No. 300.
Mr. Wallace to Mr. Blaine.

No. 30.]

Sir: The consul at Smyrna, Mr. B. O. Duncan, sent me, some days ago, a communication touching the imposition by the Turkish authorities in that city of an extraordinary duty upon alcohol. The case arose in course of the business of Messrs. Reggio & Belhomme, merchants and representatives of a Boston firm entitled Laforme & Frothingham.

Under §4, Consular Regulations 1881, I referred the papers to Consul-General Heap for his consideration and action, and he returned them to me. Copies are herewith inclosed.

After an examination of the treaty of commerce between Turkey and the United States and the agreed specified duty upon the article in question, it seemed plain that the additional duty demanded was unwarranted; and as the alcohol was of American manufacture I thought it my duty to present the matter to the Porte. My communication addressed to his excellency the minister of foreign affairs is also inclosed herewith. The demand made, you will observe, has reference to the language of the treaty.

As the in closures contain a full and particular statement of the affair, I think it superfluous to enter into further explanation. Hoping my action will meet approval,

I have the honor, &c.,

LEW. WALLACE.
[Inclosure 1 in No. 30.]

Mr. Duncan to Mr. Wallace.

Sir: I have the honor to call your attention to a new regulation of the Turkish customs first put in force at the custom-house here, which I think you will agree with me in regarding as a manifest and intentional violation of Article V of our treaty of commerce with the Ottoman Empire. That article clearly provides that with the exception of tobacco and salt “that duties to be imposed on every article the produce or manufacture of the United States of America, imported into the the empire and possessions of His Imperial Majesty the Sultan, shall in no case exceed one fixed rate of 8 per cent. ad valorem, or a specific duty, fixed by common consent, equivalent thereto”; and also that “neither the buyer nor the seller shall he charged with any further duty with respect to them.”

The equivalent of the 8 per cent. “fixed by common consent” for alcohol, which is one of the most important articles of American production imported here, is 16 paras per oke, of 2¾ English pounds. As you will see from the letter of Messrs. Reggio & Belhomme, prominent merchants of this place, a translation of which I inclose [Page 492]the custom-house here now demands of them the payment of 48 paras per oke as a fiscal duty, as it calls it, over and above the former custom-house duty of 16 paras; that is 64 paras per oke, or 32 per cent, ad valorem, just four times the duty allowed in the treaty.

Note, too, that Article XIV of this new regulation speaks of 32 paras increase, whereas the actual increase demanded by the custom-house here is 48 paras, and of 60 paras in case the goods are placed in a store, whereas the actual demand is for 90 paras. This difference is explained by the custom-house as being made on private instructions from Constantinople.

I cannot myself see any possible way of reconciling this new regulation with the language of our treaty, and that of the French treaty which I have seen is in almost exactly the same words as ours. It is presumed that the change has grown out of the financial negotiations now pending at Constantinople. But if so, it should certainly not have been put in force until fully agreed upon and sanctioned by all the powers including the United States.

The fact that Messrs. Reggio & Belhomme are not Americans—they are French—I presume has nothing to do with the matter, as they represent here an American house of Boston. The language of our treaty is as to the rights of American “produce and manufactures,” and must, I suppose, be equally applicable whether imported into Turkey by an American or a foreigner.

I submit the case for your consideration and action according as you may see fit and proper under the circumstances. I have taken no steps here except to write to the governor-general, Ali Pasha, quoting the above-cited passage of our treaty, and entering my protest against its violation.

I shall also immediately report the case fully to the Department of State, sending my report first to you, to forward with any additional report you may see fit to make.

I shall be obliged to you for any advice or instructions you may be able to give me for my guidance as early as possible.

I am, sir, &c.,

B. O. DUNCAN,
United States Consul.
[Appendix 1 to inclosure 1.—Translation of extract from the new regulations of the Turkish customhouse on spirits.]

Article 14.—On the importations of spirits (alcohol) from foreign countries, and which are to come for the manufacture of eau de vie, there will be collected, in addition to the custom-house duties (droits de douane), another fiscal duty (droit de fisc) of 32 paras, payable in cash, for each oke (2¾ pounds) of alcohol in a proportion of two okes of eau de vie for one oke of alcohol.

If, at the time of the importation of the spirits, there be persons who do not wish to pay in cash this fiscal duty, then the spirits will be placed in a store designated by these same persons, provided that the position of the store or depot is in a place authorized by the police regulations. This store must have two locks, and consequently two keys, of which one will be kept at the custom-house and the other in the hands of the owner (of the spirits). Each oke of alcohol withdrawn from these stores to be sold must pay a duty of 60 paras.

[Appendix 2 to inclosure 1.—Translation.]

Messrs. Reggio & Belhomme to Mr. Duncan.

Sir: The undersigned, Reggio & Belhomme, merchants established in this city, representatives of Messrs. Laforme & Frothingham, of Boston, have the honor to represent to you that having imported some alcohol from the United States, the direction of the “indirect contributions” at Smyrna refuse to deliver it to them for the purpose of sale on the market, on the payment of the custom-house duty of 16 paras per oke as fixed by the treaty of commerce.

It claims a supplementary duty of 48 paras the oke, according to a new regulation for the sale of spirits, prepared at Constantinople, and of which a copy is herewith inclosed.

The undersigned recommend to your attention Article 14 of this regulation fixing the new duty at 32 paras the oke, and not 48 paras, which the direction at Smyrna demands.

In addition, they beg you to remark that the new duty of 48 paras the oke is payable at the custom-house, at the game time as the old duty of 8 per cent. If the alcohol [Page 493]is sold on the market after having been in the stores of the undersigned, without the payment of the duty of 48 paras the oke, then the duty is raised to 90 paras the oke (instead of 60 paras as given in Article 14 of Regulations).

To resume, up to the present the undersigned have paid the single and unique duty of 16 paras the oke on alcohol, and have had the faculty (right) to sell it freely on the market.

Since the 21st of October, N. S., 1881, in order to have these same advantages, the old duty of 16 paras the oke is required of them, and in addition the new duty of 48 paras, in all 64 paras the oke, or a duty of 32 per cent, instead of 8 per cent., paid heretofore, and all that is recognized by the existing treaties of commerce.

The undersigned, finding themselves under the necessity of paying this duty of 64 paras the oke on a lot of 77 barrels of alcohol, which they could not allow to remain longer on the quays of the custom-house exposed to all kinds of risks, protest against this new state of affairs, for the damages which have already arisen and which may result therefrom, which they receive to themselves to establish with all necessary evidence, and they beg you to intervene with the minister of the United States at Constantinople to have instructions sent to the direction of the indirect contributions at Smyrna not to insist longer on the collection of this new duty of 46 paras the oke, and that it be limited to the old duty of 8 per cent, or 16 paras the oke, this being the only duty sanctioned by the treaties of commerce in force.

They have the honor, &c.,

REGGIO & BELHOMME.
[Inclosure 2 in No. 30.

Mr. Wallace to Assim Pacha.

Sir: I have the honor to ask your attention to a matter which is the subject of an official report to this legation from the American consul at Smyrna.

Messrs. Reggio & Belhomme, merchants of Smyrna, are representatives of Messrs. Laforme & Frothingham, of Boston, United States of America. In course of their business, the latter consigned seventy-seven barrels of alcohol to the former. Upon the arrival of the goods at Smyrna the direction of the indirect contributions refused to deliver them for the purpose of sale on the market, for a reason heretofore unheard of and clearly unwarranted. Messrs. Reggio & Belhomme tendered payment of the usual customs duty of 16 paras the oke, which was the amount fixed by the agreed tariff upon alcohol under the treaty of commerce between Turkey and the United States. The direction declined the tender, and demanded a supplementary duty of 48 paras the oke, giving as a reason that they were acting in accordance with a new regulation for the sale of spirits prepared at Constantinople.

Messrs. Reggio & Belhomme at first resisted the demand, but were at length driven to payment at the rate of 64 paras the oke. They made the payment under protest, reserving the right to claim damages then accrued, and such as might thereafter accrue.

Investigation of the affair was at once instituted by the American consul at Smyrna, which brought to the surface some new regulations said to have been prepared and sent down from Constantinople; amongst them one numbered Article 14, against which he promptly protested.

Apropos this statement of facts, I have the honor to ask that the direction of indirect contributions at Smyrna be required to suspend the further execution of the said Article 14, in so far as it has any effect upon any article of production or manufacture in the United States of America, imported into the empire and possessions of His Imperial Majesty the Sultan; that as respects even articles the produce or manufactures of the United States of America, whether in the hands of a buyer or seller in His Majesty’s empire, the said Article 14 be entirely canceled and revoked; and in particular that the duties upon alcohol be returned and limited to the rate of 16 paras the oke. As Messrs. Reggio & Belhomme have reserved the right of making demand for damages sustained by them in this business, no claim of that nature is now presented to your consideration.

To obtain the relief asked I think it only necessary to present two points for consideration, and those in the briefest manner.

First. The Article 14, new regulations referred to, is in palpable violation of Article V of the treaty of commerce between the United States and the Ottoman Empire. Article V of the treaty, with exception of tobacco and salt, provides that His Majesty engages that the duties to be imposed on every article, the produce or manufacture Of the United States of America, imported into the empire and possessions of His Imperial Majesty the Sultan, shall in no case exceed one fixed duty of 8 per centum ad valorem [Page 494]on a specific “duty fixed by common consent, equivalent thereto,” and also, that “neither the buyer nor the seller shall be charged with any further duty with respect to them.”

Under the common-consent clause of the Article V the specific duty agreed to be fixed upon the item alcohol is 16 paras per oke of 2¾ English pounds, that rate having been accepted as the equivalent of the 8 per cent, recited in the treaty. (See tariff, Turkish and American.)

In the face of this plain treaty provision the Article 14 of the regulations proposes to collect on alcohol, in addition to the custom-house duty (of 16 paras), another fiscal duty of 32 paras cash per oke; that is, 48 paras in all.

To make the imposition worse, there is a clause in the article objected to, evidently of a penal character, providing that in a certain contingency the so-called fiscal duty shall be increased to 60 paras. The word fiscal applied descriptively to the new duty can be of no assistance in giving validity to the measure as against the treaty.

Second. Turning in the next place to the operation of the Article 14, as it was exemplified in this case by the direction of indirect contributions in Smyrna, it appears from the report given by the American consul that before the Messrs. Reggio & Belhomme could get the 77 barrels of alcohol they were compelled to and did pay in all at the rate of 64 paras the oke. When in protest they represented that Article 14 stopped at 48 paras (the goods not having been put in store), and asked the authorities demanding 64 paras; they were told that it was according to private instructions from Constantinople. This fact is given your excellency without comment further than that it indicates a tendency to lawlessness, which I do not doubt will be promptly checked.

I avail myself, &c.,

LEW. WALLACE.