tion of the outstanding Bonds of the Five per Cent. Loan of 1854, and the Four and a-Quarter per Cent. Loan of 1871.

Holders of the former received new 3 per cent. Bonds and a bonus of £6 in cash, with £1. 6s. 4d. interest accrued, and the Holders of the latter received new 3 per cent. Bonds and bonus of £6 in cash, with £1. 2s. 4d. interest accrued. Bonds of 1854 and 1871 not exchanged were paid off at par.

1894. Four per Cent. Railway Loan for 40,000,000 fr., issued on the Continent at 85 per cent. Redeemable in 64 years by drawings at par. Secured on a sum of 1,500 fr. per kilometre, payable annually to the Government by the Company which works the Oriental Railways.

1896.--Five per Cent. Loan of £2,975,200. £2,110,000 of this issued in Paris by the Imperial Ottoman Bank at 96 per cent. The Loan is redeemable by half-yearly drawings at par, in 49 years, with a Sinking Fund of about per cent. The service is secured on the Sheep Tax in certain Provinces to the amount of £109,091, and upon agricultural tithes estimated to yield £72,727 per annum, the amount required for Interest and Sinking Fund being only £163,636. Controlled by the Debt Council.

Negotiated with the Ottoman Bank. Redeemable at par by a 1 per cent. accumulative Sinking Fund. The annuity of £68,400 was secured on the surtax of per cent. levied by the Debt Council, on behalf of the Government, on all the tithes which it administers, and, further, upon certain special tithes estimated to yield £62,363 per annum. The Bonds of this Loan were not issued to the public. Controlled by the Debt Council. (Converted in 1903. See below.)

1901.--Five per Cent. Loan, £1,140,000.

1902. Four per Cent. Customs Loan, £7,818,200. Redeemable in fi'ty-six years or less by drawings or purchases. Issued by the Ottoman Bank at 86 per cent. for the conversion and redemption of the Customs Loan of 1886, and secured upon the same annuity of £354,545. Holders of Bonds of the 1886 Loan were offered the option of repayment at par or conversion at the rate of £T. 100 nominal of the new Bonds for £T. 86 nominal of the old.

1903. Four per Cent. Loan for fr. 60,000,000. Issued at 90 per cent. on the Continent by the Banque de Paris et des Pays Bas, the Deutsche Bank and others, for the conversion of the German Loan of 1888 (30,000,000 marks), Bonds of that Loan being received for conversion at their nominal capital value and exchanged against a corresponding amount of the New Bonds at the price of fr. 448.75 per fr. 500 Bond plus a small cash payment. The New Loan to be secured upon the revenues originally assigned to the Loan of 1888, and to be redeemed in fifty-five years by half-yearly drawings. 1903.--Four per Cent. Unified Converted Debt. Amount, £29,762,520. Redeemable by an accumulative Sinking Fund of 0'45 per cent., applicable by purchases or drawings. Issued under a Decree of 1/14 September, 1903, modifying the Decree of 8/20 December, 1881 (see above), and including the following principal stipulations :

I. The functions and attributes of the Council of Administration to remain unchanged.

2. The outstanding Bonds of Series B, C, and D to be converted at the respective rates of 70, 42, and 37 per cent.

3. The assignment of the revenues ceded to the Bondholders in 1881 to be confirmed, and a fixed annuity of LT. 2,157,375 (to be reduced to £1,726,875 on the extinction of the Priority Bonds should the same not have been previously converted) for the service of the Priority Bonds, the Unified Loan, and the Lottery Bonds to be a first charge on the product of these revenues. Any surplus above this amount to be divided between the Turkish Government and the Ottoman Public Debt in the respective proportions of 75 and 25 per cent., and the Debt's share to be devoted to Extraordinary amortisation.

4. A Reserve Fund to be created, consisting of (a) the amount standing on 1/14 September, 1903, to the credit of the "Reserve Fund for increasing the Rate of Interest" formed under the provisions of the Decree of 8/20 December, 1881 ; (b) a sum of £T. 300,000 in cash from the product of the new Bonds; (c) £T. 150,000 to be provided by the Turkish Government at the rate of £T. 15,000 per annum. This Fund to be increased by its interest until a total of £T. 2,000,000 is reached, but to be reduced to £T. 1,000,000

on the reduction of the outstanding Unified Debt to LT. 16,000,000. Any possible deficiency in the revenues below £2,157,375 to be made good from the Reserve Fund, and such deductions to be repaid from the Debt's share of surpluses during the year or years following. If, however, a deduction should be necessitated by the non-payment of the Eastern Roumelian Annuity or of the Bills on the Customs, the arrears of these revenues, when collected, to be applied preferentially to the repayment of the said deduction.

5. The original scheme of drawings for the Lottery Bonds to be maintained. The rates of repayment, however, to be fixed in the future at 60 per cent. for Bonds drawn without prizes and 100 per cent. for Bonds drawn with prizes. The holders to renounce their claim to interest and to surrender their coupon sheets.

1903-Four per Cent. Loan. Amount, £2,424,440. Redeemable by a Sinking Fund of per cent. by purchases or drawings. Issued for the conversion of the Five per Cent. Loan of 1901, known as the "Four per Cent. Loan of 1901." The annuity of £109,090 is secured upon the surtax of per cent. levied on all the tithes which the Debt Council administers, and also upon certain special tithes estimated to produce £75,181. Controlled by the Debt Council.

REPORT.

At the time of the publication of the Council's last Report, negotiations were being carried on with the Turkish Government concerning the four modifications in the Unification Scheme demanded by the English Committee. These modifications were as follows:

1. An undertaking from the Turkish Government that they will make good the sum required for the service of the Debt in the event of the assigned Revenues proving insufficient and the Reserve Fund being exhausted.

2. The rate of exchange for Series C to be not less than 42.

3. Article 8 of the Draft Decree to be amended so as to secure that the repayment of any sums taken from the Reserve Fund shall

constitute a first charge on the whole of the surplus nett receipts in the following year or years, before any division of such surplus between the Government and the Debt takes place.

4. The period of 8 years fixed by Article 2 of the Draft Decree for the prescription of Bonds of the Series not presented for exchange to be extended to 15 years, as in the case of the Drawn Bonds.

After some delay a compromise was arrived at between Mr. Babington Smith and the Council of Ministers, by which, practically, complete satisfaction was given as to the Committee's third and fourth requirements. As regards the first and second points, it was agreed that the Turkish Government, in return for the withdrawal of the demand for a guarantee on its part, should bring a revised Stamp Law into force simultaneously with the Unification, and that the rate of exchange for Series C should be fixed at 414.

The acceptance of this compromise was strongly recommended by Mr. Babington Smith, and the Committee, after careful consideration, intimated to him that they would be prepared to recommend them to the Bondholders on condition that the rate for Series C was raised to 42. Fresh negotiations followed, it being generally understood that the only point at issue was the rate of exchange for Series C. As the Turkish financial half-year ends on the 14th September, it was essential, for administrative reasons, that the matter should be decided before that date, and a General Meeting of the English Bondholders was accordingly convened for the 9th of that month. To their great surprise, however, the Committee heard, after the Meeting had been called, that the Sultan had declined to ratify the terms proposed with regard to the repayments to the Reserve Fund. The whole question was consequently re-opened, and it was only on the 7th September that a final understanding was arrived at with

the Council of Ministers. Although the Sultan's Iradé approving the amended scheme had not been issued, it was thought inadvisable to postpone the Bondholders' Meeting. It therefore took place on the 9th September as arranged, and the following conditional resolution, embodying the terms finally agreed upon between the Council of Ministers and Mr. Babington Smith, was unanimously passed:

That this General Meeting of Holders of Turkish B, C and D Bonds accepts the scheme for the Unification of the Debt as contained in the Draft Decree of 2nd June, 1903, subject to the following modifications and conditions :

(1.) The rate of exchange for Series C to be 42.

(2.) The date of prescription for Bonds not presented for conversion to be extended from 8 to 15 years.

(3.) In case during any financial year a deduction shall have been made from the Reserve Fund in consequence of a deficiency in the receipts due to a delay in the payment of the Eastern Roumelian Annuity and the Bills on the Customs, the arrears of these Revenues shall be preferentially applied to the repayment of the said deduction and shall not be regarded as surplus receipts.

The Government to augment the Reserve Fund by the sum of £T.150,000, payable in ten annual instalments.

(4.) The capital of the Unified Converted Debt to be £T.32,738,772, and the Sinking Fund to be not less than 0'45 per cent.

(5.) The Turkish Government to forthwith introduce a revised Stamp Law.

A resolution to the following effect was also unanimously carried:

That the cordial thanks of this Meeting be tendered to the Council of Foreign Bondholders and the Committee of Turkish Bondholders, and also to Mr. Babington Smith and to Mr. Cooper, the Secretary of the Council, for their energetic action in support of the interests of the British Holders of Turkish Bonds.

CC