667.008/122
The High Commissioner at Constantinople ( Bristol ) to the Secretary of State
[Received June 8.]
Sir: At a meeting of the Advisory Trade Commission of the Associated Powers, held April 26, 1921, it was unanimously decided to recommend to the Associated High Commissioners that they should send identic notes to the Sublime Porte requesting the immediate return to the eleven per cent ad valorem tariff in effect before the war.
The three Allied Delegates on the Advisory Trade Commission favored as well the retention of the present consumption taxes, but the American Delegate objected emphatically to such an arrangement. The Allied Delegates thereupon formally requested that the American High Commissioner should present to his Government their arguments in favor of the retention of the consumption taxes in addition to the 11% ad valorem and request the consent of the United States Government to this mode of taxation.
Their arguments are as follows:
- First, the proceeds from the consumption taxes would go into the hands of the Ottoman Treasury, whereas according to the decree of Mouharrem of 1881 and its Annex Decree of 1903, all proceeds from customs duties over eight per cent go to the Ottoman Public Debt Administration and not to the Turkish Government. If, as had been suggested, the ad valorem were increased from eleven to [Page 894] fourteen or fifteen per cent, the increased revenue would not be available for Government purposes, but would have to go to the Public Debt. The condition of the Treasury is in such a deplorable state that immediate steps must be taken to increase the Government receipts. Turkish officials have not been paid since early January and many of them are literally starving. The consumption tax would bring in approximately two hundred and fifty thousand Turkish pounds per month additional and would alleviate the situation.
- Second, the consumption taxes would not affect the importation of American merchandise, in view of the fact that they are being levied on the prime necessities of life, i.e. sugar, tea, coffee, and petroleum, and consequently the demand would remain as great as ever and American trade would not suffer.
- Third, the consumption tax is now being collected and would not involve any discussion with neutral powers as to its acceptance, as the neutral powers are already acquiescing in its collection.
In transmitting the contentions of the Allied Delegates, I desire to reiterate my objections to the continuance of the consumption taxes. Taking up their arguments in succession:
-
Argument #1.
- a)
- By a decree of 1880 it is true that all of the customs receipts over 8% ad valorem were pledged to the interest and amortization of the Ottoman Public Debt, and the Decree of Mouharrem of 1881 and its Annex Decree of 1903 confirmed these arrangements. However, if the Allied High Commissioners can do an illegal thing, namely, enforce consumption taxes in addition to the 11% ad valorem, they can also do another illegal thing and turn over the receipts above 8% ad valorem to the Treasury instead of the Ottoman Public Debt.
- b)
- While it is undoubtedly true that there is much misery and suffering amongst Turkish officials, this condition is the direct result of the failure of the Allies to restore the 11% ad valorem customs duties when the blockade was lifted. Our figures show that there would have been no deficit in the Ottoman budget had this been done.
- c)
- The Consumption taxes would bring in Ltqs. 250.000 additional per month, but not as much revenue as an increase to 14 or 15 ad valorem would do—by almost one half. The situation would be alleviated, but no accurate figures have been furnished me as to the finances of Turkey, and I am unable to make recommendations to my Government on the vague and general statements of conditions as submitted by the Allied Delegates.
-
Argument #2.
- a)
- The consumption taxes are discriminatory in their nature in that they are placed on articles which come largely from America, and while the consumer and not the American exporter pays this tax, it will react upon American business when normal conditions are restored.
- b)
- The consumption taxes are placed on necessities of life and tend to increase the already high cost of living in Constantinople for the poor people who are much overburdened.
- c)
- The increase of the ad valorem tax from eleven to fourteen or fifteen per cent by agreement among the different powers would be fair to every nationality and would require only one system of collection of customs taxes.
-
Argument #3.
- a)
- It will be quite as easy to induce the neutral powers to accept an extra 3% ad valorem as to accept the imposition of the consumption taxes, plus the 11% ad valorem.
- b)
- After the Armistice, the regulation of trade with Turkey was vested by the Supreme Council in the hands of the Associated High Commissioners. No treaty with Turkey has since been signed and such control technically still rests in their hands, and I believe any joint decision would be accepted by all powers.
I have just obtained copies of the notes sent by the Allied High Commissioners on March 14th and May 3rd, (copy and translation of which are enclosed8), in regard to the restoration of the 11% ad valorem customs tariff. From their note of March 14th, a summary of which I transmitted by telegram No. 93, of March 12, 10 p.m.,9 you will observe that the Allied High Commissioners recommend the 11% ad valorem, plus the consumption taxes. Their note of May 3rd was supposed to have been sent as a result of the recommendations of the Advisory Trade Commission, after its meeting of April 26, 1921. They have not followed the recommendations of the Trade Commission in this matter, for they do not expressly request the 11% ad valorem without the consumption taxes, as had been the sense of the meeting of the Advisory Trade Commission.
The whole history of my negotiations with the Allied Representatives on the subject of the tariff indicates a desire on the part of the Allies to keep me completely in the dark, and to foster the trade of their nationals at any cost, and I think the time has arrived when representations should be made by my Government in Paris, London and Rome, looking toward a more complete cooperation in all questions in Turkey than there has been in the past.
I have [etc.]