The object of the visit of General Marquez, the special envoy of the
so-called emperor Maximilian, is limited to the purpose designated in my
last despatch. The grand vizier declares to be without foundation the
report that the Porte will give him its sanction of the incorporation of
the Egyptian blacks into the imperial army, and of a further contingent
of black troops from Egypt. He said, in reply to my inquiries on the
subject, that the Porte would have nothing to do with such an affair. I
learn, however, that General Marquez expects to receive at Vienna four
battalions and a regiment for the service of Maximilian. The soldiers
enlisted in Europe for this purpose are needy adventurers, whom
necessity, and not sympathy with the imperial cause, has induced to
accept the proffers of the agents of Maximilian. They are not such a
class of men as can be relied on to support a government in the hour of
adversity. The desire to get to America also is so great that men will
embrace any pretext to compass their wishes in this respect. Never was
there a time when the hearts of the million masses of Europe throbbed so
warmly to the United States as now, and never was there less sympathy
with any movements directed against the spread of our political
principles on the American continent.
Hon. William Hunter,
Acting Secretary of State.
(For enclosures see Appendix, separate volume.)
P. S.—I beg to enclose a brief statement of the last financial scheme
of the Turkish government.
The conversion of the home debt.
The following is an abstract of the statement issued in London by the
contractors for this operation:
“The great object of the scheme may be described as that of
definitely transporting Turkish finance from the region of, Oriental
into that of European finance. Oriental governments invariably live
from hand to mouth. They contract debts without forethought, are
irregular in their payments, and as a consequence pay, in a long
run, usurious rates in order to cover the risks. European
governments, on the other hand, make the act of borrowing a
deliberate and public act, surrounded by as many safeguards to the
lender as possible, and they invest their public stocks with as many
attributes of security and convenience to the holder as possible, so
as to get money at the lowest rate which the intrinsic state of
their credit admits of. Foremost among these attributes is the
existence of one large, uniform stock, or consols, instead of
various petty stocks of different denominations. Nor is it less
important for countries where domestic capital is scarce and a large
part of their national debt is raised abroad to make it payable in
specie, at a fixed exchange, at all the principal monetary centres
of Europe. A consolidated debt of this sort, payable at London,
Paris, Amsterdam, and Frankfort, as well as at home, inscribed in a
grand livre, and charged on the general revenues of the empire, with
due provisions against frittering these means away by hypothecations
or raising further loans, except openly and under legislative
authority, may be said to afford the maximum of security and
convenience possible, and, consequently, to enable the state which
adopts it to raise money at the minimum rate consistent with its
intrinsic resources and credit. There is as much difference between
this and the irregular expedients by which Oriental governments are
accustomed to raise money as between the mortgage which a nobleman
may give an assurance company on his estate, and the bills which the
same nobleman, in the thoughtless days of his youth, may have given
to some West End money-lender to meet a loss on the turf. The former
is in some respects less convenient, for it must be paid punctually
each quarter day in actual cash, while the latter may probably be
staved off for a term or two by signing a fresh piece of stamped
paper; but then he pays the difference between 4 and 40 per cent,
for the accommodation, and, what is even more important, he executes
the mortgage deed only after due reflection and on some grave
occasion, while, if once accustomed to it, he is apt to scatter
about his signature to the looser sort of paper to meet every
passing whim or inconvenience. These general principles apply
peculiarly to the case of Turkey. The cause of her pecuniary
embarrassments has been, not the deficiency of her resources to meet
her necessary expenses, but the inveterate habit of borrowing from
local money-lenders at Constantinople at 15, 20, and even 30 and 40
per cent., to meet arrears in the collection of taxes and irregular
expenses incurred without any publicity or sanction.
“Again: punctuality in the payment of debts necessitates punctuality
in the collection of revenue. Now, the want of this punctuality has
been the want of Turkish finance. The revenue is ample to meet the
expenditure, but practically from 20 to 30 percent, of each year’s
collection is allowed to fall into arrear, and a considerable part
of this arrear is never recovered. There is no reason why the whole
revenue should not be punctually collected, as in India, where the
arrears are inconsiderable. The necessity of paying half-yearly
dividends punctually will soon bring about the administrative
reforms which are alone necessary to make the collection of the very
light taxation of Turkey prompt and regular. As regards the payment
of a large part of her debt abroad, Turkey is also in an
exceptionably favorable position. Turkey is like India, a country
which habitually exports more than it imports, and this favorable
balance of trade is certain to increase as roads and railways
develop the resources of the interior. In the case of Turkey,
therefore, as in India, a large amount of payment may be made abroad
by the State without preventing the influx of a moderate amount of
specie. If these payments ceased, the influx of specie would soon
become excessive and raise prices to a point that would check
exports.”
“In addition to these general considerations, it is pointed out that
the special advantages to the Turkish government of the present
consolidation will be—
“1. That it enables them to raise a sum of £2,000,000 cash, without
any increase of present burden on the budget, the saving by the
reduction of the sinking fund from 2 to 1 per cent on the capital
covered being enough to pay 5 per cent, interest and J per cent,
sinking fund on £4,000,000 of new stock.
“2. The new sinking fund being applied in the purchase of stock in
the market at 55 or 60, instead of in drawings at 100, will go
nearly twice as far, and, in addition to paying off the capital of
the debt in 37 years, will accumulate a reserve fund equal to that
capital in the same period.
“3. The existence of this reserve fund, and of a reserve of
authorized inscription in the grand livre, will always enable the
treasury to obtain such temporary advances as may be required to
equalize the receipts and payments of different periods of the year,
or to meet grave emergencies at a moderate rate of interest.
“As regards the present holders of the internal debt, the advantages
are equally obvious. The holder of a six per cent, consolidé of 100
medjidies d’or, or £90 sterling, gets £110 sterling
[Page 296]
of new 5 per cent. consols, yielding a
slightly better interest, with £20 more capital and all the vast
improvements of security afforded by inscription in the grand livre
and payment of interest in gold, at a fixed exchange, in all the
principal places of Europe. For this great advantage he gives up
nothing but the difference between the present two per cent,
amortissement and the one per cent, new amortissement applied in
purchasing the stock. As a question of figures, it is quite clear he
gains greatly. The new consols are in all respects on a par, as
regards security, with the existing six per cent, external loans,
except as regards the special hypothecations of certain branches of
revenue in favor of the latter, which are fast running off by the
action of their sinking funds, and to which, with the exception of
the special charge on the Egyptian tribute for the loan of 1854, no
great value could be attached in the extreme and improbable case of
Turkey becoming insolvent. But if a 6 per cent, stock with a 2 per
cent, amortissement be worth 70, (and it is now quoted higher,) a 5
per cent, stock is worth 53 without any allowance for the 1 percent,
amortisation, which, being applied in purchase, tends to raise the
average market price of the stock. And if £ 100 of the new consols
be worth £53, a consolidé, which is exchanged for £110, is worth
£58. But the market value of the same consolidé was not above £48
until the recent issue on the prospect of the conversion, and if the
scheme for conversion had been defeated the price would in all
probability have gone back to that figure, or lower. For the other
classes of internal debt the advantage of conversion is equally
obvious. Lastly, as regards the holders of the external debts, their
position is improved by the general improvement of Turkish finance.
Whatever improves the credit and adds to the borrowing power of a
state, improves the security of previous debts. The holders retain
all their special securities, whatever they may be worth,
unaffected, and the only suspicion of an injury to them is that the
superior attractions of the new stock may lead to competition with
the old stocks in foreign markets. But this is by no means certain,
as it is generally found that when a domestic stock rises in value
the native holders buy rather than sell. This was strikingly the
case in India with regard to the rupee paper, and there is every
reason to believe that as Turkish stock rises and confidence is
created, a larger, rather than a smaller, proportion of the whole
debt will be held in Turkey. At any rate, the holders of the old
external debts will always have the opportunity of converting, at a
fair rate, if they desire it, into the new stock, as the policy of
the Turkish government must always be anticipated by voluntary
conversions, the period of the complete unification of the whole
national debt, and discharge all special hypothecations. Supposing
all debts converted into the new stock, the whole existing national
debt of Turkey would only be about £60,000,000. Such a debt will be
by far the smallest debt of any country of Europe in proportion to
its population, revenue, and resources; and with a moderately good
system of taxation and financial administration, which are now in
the way of being carried out, the Turkish treasury would soon be in
a state of prosperity.
“The following extract from a statistical return just published by
the Foreign Office affords the best proof how light are the debt and
taxation of Turkey compared not only with those of wealthy nations,
such as England and France, but with the poorer countries of Europe,
such as Russia and Austria, and even with the states of South
America:
PER HEAD OF POPULATION.
|
Annual Revenue. |
Public debt. |
|
£ |
s. |
d. |
£ |
s |
d. |
| England |
2 |
8 |
2 |
28 |
2 |
5 |
| France |
2 |
0 |
4 |
14 |
0 |
4 |
| Russia |
0 |
12 |
7 |
3 |
11 |
1 |
| Austria |
0 |
16 |
8 |
6 |
12 |
4 |
| Italy |
1 |
4 |
9 |
5 |
13 |
3 |
| Spain |
1 |
6 |
4 |
9 |
8 |
5 |
| Portugal |
0 |
17 |
1 |
8 |
7 |
1 |
| Brazil |
0 |
15 |
8 |
2 |
19 |
8 |
| Chili |
0 |
17 |
10 |
1 |
16 |
4 |
| Peru |
1 |
13 |
11 |
2 |
14 |
10 |
| Turkey |
0 |
7 |
9 |
13 |
1 |
1 |
