667.003/108: Telegram

The High Commissioner at Constantinople (Bristol), temporarily at Alexandria, to the Secretary of State

Referring to your telegram of February 19th, quoting your telegram sent American Minister at Athens for Greek Government regarding import taxes at Smyrna, I visited Smyrna yesterday and had conference with delegate Horton and Greek High Commissioner Sterghiades who had just returned from Athens the day before, February 22nd. Sterghiades claimed to know nothing about Department’s aforesaid telegram for Greek Government …

When manager of the Standard Oil Company visited Smyrna 14th instant written agreement was made with Greek representative of Sterghiades for free pursuit of the company’s business pending [Page 159] diplomatic settlement of the tax question. Yesterday Sterghiades confirmed this agreement to me. Therefore, for the time being American business interests are protected but I recommend that there should be no delay in pressing for a settlement of the question of the legal taxes that should be imposed not only in Smyrna but in other parts of Turkey. Business interests require a definite decision.

Sterghiades first claimed full Greek sovereignty over Smyrna district but hedged when I then declared for application of the capitulations and straight import taxes at a rate of 11 percent ad valorem. He also stated that he could not impose 11 percent tax without consent of the Allied High Commissioners in Constantinople. Sterghiades was finally compelled to tacitly admit that the Greek Government is administering the Smyrna district as Turkish territory until such time as the Sèvres Treaty is duly ratified, and all taxes now being collected by Greek authorities and expended by them are kept in a separate account that will be finally balanced when the question of indemnity is adjusted.

Sterghiades, being pressed, protested that he could not act without permission of the Allied High Commissioners or authorization his Government. He proposed that: (1) the present method of taxation be continued, that is, specific tax on all merchandise with consumption tax [on] certain articles; (2) the Greek Government to collect the taxes, including all arrears, and give to the United States Government a guarantee that when a final adjustment is made the Greek Government will pay the funds so collected to whomsoever it is decided should have received them. Sterghiades also agreed to recommend to his Government the adoption of the tariff in force before the war, and with the same guarantee. Pending further instructions from the Department, Horton has been instructed to maintain the status quo in Smyrna and allow Sterghiades to receive direct instructions from his Government and submit in return the aforesaid recommendations.

I strongly urge the desirability of pressing at this very time for an adoption of the import taxes in accordance with tariff in force prior to August, 1914, without any reservations whatever. The proposition of the Allied High Commissioners to adopt the 11 percent tax but with a continuation of the present consumption tax on certain articles would be just as illegal as the present tax and therefore not justified. The Allied High Commissioners, and evidently backed by their Governments, have never given proper consideration to American commercial interests in Turkey and have constantly put off this settlement of the tax question without justifiable cause; while at the same time, have half-heartedly and after evading the issue as long as possible admitted the equal rights of the United States in the regulation [Page 160] of trade with Turkey under the provision for raising the blockade two years ago. I invite attention to my various despatches on this subject during this time and the reports of the Advisory Trade Commission that have been forwarded.19

I recommend that this question should be taken up directly with the Governments of Great Britain, France and Italy and a decision required without any delay. There should be no delay waiting for a London conference that will most probably only, decide where the next conference will be held. This is only a question of doing what is right and just and I suggest that this should be an appropriate time, when the European countries are looking to the United States for financial assistance, for them to play a fair game. I suggest that the prompt and unqualified resumption of the legal 11 percent tax might be accompanied with an agreement to place before the Advisory Trade Commission of the Associated Governments in Constantinople the question of increasing the ad valorem tax to meet the present financial difficulties of the Turkish Government which are partially attributable to not enforcing the 11 percent tax two years ago.

I request to be informed of Department’s further action.

  1. See pp. 890 ff.