The Consul General at Smyrna (Horton) to the Secretary of State
[Received April 16.]
Sir: I have the honor to inform the Department that on February 23rd, Admiral Bristol, American High Commissioner to Turkey, arrived in Smyrna on board the Cruiser St Louis. After I had called upon him, he came to the Consulate, and we had a long talk on the local situation, especially with reference to the illegal taxes which the Greek administration here has been attempting to levy upon certain American imported articles, notably petroleum, alcohol, sugar, etc.
At Admiral Bristol’s request I invited Mr. Sterghiades, the Greek High Commissioner, to come to the Consulate General and have a conference with us. The Admiral, in talking with Mr. Sterghiades, emphasized the statement that in view of the fact that the treaty of Sevres has not been ratified, the American Government could not recognize the Greek administration in any other light than as military [Page 161] occupant executing the terms of the Armistice with Turkey, that we did not recognize the right of the Greek administration to levy other taxes than those provided for by the Capitulations nor to appropriate these to their own use.
This matter of consumption and special taxes has already been fully explained in my dispatches No. 207 of September 9, 1920, File No. 630, No. 273  of January 20, 1921, File No. 630, and No. 274 of January 21, 1921, File No. 630.20
Mr. Sterghiades, replied that he was ready to accept the 11% ad valorem or any other tax, if all the High Commissioners would agree, but that he could not have several tax schedules operating at the same time here, as those nationals who were unfavorably affected would be continually complaining and other complications might arise which would affect the commerce of Smyrna and divert it elsewhere.
He said that the Greek authorities were keeping a detailed account of all the taxes collected by them, which they were using for the expenses of the occupation, and which sums would eventually be deducted from the amount due Greece by Turkey in the way of indemnities, etc. He said that Turkey, by the terms of the treaty would be obliged to pay the expenses of the various armies of occupation, and that the taxes now being collected by the Greeks were in this sense actually being realized on behalf of the Turkish Government.
The Standard Oil Company, which was the business firm chiefly affected by collision over the special and consumption taxes, is not being interfered with at present by the Greeks and is peacefully conducting its affairs.
The Admiral explained to Mr. Sterghiades that there never has been any question as to the payment of all legal taxes by American firms, as soon as the two questions are settled as to the rate of taxation and second, as to the parties entitled to receive the amounts collected.
He gave to Mr. Sterghiades the substance of a telegram recently received from the Department21 informing him (the Admiral) that the Department had taken up this matter with the American Minister at Athens on February 16, 1921.
As to Mr. Sterghiades’ contention that it will not be practicable for him to have several schedules of taxation here, basing his assertions on instructions received by the French and British delegates here from Constantinople, advising them to allow their nationals [Page 162] to pay the consumption tax under protest, on the ground that the Turkish treasury had need of being fortified, I have the honor to report that at the latest meeting of delegates, held last Friday, Mr. Laporte, the French delegate, read a communication from his High Commissioner to the effect that the Allied nationals should pay the illegal taxes in question, in case they were paid by all other nationals. He explained that this was the decision of the Allied High Commissioners. He asked me if Americans would pay the special and consumption taxes. I replied that I had no authority to instruct Americans to pay any tax other than that of the Capitulations, i.e. a maximum of 11%. He said then that he should follow suit for French citizens. He so interpreted his instructions. The other two delegates had received no instructions on this point, but I believe that these will not be long delayed.
I believe that the apathy of the Allied High Commissioners on this point, especially the British, is due to the fact that America is at present the chief importer into Turkey, and that they have no especial objection to American imports “fortifying” the Turkish treasury, and paying the expenses of the Greek army of occupation.
I think it certain that if we insist upon the maximum of 11% tax that the others will be forced to fall in line.
I have the honor to enclose herewith clippings from the Echo de France, a local newspaper, on the Admiral’s visit to Smyrna.22
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