HC Deb 01 August 1906 vol 162 cc1127-36 "That a sum, not exceeding £40,396, be granted to His Majesty, to complete the sum necessary to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1907, for the Salaries and Expenses of the Department of His Majesty's Secretary of State for Foreign Affairs."
MR. GOOCH (Bath)

referred to the question of Macedonia, and said he thought all agreed that this was the most troublesome and perhaps the most difficult question confronting this country at the present time. He hoped very much that the Government and the Secretary of State for Foreign Affairs would not give the consent of England, which was the country principally interested, to the Customs increase unless they got in return conditions very much more far-reaching and satisfactory than anything they had up to the present obtained. To allow the Sultan to claim an extra half million a year without some such conditions as those laid down by Lord Lansdowne last year would only enable him to maintain his already swollen Army and perpetuate a state of things of which we all complained. He wished also to know from the Foreign Secretary whether he had received any reply from the Sultan with reference to the demands put forward by all the Powers in connection with the increased powers of the gendarmerie. Those demands were so reasonable and so moderate that it was exceedingly weak and undignified on the part of the great Powers to allow month after month to pass—the demands were made in April—without receiving a reply. He hoped, therefore, the Foreign Secretary would ask once again and in a more determined manner than hitherto. He should like to know also whether the report of the English representative on the Financial Commission had been received or was likely to arrive in the immediate future. From the accounts of several correspondents it appeared that the condition of affairs in regard to the Financial Board was exceedingly unsatisfactory. The scheme had the making of an excellent scheme as put forward last autumn, but it was very much whittled down before being accepted by the Sultan, and since then he was afraid the amount of work which the Commission had been able to do had been very small. Would the Secretary of State for Foreign Affairs ascertain whether it was making any real progress? If it were not, would he take whatever steps were necessary to give that Commission more power and to bring it more into conformity with the plan originally designed when Lord Lansdowne made the suggestion last year? There were two main reasons for imploring the Foreign Secretary to take a more active line in connection with this question. The first was the internal condition of Macedonia. He understood that there were something like 200 murders a month. Neither the gendarmerie, nor the Commission, nor the civil assessors have been able to render life and property safe. The second reason was the international situation. Lord Lansdowne said in the House of Lords a few weeks ago that Macedonia was a constant menace to the peace of Europe, and since then additional proof of that statement had been received. War had almost been brought about between Greece and Roumania. So long as the Bulgarians in Macedonia were at the mercy of raiding Greek bands or Turkish irregulars so long would there exist a feeling of tension between Turkey and Bulgaria which might involve other countries in Europe. He hoped he would get a satisfactory reply from his right hon. friend in regard to these matters.

MR. LYNCH (Yorkshire, W.R., Ripon)

said that it had been decided to take this Vote because of the recognised importance of foreign affairs. But if foreign affairs had the importance with which he knew his right hon. friend invested them, and with which many hon. Members would be inclined to agree in investing them, then surely they ought not to be brought up for debate in forty minutes between lunacy and 10 o'clock, with the object of allowing Members like himself to air their views. The question he wished to raise to-night was that of the 3 per cent. increase in the Customs duty on British goods entering Turkey, an increase which was not leviable without our consent. In itself that might not appear to be very important, but, as he hoped to show this evening, it brought with it most important commercial and also political results. They on the Ministerial side were a Party committed to the principles of Free Trade, and, that being the case, he submitted that they should do their very best to develop those great neutral markets in which hitherto, if there were any Customs duties, they were only for revenue purposes. The great markets of China, Manchuria, Persia, and Turkey were the markets which a Free Trade country like ours should above all things endeavour to cultivate and to develop. This question of the 3 per cent. increase vitally affected one of these great neutral markets. The question had been already debated in another place, the discussion having been remarkable for a speech by Lord Lansdowne in which two things became clear; first, that the policy of the late Government in the matter was the policy of the British Ambassador in Constantinople, and secondly, that the late Secretary of State strongly counselled his successor, the right hon. Gentleman, to stiffen his conditions considerably before reopening negotiations with the Porte. His right hon. friend was well aware of his views and those of his friends, as well as of the Balkan Committee and the great chambers of commerce of this country. His right hon. friend had received strong protests from these bodies against the proposed increase. In view of all these remonstrances he would personally have been content to leave the matter to the judgment of his right hon. friend. But his right hon. friend was, after all, not merely an autocrat. He was the only representative organ of a powerful bureaucracy, whose transactions were screened from the representatives of the people by an impenetrable veil of secrecy. He could wish that the conduct of foreign affairs could be scrutinised by a Committee of this House, framed somewhat on the model of similar committees in other Parliaments. It would inspire greater confidence and bring to the consideration of foreign questions new points of view. Above all, it would impress into the service of the country the ripe experience of many hon. Gentlemen who had particular knowledge of these questions. But without labouring that point it was sufficient for him to dwell upon the fact that, outside official circles, the opinions of those who had studied the question were on one ground or another unanimously, or almost unanimously, against the proposed increase of the Customs. Now where did they stand? In May last proposals were presented by the Powers to the Porte making certain conditions to their consent to the increase. These were rejected by the Porte. The Government had informed the House that they were now engaged in reconsidering the whole question. Two courses were open to them: either to refuse to negotiate further or to make more stringent conditions to their consent. The latter course he understood was suggested by Lord Lansdowne in another place. What were the facts? By the scheme 60 per cent. of imports duties were to be evied upon British trade. By whom would it be paid? Who were the Powers who asked us to make this concession? What was the consideration offered? It was not for him to argue whether the duties were paid by British manufacturers or whether, as he believed, by the Turkish consumer, for the effect must inevitably be injuriously to affect British trade, because the Turkish consumer, who was an extremely poor man and becoming daily poorer, would be unable to purchase the same amount of commodities owing to the increase of price. For what purpose were these revenues to be applied? The Powers which were urging us to give our consent to the increased duties were the protected Powers of Europe—the very Powers which were taxing the imports from Turkey into their countries at very high rates. But it made very little difference to the other Powers of Europe whether Turkey put on a tax of 11 per cent., or 8 per cent., because being protected nations they clapped on far higher taxes on the imports that Turkey sent to them, whereas we took all the imports Turkey sent us entirely free from duty. Therefore we occupied a privileged position and we had a right to say to the Powers that in virtue of the fact that we supplied 60 per cent. of this trade we, above all other Powers, ought to be considered in this matter. We were entitled to say to Turkey that she had a right to consider us most, as we let in all her goods free of duty. Inasmuch as we gave all this to Turkey, what was the consideration we got in return? He understood we were going to get an improvement of the Customs Houses, a new Mining Law, and possibly collection by the Public Debt. As regarded the last-mentioned, it was already provided for by the Decree of Muharram of 1903. As regarded the new Mining Law, lie had been in communication with some mining authorities, and he had received a letter, unsolicited, from a leading mining authority in which the writer said that a point which struck him forcibly about these transactions with the Turkish Government was the ignorance of this country as to the supposed benefits which we were to receive by the improvement of the Mining Law. He hoped his right hon. friend would not think that collection by the Public Debt was entirely in the interests of this country. It was an admirable administration, but at the, same time collection of Customs by European administration was always an assistance. The bringing in of European Customs administration into Persia was the only means by which Russia gained her great commercial supremacy there. Then for what purpose were these revenues to be applied? They were to be devoted to supply the Macedonian deficit. But what on earth had our traders to do with the Budget of Macedonia? Surely if it was the desire of the Powers to come to the assistance of Turkey in Macedonia, why did they not issue a joint loan to Turkey in connection with Macedonia, and leave the Customs free? Was there not need for such a loan? The deficit in the Customs for the year ending March 13th, 1906, was £687,855, caused entirely by the enormous military expenditure in Macedonia, which during the year was £l,303,liil, as against the civil expenditure of £678,223. The revenues from increased duties were £750,000, and, deducting 25 per cent. for the reduction of debt, there was £560,000 left. If the proposal had been adopted to have the Customs collected by the Public Debt authorities, there was no doubt that the revenues would have more than balanced the deficit in the Macedonian Budget. The deficit was now supplied by drafts on the Department of Indirect Taxation according to the concession of December, 1905. At present, therefore, the deficit in Macedonia was supplied by Turkey out of Customs duties, and what we were asked to do was to supplement those revenues of indirect taxation to the extent of £600,000 a year. The result would inevitably be that this sum, which was at present drawn from Imperial taxation, would be applied to other purposes which Turkey had in view. Everything pointed to the fact that these sums would be used by Turkey to provide a guarantee for the Baghdad railway. He was not in the-least opposed to that railway, but they must insist that this country obtained proper terms in that settlement. If our Government consented to an increase before we had obtained proper terms from Germany, we would be throwing away one of the strongest weapons in our power. He therefore entered his protest. We supplied at present three-fifths of the trade with Turkey, and he was sure if we were only left alone we might increase it to a greater proportion. If the Foreign Office came in with an arrangement of this nature, all he could say was that the same result would follow: in Turkey as had followed elsewhere.

THE SECRETARY OF STATE FOR FOREIGN AFFAIRS (Sir EDWARD GREY,) Northumberland, Berwick

My hon. friends have raised a very important question. The increase in the Customs dues and the reform of Macedonia have been, by the policy of the late Government and continued by the present Government, undoubtedly linked together. My hon. friend truly said that this question of the increase of Customs duties in Turkey was not initiated by the present Government. We took it up where we found it. Lord Lansdowne had been approached with regard to it; he did not meet it with a negative. He had, on the contrary, indicated the conditions on which his Government would be prepared to agree to a 3 per cent, increase of the Customs dues in Turkey as far as this country was concerned. When a Foreign Minister, on behalf of his Government, indicates to another Government that he is prepared to agree to a certain increase in their Customs dues on certain conditions, it is not open to us without a considerable breach of continuity of policy—however we may regard it from a Party point of view here—and without its being regarded abroad in a commercial transaction of this kind as a breach of faith, to abandon at once the condition laid down by your predecessors and to say that you should start afresh. I thought it necessary to take up this question where Lord Lansdowne left it, and I found that certain expectations had been created, not only in the mind of Turkey but in the minds of the other Powers with whom Lord Lansdowne had been working closely with regard to Macedonian reforms, that the consent of this country should not be withheld from the increase of the 3 per cent, duties on Customs after the financial provisions had been granted by the Sultan and accepted by the Powers in Macedonia. I do not think that the expectation in the simple form in which I have stated it was warranted by what Lord Lansdowne said. He did not commit this country in quite such a simple form as that, and I went closely into the conditions which it seemed to me Lord Lansdowne had laid down. Broadly speaking. I interpreted them as being that Lord Lansdowne, would have been prepared to agree to the 3 per cent, increase of duties provided he could have been satisfied that the money raised by the increase would have been applied to the reform scheme in Macedonia in such a way as to be a benefit to Macedonia and to develop that scheme. I developed that condition a little further. It was not merely necessary to satisfy us that, the money would be applied to reform in Macedonia. We must also be satisfied that the whole of the 3 per cent. Customs was properly collected and applied. Unless you are sure that the whole was properly collected, it is impossible to be sure that it would be properly applied to the reforms in Macedonia. We developed that condition, and the proposal which we indicated would be acceptable to us was that the Commission of the Debt, a well-known body, trustworthy in finance, should have the supervision of the collection of these Customs dues, and that the dues so collected should be paid in in such a manner that they should be applied to the scheme o£ reforms in Macedonia. We were fortunate enough to secure what was very important—the co-operation of the other Powers—in pressing that condition upon, the Sultan. After all, on this matter of the increase of the Customs, I have felt it important to maintain another condition which Lord Lansdowne bequeathed to us as part of his policy—namely, to preserve the concert of the Powers. We have stipulated in regard to the increase of the Customs, that we should carry with us the other Powers, because I consider that most important both from the point of view of Macedonia and of securing adequate conditions for the increase. Why is the concert of the Powers so important? It is everything to the progress of reform in Macedonia. This country is not prepared to undertake responsibility alone, beyond its power to fulfil it, for preserving order in Macedonia. All we can do in regard to Macedonia we must do by diplomatic influence at Constantinople. Dissension among the Powers would undoubtedly bring into the whole question not order in which is so much wanted, but confusion. And the influence of diplomacy at Constantinople must be infinitely weakened by the withdrawal even of one of the Powers from the concert which Lord Lansdowne succeeded in maintaining. I do not agree with my hon. friend who spoke first with regard to the work that the Financial Commission has done. Some progress has been made in Macedonia— improvements have been made with regard to the levy of the tithe and the collection of the taxes, both of which were felt to be oppressive in many parts of the Turkish Empire. The situation has been very much improved in Macedonia, and it would compare favourably to-day with some other parts of the Turkish Empire. The thing which has stopped progress in Macedonia has not been that the Financial Commission has been a failure, it has been the constant activity of the bands of rival nationalities that has continued throughout this year. When my hon. friend quotes, and rightly, with regret and sadness the number of murders which have taken place in Macedonia, those are due to the activity of the irresponsible bands of rival nationalities. The mere presence of the European officers of the gendarmerie in Macedonia has done a great deal to ameliorate the conduct of the Turkish troops, and the worst difficulty in Macedonia to-day is not oppression with regard to the collection of the tithes or taxes, not the conduct of the Turkish troops, but the constant activity of bands, sometimes of one rationality, sometimes of another. That makes it very difficult to insist upon the reduction of the military force which the Turks maintain in Macedonia. I do not see how you can insist upon a reduction of the force there unless you are prepared to guaranteee the frontiers from attack. But I see great force in the point that if the Turkish Government is allowed indefinitely to increase the amount of military expenditure charged to the Macedonian Budget it may result in the scheme of reforms, which must depend on civil expenditure, being starved; and the increase in the Customs may result in an increase not of the civil but of the military expenditure. Therefore I think it is important that though it may be impossible to reduce the amount of military expenditure on the Macedonian Budget, yet, if we agree to the increase of the Customs with the object of effecting civil reforms, we should have some undertaking that the military budget will not be increased.

MR. LYNCH

Is not a reduction of the 80,000 men now in Macedonia possible?

SIR EDWARD GREY

As I found the question, a considerable reduction of military expenditure had taken place; but the Powers had agreed to the present military expenditure being charged on the Budget. I am sure that, with the proper administration of the Macedonian finance which will be secured in due time under the Financial Commission, an increase in the Customs duties would in a few years provide a sum of money for civil reforms, providing that the military expenditure was not increased. After all that has passed you cannot get the Powers to consent to a reduction of the existing expenditure; but if you secure that it shall not be increased, you will get the product of the increase of the Customs for ameliorating the state of affairs in Macedonia. I think that the increase in the Customs should not be permitted until we have satisfactory guarantees that the money will not be wasted, but will be properly applied. If we do not succeed in securing those conditions and if the 3 per cent, increase is not granted, then I am afraid the outlook in Macedonia is a very bad one, and, in spite of what my hon. friend has said with regard to the use we are prepared to make of the money, I am convinced from all the information I have that the present condition of Turkish finance is such that unless some relief of this kind is given to the Porte on satisfactory conditions there is a danger that the whole scheme of financial reform as it exists to-day will fall to the ground. That is why I regard this question as so serious, and, though we are not prepared to give way, except on satisfactory and adequate conditions, I cannot for a moment hold out any prospect that we are prepared to meet this demand with an unconditional refusal.

Resolution agreed to.

And, it being Ten of the clock, Mr. SPEAKER proceeded to put forthwith the Questions, That this House doth agree with the Committee in the outstanding Resolutions reported in respect of Class II. of the Civil Services Estimates, and the Navy Estimates.

Question, "That this House doth agree with the Committee in the outstanding Resolutions reported in respect of Class II. of the Civil Services Estimates,"

Put, and agreed to.