HC Deb 31 March 1862 vol 166 cc289-99
MR. HUBBARD

said, he rose to call the attention of the House to the participation of Her Majesty's Government in the proposals for an Ottoman Loan. The subject was first brought to his notice by the receipt of a circular from a highly respectable firm of stockbrokers. The letter was as follows:— We beg to call your attention to the prospectus of the New Turkish Loan, which will appear in to-morrow's newspapers. You will observe, as a special feature, that it is under the direct cognizance and favour of the British Government. The low price of the new issue, when compared with the present market value of the previous loans, the great advantages offered by the sinking fund for the redemption of the loan at par, and the securities which have been taken for the fulfilment of all its conditions, leave no doubt of the complete success of the operation. Being duly authorized to make up a list of subscribers, we shall be glad to know, as early as convenient, if we may have the pleasure of including your name in it. The amount of deposit to be lodged with each application is 5 per cent. The prospectus of the loan certainly war- ranted the terms employed in that letter. It commenced by stating that a special commissioner had been appointed by Her Majesty's Government, at the request of the Sultan, to assist in the due application of the proceeds of the loan to the consolidation of the floating debt and extinction of the depreciated paper money. It was intimated that a copy of a letter written by Earl Russell was annexed, and to that letter especially he desired to call attention. The letter was as follows:— Foreign Office, March 15. Sir,—When I had the pleasure of receiving you and Mr. G. G. Glyn at the Foreign Office a week ago, I informed you, that if the Sultan's commissioners or agents in this country should be successful in obtaining a loan, Her Majesty's Government, anxious for the well-being and prosperity of Turkey, would be ready to send one or two gentlemen in whom they had confidence to assist the Sultan's Ministers in the due application of the proceeds of the loan to the extinction of the paper money and the funding of the floating debt. I stated that Her Majesty's Government would take an interest in this operation from their feelings of friendship towards Turkey. I said the contractors of the loan might see in such a mission a further security against the misapplication of the present loan, and the loss of credit which would ensue. I am happy to inform you that Lord Hobart has consented to proceed to Constantinople for six months for the purpose I have indicated. I am, Sir, Your most obedient humble servant, RUSSELL. H. A. Bruce, Esq., M.P. It was to that letter that he wished to call the attention of the House. He took no objection to any assistance which Her Majesty's Government might give to the Ottoman Government or any other foreign power in the way of advice in regard to financial matters, either directly themselves, or through any individual; but what he submitted to the House was, that the letter of Earl Russell went infinitely beyond that limit. That letter took a ground which was unusual in subjects of this kind. There was moreover an apparent discrepancy between the prospectus and the letter of Earl Russell, because the former stated that the appointment was at the request of the Sultan, and he did not find that Earl Russell acknowledged having received such a request. The first question, therefore, which he wished to ask was, whether that was a voluntary act on the part of Her Majesty's Government, or was it done at the direct request of the Sultan? The fact of Her Majesty's Government having sent a commissioner would seem to imply, that he proceeded in their employ; and, if so, he should also like to know whether this country would have to pay the cost of the mission to Constantinople. It was not, however, so much on the fact of that mission being sent oat as upon the subject-matter with which it was connected that he wished to lay stress. It was said the object of the mission was to see that the proceeds of the loan were applied to the extinction of the paper money and the funding of the floating debt, and those operations would, as Earl Russell naturally remarked in his letter, give the contractors of the loan much confidence in the undertaking. To that extent Earl Russell was perfectly justified, and the brokers who had the negotiation of the loan were also, he thought, justified in anticipating the success of a scheme which had been launched under such high auspices as that of the noble Lord the Secretary for Foreign Affairs. The result, at all events, was in conformity with such anticipations, for it was stated, that whereas £5,000,000 was the real amount required, £25,000,000 had been offered by the British public. Now, that fact furnished a clear proof of the action of Government interference in the matter, but he entertained very serious misgivings as to the policy of that interference; because, if the loan had been a success mainly on account of the part which the Government took with respect to it, he should like to know what would be the consequences of any ulterior disappointment in its case. He would assume that the chief object, for which Lord Hobart was to go Out to Constantinople was to insure the complete success of the loan, so far as he was concerned, and that he returned to this country having fulfilled his mission so for as having the money, which might be supposed to be under his control, applied to the extinction of the paper money. That being so, what were to be the subsequent proceedings of the Government of the Sultan, whose want of knowledge and intelligence in such transactions no doubt the mission was meant, to supply? Admitting that the present Ministers of the Porte were men of integrity, and that the Sultan himself was well affected, yet they might vanish from the stage before the loan reached its conclusion, and in the event of any obstacle to the future completion of the contract between British capitalists and Turkey, would not the subscribers to it say to Her Majesty's Government, "We contributed to this loan owing to the encouragement which you gave ns; we ask you now to interfere to obtain for us the fulfilment of our expectations"? Thus, under the circumstances, a prospective and possibly undeniable claim on the Government was established.

But there was another practical difficulty connected with the subject to which he wished to draw attention. The proceeds of the loan were to be applied, it seemed, to the extinction of the paper money. Now, the debt of Turkey, according to a statement made in an official paper, of which a translation appeared in the newspapers in England, was as follows:—External debt, £15,000,000; floating, £9,000,000, and somewhat more; the amount of the paper money being £9,000,000. What amount, he would ask, was applied to the extinction of the debt? The amount subscribed for was £8,000,000 at 68; but from that 2 per cent must be deducted as commission to the negotiators, and 6 per cent as the year's interest; so that only 60 per cent at the utmost would be applicable to any financial purpose in Turkey. Was the money to be devoted in the first instance to the extinction of paper money, or to the satisfaction of those pressing claims which had been hanging over the Turkish Government for some time past? Hon. Members were, of course, aware that the Bank of France had a large claim against it on account of the dishonoured drafts of Mirès, and he believed the Ottoman Bank in London had also some claim. That being the ease, be should like to know whether those two corporations, were to be satisfied out of the amount subscribed before the residue was applicable to the extinction of the paper money? But let him suppose that the whole sum stood over for the purpose, it would be found that £8,000,000 subscribed at 60 per cent made only £4,800,000, while the. paper money which it was meant to extinguish amounted to £9,000,000; so that after the most careful scrutiny of the matter, he was unable to satisfy himself as to how the object in view was, under these circumstances, to be accomplished. Now, the noble. Lord at the head of the Government would, he was sure, put the best complexion on the matter, and be able to solve, if possible, the practical difficulties, and might say something in extenuation of the course which had been pursued; but he (Mr. Hubbard) would venture to say that no amount of exte- nuation would justify the Government in: having interfered in the proceedings with regard to that loan. Whether they looked at it as forming a precedent for future Operations, or whether they looked at it in its individual character, it was equally objectionable. If foreign powers were to apply to the Government of this country, and ask Secretaries of State to give them letters to be inserted in circulars for loans, it was a course which he conceived was highly objectionable, as a positive interference with the appropriation of the national capital; but the system was still more objectionable and dangerous in its prospective operation, for it was likely to lead to embarrassments with foreign powers, such as had occurred with reference to Mexico, to which place this country had had to send a fleet to enforce the payment of the claims of British subjects, although the Government had been in no degree concerned in the transactions from which those claims originated. As a matter of precedent, then, it would be seen that the course which had been followed must, probably, lead to interference with the foreign relations of the country. On the other hand, if it were to be regarded as an individual case, if they were to be told that Her Majesty's Government considered it an isolated and solitary instance, in which it acted from feelings of friendship to the Turkish Government, he should like to know what were the claims of Turkey to that special friendship and interference. When, at the close of the last war, Government took the responsibility of guaranteeing a loan for her, it was raised at 4 per cent interest. The present loan yielded a return of 11½ per cent, so that, 4 per cent being interest, 7½ per cent represented the risk which the capitalist ran; and he must say that the noble Lord the Secretary for Foreign Affairs had displayed infinitely more nerve in recommending such a transaction to the British public than he would have done even if he had taken the command at a moment's notice of the Channel fleet. In conclusion, he had simply to say that he had brought the subject forward from no wish to embarrass the Government, but because of the danger which he thought was likely to flow from the adoption of the policy to which he had adverted. He begged leave to move for the correspondence which had taken place on the subject.

MR. SPEAKER

The House having already decided that the words "the Speaker do now leave the Chair" should stand part of the Question, the hon. Member cannot make his Motion.

MR. FREELAND

said, he wished to say a few words on a subject very closely connected with the question before the House. He would not allude to the proposed second mission of Lord Hobart further than to say that it was a mission which he thought that the House would approve of, and which, under the circumstances, her Majesty's Government could hardly refuse when called on to embark in. He should be very much surprised if, in the answer which they would receive, the House were told that that mission would involve all the serious consequences which his hon. Friend opposite appeared to anticipate from it. It would be found, he thought, to have a much narrower and simpler object. The matter to which he wished particularly to refer was the former mission of Lord Hobart and Mr Foster, and be wished, respectfully but earnestly, to press on the consideration of the Government the great importance of applying at the earliest possible day to the Turkish Government, through M. Mueurus, for their consent to lay upon the table of that House a copy of the report of Lord Hobart and Mr. Foster on the finances of Turkey. They had lately had placed before them some rather sanguine statements as regarded the state of Turkish finance; but having given great attention to the whole subject, he must say that he thought those statements were too highly coloured. Coincident with the announcement of the new loan, they had had transmitted to them from Constantinople an able document in the shape of a budget from Fuad Pasha, anticipating a surplus of £844,463. In connection with that budget, he wished to notice one item—namely, the increase on customs duties under the new treaties of commerce of £914,200, a sum larger than the whole of the anticipated surplus. Among the new treaties was the treaty recently concluded between Turkey and this country. By that instrument the export duties were reduced from 12 to 8 per cent, and they were to diminish 1 per cent every year, until they reached 1 per cent, at which point they were to remain stationary. The import duties were raised from 5 to 8 per cent. It was possible that the revenue arising from the diminished export duties might eventually reach its present amount, but time must be allowed for that, while it was rather sanguine to expect that the produce of the import entries would be largely increased at once by means of a treaty which raised those duties from 5 to 8 per cent. At all events, many of the calculations of the Turkish financiers must be somewhat problematical, and he was afraid that if they should turn out to be unfounded our Government might be blamed for having withheld information which the public ought to possess. He trusted, therefore, that they would lose no time in laying the report of Lord Hobart and Mr. Foster on the table of the House.

SIR ROBERT CLIFTON

said, he could not but express his regret that the hon. Member for Buckingham (Mr. Hub-bard) should have brought forward his Motion at the present time. Great reforms had recently been carried out in Turkey, and the waste which formerly prevailed in Turkish finance had almost entirely disappeared. The present Sultan had devoted a large sum out of his privy purse to the payment of arrears due to the Turkish army, and it was to be remembered, that if the foreign debt of Turkey had been greatly increased of late years, that increase was mainly due to the recent war with Russia. It was much more difficult for the Sultan to introduce reforms among his people than it was in this country. Every year panics were made by large houses to force the market for bourse transactions. He trusted that both France and England would always be ready to maintain the independence and integrity of Turkey, which, as long as she retained possession of the Dardanelles, might be regarded as the key of Europe.

VISCOUNT PALMERSTON

Sir, I can hardly accept for my noble Friend at the head of the Foreign Office the compliment paid to him by the hon. Member for Buckingham, that he has shown great intrepidity by the part he has taken in the present transaction. My noble Friend acted, I think, simply upon the commonest dictates of prudence and statesmanship in a matter which deeply concerned the interests of a friendly Power, and a Power, moreover, the maintenance of which is a point of very great and deep importance to England. The way in which the transaction took place may be briefly stated. The Turkish Government represented that it was essential an attempt should be made to arrange their finances. It is well known that, at their request, we sent two very able men—Lord Hobart and Mr. Foster—to make a minute investigation into everything connected with the finances of the Ottoman Empire. Those gentlemen made a report of the greatest possible value. They were furnished with every information which they could wish or desire to obtain. They had access to all the public departments and all the documents necessary for giving them full information as to the state of the Turkish finances. One portion of the arrangement suggested was, that the paper money, which was in excess, should be called in, part being exchanged for money, and part exchanged for engagements of another kind, terminable in point of time and bearing interest. The Turkish Government made several attempts to procure a loan, which they represented to be absolutely necessary for that purpose. They applied to capitalists of other countries, but they failed to obtain the amount they required, except upon terms which were thought too burdensome and too onerous for the interests of Turkey. They then applied to this country, and they were informed they might obtain here upon very different conditions the sum they wanted. But they represented that it would give them great facilities for obtaining upon tolerable terms the amount which they required if Her Majesty's Government would consent, not to assume any responsibility or enter into any engagement as to the payment of the interest, but simply to commission some competent person to go to Constantinople, and in conjunction with the Turkish Government, to see that the money raised by the proposed loan should be applied to the purpose for which it was ostensibly asked—namely, the exchange of the paper money and the liquidation of some part of the floating debt. If Her Majesty's Government had refused to comply with a request so simple, so easily granted, and involving so little responsibility, I must say they would have been justly chargeable by the Turkish Government with indifference, if not something more, towards the prosperity of Turkey. I will simply state that the British Government take upon themselves no responsibility whatever with regard to the payment of the interest of the loan, and all that the functions of Lord Hobart (who has kindly undertaken the duty on the part of Her Majesty's Government) will extend to is simply to see that the money raised is applied solely to the purpose for which it is raised. Now, that purpose is one to which we cannot be indifferent. The money it is hoped will lay the foundation for putting the finances of the Turkish Empire in a sound and healthy state. It is well known that for a long time past, from various circumstances, the finances of Turkey have been in the greatest possible confusion and disorder; troops have been for months without pay, public servants have received no salaries, engagements of nil sorts have been contracted which there were no means of satisfying; and the evil grew to such a degree that the Turkish Government, became most anxious to have matters placed on a better footing; and Tier Majesty's Government felt that until that was done there was no solid and safe foundation for the permanent interests and the security of the Turkish Empire. We have been told that the gentleman was sick. Well, he was, and we were asked to supply a remedy and put him on a bettor regimen I trust we have done so. I have hopes that in a time not very distant we may find that he has become more robust than many of his neighbours who have hitherto boasted of the strength of their constitution and the vigour of their health. Fortunately, Turkey has a Sovereign who possesses, in an eminent degree, qualities calculated to enable him to regenerate that Empire. He is a man of great vigor of mind. of determined patriotism, of the most frugal and even parsimonious personal habits, in defatigable in industry; from the habits of life formerly imposed upon him, not, per haps, so well versed in the details of government as others, but most anxious the learn, most desirous always of arriving at the truth, and firm in setting his face against corruption, jobbing, favouritism, and all those abuses which of late years tended so much to the decay of the Turkish Empire. Well, Sir, this Sovereign is anxious for the assistance of the British Government, and we have afforded that assistance, in the first place by that commission to which I have alluded, and in the next place by this temporary aid of the commissioner to give security that the money raised will be applied to the whole-some purpose for which it was raised.

Now, Sir, the hon. Gentleman who made this Motion seems to think that we have no interest in the maintenance of the Turkish Empire, and that, even if we have, there is no hope that that Empire will be preserved. Why, Sir, as to the interest that we have in the maintenance of the Turkish Empire, as an element tending to preserve the balance of power in Europe, I think any person who looks to the history of modern times, and casts his eye over the map of Turkey, must see that we have a distinct interest, at all events, that other Powers shall not occupy that country. Well, in order that that should not happen, it is necessary that the Government which occupies that vast country should be strong and able to maintain its independence. Well, Sir, financial reform must be the basis of all national strength. Until the finances of Turkey are placed in a healthy condition no other assistance that could be afforded her would be of any real or permanent value. But is it true that Turkey is in that hopeless state that nothing will save her from that doom which has been denounced against her so often? We have hoard that threatened men live long, and if that be so certainly no State has a better chance of longevity than Turkey, because she has been so much threatened. Every one must see that the Turkish Empire comprises some of the most fruitful and favoured regions of the globe, with every variety of climate and soil, with mineral riches beyond calculation, and geographical and topographical advantages for commerce greater than almost any other country in the world. The inhabitants are of a mixed race, not at all deficient in intellect; labouring, it is true, under the disadvantage of conflicts of religious opinion between large portions of them; but we may hope that that spirit of enlightenment which has marked of late years the conduct of the Turkish Administration will under the present Sultan be pursued, and that those hatreds and religious differences which have in many cases led to conflicts may henceforward be gradually softened, and may ultimately disappear. It is true, as was stated by my hon. Friend who spoke last, that great reforms have been and are being carried out, and that the whole system of administration is in progress of improvement; but these things require time, and nobody has time to give them who is nut able to pay his debts. Therefore, anything which enables the Sultan to pay his way and to redeem his Empire from that state of financial embarrassment in which, unfortunately, it was placed in former times will enable him to carry into effect those social, political, and religious improvements which I am persuaded he is anxious and determined to accomplish. The hon. Gentleman (Mr. Hubbard) has said that the Turkish Empire has cost us quantities of money and torrents of blood; but if you could establish Turkey on a solid basis and make her a highly prosperous country, as she is intended by nature to be, you would pave for the future all that expenditure which in time past has been incurred. Nothing would more contribute to the permanent peace of Europe than the establishment of a strong, independent, and well-administered Government in Turkey. I hope we have a prospect that that end may be attained. Of course there are great difficulties in the way of correcting evils of long standing, in establishing order where confusion has hitherto to a great extent prevailed; but I am sure that this House and this country will feel that Her Majesty's Government in lending its aid in any way in which it properly can to the accomplishment of that object, especially when that aid is afforded without incurring any pecuniary responsibility, are doing their duty and are entitled in that respect to the approval of the country. As to the report of the Commission to which the hon. Gentleman (Mr. Freeland) called attention, that Report was made, not to the British, but to the Turkish Government, and it applies to a great number of intricate details connected with the Turkish Administration. Until we have the permission of the Turkish Government to present it, we could nut take advantage of the knowledge we have obtained of matters which concern the internal administration of Turkey and which are not of general interest.