HL Deb 02 July 1906 vol 159 cc1338-60

rose to call attention to the proposed increase in the Turkish Customs duties and to move for Papers. The noble Lord said: My Lords, the question of an increase in the Turkish Customs duties is a matter which has been under discussion for some time, and it arises solely from political reasons. The Turkish Customs tariff was fixed by Treaty at 8 per cent., and it is calculated, I believe, by our Foreign Office that the proposed increase will result in a gain to the Turkish Government of £750,000 a year. Of this 25 per cent goes to the bondholders under the decree of 1903, leaving the sum available to the Turkish Government at about £560,000; that is to say, if it is collected under the present methods—methods under which what may be euphemistically called leakages to a considerable extent continually occur. But if, on the other hand, as I have heard it rumoured, the collection is undertaken by the Administration of the Public Debt, which, of course, is under European control, the yield will in all probability be considerably higher.

It has been further calculated by the Foreign Office, I understand, that no less than 60 per cent, of the increased duties will fall upon British trade. As I need hardly point out, the inhabitants of Turkey are extremely poor; the English goods which are sold in Turkey are of a somewhat superior description, as a rule, to those sent by foreign countries, and, therefore it is to be feared that the sale of British goods may considerably diminish. In return for this increased charge we are promised certain somewhat shadowy advantages in connection with mining laws in Turkey, and improvements in the Custom Houses and matters of that kind. I believe I am correct in stating that there are extremely few British subjects who are interested in mining in Turkey, and as for the promised reform in the Custom Houses and so forth, those are promises which have been very frequently made before. I would like to point out that the increase is proposed not for the benefit of international trade, but for political reasons, namely, as a means of meeting the deficit in the Macedonian Budget, a deficit which roughly corresponds to the increased sum which it is thought will be available if the proposed increase takes place.

I have so frequently brought the subject of Macedonia before this House that I really shrink from even uttering that ill-omened name, but I am afraid I must once more allude shortly to that question. Briefly stated, the position is as follows. At the present moment Europe, represented by the great Powers, is endeavouring to carry out a scheme of so-called reforms. These so-called reforms naturally cost money, and the Turkish Government represents that the increased expenditure can only be met by increasing the Customs tariff. At present, as I have already stated, the annual deficit on the Macedonian Budget amounts, roughly, to £600,000 a year. This deficit is clearly and obviously caused by the fact that the Turks are obliged to maintain a very large force in those provinces. If these reforms had really come into operation, if they really existed, and if there had been any practical and tangible improvement in the situation in Macedonia since Europe took the task in hand, then I admit at once that there would be very little to be said against devoting this increased sum to this particular purpose. But so far as I am aware, nobody who really knows the facts of the situation, nobody who is really acquainted with Macedonia and does not get his knowledge at second hand, believes for one single moment that internationally controlled finance is going to settle what is called the Macedonian question.

Everybody must realise by this time, except Count Goluchowski and a few firm optimists of that character, that the real cause of the present distracted condition of the country is not only the misgovernment of the Turks, bad enough as that may be, but the rival ambitions and mutual hatred of the Christian races inhabiting those provinces, and the designs of neighbouring States. These difficulties will never be settled by international finance. The Turks and everybody else acquainted with the situation know very well that financial reform will do little else than postpone the final smash. I am under the impression that the Turkish Government, or perhaps it would be more correct to say the Sultan, does not believe in the very least in the disinterestedness of Europe. He observes that Europe pays no attention, for instance, to what is going on in Russia at the present moment. He observes that no serious effort has ever been made to restrain the neighbouring States from waging a kind of unofficial war on Turkey. Only this afternoon I received intelligence that a large band has just gone out from Greece for Macedonia under the leadership of two half-pay officers in the Greek Army.

I am under the impression that the Sultan and the Turkish Government are firmly convinced in their own minds that no force is likely to be employed against them unless the interests of one of the great Powers is involved; this belief is probably shared by all the Mussulman subjects of the Sultan, and for that reason he will have the support of his Mussulman subjects in opposition to any reforms which may be put forward from outside. I have before expressed the opinion—it may be an exaggerated opinion—that the so-called scheme of reforms is little better than a vast international sham; but I have never flattered myself that my words have produced the slightest impression upon this assembly or elsewhere. But what I do find is corrobation from other sources. For instance, I received a letter only a few days ago, from an exceptionally well-informed gentleman who resides in Macedonia, to this effect— Things are not going on well. There is going to be a suspension of payment tomorrow. General de Giorgis can get nothing done. I do not think we shall have any general rising this year, but as things are going on it is inevitable later on, an I cannot but think that the sooner it comes the better it will be for all parties. At present, people are being killed uselessly at the rate of 250 a month, and a good honest war would be far less demoralising. Such is the state of these provinces, which for some years have enjoyed the benefit of the Mursteg programme. These somewhat pessimistic views are corroborated by correspondents who have written in the Press and the reviews, and I may claim that at all events I am not a solitary pessimist with regard to this particular question.

In face of these opinions, I might say of these facts, I would ask whether it is of much use agreeing under the circumstances to the proposed increase. It seems to mo clear that, however much you may tie up these funds on paper, the money must eventually go to the support of the large military force which is now established in that country and is eating up the revenues. It is all very well to inveigh against the criminality of helping the Turks to maintain large armies for the purpose of over-aweing the population, but this large military force is part and parcel of the whole thing. These men are maintained there because the Turks intend to keep that country as long as they can, and they do not intend to be taken unawares. For my part, I do not see how it will be possible, as has been proposed, that the military expenditure should be separated from the other form of expenditure. It is clearly a part of the general expenditure, and I expect to hear the noble Lord admit that fact. I confess it seems to me that if money is going to be found for what is really a humanitarian and political purpose, it is preferable that the Powers concerned should themselves guarantee a loan; and if they really believe in the efficacy of their own reforms there surely cannot be much risk about it.

But there is another aspect of the question to which I should like to draw attention. It is perfectly plain that if this large additional sum is secured it will free an equivalent amount, and I confess it appears to me that as the proposed increase will largely fall upon ourselves, we have a right to ascertain that such sums as are liberated will not be used in any way prejudicial to British interests. My noble friend who will reply for the Foreign Office will probably tell me that Turkish Imperial expenditure is no concern of ours, a view from which I am prepared to dissent. Ho will probably also state that the increase will only be allowed for a limited period. This may be so, but it appears to me an absolutely illusory safeguard. The Turks, having once tasted the joy of an 11 per cent. instead of an 8 per cent. Customs tariff, will not be likely to relinquish it except under very great pressure, and, in view of the chronic financial embarrassment of that country, I think that once you have agreed to the increase it will be found impossible in practice to revert to the old scale.

By a somewhat singular coincidence, whenever an increase in the Turkish Customs tariff is mooted, the question of the Baghdad Railway again comes up. In 1903, when the question of the Baghdad Railway was before the world, it coincided with the proposed increase in the Turkish Customs tariff, and we observe the same phenomenon now. It is an open secret that it is hoped in some quarters that the proposed increase in the Turkish Customs duties will facilitate the granting of the kilometric guarantee for the Baghdad Railway. I do not wish to say too much upon the subject of that railway, but I may perhaps be permitted to remind the House that it is a purely German undertaking, and that when, in 1903, negotiations were going on for the purpose of enabling us to participate in the making of that railway, the noble Marquess who was then Secretary of State for Foreign Affairs (the Marquess of Lansdowne) announced that it had become clear that the control over this line was to be almost entirely German, and not international in the proper sense of the word, and that we had abandoned any further idea of co-operation. And at the same time the noble Marquess made a still more important statement, warning other Powers from establishing military or naval ports in the Persian Gulf.

The Baghdad line has hitherto made very little progress. Only one section of 200 kilometres has been finished, and this section, as I know by experience, is one which was very easily made. But the line has now reached the foot of the Taurus, and it is quite obvious that very much more money will be required in order to continue it. It is plain that if the Turkish Government have more money at their command there will, at all events, be some chance of obtaining the kilometric guarantee for the line. With regard to this railway enterprise, I admit that this country cannot adopt a purely obstructive attitude. The probability is that the line will be made sooner or later, but it is much more likely to be made sooner if the kilometric guarantee is forthcoming. I am not one of those persons who are always talking about the German danger, but I think any one will admit that the prospect of a railway running from the Bosphorus in one direction to Baghdad, and in another direction to Mecca or Medina, one route entirely controlled by Germany, and the other partially controlled by Germany, is a contingency which we cannot regard altogether with indifference. Therefore, what I wish to point out is that the time has come when we ought to decide upon our policy with regard to this matter, and endeavour to come to terms, not only with Germany, but with the Turkish Government.

It is perfectly plain that as long as the Turkish Customs duties remain at their present rate, we are in a strong position. We have a good card in our hand; we have got something to bargain with; but if we surrender without obtaining a proper equivalent we are, it seems to me, to a great extent weakening our bargaining power. I urge, therefore, that a favourable opportunity has now occurred for making a bargain with the Germans and the Turks with regard to this railway, before we finally assent to the increase in the Customs duties. I have endeavoured to show, very roughly and very imperfectly, I am afraid, that there are at all events some objections to our assent being given, if it has not already been given. I have endeavoured to point out that the proposal to apply such funds to the meeting of the Macedonian deficit is open to objection, on the principle that the increase will release sums which may possibly be employed for purposes not beneficial to British interests; that the benefits to be obtained in return for our assent do not appear to be of much importance; and, lastly, that as the additional duties will affect our trade considerably more than that of any other country, commensurate concessions ought to be obtained on our part. My noble friend opposite may have a complete answer to such objections as I have made, and perhaps he will show that the Government have fully considered the points I have enumerated. All I desire to say, in conclusion, is that I draw attention to this matter not with any desire of embarrassing the Government or of making Party capital out of it, if Party capital is to be made, but with a view to eliciting a full and comprehensive statement from the noble Lord.


My Lords, it sometimes happens that a Minister in charge of a Department, when he sees a Notice upon the Paper in regard to what may be called current negotiations, is obliged, however unwillingly, to make an appeal to whoever has placed that Notice on the Paper to abstain from bringing it forward, on the ground that a debate would be inconvenient to the negotiations which were proceeding. But upon this occasion I made no such appeal to my noble friend, although well aware of the courtesy with which he always meets any appeal that is made to him in regard to foreign affairs, because this is one of those rare occasions when, so far as I am able to judge, a debate in this House, instead of being in any way injurious to the pending negotiations, may, on the contrary, be useful as tending to remove certain current misapprehensions, and to strengthen rather than weaken the position of His Majesty's Government.

My noble friend has very accurately, in the rapid survey which he has made of a very large and many-sided question, pointed out that when you begin to discuss an increase in the Turkish Customs duties, you immediately touch on the question of Macedonian reform on the one side, and on the oven more delicate and difficult subject of the Baghdad railway on the other. That is why the subject excites an interest that would not attach to a question of dry finance. Broadly speaking, the question of the increase of the Turkish Customs duties has, ever since 1880, been mixed up with the subject of the revision of the commercial treaties with Turkey. But, owing to the delicate character of the questions involved, owing to the political complications which have constantly arisen, and owing to the dilatory habits and methods of the Turkish Government, it has not been found possible to arrive at a general revision of the commercial treaties with Turkey, a matter which affects not only this country, but all the great European Powers. Therefore, when the last grave set of questions arose, to be dealt with by his Majesty's late advisors in Macedonia, the question of the Turkish Customs and all the controversies that surround it stood exactly where they stood a considerable number of years ago, except that growing years had, if anything, aggravated the political situation, and that the Turkish Government was becoming more and more anxious to get hold of increased revenue.

There was, therefore, no reason to be astonished that the trained diplomatists of the Ottoman Empire, when called upon to introduce reforms into Macedonia, took the opportunity of bringing to the notice of the Foreign Office how very desirable it would be to let them have a little more money. But the matter was not so simple; and the Blue-books show that, from the first occasion on which the Turkish Ambassador approached His Majesty's Foreign Secretary it was pointed out that, instead of a revision of commercial treaties, if a simple arrangement of an increase by 3 per cent, of the ad valorem duties which govern British trade with Turkey were granted, it would be necessary to attach strict conditions to any agreement on our part. Thus it was that the question of Macedonian reform and that of the increase of the Turkish 3 per cent. Customs —though having a distinct history— became mixed up together.

The close connection of the two questions was the other day insisted on by the Austro-Hungarian Minister for Foreign Affairs in addressing the Hungarian Delegation. That passage in Count Goluchowski's speech has not received the attention which it deserves. From the beginning the British Government have marched in line with the Austro-Hungarian Government. The passage in Count Goluchowski's speech to which I refer was as follows— The immediate cause of the naval demonstration was the refusal of the Porte to consent to the demand of the Powers for the appointment of an International Commission of Finance nominated for a limited period for the purpose of organising the financial administration and obtaining such guarantees as would ensure the revenue obtained by taxation being applied in the future to the requirements of the three vilayets. Especial justification for this demand was to be found in the fact that in the meantime Turkey had claimed to be allowed to make a 3 per cent, increase in her import duties—a measure recognised by the Powers as an absolute necessity, if the so-called Macedonian Budget were to be made to balance; and that several Cabinets, and amongst them, above all, the English Cabinet, bad made their acceptance of this increase in the Customs duties conditional primarily on the concession to them of a direct participation by their own representatives in the work of organising the produce of taxation in future. After decided pressure by the naval demonstration, the moderate demands of the Powers, which included the appoint- ment of the Commission, were agreed to, but they were not found to contain the full measure of reform which, with the unanimous consent of the people of this country, the late Secretary of State had desired to incorporate. That was not owing to any weakness on the part of His Majesty's Government, but owing to the impossibility of inducing other Powers to come into line.

The unfortunate consequence of the Foreign Office's finding itself obliged to moderate its demands is that at this moment the chapter of Macedonia reform is, for the time being—and I lay stress on that qualification — closed by the acceptance of the Commission. Because, as that Commission only began to operate in January, it would be impossible, whatever the wishes of His Majesty's Government might be, for us to come forward and reopen all those questions which only a few months ago were; for the time being, closed. Having accepted the reforms, for whatever they were worth, in December last, it is the duty of His Majesty's Government to give those reforms some little time to operate. But, in regard to that part of Count Goluchowski's speech which relates to the Turkish 3 per cent. Customs, we stand on different ground. The noble Marquess opposite pointed out most clearly and distinctly in the different Notes which were addressed by him to the Turkish Ambassador and in the despatches which he wrote to our Ambassador at Constantinople, that upon grounds mainly commercial, but in some cases partly political, there were other conditions besides the Financial Commission which must attach to the consent of this country to the increase of the 3 percent. Customs. Those conditions included improvements in the Custom houses, the removal of those grievances, or as many of them as possible, under which trade suffers from the antiquated and obstructive method of levying duties at the Turkish ports, the peculiar hardship with which a certain interpretation of the meaning of existing duties falls upon some classes of English goods, and the removal of the antiquated provisions of the Turkish mining law, which so greatly hampers the investment of capital, especially in Asiatic Turkey, which is beginning to have a new and growing importance for the world at large. These were the commercial conditions.

But there was another condition which, no doubt, grew out of, although it was not absolutely contained in, the agreement in regard to the Financial Commission. There was the condition accepted by the Porte during these discussions, though not absolutely incorporated textually in the law of the Vilayet itself, that the money necessary to balance the vilayet Budget should be provided by the Turkish Government out of Imperial revenues, so that the local revenues of Macedonia might be used to defray local expenses and the heavy military expenditure which the Turkish Government insisted on keeping up should not be thrown on the unfortunate inhabitants of the vilayets. The questions have not been lost sight of by His Majesty's Government.

I have seen with some astonishment statements recently appearing from gentlemen ordinarily well informed in these matters, who have addressed communications to the Press, apparently under the belief, which they think to be well founded, that the whole of this question of the 3 per cent. Customs has been agreed upon, and that the Foreign Office has walked into some trap. I cannot agree with the noble Lord that the conditions in regard to the mining laws, the levying of duties, and the improvements in the Customs are small or unimportant matters. I have enjoyed the advantage of discussing these questions with gentlemen of great knowledge and experience in Turkish finance and commerce, and they take a more favourable view of the matter than the noble Lord. I think, how ever, that, putting these questions aside, His Majesty's Government would not have met with the approval of either House of Parliament if they had not been in a position to say, as we can, that we have adhered strictly and sternly to the policy of our predecessors in insisting that we shall have adequate guarantees that the money arising from the increase of the 3 per cents., if ever collected, shall find its way into the Budget of the Macedonian vilayets, and shall not go to Constantinople to be played with and used for any purpose which the Government of the Porte way think desirable.

The machinery which we have proposed to call into play for the object I have described is the machinery provided by what is known as the Commission of the Ottoman Debt. The Commission of the Ottoman Debt is a body whose existence is well known, and there is a convincing reason why the Government have decided to press on the Porte the adoption of the machinery of the Ottoman Debt Commission rather than that of any other body. Dealing with the Porte in matters of this kind is a long and dilatory process, and if you can find some proposal which is more likely than another to be acceptable to the Porte, it is wise to adopt it. The advantage of suggesting the machinery of the Ottoman Debt Commission is that it is looked upon as an Ottoman service. A proposal to the Porte to work either in this matter or in any other through the Ottoman Debt Commission does not meet with the amount of resistance that might arise over a proposal of a European commission appointed by foreign Governments.

Apart from this, however, the Ottoman Debt Commission has been a singularly honest and successful service. It is perhaps almost the only bright spot in Turkish finance. I might compare it— though the comparison is not a complete one—to the position of the European Customs in China. Just as the European Customs in China, are the bright spot amid a chaos of utter confusion, so is the work of the Ottoman Debt Commission in Turkey. That Commission is not a body which merely takes a certain amount of money and hands it over to certain bondholders. No doubt this was its first origin and what called it into existence; but gradually, owing to the great skill of the financiers who have had control of its operations, it has been entrusted with the collection as well as with the administration of certain funds, and the taxes which it collects with the consent of the Ottoman Government have gradually gone on increasing. At this time it collects the sheep tax, the sites tax, and what are known as the six revenues—namely, salt, stamps, silk, fisheries, tobacco, and spirits. Under a Decree known by its Turkish name of Mouharrem, and a later Decree amending it, it has also the right of collecting any future increase that may arise in the Customs, and of allotting a certain proportion of the net revenue so collected for the benefit of the bondholders, and then of handing over what remains—namely, 75 per cent.—to the Turkish Government. Here, then, was a machine ready to our hands, and which, probably with the consent of the Porte, we could use to collect revenue, to earmark it for a particular purpose; and to see that it found its way into the account of the Budget of the vilayets at Salonika.

Those were the conditions which, after communication with the Powers, we were able to place as the unalterable demands we attached to the consent of this and the other Governments to the increase of Customs duties; and, in addition, we required that there should be fair notice given so that the increase of Customs should not come into operation like a thief in the night, but should be limited to a certain period. That period was eventually fixed at seven years. I am glad to inform your Lordships that we were also able, by the good will chiefly of the representatives of the Great Powers at Constantinople, to obtain the assent of those whom they represented; and a Note was handed to the Forte in the last days of May embodying these demands, and stating in unmistakable language that there was no question of receding from the demands so made, and that if the Turkish Government desired to have this increase of revenue they must make up their minds to carry out in practice as well as promise the demands made upon them by the Ambassadors who signed the Note.

I was in hopes until recently that it might possibly be my good fortune this evening either to have left my story there or that probably in a few days I might have been able to announce the result of the negotiations. But that is not the case. The Turkish Government has during the last few days sent a reply to the Note which we had every reason to believe would have been accepted in a friendly spirit, raising so many new points, and suggesting so many changes in what we have put forward, that I think I am not in the least exaggerating my statement when I say that the most correct account I can give of the present state of the negotiations is that they practically stand at almost exactly the same point at which they stood when the late Government left office The responsibility of this lies entirely with the Turkish Government; but in any case the result is entirely to absolve His Majesty's Government from those rather unwarrantable and hasty imputations that have been made by those who have rushed forward to say that the whole matter is settled and that the Turkish Government has proved itself to be master of the situation.

The noble Lord opposite has introduced the question of the Baghdad Railway; and he has pointed out what is no doubt theoretically true, that if all our terms are accepted by the Porte, and if this large surplus is handed over to the account of the Budget of the vilayets at Salonika, other revenues now in the possession of the Porte, and now theoretically being under the obligation appropriated for the use and the benefit of the Budget of the vilayets, might in conceivable circumstances be used for the purpose of finding a subvention for the Baghdad Railway. I do not desire to go into this great and difficult question. It is one of the greatest questions of the time. It occupies the same sort of position in the Oriental world which many years ago the making of the Suez Canal occupied; and every step which this country takes and every word which the Foreign Secretary or the tinder-Secretary uses about it must be carefully weighed and considered. But I cannot help pointing out to my noble friend that I think his fears are rather premature. Turkish finance is not to be reasoned about as if it were, let us say, British finance under the control of Mr. Gladstone. Turkish finance is a mass of confusion, and no doubt the Turkish Government will be in a position to use certain revenues which may be liberated; but I cannot think that between those revenues and the Baghdad Railway there is anything but a rather distant connection. Unless we are prepared to assume the permanent control of Turkish finance as a whole, how is it possible for us to say that certain revenues—assuming their existence, which is to assume a good deal—will be liberated, and at once used for the particular purpose of constructing the Baghdad Railway? No doubt in theory some revenues may be liberated; and, just in proportion as the collection and control by the Commission of the Debt of all the revenues which they collect is successful or not, the revenue liberated will be greater or less.

But the Turkish Government has many prior claims upon it—for instance, the arrears of pay to all its servants, civil and military; improvements long due which it ought to make at once; there is the suppression of the rebellion in Arabia, and large borrowings on current account which have to be repaid; and we cannot say to the Turkish Government, unless we are prepared to travel another long step on the road of interference, "You shall do this, and you shall not do that with your surplus revenue. You shall pay your Civil servants; you shall reduce your army; you shall not construct this railway, but you may construct that one"—and so on. But what we can say, and what we are saying, is that the increase of the Customs shall not be used for any purpose until the limited yet important object for which we have assumed responsibility is first satisfied—namely, the balancing of the Macedonian Budget.

In regard to the Baghdad Railway, we are not of opinion that its construction is necessarily a British interest in itself, but it does raise many questions which are of British interest, and affects others; and these are receiving careful consideration. I cannot say more on that subject now beyond this, that we do not think that to proclaim, as we are apparently invited to proclaim on the house-tops, that we shall object to the increase of the Turkish Customs merely because indirectly such a step might be of some advantage to the construction of the Baghdad Railway is a course which prudent statesmanship recommends. We should then appear in the unenviable position of the dog in the manger, and should probably incur the hostility of great interests without whose goodwill this question cannot be placed on a permanent or satisfactory basis.

This word only in conclusion. I have told your Lordships that the Turkish Government have practically, by their reply to our Note, adjourned this question. What, however, I would venture to point out to the Turkish Government is this, that although we consider that the immediate chapter for the time being of Macedonian reforms is closed by the law of the vilayets, if by any action of the Turkish Government it is made impossible to make these reforms really thorough and satisfactory, then the great Powers will be fully justified in opening a new chapter. I would venture to urge that point of view on the Turkish Government; and in any case, if the Turkish Government fail to realise that in our negotiations with regard to the increase of the Customs we have gone as far as possible in concession to their demands—so much so that we have been threatened almost within the last few days with the censure of our friends—they must bear in mind that the immediate remedy that his Majesty's Government are fully justified in urging upon them is that, if they will not make it possible even with our good will and with the consent of the other Powers, to find money in the way that has been suggested, they must immediately adopt the only other remedy which they can adopt and reduce the enormous military force which, as I think, is quite unnecessarily kept up in Macedonia. These explanations will, I trust, be satisfactory to my noble friend. I only ask him and his friends to believe that we are fully conscious of the great importance of the issues involved in this question, and we can only hope that the House and the country will acknowledge how difficult our task is.


My Lords, I venture to think that the very full statement which has been made by the noble Lord the Under-Secretary of State for Foreign Affairs is as satisfactory as any one could expect in such very perplexing circumstances. It was once remarked by a Naval Lord of the Admiralty that no one could conceive the sufferings of an officer in command of a second-class torpedo boat except the officer himself; and that he had not words to describe them. I think it may be said, in the same way, that no one can realise the perplexities and difficulties surrounding the question of Turkish reforms except those who have to deal with them, and that they are never allowed to reveal more than half of them. There is one main principle to which we pledged ourselves by the course we took in regard to the Treaty of San Stefano, and to which we have always adhered—that of working in concert with the other Powers. The method is no doubt tedious and slow in practice, but it is sound and safe. I do not think that in the present circumstances we could have departed from that principle by making further conditions in regard to the concession of the increased Customs duties, and I trust that His Majesty's Government will continue upon the same lines.


My Lords, as my noble friend has truly said, said important subject has always been treated by your Lordships as one altogether outside the scope of party controversy; and it would have given us great pleasure to congratulate His Majesty's Government if they had been able to tell us that they had found it possible to effect a thoroughly satisfactory settlement of these difficult and embarrassing questions. But the concluding announcement made by my noble friend makes it clear that once again the perversity of the Turkish Government has rendered impossible an arrangement which, so far as I was able to follow the outline given by my noble friend, would have been upon the whole a very advantageous one to them. I cannot help hoping that, if the negotiations should be renewed hereafter, His Majesty's Government may find it possible to stiffen their conditions somewhat and really to open what my noble friend describes as a new chapter in the lamentable history of these transactions.

The settlement upon which His Majesty's Government were on the point of entering was certainly one which deserved very careful consideration by your Lordships' House. We were on the point of agreeing to an increase of 3 per cent. in the Customs duties levied on the goods of this country. I do not suggest that this is a very crushing burden on our trade, but it is certainly an appreciable burden, and one which we had no right to submit to except in the face of inexorable necessity. Then by accepting this addition to the Customs duties we should have deprived ourselves of a lever which I believe it would be possible to use to very good effect in any negotiations on any subject with the Turkish Government. I therefore should certainly be inclined to say, do not let us accept that burden, do not let us let go our hold on that lever unless we are absolutely satisfied that we obtain an adequate return for the sacrifices we are asked to make.

There are two directions in which it is possible to look for such a return. There is, in the first place, the possibility of obtaining in consideration of the sacrifice some improvements in the conditions under which British commerce is carried on in Turkey. I gather that such concessions were to have been obtained—I mean such concessions as the improvement in the administration of the Turkish Custom Houses and certain improvements in the mining regulations—concessions which I believe Sir Nicholas O'Conor, whose high authority I am the first to recognise, regards as of considerable value to this country. But when we are told that we are to be recouped in this manner I think we have a right to make the rejoinder that some of the most scandalous abuses to be found in the administration of the Turkish Customs are abuses which ought to be redressed as a matter of right without the offer of anything in the shape of a bribe or any increase in the burdens to which our trade is called upon to submit.

Another point which it seems to me should be considered, and which, I hope, will be considered, is this—what security are we able to obtain that these improvements in the Customs administration, these new mining regulations, these alterations in the manner in which British imports are to be examined at the port of entry will be continued to us? We have had a very bitter experience of the value of Turkish promises. I should be glad if it were a feature in any settlement of the kind we have been discussing this evening that the 3 per cent. increase of the Customs duties should not be allowed to come into operation until, by an experience spread over a certain length of time, we had become satisfied that the ways of the Turkish Customs authorities had really been amended.


I think it will be found, as I said, that all those matters have been considered and will be found touched upon in the Note which we presented, and which, of course in time will be laid before your Lordships. The conditions which were placed before the Turkish Government followed closely the conditions laid down by the noble Marquess, and which are to be found in the Blue-books before the House.


That is not quite my point. My point was that not only should the conditions be insisted on, but that we should insist on having a certain amount of experience of the way the new regulations were carried out before the increased duties were allowed to come into operation. Although, therefore, I admit that concessions of this kind are not without a certain value, I am bound to say that the coin is one in which I do not think I should care to be paid in full for so great a concession as we are called upon to make on our side.

But there can be no doubt, if we are to speak frankly about these things, that the real return which we have been expecting to get for agreeing to the 3 per cent. increase is that we should secure better government in the Macedonian vilayets. Now it may be said, Why should you tax the trade of this country, and of a particular section of the trade of this country, in order to obtain better government for a part of the Turkish Empire? I think the only answer that can be given is that the present condition of Macedonia is a standing menace to the peace of Europe and that it is, therefore, to the interest of this country as it is to the interest of all the civilised Powers that the condition of those regions should be improved.

We have acted upon that assumption throughout. We have taken great trouble, we have submitted to considerable sacrifices, in order to bring about some improvement of the condition of Macedonia. Therefore, I for one would certainly agree with his Majesty's Government in saying it is right that we should submit to sacrifices such as the sacrifice involved in this increase of duties in order to bring about more orderly and more decent government in Macedonia. Then my noble friend who introduced this subject, and has studied it so thoroughly, threw great doubt upon the value of these reforms.


Hear, hoar!


I am not surprised to hoar my noble friends cheer. Like him, I have been again and again disappointed in my hopes of seeing better government introduced in Macedonia; and I admit that many of those schemes for which such high hopes were entertained have greatly disappointed their authors. But I am bound to say that it does seem to me that the appointment of this Financial Commission is by far the longest step that has yet been taken in the direction of an amelioration of the state of affairs in Macedonia. I think we can gauge the value of the step by the reluctance with which it was accepted by the Turkish Government. It was accepted by the Turkish Government only, so to speak, at the point of the bayonet. I think that shows pretty conclusively that they, at any rate, know what a serious matter it is for them.

It is, no doubt, true that a considerable part of the scheme to which the Financial Commission was to give effect was whittled away during the course of the negotiations and that the réglement does not at this moment stand at all in the same form as that in which it was originally framed. I gather, nevertheless —and here, again, I am greatly guided by the opinion of Sir Nicholas O'Conor—that, though something has been taken, a good deal has been left. The scheme provides for improvement in the administration of the tithe, for the more regular payment of the local officials, for the framing of a proper Budget, and for a much needed improvement in the prisons administration. I say, then, that the scheme is worth something—worth more, I believe, than any scheme that has yet been put forward. If that is so, it seems to mo to follow that the scheme cannot operate unless there are sufficient funds to enable effect to be given to it. I think I am right in saying that the Financial Commission have reported that without additional funds they are unable to carry the scheme out.


indicated assent.


I see that I am correct. If that is so, then I think that His Majesty's Government could not have taken upon themselves the responsibility of shipwrecking the scheme by withholding their consent to this increase of duties. There is, however, a preliminary question which, I think, ought to be asked, and I shall be glad if it can be answered—namely, is it quite clear that the necessary funds, which amount to about £600,000, cannot be provided by the Turkish Government without increasing the Customs duties? I remember that, when the proposal was first made to the late Government, I raised that question. I asked whether a more careful and honest administration of the revenues of the three vilayets would not provide, perhaps not the whole of the sum needed, but something towards it.

I also raised the question whether an improvement in the administration of the Turkish Customs as a whole would not provide a sum amply sufficient to supply the deficit of the Macedonian Budget. The whole yield of the Turkish Customs does not, I believe, exceed £2,000,000. I refuse to believe that, with decent administration, the Turkish Customs could not be made to produce a very much larger sum. I should like to be told that the resources of diplomacy had been exhausted with regard to these two points before the 3 per cent. increase was agreed to. I may be told that difficulties have been encountered with the other Powers in obtaining consideration for a proposal of that kind. It was said with absolute accuracy by my noble friend on the Cross B nches that, in all these matters we have endeavoured to keep the European concert working, and I am aware that we have not infrequently had to change our step because others would not keep pace with us.

There is another point which I should like to mention in passing. I gather from my noble friend that His Majesty's Government are satisfied that this extra 3 per cent. which will be, I think, in the form of a surtax, will be collected in such a manner by the Commission of the Debt that there will be no doubt whatever that it will be applied to and find its way to the Administration of Macedonia. If the 3 per cent. were not more honestly and carefully administered than the present 8 per cent., I think it highly probable that the Macedonian vilayets would not get the £600,000 which they require.

One word about military expenditure. The military expenditure is a terrible burden upon the Macedonian finances. I believe the military expenditure in the three vilayets reaches something like £2,200,000 a year.


No, £1,300,000


The noble Lord is quite right. It was £2,200,000, and it is now £1,340,000 a year. There at once is a saving of over £800,000 a year. Is it clear that this £800,000 a year would not have sufficed, or partly sufficed, to make good the deficit without an addition to the burdens on the trade of this country? With regard to the military question generally, it is our duty to bear in mind that we cannot expect the Turks to get rid of the whole of their forces in Macedonia unless we are prepared to take upon ourselves the responsibility of protecting the Turkish frontier against inroads from Bulgaria or from other quarters. I remember that at one stage of these negotiations I ventured to put forward proposals which contemplated a guarantee of that kind, but those proposals must be added to the many well-meant efforts which have failed to succeed on account of the reluctance of other Powers to support us.

I should like to say one word before I sit down as to the question of the Baghdad Railway. I agree with my noble friend opposite that it would be a fallacy to suppose that because the increase of the Customs duties provides a certain additional sum to meet the requirements of the Turkish Government in Macedonia it follows that an equivalent sum is automatically liberated for other purposes That belief is founded upon a misapprehension as to the chronic condition of Turkish finances, and it by no means follows that these additional duties will give the Turkish Government an equivalent sum to dispose of as they think fit. But there is another point which, I think, was not touched upon by my noble friend opposite. The prospect of the increased yield in Customs duties being indirectly applied to the Baghdad Railway seems to me a remote one, for this reason: that I understood my noble friend to say that the consent of his Majesty's Government was given on condition that the increase was to be for seven years only. If that is so, it is clear that the Turkish Government would not be in a position to hypothecate the extra revenue and to obtain upon the strength of it a capital sum which they would be free to expend upon the Baghdad Railway. I entirely agree with what has been said by Lord Newton as to the importance of this question of the railway. I have always recognised the necessity of safeguarding British interests if ever there was a chance of that railway being pushed through to the Persian Gulf. When the question was being discussed in 1903 we were in confidential communication with some of the great financial houses concerned in the matter, and we hoped to see an arrangement the result of which would have been that the line—a part of which is now a purely German lino—should be rendered international from sea to sea. If that could be done by proper guarantees, there would be no occasion for us to adopt towards it an obstructive attitude, which my noble friend opposite very properly deprecates.

To sum up these few remarks, I think his Majesty's Government would, in certain circumstances, and for an adequate consideration, have been justified in agreeing to an increase in the Customs duties. But I confess that the bargain as it has been described by my noble friend opposite does not seem to me in all respects a very attractive one, and if ever there should be a question of reopening the negotiations, and negotiating a further settlement, I trust that, both for our own sakes and in order to read the Turkish Government a lesson, which I think they richly deserve, we shall insist upon conditions not only as stringent as those they have now rejected, but considerably more advantageous to ourselves and imposing a heavier obligation upon them.


My Lords, the tone of the speech of my noble friend who has just sat down has been so fair in regard to this most important question that I have not a word of controversy to say. We have been really walking in the footsteps of the noble Marquess opposite. We have been endeavouring to obtain the Porte's acceptance of the conditions which he laid down when in office. Unfortunately, up to the present time, we have not been successful, and the last communication received leads us to fear that the negotiations may almost be considered to have come to an end. My noble friend Lord Fitzmaurice alluded to the collective Memorandum which was presented to the Porte at the end of May. It is a matter of very great importance that in regard to this question—so delicate and yet so grave—we shall continue to act, as His Majesty's late Government acted, in concert with the Powers of Europe. The Note presented was a collective Note. If these negotiations fail, and if the attempts which have hitherto been made to come to a settlement of the question upon lines based very much upon the policy of the late Government should not be successful, then the hands of the Great Powers will, in our judgment, be set free. If the Porte rejects those proposed conditions and sots free our hands and those of the great Powers with whom we desire to act in perfect union, we shall be perfectly entitled then to put forward other proposals involving other conditions in order to bring a question which has been threatening the peace of the world to a final and satisfactory conclusion.


I should like to ask the noble Lord the Under-Secretary whether he is going to publish any Papers, and, if so, whether they will include the reply of the Porte to which allusion has been made in the course of this debate.


Papers on the subject will undoubtedly be published, but I cannot undertake to lay them on the Table at once. The Papers will include the Note and the reply.