by taking immediate steps to restore the credit of his country.

The Council have not failed to urge on the Governments of the United States and of Panama the claim of the Colombian Bondholders that Panama should assume a just and equitable share of the Colombian Debt. A meeting of the Bondholders was convened by the Council in April last, when Resolutions were passed formally recording this claim, and requesting the good offices of the Governments of Great Britain and the United States. It is to be hoped that an understanding may be arrived at honourable to Panama and satisfactory to the Bondholders.

The Costa Rica Government having failed COSTA RICA. even to comply with the conditions which they themselves had proposed, viz., that the service of the Debt should be suspended for two years, and payments recommenced from April, 1903, the

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