Talk:Turkey/Archive 7

Revenue. Direct Taxes.
The tax on realty (verghi) is estimated to yield &#163;T2,599,420. Duties on profession (temettu) consist (a) of a fixed duty leviable at rates declared in a schedule forming part of the special law (Dec. 8, 1907) regulating the tax, and (b) of a proportional duty at the rate of 3% on the value of buildings occupied by companies or individuals in the prosecution of their business; of 3% on salaries (subject to certain deductions) of employes of such companies and individuals; and on government contractors and revenue farmers, at the rate of 3% of 10% of the value of contracts filled and of revenues farmed. The law is defective and unfair in its incidence, and it is not applicable to foreigners. The government promised in 1910 to remedy the law with the assent of the Great Powers, and, if successful in its negotiations, to present an amended law. The duties are estimated to produce &#163;T393,107; other professional duties &#163;T110,887 - together &#163;T503,994 A " Military Exoneration tax " is levied on male Ottoman subjects between the ages of 15 and 75 to the amount of &#163;T50 for 135 persons - certain exceptions such as priests, religious orders, &c., are allowed. The estimated revenue from this source is &#163;T1, 289,612. " Prestations " are payments in lieu of services (apart from military service) to the state, such as maintenance of highways, &c. - in effect, purchase of exoneration from forced labour. These duties vary in different parts of the empire: in the vilayets of Constantinople, Bagdad and Adrianople, and in the sanjaks of Bigha and Tchataljatheday'sworkis calculated at 5 piastres (about 11d.); in the vilayets of Aleppo, Trebizond, Angora, lannina, Konia, Sivas and Kastamuni at 4 piastres (about 9d.); and in most other parts of the empire at 3 piastres (about 7d.). These taxes were formerly levied either in cash or in kind: it has now been decided to levy them in cash only, although this change was expected to cause some arrears. Allowing for these, the estimated revenue is &#163;T553,938. The " tax on sheep, camels, buffaloes and hogs " (aghnam, meaning literally " sheep," but for taxing purposes the other animals are included under the same name), formed originally part of the " tithe." It was transformed long since into a fixed amount per head of the animals taxed, which amount varies according to the region in which the tax is levied, the highest tariff being in the sanjak of Jerusalem (72 piastres) and the lowest in the Yemen (1 piastre). The estimated receipts are, from sheep &#163;T1,790,720, from camels and buffaloes &#163;T144,520, :and from hogs &#163;T8890, or together &#163;T1,814,152. " Tithes " are the direct descendant of the kharaj already alluded to above. It should here be noted that, from the fiscal point of view, the reforms instituted at the commencement of the 19th century may be summarized thus. In permanent remuneration of certain services to be rendered to the state, the sovereign assigned to civil or military functionaries territorial regions for the purpose, and with the power, of collecting land taxes imposed by Mussulman and Imperial law, i.e. the kharaj or tithe, and transfer and succession duties. The tithes were originally based on one-tenth of the agricultural produce of the country, but this proportion was gradually raised under the euphemistic pretence of " public instruction," but really, under financial pressure, to 12% and again in 1900 for military " equipments " (Tejhizat-i-'Askeriyeh) by a further 2% to 122%. This last surtax, which produces about &#163;T90,000 per annum, was specially affected to a loan, known as the " Tejhizat-i-'Askerieh of 1905," of &#163;T2,640,000, by virtue of a contract between the government and the Deutsche Bank (April 17, ' It should be noted that the classification of the revenues included respectively under the " direct " and " indirect " categories has now been quite properly changed, the sheep-tax, tithes, mining royalties and forest royalties being comprised under " direct taxes "; stamps and registration duties are placed in a special category, and salt and tobacco under " monopolies." 1905). The estimated receipts from the " Tithes " (including tobacco and silk, both hypothecated to the Public Debt Administration) are &#163;T6, 73 1,107. The remaining taxes under the category " direct " are the forest-dues (generally speaking 15% of the value of wood cut), estimated to produce &#163;T130,094; the mining dues (being a fixed duty of 10 piastres per io,000 sq. metres of the superficial area covering the mine, and a proportional duty varying from I % to 20% of the gross value of metal contained in the ore, according to the kind of metal and the method of extraction of the ore), &#163;T45,141; and tax-papers (Tezkeres), &#163;T58,434. The total " direct taxes " (inclusive of tobacco and silk tithes) are thus estimated to amount to &#163;T13,725,892.

Section II. of the budget is composed entirely of revenues from stamp-duties. Of these, commercial stamps are among the revenues specifically hypothecated to the Public Debt Administration, &#163;T460,079; the others, consisting of legal stamps of various kinds, registration and transfer-duties, &c., are estimated to produce &#163; T6 53,373 forming a combined total of &#163;T1,113,452.

Under Section III. fall the " indirect contributions " as now reclassified. The first revenue specified among these in the budget is that accruing from the wine and spirit duties, which is again among those assigned to the Public Debt, &#163;T283,079. Licenses for sale of Tumbeki, a variety of Persian tobacco used for the ''narghile, T2046. '' By far the most important " indirect " revenue is that produced by the customs, consisting of import, export and transit duties, and various unspecified receipts. Under the old commercial treaties which lapsed about 1890 - but which have been maintained " provisionally " in force until one or other of the great powers consents to set a term to the negotiation of fresh treaties - an ad valorem duty of 8% was imposed on all articles imported into the Turkish empire. In 1905 financial resources had to be found for the special administration of the three European vilayets as insisted upon by the powers, and to this end the Porte initiated negotiations with the latter to increase the import duties by 3%. As is usual in Turkey, this opportunity was seized for the demand of redress of grievances by such powers as considered they had any, and the negotiations were protracted until July 1907, when France finally gave in her adhesion. Since then the import duties have been collected at the rate of 11% ad valorem under the supervision of the Public Debt Administration, the bondholders having certain rights, under the decree of Muharem, described below, over any increase of revenue arising from modification of the commercial treaties. By the provisions of the " Annex Decree," also described below, three-quarters of the additional revenue is assigned to the Turkish government, and one-quarter to the Public Debt Administration to swell the sinking-fund. Fresh negotiations were also undertaken to increase the importduties by a further 4% in order to balance the deficit shown in the budget. In the year1910-1911the import duties were estimated to produce &#163;T3,980,395, the transit duties &#163;T20,276, and the export duties (1% ad valorem, which it was hoped the government might soon afford to abolish) &#163;T168,993 - total customs revenue, &#163;T4,217,752. The remaining " indirect contributions " are port and lighthouse dues, &#163;T148,426. Sanitary taxes, &#163;T20,519, and fisheries and sporting licenses affected to the service of the public debt, &#163;T153,990. The revenues figuring under " indirect contributions " thus reach a total of &#163;T4,825,812.

Monopolies form Section IV. of the budget, and include in the first place the salt revenue (&#163;T1, 227,750), which is assigned to the Public Debt Administration, and tobacco revenues of which the larger part, &#163; T86 5,737, is assigned to the same administration, the total (including share of Tumbeki profit) producing &#163;T965,754; the remaining monopolies are: fixed payment from the Tumbeki Company, &#163;T40,000; explosives, &#163;T106,323; seignorage (Mint), &#163;T10,466; and posts and telegraphs, &#163;T912,129. The " Monopolies " thus render a total revenue of &#163;T3,262,424.

Section V. includes receipts from commercial and industrial undertakings belonging to the stateThese are the Hejaz railway, &#163;T152,000; the Dolma-Bagtche gas-works, &#163;T59,130; technical school, &#163;T8536; the Tigris and Euphrates steamships, &#163;T62,513; and mines (Heraclea coal and other), &#163;T120,710; forming a combined total of &#163;T402,889.

Section VI. is composed of receipts from " State Domains " of which a large proportion was formerly included in the civil list. Under the deposed sultan the Civil List Administration had encroached in every direction not only on the revenues properly accruing to the state, but upon private and upon state property in most parts of the empire. Thus it is explained in the preface to the budget that the revenues " proceeding from the deposed sultan " are not classed together under one heading, but that they have been apportioned to the various sections under which they should fall " whether taxes on house property or property not built upon, tithes, aghnam, forests, mines, cadastre, sport, military equipment, private domains of the state, various receipts, proceeds of sales, rents " - a truly comprehensive list which by no means set a limit to the private resources of Abd-ul-Hamid II., who looked upon the customs also as a convenient reserve on which he could, and did, draw when his privy purse was short of money. Apart from the sources of revenue specified above, of which the amounts actually transferred from the civil list are not stated, Section VI. is estimated to produce &#163;T513,651. In the previous budget there had been a special heading, " Proceeds of Domains transferred from the Civil List," estimated to produce ET620,233, which may have been intended to include all the various receipts above enumerated.

Section VII., formed of the tributes of dependencies of which the two principal are the Egyptian, ET765,000, and that of Cyprus, T102,590 (assigned to the public, debt) comprises a total revenue of T871,316. Finally, various receipts of which the principal separately specified are government share of railway receipts (Oriental railways and Smyrna-Cassaba railway), ET201,710, and " subscriptions " for the Hejaz railway, ET264,600, form Section VIII.

The total revenues of the empire are thus estimated to produce 725,848,332, and seeing the careful and moderate manner in which the estimates have been framed, this may be looked upon rather as a minimum than a maximum. The minister of finance stated in his budget speech to parliament, delivered on the 23rd of April 1910, that the revenues for the year 1909-1910, which had been estimated to produce T25,000,000, had as a matter of fact produced &#163;T26,50o,000.

Expenditure. Ministry of Finance
The first item of expenditure shown in the budget is the service of the public debt, amounting to &#163;T8,288,394. The Public Debt Administration plays so considerable a part in the finances of the Ottoman Empire, and its history is of such importance that a special section of this article will be devoted to it below. Under the budgetary heading " Public Debt " is included, as it should be, all expenditure in connexion not only with the public debt proper, but also with advances from banks and others, railway guarantees, an account of which will also be found below, and all capitalized liabilities, as far as known, contracted by the state.

It is explained in the preface to the budget - that one of the abuses of the previous regime had been to obtain advances from credit establishments at high rates of interest varying from 7% to 9%, when it was found impossible to issue a public loan. The rates on these advances have now been generally reduced to 6% with the exception of that on the advances from the lighthouse administration, which refused to allow any reduction below 7%. In the years1908-1909the advances were reduced by ET688,000, in addition to repayments allowed for in the budget, and the credit agreed for the year1909-1910is ET663,000, as compared with &#163;Ti,160,000 for the previous year. In the year1910-1911the outstanding advances were to be so far paid off that the credits to be opened under this head would be still further reduced by &#163;T500,000.

The civil list has been reduced to the definite amount of &#163;T443,880, which, without the consent of parliament, cannot be increased. The sultan receives an annual allocation for himself and household of &#163;T240,000, the crown prince one of &#163;T24,000, and a sum of T153,000 is assigned to the Imperial princes and the sultanas. The deposed sultan was allowed ET12,000 a year, and a similar amount was set aside to provide dowries for two sultanas who were just about to be married. The debts of the former are stated in the preface to the budget to be very large, and as payments are effected fresh creditors present themselves with undeniable vouchers in their hands, causing much embarrassment to the minister of finance: no figures, however, are given. The Finance Bill provides that these debts are to be paid out of supplementary credits.

Under the reformed constitution every senator is entitled to a salary of &#163;Tloo per month, any remuneration which he may receive from the government for other services to be deducted from the senatorial allowance which, however, it may of course exceed. Deputies are allowed T30o for each session of parliament, and &#163;T50 per month in addition should the session exceed its legal duration. They are further allowed travelling expenses from and to their constituencies on the basis of rules governing journeys of functionaries receiving a monthly salary of &#163;750. The amount reserved in the budget for these purposes is ET181,871.

The ministry of finance absorbs &#163;T2,989,600. In this are included the expenses of the administration of both the central and provincial departments of the finance ministry, the mint, charitable allowances, expenses and presents in connexion with the holy cities (&#163;T121,410), pension funds of state officials (&#163;7628,038), administrative allowance made to the agricultural bank (ET225,380) and various other expenses. Various administrative reforms were in hand in 1910-1911, by which it was expected considerably to reduce the credits demanded by the finance ministry - especially those in connexion with the holy cities. Special attention was called by the minister to the fact that the system of contributions of officials to the pension funds has been modified, the deduction from salaries being now To °A instead of 5%, and the contributions to the funds being made as to one-third by the treasury, and two-thirds by the officials, instead of the reverse as formerly: the economy effected is about &#163;T30o,000. A credit of &#163;T17,124 is allowed for the central accounts department. The total credits for the ministry of finance are, then, as follows: Ottoman public debt, &#163;T8,288,394; House of Osman, &#163;T443,880; legislative corps, U181,871; treasury, ET2,989,600; central accounts department, &#163;T17,124; forming an aggregate of &#163;T11,920,869.

Indirect contributions, or more familiarly " customs," are allowed a credit of &#163;T512,670. The minister of finance points out the immense importance of the thorough reorganization of the customs administration. The services of a first-rate English expert (Mr R. F. Crawford) were obtained, and much has been done at Constantinople, but the provincial customs offices are still lamentably defective. These were immediately to be taken in hand, and considerable sums are being voted for repairs of existing customs buildings and the construction of new buildings. The reforms already accomplished have resulted in a marked increase in the customs revenues.

Posts and telegraphs, which absorbed a credit of ET782,839 in 1910-191 I, have also long been in urgent need of extension and better administration. An additional credit of ET90,000 was granted, as compared with the previous year, and increased expenditure was foreshadowed for the future; on the other hand, it was confidently expected that the post office receipts would increase in far more rapid ratio than the expenditure.

The ministry of the interior was estimated to require &#163;TI,157,230. This sum covered " immigration expenses," i.e. assistance given in settling Mussulmans immigrating from provinces detached from the Ottoman Empire. There can be no doubt that this expenditure is remunerative, since many rich regions of Asia Minor have long suffered from want of population.

Military expenditure, including the three departments of war, is as follows: the army (excluding artillery), ET8,280,452; ordnance, T 35 6 ,439; and gendarmerie, &#163;TI,694,778. As regards the first of these, it is curious to observe that the budget decree of 1880 stringently limited the peace strength of the Ottoman army to 100,000 men, " including officers and generals," in order to put a stop to the rapidly increasing military expenditure; but this was merely the expression of a pious wish, at a time when European financial good will was indispensable, that expenditure might be kept down. No real attempt has ever been made to observe the decree, and indeed observance has been impossible seeing the dangers which never cease to menace the empire. To some extent the real level of military expenditure has been masked by the separation of certain payments into " extraordinary " expenditure, a course which, it is understood, has not been followed in the budgets of the " new regime," and which will not be revived. It should however, be remarked that out of an " extraordinary" budget, which will be mentioned below, sums of &#163;7709,305 and of &#163;T27,827 were allocated to the ministry of war and the ordnance department respectively in 1909. It is not expected that military expenditure can be much reduced, except in the direction of supply contracts, which have been the cause in the past of iniquitous waste of means.

The official budget shows a credit for admiralty expenditure of &#163;TI,000,327, which is apparently less than that for the previous year by some ET220,000. This, however, is not a real decrease, salaries of functionaries not on the active list having been removed to the region of supplementary credits, as are those of civil departments. As a matter of fact, the marine budgets of the two years are almost identical. The vote of &#163;T50o,000 a year for ten years for the reconstruction of the Ottoman navy by " national subscription," as already mentioned, was not included in the official budget, nor was there any allusion to it in the prefatory memorandum. The minister of finance did, however, allude to it in his budget speech, (April 23, 1910), and stated that four destroyers purchased in Germany had been paid for from the national subscription only, without touching the ordinary state revenues. It should be added that the Greek War (1897) revealed to the sultan the decrepit state into which the Ottoman navy had fallen, and considerable " extraordinary " expenditure - much of which was wasted - has been incurred since (and including) 1902 to put the least out-of-date warships into a serviceable condition.

The ministry of commerce and of public works absorbed &#163;T883,161 a reduction of some &#163;T 180,000 on the previous year. The government acknowledges the unavoidable necessity of greatly extending and improving the internal communications of the country, but cannot see its way to doing so satisfactorily out of the ordinary resources of the country. This question was being seriously studied, and it was hoped that a comprehensive scheme would be presented ere long. The Hejaz railway figures in the budget for &#163;T550,180, and it is explained that this will not only cover working expenses, but also the final completion of the line.

Floating Debt
This is really an accretion of undetermined liabilities which has been indefinitely, and probably alternately, advancing and receding for a great number of years, and which no previous minister of finance, or Turkish government, had the courage to face. Now and then it has been dealt with piecemeal, when some particular class of creditors has become too pressing, but it is more than probable that the piece got rid of has been more or less rapidly replaced by fresh liabilities occasioned by budgetary deficits, or by the mere accumulation of interest on debts allowed to run on.

In March 1897 the floating debt was calculated by a financial authority in the Fortnightly Review to amount to upwards of &#163;TJ5,000,000, which might be compressed to &#163;T25,000,000 since a large proportion was certainly composed of salaries in arrear and other items of a similar kind which the government would never, under any circumstances, make good. Laurent tells us that the present government having found it absolutely impossible to arrive at even an approximate estimate of this " occult debt," recourse was had, in order to fix it, to the creditors themselves, and a short act of parliament was passed declaring all debts prescribed which should not be claimed by a fixed date. In consequence of this 560,000 claims were received, and a first examination showed that the aggregate amount reached by these claims was not less than &#163;T13,000,000. Considering the dilatory methods of Orientals, even when they are creditors, it is doubtful whether this sum adequately covers the whole of the claims outstanding, and it may be found difficult, even for a parliament, to refuse claims which should equitably be admitted and which may be preferred later. High authority in Constantinople put the true amount of the floating debt in1910-1911at the amount previously estimated, viz. &#163;T25,000,000. No provision was then made in the budget to meet these liabilities, nor did the minister in his prefatory memorandum make any allusion to them; in his budget speech, however, he announced that a scheme for dealing with them would be presented with the budget for 1911-1912. Under the heading " Floating Debt " in the budget for1910-1911are placed the advances before described.

No other items in the budget call for special remark, but in order that the information given may be complete, each head of expenditure is shown separately below, and the budget for 1910-1911, as first placed before the Turkish parliament, presents the following picture, from which it may be observed that the public debt absorbs 26% of the revenue, war service 38% and civil services 36%.

''Expenditure. Revenue. '' agriculture.. Public works and commerce. Hejaz railway Total. &#163;T30,270,246 This deficit was increased, by the action of parliament, to &#163;T9,678,000. Almost immediately after the budget was drawn up a change of government took place, and largely owing to this fact the parliamentary budget commission introduced various modifications on the expenditure side of the account, which increased the estimated deficit to the account just mentioned.' The principal increase is due to the war departments, according to the budget speech of the minister of finance (April 23, 1910), although he states that some 1 On the 25th of June 1910 the chamber finally passed the budget for 1910-1911. The figures were as follows: Ordinary expenditure, &#163; T 3 2 ,997, 000; extraordinary expenditure, &#163;T2,696,000; revenue &#163;T26,015,000, leaving a deficit of &#163;T9,678,000, which was brought up to over &#163;T10,500,000 by special credits for the pension fund, the payment of debts incurred by Abdul-Hamid and indemnities to officials. On the other hand, the minister of finance reckoned that the revenue would probably show an increase of &#163;TI,Soo,000, while about &#163;T2,000,000 of expenditure would remain undisbursed, which, with a reserve of &#163;T2,000,000 from 1909, would reduce the deficit to roughly &#163;T5,000,000.

increase is apparent in all departments. The actual figures of the increase are not, however, given. Exaggerated importance must not be attributed to the swollen deficit. The demands of the various departments of state had been much cut down, and according to the minister of finance's own statement much of the reduction was merely unavoidable expenditure deferred; the fact that some of this expenditure, which had been jealously scrutinized, was to be undertaken at once, meant that demands on future years would be relatively re-  duced. A loan of &#163;T7,040,000 was arranged with a German group headed by the Deutsche Bank. This loan followed upon one of &#163;T4,70o,000 in 1908, and another of &#163;T7,000,000 in 1909 (of which the service is provided by the revenues assigned to the Russian War indemnities amounting to &#163;T350,000 per annum, of which payment has been deferred for forty years), the year 1909 having shown a realized deficit of about that amount - a condition of affairs which would appear alarming were it not that the Turkish Empire was passing through absolutely abnormal times, and was attempting to convert the unstable morass of disorder, ineptitude and corruption left by the previous system into a solid foundation for good and orderly constitutional government. With the two previous loans above mentioned, &#163;T5,50o,000 capital liabilities were paid off, the work of reorganization had made considerable progress, and &#163;T2,000,000 remained in hand at the beginning of1910-1911to continue it. As before stated reorganization was quickly followed by a marked increase of revenue, and it seemed probable that the forecast of the minister of finance that within a comparatively short time that increase would amount to &#163;T5,000,000 Was not excessive. Negotiations were undertaken to increase the customs import duties by a further additional 4%. This measure would produce about &#163;T1,250,000 per annum.

Further expenditure was voted in the course of 1909, to be met by an extraordinary budget. On the receipts side of this budget were comprised the Austrian indemnity for the annexation of Bosnia and Herzegovina (&#163;T2,50o,000), cash and securities belonging to the deposed sultan (&#163;TI,600,000), sale of old guns (&#163;T300,000), sale of lands and other property recovered from civil list encroachments (&#163;T908,000), and finally the unexpected balance of the proceeds of the 1908 loan (&#163;T6J5,000), the whole forming an aggregate total of &#163;T5,963,000. It was intended to assign to the war department &#163;T3,804,918, to the grand master of ordnance &#163;T358,108, to the admiralty &#163;T93,912, and to the ministry of finance &#163;T2,443,202 for the payment of the war indemnities in Thessaly and other urgent liabilities, the estimated aggregate extraordinary expenditure thus amounting to &#163;T6,700,140. Some of the assets above mentioned proved, however, not to be easily realizable. Ready buyers were not found for the state lands, and the sale of the ex-sultan's securities was disputed by the German Reichsbank with which they were deposited, while the government did not consider it good policy to sell the Anatolian railway shares, which it seized at Yildiz, so that only &#163;T450,000 were encashed by the ministry of finance from these sources. Of the sums really received the ministry of finance expended some &#163;T3,000,000, in payment of the Greek indemnity, in repayment of &#163;Ti,000,000 of advances to the treasury and by assigning the credit voted to the ordnance department, and it was stated that these payments exhausted the extraordinary resources. so far as it has been possible to realize them.

Collection of Taxes
The Ottoman Empire possesses a very complete system of local self-government within certain limits. Every village or town district has a kind of mayor (mukhtar) appointed by election and approved by the official provincial authorities, and a " council of ancients " whose members are elected directly. The taxes are collected by means of the mukhtars, termed for this purpose kabz-i-mal (receiver of treasure), and under the supervision of gendarmes specially named, termed tahsildar (collectors). The official authorities provide lists of all the taxes to be collected to the tahsildars, who hand them, against formal receipt, to the ''kabz-i-mals. '' The latter are bound to pay in to the local authorities all sums collected in five days in town districts, and in fifteen days in villages, if under 1500 piastres; sums of 1500 piastres and over are paid in at once. The tahsildars check the accounts of the kabz-i-mals, and, if they discover peculation, send them at once to be dealt with by the chief official authorities of the Gaza (department); all the electors of a mukhtar are, ipso facto, joint sureties for him. If the tax-payer declines to pay his due, he is brought before the proper authorities by the tahsildar; if he persists in his refusal, all his goods, except those indispensable for his dwelling and the pursuit of his trade, are sold by auction, without recourse to a judgment by tribunal. If he has no goods which may be seized, he may be summarily imprisoned for a term not exceeding 91 days: two imprisonments for the same debt are not permitted. The military exemption tax is not collected as above, but by the spiritual chiefs of the various religious communities. None of the above regulations apply to Constantinople, where no military exemption tax is imposed, and where separate official regulations for the collection of taxes are in force. The system of farming out the revenues is admitted, and is almost invariably followed in the case of the tithes. When this is done, the revenues to be farmed are put up to public auction and sold to the highest bidder, provided he can prove himself amply solvent and produce sufficient sureties. Elaborate regulations are in force for this method of collection to secure the state receiving its full due Total.. &#163;T30,270,246 370,520 883,160 550,180 from the farmers, who, on the other hand, are entitled to full official assistance to enforce their rights.

Assessment of Taxes
For the purposes of assessment the taxes may be divided roughly into two classes: (I) variable taxes; (2) nonvariable tapes. Under the first head would be included proportional taxes dependent upon the value of the property taxed; under the second, taxes whose amount does not depend upon that value. The first class contains such revenues as the emlak verghi-si (duty on realty), `ashar (tithes), temettu (professional tax), &c. In all such cases the taxable values are fixed by a commission of experts, sometimes chosen by the tax-payers themselves, sometimes by the official authorities; in all cases both tax-payers and authorities are represented on the commissions, whose decisions may be appealed against, in last resort, to the council of state at Constantinople, whose decision is final. Revenues composing the second class such as the tapu  (registration tax) do not vary, unless by special decree, and the assessment is automatic.

The systems, both of assessment and collection, were equitable and far from oppressive in theory. In practice they left almost everything to be desired. The officials, already too numerous and underpaid, frequently, as has been stated above, found such pay as they had far in arrear. They were therefore naturally open to bribery and corruption, with the result that, while the rich often got off almost scot free, the poor were unduly taxed, and often cruelly oppressed by the tax collectors and farmers of revenue. In all departments there ensued, thus, an alarming leakage of revenue, amounting, it was credibly estimated, to quite 40%. The new government energetically proceeded to remedy this state of affairs.

International Administration of the Ottoman Debt
In consequence of the piling up of the exterior public debt as described above, it amounted after the issue of " general debt " in 1875 to &#163;T1 9 o,750,000, and swallowed up annually upwards of Tio,000,000, or nearly half the revenue of the empire as it was then constituted. The revolt of various disaffected provinces brought matters to a climax; in September 1875 one-half of the service of the interest was suspended, paper certificates known as " Ramazans " (since they were issued in the Arabic month of that name) being issued for that half in lieu of cash, and in the following March it was suspended altogether. After the war with Russia, in order to obtain credit from the Imperial Ottoman Bank and local financiers, who refused any further accommodation unless their previous and further advances were amply secured, revenues known as the " six indirect contributions " were handed over to a committee of local bankers (by decree of Nov. 22, 1879), to be administered and collected directly by them. These " six indirect contributions " were the revenues from tobacco, salt, wines and spirits, stamps (commercial), certain specified fisheries, and the silk tithe in specified provinces. Two years later, partly in view of the recommendations of the Congress of Berlin, partly to overcome insuperable difficulties in obtaining any kind of credit, the sultan authorized the Sublime Porte to issue an invitation to the various bondholders' committees in Europe to send delegates to Constantinople for the purpose of negotiating a resumption of payments. These " committees" were the " Council of Foreign Bondholders " for Great Britain, the Imperial Ottoman Bank and its " group " for France, Herr S. Bleichrdder for Berlin, the Credit-Anstalt and its " group " for Austria-Hungary, and the Chamber of Commerce and of Arts of Rome for Italy. The Dutch bondholders placed their interests in the hands of the British council. Russia declined to countenance the negotiations in any way. Delegates from the various committees assembled in Constantinople in the early summer of 1881. The commission formed by them in conjunction with the delegates of the Sublime Porte is more generally known as the " Valfrey-Bourke commission," from the leading parts played by the Right Hon. R. Bourke (Lord Connemara), the British delegate, and M. Valfrey, the French delegate. The outcome of the negotiations was the issue of an imperial decree, known as the " Decree of AIuharrem," owing to its bearing the date (Turkish style) of the 28th of Muharrem (Dec. 20) 1881. By this decree the outstanding capital of the exterior debt, to which were added the Ramazan certificates above mentioned, and all interest fallen due, making a grand total of &#163;252,800,000, was scaled down to &#163;106,437,234 (&#163;T117,080,958). On this reduced capital a minimum interest of % was to be paid, the rate of interest to be increased by quarters per cent. as the revenues set aside for the service of the reduced debt permitted. For purposes of sinking fund the old loans were combined into four groups: group i. containing the 1858 and 1862 loans, with a reduced nominal capital of &#163;T7,902,259; group ii. the 1860, 1863, 1864 and 1872 loans, with a reduced nominal capital of &#163;T11,265,153; group iii. the 1865, 1869 and 1873 loans, with a reduced nominal capital of &#163;T33,915,762, and group iv. the " general debt," of which the last issue was in 1875, with a reduced nominal capital of &#163;T48,365,236, and the " lottery bonds " (railway loan), with a reduced nominal capital of T15,632,548, the total of group iv. being thus &#163;T63,997,784. As security for the service of the new reduced debt it was provided that an international council should be formed, composed of one delegate each from the bondholders of the United Kingdom, France, Germany, Austria-Hungary, Italy and Turkey, and one representing the " priority bondholders," a term which will be explained later. On this council the Turkish government has the right of naming an imperial commissioner with " consultative voice," i.e. no voting power, but the right to express his opinion on the proceedings of the council, who would make all reports he considered necessary to his government. The government was empowered also to name controllers to whom all the accounts of the administration should be open for inspection on demand. In all other respects the council, provided that it kept within the limits of the laws the administration of which was entrusted to it, was to be entirely independent of the Ottoman government, free to appoint and dismiss its own officials from highest to lowest, and to carry on its administration on such lines as it thought best. Proposals made by the council for the modification and improvement of the existing laws and regulations which concerned it were to receive an answer from the government within six months; this provision has remained a dead letter. Any difference between the government and the council, if not possible of adjustment, was to be settled by arbitration.

To this council, with these extended powers, was handed over the absolute administration, collection and control of the " six indirect contributions " above enumerated, for the benefit of the bondholders, and in addition, it was to encash for the same purpose bills on the customs, to be drawn half-yearly in its favour by the minister of finance, amounting annually to &#163;T180,000, representing the tax on Tumbeki (&#163;TSo,000) and the surplus revenue of Cyprus (&#163;T130,000); and the Eastern Rumelian annuity, originally fixed at &#163;T245,000, but gradually reduced by force of circumstances, until after frequent suspensions of payment it reached in 1897 the level of &#163;T114,000, and has, since the declaration of Bulgarian independence, been definitely stopped. In order to assist the young kingdom of Bulgaria, which could only with great difficulty and with much damage to its resources have found means to indemnify Turkey for this serious breach of treaty engagements, the Russian government intervened, and proposed as compensation to the Turkish government the deferment for forty years of the annual payment (&#163;T350,000) of the 1877 war indemnity. This proposal was accepted by the Turkish government, which undertook to continue the annual payment of &#163;T114,000 to the public debt administration until the extinction of the debt. The public debt council consented with good grace, although the minister of finance, by omitting to consult that council during the progress of negotiations, lost sight of the fact that a sum of &#163;T87,823 was due to the public debt administration on account of arrears of the Eastern Rumelian annuity up to December 1887, and that a further sum of &#163;T430,741 was due by the Bulgarian to the Turkish government itself in compensation Tor the Rustchuk-Varna railway under the Treaty of Berlin. As pointed out by Sir Adam Block, the representative of the British and Dutch bondholders, in his report for 1908-1909, the above arrangement would have been prejudicial to the bondholders had the public debt not been " unified " (as described below) since, however, as a result of that unification, the ceded revenues now produced a sum more than sufficient for the service of the debt, it was only the surplus of revenue reverting to the government which was affected. There were further handed over, under the Muharrem decree, to the public debt council, the tribute of Bulgaria, the amount of which has never even been fixed, but as compensation for which the tobacco tithe up to a yearly amount of &#163;Tioo,000 was ceded to the council in the same conditions as the " six indirect contributions "; the proportional shares (generally known as the " contributive 1 For simplicity's sake, the lottery bonds having a special treatment different from that of the rest of the loans, these groups, when the new bonds of the reduced debt were exchanged against the old bonds of the original loans, became " series " thus: Series A, group i.; series B, group ii.;. series C, group iii.; series D, group iv. and lottery bonds.

parts ") of the Ottoman public debt to be borne by Bulgaria, Servia, Greece and Montenegro, which according to the Treaty of Berlin were to be adjudged by the representatives of the Great Powers at Constantinople, one of whom (the Russian) never succeeded in obtaining his instructions, and which therefore have never been fixed; and, finally, the excess of revenue resulting from a revision of the commercial treaties. The ceded revenues, exclusive of the " contributive parts " and the excess from commercial treaties, were estimated by Bourke, in his report to the bondholders on the decree of Muharrem, at &#163;I,812,562 (&#163;T1,993,818). A substantial reduction however, had to be made in favour of the 5% " priority bonds, " which were bonds issued to the local banks before mentioned in satisfaction of their claims, and formed an annual first charge of T590,000 on the whole of the revenues ceded to the bondholders; the capital amount of the " priority bonds " was &#163;T8,169,986, which was to be extinguished by 1906. Four-fifths of the net product of the revenues, after deduction of the first charge of &#163;T590,000, was to be applied.to the service of the interest on the new reduced debt, and provided that the four-fifths were sufficient to allow the distribution of 1% interest, one-fifth was to be devoted to sinking fund; but this latter fifth was to be reduced, if necessary, by an amount sufficient to maintain the rate of interest at i %. The interest on bonds amortized was to be added to the funds available for sinking fund. The sinking fund was to work as follows: First 4% on the whole reduced capital was to be applied to group i.; if there were any surplus this was to be applied to group ii., until that also received the same full 4%, and so on for group iii. and group iv., until the whole sinking fund amounted to I % on the reduced capital. It was to be applied by redemption at the best price possible on the market, until that price stood at &#163;T66.66, when, if the rate of interest served were 1%, it was to proceed by drawings; if the interest were anything more than 1%, and less than 3%, the limit of price for redemption was to be raised to U75; if the interest were between 3% and 4% inclusive, the limit was to be raised to par. Any surplus of revenue beyond that necessary to provide 4% interest and I % sinking fund was to be handed over to the government. The lottery bonds receive a special treatment both in regard to interest and sinking fund; full information as to the intricate arrangements made for these bonds will be found in the decree of Muharrem and the published reports of the council of administration of the Ottoman public debt. In 1890 the sinking fund was increased by the conversion of the " priority loan " into a 4% loan and the extension of the term of its redemption for 15 years. In this manner an annuity of &#163;T159,500 was set free, of which &#163;Ti i,000 per annum was allotted as " extraordinary sinking fund " to series A and &#163;T49,500 per annum each to series B, C and D; the lottery bonds were originally excluded from this arrangement, and special compensation was granted to these later. Each series receives the benefit of the interest on bonds belonging to it amortized by this special annuity. Thus, in the financial year1900-1901the total amount of the fund had risen from &#163;T159,500 to &#163;T231,500.

The arrangement set forth in and sanctioned by the decree of Muharrem on the whole worked admirably. Gradually, however, it became apparent that it would be desirable to give Turkish state securities, of which those governed by the decree of Muharrem formed the principal part, a better standing in European financial markets than was possible for bonds bearing so low a rate of interest; to obliterate thus, as far as possible, the effects of the past bankruptcy; and, further, to give the Turkish government a joint interest with the bondholders in the progress of the ceded revenues. The French bondholders, who hold by far the largest proportion of Turkish securities, took the principal initiative in this matter, and, after protracted negotiations with the Turkish government and the other " syndicates " of bondholders, they succeeded, in 1903, in obtaining the following modifications of the original decree of Muharrem.

Series B, C and D (series A having already been completely redeemed by the action of the sinking fund) were replaced by the creation of new 4% bonds to a nominal amount of &#163;T32,738,772, with a sinking fund of 0.45% per annum, bearing identical rights and privileges, and ranking immediately after, the priority bonds. The rates at which the series were respectively exchanged against the new unified bonds were &#163;loo series B against &#163;70 unified, &#163;loo series C against &#163;42 unified and &#163;too series C against &#163;37, 10s. unified. Bonds of the old series not presented for exchange within a period of fifteen years are prescribed. The amortization is to proceed by purchase when the unified bonds are below par, and when at or above par, by drawings. Coupons and drawn bonds not presented within six and fifteen years respectively of their due dates of payment are prescribed. Interest on amortized bonds goes to swell the sinking fund. When the net product of the ceded revenues amounts to &#163;T2,157,375, the surplus is divisible as to 75% to the Turkish government and 25% to the public debt administration. A variation from this was provided as soon as the priority bonds should become extinct; but these bonds having since been repaid (as mentioned below) by a further issue of unified bonds, this variation lapses. The above 25% is to be employed as additional sinking fund for the unified debt and lottery bonds, in the proportion of 60% and 40% respectively. A reserve fund was created of which the nucleus was the sum already standing to the credit of the " Reserve fund for increasing the rate of interest " (&#163;TI,113,865), plus &#163;T300,000 at least in cash by the issue of sufficient unified bonds to produce that amount and the sum of &#163;T150,000 to be paid by the government to the public debt at the rate of &#163;T15,000 per annum. It should be added that the total issue was made sufficient to reserve also &#163;TI ,460,000 for expenses, after taking into account &#163;ioo,000 in cash paid by the government to the public debt administration out of the said issue. The reserve fund was created primarily to make good any deficiency in the revenues below the amount required to pay the interest due. If such drafts upon the reserve fund become necessary, they are to be made good in the following years out of the surplus above mentioned. The reserve fund is increased by the interest it may earn, but when the capital amount of the fund reaches &#163;T2,000,000 the interest earned is merged in the general receipts of the public debt administration. As soon as the unified debt is reduced to &#163;T16,000,000 the reserve fund is to be reduced to &#163;Ti 3 000,000, the surplus over this last amount being paid to the government. The unified bonds and coupons are exempt from all Turkish taxation existing or to come. Further special stipulations regarding the Turkish lottery bonds were made, but these are, as before, omitted. They will be found in art. x. of the " Annex-Decree " of September 1-14, 1903, which gave the modifications to the Muharrem decree here described force of law. Finally the Imperial Ottoman government reserved to itself the right of paying off the whole unified debt at par at any moment, and all the dispositions of the decree of Muharrem not modified by the new " Annex-Decree " were formally confirmed and maintained. In 1906 a further modification took place in the shape of the final and complete repayment of the priority bonds by the additional issue of &#163;T9,537,000 of unified bonds for the purpose, taken firm by the Ottoman bank at 86. The rate at which the exchange was effected was par with a cash bonus of 6%. The previous annuity required for the service of these bonds having been &#163;T430,500, and the additional charge for the service of the unified debt as a result of the operation being &#163;T424,396, while the government received &#163;T1,272,600 in cash for its own purposes, there was a slight immediate advantage to be found in it: as, however, the priority debt would have been completely extinguished in 1932, the financial wisdom of the change is not apparent.

The ceded revenues administered directly by the public debt council have shown remarkable expansion, and may be fairly looked upon as exemplifying what would occur in the general revenues of the empire when good and honest administration and regular payment of officials finally took the place of the carelessness, corruption and irregularity which existed up to the change of regime. The council has not limited its duties to the collection of the revenues placed under its administration, but has taken pains to develop commercially the revenues capable of such development. A large and remunerative export trade in salt to India is now established, whereas formerly not one grain found its way there; the first steps in this direction were taken in 1892 when works were begun to place the great rock-salt salines of Salif, on the coast of the Red Sea, on a commercial footing. The gross receipts from this export trade amounted in the year1908-1909to &#163;T99,564, and the profits approximately to &#163;T12,000, in spite of the contest between Liverpool and Spanish salt merchants on the Calcutta market, which led to a heavy cutting of prices. Pains, moreover, have been taken by the public debt council to develop the sale of salt within the empire. These efforts have been rewarded by the increase of the salt revenue from &#163;T635,000 in 1881-1882, the year preceding the establishment of the council, to &#163;T1,075,880 in 1907-1908. Again, in the early years of the administration (1885), the Pasteur system of selection of silk-worms' eggs for the rearing of silkworms was introduced, and an " Institute of Sericulture " on modern lines was erected (1888) at Brusa for gratuitous instruction in silk-rearing to students from all parts of the empire. Up to the end of 1907-1908, 919 students had received the diploma of the institute, and 465 silk-growers in addition had passed through the course of instruction. These men, returning to their various districts, impart to others the instruction they have received, and thus spread through the regions adapted to sericulture the proper methods of selection and rearing. As a result some 60,000,000 mulberry trees were planted in Turkey during 1890-1910, involving the plantation of about 130,000 acres, and new magnaneries and spinning factories sprang up in every direction; while the revenue (silk tithe) increased in the regions administered by the council from &#163;T17,000 in1881-1882to LT125,000 in 1906-1907, the value of the silk crop in those regions having thus advanced by over &#163;Tr,000,000. But the regions not under its administration benefited at least equally by the methods above described. Thus the total value of the silk tithe in Turkey increased in the period named from about &#163;T20,000 to &#163;T276,500, and the total annual value of the crop from about &#163;T200,000 to &#163;T2,765,000, or by nearly 22 millions pounds sterling.

Table A gives the produce of the revenues in 1881-1882, the last year of the administration of the " Galata Bankers," the average product of the first, second, third, fourth and fifth quinquennial periods since the public council was established, and of the year 1907-1908.

Table B shows the total indebtedness of the Ottoman Empire, exclusive of tribute loans.

Tobacco Regie.-From the beginning of the year 1884 the tobacco revenue has been worked as a monopoly by a company formed under Ottoman law, styled " La Regie Imperiale Cointeressee des Tabacs Ottomans." This company has the absolute monopoly of the manufacture and of the purchase and sale of tobacco throughout the Ottoman Empire, with the exception of the Lebanon and Crete, but exportation remains free. It is bound to purchase all tobacco not exported at prices to be agreed between itself and the cultivators; if no agreement can be arrived at, the price is fixed by experts. It is obliged also to form entrepots for the storage of the crops at reasonable distances from each other, and, on certain conditions, to grant advances to cultivators to aid them in raising the leaf. The cultivators, on the other hand, may not plant tobacco without permits from the regie, although the power of refusing a permit, except to known smugglers or persons of notoriously bad conduct, seems to be doubtful; nor may they sell to any purchaser, unless for export, except to the regie, while they are bound to deposit the whole of the tobacco crops which they raise in any one year in the entrepots of the regie before the month of August of the year following, Table ''A.-Showing Revenues ceded to Ottoman Public Debt Administration at Various Periods to 1907-1908. '' * Exclusive of &#163;T50,000 representing the retrocession of the reftish (Egyptian tax, abolished in 1895) to the regie.

f Up to1902-1903the extra-budgetary receipts and fines had been carried to account of the respective revenues concerned; after that date they were placed under a special heading. After1905-1906extra-budgetary receipts relating to expenditure previously effected have been deducted from " General Expenses." + The 3% customs surtax is not included in this table. It came into force on the 13th of July 1907, and produced during the remainder of the financial year U544,987; 2 5% of this revenue is ceded to the public debt; the remainder reverts to the government.

Table ''B.-Position of the Ottoman Public Debt on the 1st of March 1326 (March 14, 1910). '' The capital in circulation for these loans, established on the 1st of March 1326 (1910), is approximate.

and may not move any tobacco from the place where they cultivate it without the regie's express authority. In order to facilitate supervision, a minimum area of one-half of a deunum (a deunum = about one-fourth of an acre) is fixed for ground upon which tobacco may be cultivated; in the suburban districts of Constantinople and some other towns, and in enclosures surrounded by walls and attached to dwelling-houses, it is altogether prohibited. For its privileges the regie has to pay a rent of &#163;T750,000 per annum to the government (assigned to bondholders), " even if it has no revenues at all," and after the payment of a dividend of 8% to its shareholders, and certain other deductions, it has to share profits with the government and the bondholders according to a sliding scale agreed upon between the three parties. The regie did badly during the first four years of its existence, owing principally to two causes: (1) its ineffectual power to deal with contraband to which the system described above leaves the door wide open; (2) the admission of other than Turkish tobaccos into Egypt, which deprived it at once of about fTioo,000 per annum. So great were its losses that in the year1887-1888it was obliged to write them off by reducing its capital from &#163;2,000,000 to &#163;1,600,000. At the same time it was granted an extension of penal powers, and the losses on reftieh (duty on tobacco exported to Egypt) were to be partially borne by the public debt administration. Things went better with it from that time until 1894-1895, when, owing to internal troubles in the empire, and the consequent fear of creating worse disorders, by the strict enforcement of the monopoly, the government withdrew most of its support, and contraband enormously increased. The following table shows the movement of the revenue of the regie from the year1887-1888to1908-1909inclusive: - * There was a heavy fall in the receipts in the four years1895-1896to1898-1899inclusive. The climax was reached in1897-1898when the net revenue amounted to only &#163;63,975 as compared with T352,000 in 1894-1895, and it did not revert to its previous level until 1902-1903. This was the result of the Armenian massacres, the wholesale emigration of Armenians of all classes, the accompanying profound political unrest throughout the country, and the great extension of contraband which ensued from it.

Negotiations were initiated in 1910 for the prolongation of the concession of the tobacco monopoly, which reaches its term in 1913.

Railway Guarantees
Up to 1888 the only railways existing in the Turkish Empire (exclusive of Egypt) were, in Europe, the Constantinople-Adrianople-Philippopolis line and the SalonicaMitrovitza line (finished in 1872); and in Asia Minor, the SmyrnaAidin (completed in 1866), the Smyrna-Cassaba (completed in 1866), the Constantinople-Ismid (completed in 1872), the MersinaAdana (completed in 1886). The want of railways in Asia Minor was urgently felt, but no capitalists were willing to risk their money in Turkish railways without a substantial guarantee, and a guarantee of the Turkish government alone was not considered substantial enough. In 1888 it was proposed by the public debt administration to undertake the collection of specified revenues to be set aside for the provision of railway guarantees, the principle to be followed being, generally, that such revenues should consist of the tithes of the districts through which the railways would pass, and that the public debt should hand over to guaranteed railway companies the amounts of their guarantees before transmitting to the imperial government any of the proceeds of the revenue so collected. The government adopted this proposal, and laid down as a principle that it would guarantee the gross receipts per kilometre of guaranteed railways, such gross receipts to be settled for each railway on its own merits. Considerable competition ensued for the railway concessions under this system. The first granted was for the extension of the Constantinople-Ismid railway to Angora to a group of German and British capitalists in 1888. The Germans having bought out the British rights, this concession became a purely German affair, although a certain proportion of the capital was found in London. Since that time various other concessions have been granted to French and German financial groups, principally the Imperial Ottoman Bank group of Paris and the Deutsche Bank group of Berlin.

The systems of guarantee above described are clearly faulty, since theoretically the railway company which ran no trains at all would, up to the limit of its guarantee, make the largest profits. The concessionnaire companies have, however, wisely taken the view that it is better to depend upon their own revenues than upon any government guarantee, and have done their best to develop the working value of the lines in their charge. The economic effect of the railways upon the districts through which they run is apparent from the comparative values of the tithes in the regions traversed by the Anatolian railway in 1889 and 1898 in which years it so happened that prices were almost at exactly the same level, and again in 1908-1909, when they were only slightly higher. Thus in 1888 they produced LT145,378, in 1898 LT215,470, and in1908-1909LT281,919.

A different system, still more uneconomic than the kilometric guarantee pure and simple, was adopted in the case of the Bagdad railway. In January 1902 the German group holding the Anatolian railway concession was granted a further concession for extending that railway from Konia, then its terminus, through the Taurus range and by way of the Euphrates, Nisibin, Mosul, the Tigris, Bagdad, Kerbela and Nejef to Basra, thus establishing railway communication between the Bosporus and the Persian Gulf. The total length, including branches to Adana, Orfa (the ancient Edessa) and other places was to exceed 1550 m.; the kilometric guarantee granted was 15,500 francs (f,;620). It should be noted that this concession was substituted for one negotiated by the same group, and projected to pass through Diarbekr. This raised strong objections on the part of Russia, and led to the Black Sea Basin agreement reserving to Russia the sole right to construct railways in the northern portion of Asia Minor. The Anatolian railway company, apparently unable to handle the concession above described, initiated fresh negotiations which resulted in the Bagdad railway convention (March 5, 1903). This convention caused much excitement and irritation in Great Britain, owing to the encroachment of German influence sanctioned by it on territories bordering the Persian Gulf, hitherto considered to fall solely within the sphere of British influence. Attempts were made by the German group, assisted by their government, to secure the participation of both Britain and France in the concession. These were successful in France, the Imperial Ottoman Bank group agreeing to undertake 30% of the finance without, however, any countenance from the French government - the " Glarus Syndicate " being formed for apportioning interests. The British government seemed, at one time, rather to favour a British participation, but when the terms of the convention were published, the strongest objection was taken to the constitution of the board of directors which established German control in perpetuity, while it was evident from the general tenor of the convention that a political bias informed the whole; in the end public feeling ran so high that any British participation became impossible.

The financial advantages, however, granted by the Turkish government were singularly favourable to thq concessionnaires and onerous to itself. The kilometric guarantee of 15,500 francs (&#163;620) was split into two parts, 4500 francs (&#163;180) being granted as the fixed working expenses of the line, all receipts in excess of which amount were to be credited to the Turkish government in reduction of the remaining 11,000 francs (f440) which took the form of an annuity to be capitalized as a 4% state loan redeemable in 99 years, that being the period fixed for the duration of the concession. The line was to be constructed in sections of zoo kilometres (125 m.) each, and as the complete plans and drawings of each were presented at the times and in the order specified in the convention, the government was to deliver to the concessionnaires government securities representing the capitalization of the annuity accruing to that section. The capital sum per section was fixed, in round figures, at 54,000,000 francs (&#163;2,160,000), subject to adjustment when the section was completed and its actual length definitely measured up. A minimum net price of 812% was fixed for the realization of these securities on the market. The bonds are secured on the surplus of the revenues assigned to the guarantee of the Anatolian railway collected by the Public Debt Administration, on the excess revenue, after certain deductions, accruing to the government under the " Annex-Decree to the Decree of Muharrem " above described, on the sheep tax of the vilayets of Koniah, Adana and Aleppo, and on the railway itself. The first series (54,000,000 francs or &#163;2,160,000), was duly handed over to the concessionaires in 1903, and was floated in Berlin at 86.4% realizing the sum of &#163;1,868,000. The division of the line into equal sections of 200 kilometres apiece produced at once a somewhat ridiculous result. The little town of Eregli, some 190 kilometres distant from Konia, presented the only excusable locality for the terminus of the first section, and even that place is 90 kilometres distant from Karaman, the last town of any importance for some hundreds of miles on the way to the Euphrates valley, the country between the two towns being desolate and sparsely inhabited. But the Bagdad Railway Company' (the share capital of which is &#163;600,000 half paid up), naturally anxious to earn the whole of the capitalized subvention, completed the construction of the entire 200 kilometres. The line was thus continued to a station taking its name from Bulgurlu, a small straggling village four miles away, between which and Eregli there is not a single habitation. But even this did not quite complete the distance, and the line was carried on for still another kilometre and there stopped, " with its pair of rails gauntly projecting from the permanent way " (Fraser, The Short Cut to India, 1909). The outside cost of construction of the first section, which lies entirely in the plains of Konia, is estimated to have been &#163;625,000; the company retained, therefore, a profit of at least I' 4 millions sterling on this first part of the enterprise. In the second section the Taurus range is reached, after which the construction becomes much more difficult and costly. On the 2nd of June 1908 a fresh convention was signed between the government and the Bagdad Railway Company providing, on the same financial basis, for the extension of the line from Bulgurlu to Helif and of the construction of a branch from Tel-Habesh to Aleppo, covering a total aggregate length of approximately 840 kilometres, The principle of equal sections of 200 kilometres was thus set on one side. 1 he payments to the company were to be made in two lump sums forming " series 2 and 3 " of the " Imperial Ottoman Bagdad railway loan," series 2 amounting to &#163;4,320,000, which was delivered to the company on the signature of the contract, and series 3 to &#163;4,760,000. The Bagdad railway must for much time be a heavy ''Ottoman Railways worked at end of 1908. Results of r908 according to the Nationality of the Capital. '' weight on the Turkish budget, the country through which it passeswith the exception of the sections passing from Adana to Osmanieh, through the Killis-Aleppo-Euphrates district (that is, the first point at which the line crosses the Euphrates some 600 m. from Bagdad), and to a lesser extent through the plains of Seruj and Harranbeing very sparsely populated, while the financial system adopted offers no inducement to the concessionaire company to work for Specially formed by the Anatolian railway group for the execution, which the Anatolian Railway Company guarantees under the Bagdad Railway Convention, of the Bagdad railway concession.

increasing earnings. It should be mentioned that the Bagdad Railway Company has sublet the working of the line to the Anatolian Railway Company at the rate of &#163;148 per kilometre, as against the &#163;180 per kilometre guaranteed by the Turkish government The line from Mustafa-Pasha to Vakarel now lies in the kingdom of Bulgaria.

Constructed and worked by the State.

4 Extension of Anatolian Railway.

5 The Anatolian Railway group (German) has obtained control of this little railway, which was originally British.

- an additional indication, if any were needed, of the thriftlessness of the latter in the matter. Moreover, the Anatolian railway receives, under the original Bagdad railway convention (1) an annuity of &#163;14,000 per annum for thirty years as compensation for strengthening its permanent way sufficiently to permit of the running of express trains, and (2) a second annuity of &#163;14,000 in perpetuity to compensate it for running express trains - this to begin as soon as the main Bagdad line reaches Aleppo.

It was stated in the preface to the budget of 1910 that the government would grant no more railway concessions carrying guarantees. The amount inscribed for railway guarantees in the budget of 1910 was 746,790. The tables on p. 440 show the respective lengths of the various Ottoman railways open and worked at the end of 1908 and the amount of kilometric guarantees which they carried - and the lengths, &c., of railways worked by the various companies according to the nationality of the concessionaire groups.

Banks
At the close of the Crimean War a British bank was opened in 1856 at Constantinople under the name of the Ottoman Bank, with a capital of &#163;500,000 fully paid up. In 1863 this was merged in an Anglo-French bank, under a concession from the Turkish government, as a state bank under the name of the Imperial Ottoman Bank, with a capital of &#163;2,700,000, increased in 1865 to &#163;4,050,000 and in 1875 to &#163;10,000,000, one-half of which is paid up. The original concession to the year 1893 was in 1875 extended to 1913, and in 1895 to 1925. The bank acts as banker to the government, for which it has a fixed annual commission, and it is obliged to make a permanent statutory advance to the government of &#163;T1,000,000, against the deposit by the government of marketable securities bearing interest at a rate agreed upon. The bank has the exclusive privilege of issuing bank-notes payable in gold. Its central office is in Constantinople, and it is managed by a director-general and advisory committee appointed by committees in London and Paris.

The National Bank of Turkey (a limited Ottoman Company) is a purely British concern with a capital of &#163;1,000,000, founded by imperial firman of the 11th of April 1909, under the auspices of Sir Ernest Cassel. It is understood that it was originated at the unofficial instigation of both the British and Ottoman governments, with the idea of forming a channel for the more generous investment of British capital in Turkey under the new regime, so that British financial interests might play a more important part in the Ottoman Empire than has been the case since the state bankruptcy of 1876. This bank brought out the Constantinople municipal loan of 1909 (&#163;1,000,000). Other banks doing business in Constantinople are the Deutsche Bank, the Deutsche-Orient Bank, the Credit Lyonnais, the Wiener Bank-Vcrein, the Russian Bank for Commerce and Industry, the Bank of Mitylene, the Bank of Salonica and the ''Bank of Athens. Monetary System. - The'' monetary system presents a spectacle of perplexing confusion, which is a remnant of the complete chaos which prevailed before the reforms initiated in 1844 by Sultan Abd-ul-Mejid. The basis of the system adopted was the double standard with a fixed relation of I to 15.09, and free coinage. The unit was the piastre (=2}d.), nominally subdivided into 40 paras. The gold pound (18s. 2d.) was equivalent to 100 piastres; the gold pieces struck were &#163;T5, &#163;T1, &#163;T2 and &#163; T 4; the standard is 0.916* fine, and the weight 7.216 grammes. The silver coinage consisted of the mejidie (weight 24.055 grammes, 0.830 fine), equivalent to 20 piastres, and its subdivisions 10, 5, 2, I, and 2 piastre pieces. The altilik, beshlik and metallik currencies struck, the first and last in the reign of Mahmud II. and Abd-ul-Mejid, and the second in the reign of Mahmud only, were not included in the reform; these were debased currencies bearing a nominal value, the altilik of 6, 3 and 12 piastres, the beshlik of 5 and 22 piastres, the metallik of 1, 2 and 4 piastres; they represented the last degree of an agelong monetary depreciation, the original piastre having had a value of about 5s. 7d., which had fallen to 28d. The heavy depreciation in silver causing large losses to the government, free coinage was suspended in 1880, and the nominal value of the mejidie was reduced by decree to 19 piastres (105.26 piastres thus = &#163;T1), while in the same year the debased currencies were reduced, altilik, the 6-piastre piece to 5 piastres, the 3-piastre piece to 22 piastres, the 12-piastre piece to 14 piastre; beshlik, the 5-piastre piece to 22 piastres, the 22-piastre piece to 1;-piastre; metallik, the 1-piastre piece to 2 piastre, the 2-piastre piece to 4 piastre, the *-piastre piece to a piastre - these values representing approximately the intrinsic value of the silver, at mejidie standard, contained in the debased coins. The copper coinage (113,000,000 piastres) and the paper currency (kaime) (1,600,000,000 piastres) referred to in the above sketch were withdrawn in 1880 by repudiation. The 20-piastre mejidie currency, in spite of the further enormous depreciation of silver since 1880, has scarcely varied in the Constantinople market, but has always remained at a discount of about 3% (between 108 and 109 piastres to the pound) under government rate; this is doubtless due to the fact that the demand and supply of the coins in that market are very evenly balanced. The parity thus working out at;102.60, gold continued to be held away from the treasury, and in 1909 the government decided to accept the Turkish pound at the last named rate. The fractional mejidie coins (5, 2 and 1 piastres) are quoted at a separate rate in the market, usually at a premium over the 20-piastre piece. In the last twelve years of the 19th century the altilik currency was almost entirely withdrawn, and replaced by fractional mejidie; a large proportion of the beshlik has also been withdrawn, but the metallik has not been touched. These debased currencies are usually at a premium over gold owing to the extreme scarcity of fractional coinage. The standard of the altilik is about 0.440 fine, that of the beshlik is 0.185 to 0.225 fine, that of the metallik is 0.170 fine. Foreign gold coins, especially the pound sterling (par value 110 piastres) and the French 20-franc piece (par value 872 piastres) have free currency. Throughout Arabia and in Tripoli (Africa) the principal money used is the silver Maria Theresa dollar tariffed by the Ottoman government at 12 piastres. The Indian rupee and the Persian kran are widely circulated through Mesopotamia; in Basra transactions are counted in krans, taking as a fixed exchange &#163;T1 = 34.15 krans. The general monetary confusion is greatly intensified by the fact that the piastre unit varies for almost every province; thus, while the pound at Constantinople is counted at 108 piastres silver, it is at about 127 piastres for one kind of transaction and 180 for another in Smyrna, 135 piastres at Adrianople, 140 at Jerusalem, and so forth, accounts being kept in " abusive piastres," which exist no longer. In some towns, e.g. Adrianople, small change is often supplemented by cardboard tickets, metal discs, &c., put into circulation by private establishments or individuals of good credit.

A commission (the successor of many) was instituted at the ministry of finance in 1910, to draw up proposals for setting this confusion in order. In his 1910 budget speech the minister of finance, Javid Bey, demanded authority to create a new aluminium coinage of 5, 10, 20 and 40 para pieces, of which he would issue, in the course of three years, a nominal amount of &#163;T1,000,000 to those provinces in which there was a great scarcity of small coins. The amounts of Turkish gold, silver and debased coinage in circulation are approximately &#163;T16,500,000, in gold, &#163;T8,70o,000 (940,000,000 piastres at 108) in silver mejidies and fractions, and 200,000,000 piastres in beshlik and metallik.

Tenure of Property
Real property is held in one of four various ways: either mulk, emiriye, vakuf or khaliye. (1) Mulk is the absolute property of its owner, and can be disposed of by him as he wills without restrictions, save those enumerated lower down (General Dispositions) as general for all the four classes. Mulk  property is governed chiefly by the Sheri (sacred Taw). A duty of 10 per mille on its estimated value has to be paid on transfer by sale, donation or testament; 5 per mille on transfer by inheritance; and, a registration duty on expenses of transfer. (2) Emiriye is practically " public domains." The state may grant land of this category to private persons on payment by the latter of the value of the proprietary right - the tithes, ground-rent (should there be private buildings upon it), and the land-tax. It is administered by imperial functionaries called arazi-memuru; it is with the consent of the latter only that the proprietary rights can be sold. These rights are of simple possession, but they are transmissible in certain degrees to the heirs of the possessor. Emiriye cannot be mortgaged, but can be given as security for debt on condition that it be restored when the debt has been repaid. The creditor may demand the arazi-memuru to proceed to a forced sale, but the arazi-memuru is not obliged to comply with that demand; no forced sale may take place after the decease of the debtor. Emiriye is not transmissible by will, but may be transferred by donation, which returns to the donor should he outlive the beneficiary. Should a proprietor of emiriye plant trees or vines, or erect buildings upon it, with the consent of the state, they are considered as mulk;  an annual tax representing the value of the tithes on the portions of emiriye thus utilized is levied. The emiriye then becomes mulk, with certain restrictions as to transfer dues. A transfer duty of 5% on the estimated value of emiriye is paid on transmission by sale, inheritance or donation, of 22% on the amount of the debt in case of mortgage or release from mortgage, and of 10% on expenses. of registration. A different scale is established for emiriye with moukataa (rent paid for emiriye with mulk property established upon it). (3) Vakuf is " all property dedicated to God, of which the revenue is consecrated to His poor "; or " property of which the usufruct, such as tithe, taxes and rents, is attributed to a work of charity and of public interest." When once a property has been registered as vakuf it can never be withdrawn. There are two classes of vakuf: (a) Land so declared either directly by the sovereign or in virtue of imperial authority; (b) lands transformed by their proprietors from mulk into vakuf. The laws and regulations concerning vakuf are too intricate to be described; generally it may be said that they form a great obstruction to dealing with a large proportion of the most valuable property in Turkey, and therefore to the prosperity of the country. The vakufs are administered by a special ministerial department (evkaf nazareti), whose property, on behalf of the state, they theoretically are. The effect of the original system was that a vakuf property became the inalienable property of the state, and the original proprietor a mere tenant. All fundamental repairs thus fell to the charge of the state, which could not afford to effect them, and the vakuf revenues decreased so rapidly that already in the reign of Selim I. (1511-1520) a serious effort was made to deal with the difficulty. But this resulted in so heavy a: burden upon the public that the law had again to be altered to extend hereditary rights, and to admit a system of mortgage which was assimilated to that for emiriye; but the evils were little more than palliated. The curious gilds called guedik must here be mentioned. They were established at a time when industry was not free, and the government fixed the number of artisans of every kind of trade in each town, no one having 'the right to increase that number. The guedik, then, had the right to erect buildings on vakuf property and supply it with the tools, &c., necessary to exercise a trade. The ancient guediks have not been abolished, the government not daring to deprive them of their privileges; but since the Tanzimat no new ones have been created, industry being declared free. The various special dues payable on vakuf form too long a list to be inserted; the highest is 30 per mille. (4) Kkaliye. This property is also styled mevad. It consists of uncultivated or rough lands, such as mountains, stony ground, &c., which are useless without clearance, to which no possession is claimed, and which are at such a distance from the nearest dwelling that the human voice cannot be made to reach them from that dwelling. Any one can obtain a gratuitous permit to clear and cultivate such lands; the laws governing ordinary agricultural lands then apply to them. The permit is withdrawn if the clearance is not effected within three years. If the clearance is effected without the necessary permit, the land is nevertheless granted on application, and on the payment of the tapu or sum paid by the proprietor to the state for the value of the land.