The Consul General at Smyrna ( Horton ) to the Secretary of State

No. 340

Sir: With reference to my telegram to the Department of July 23rd and also to the Department’s reply to same of July 29th, I have the honor to inform the Department that yesterday I had a long conversation with the Greek High Commissioner on the subject of import duties imposed on American goods which had already paid the duty at Constantinople or other parts of the Ottoman Empire. His Excellency persisted in his point of view that the duty must be paid again here and I telegraphed today to the Department to that effect.

He gave me the following reasons for his action which he requested me to communicate to the Department of State:

—He tried for a long time to keep Smyrna and its hinterland as an integral part of the Ottoman Empire, but the Turks first effected a separation by demanding import duty on goods which had already paid duty here, beginning this state of affairs in August 1920. He endured this until about a month ago when he was obliged to retaliate and issue the order which is causing so much discussion.
—The Turkish Government has retired all its functionaries from the zone deliminated [delimited?] by the Treaty of Sèvres which has obliged the Hellenic Administration to replace them by Greek gendarmes and functionaries, for the payment of whom and for other necessary expenses the Greek Government is obliged to incash [sic] all the available resources of the province, the more so since half of these resources are absorbed by the Public Debt and the Regie.
—All the provinces which are militarily occupied beyond the zone of Sèvres are administered by a mixed system. All the Turkish functionaries in this region—Justice, Finance, Police, Gendarmes—are kept at their posts under Greek control. They are paid by the receipts of the country, but when these do not suffice the deficit must be made up from the Greek Treasury. In addition the Greek Government is building roads, promoting agriculture, taking measures against disease and so forth, all of which cost money.

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His Excellency further stated that there has been a great increase lately in shipping goods to Constantinople and to Adalia and transhipping them to Smyrna. This was for some time incomprehensible to him as the goods must pay four or five pounds per ton agents’ charges at the point of disembarkment and another four or five pounds per ton here at Smyrna, besides the double duty. His Excellency insists that there must be something dishonest in this and he claims recently to have discovered that the receipts for duty supposedly paid at Constantinople and other points are bogus and are furnished by dishonest Turkish employees who receive small salaries, or none at all, and take this means of making a living. He claims to have detected some of these bogus Customs Certificates and to have punished merchants guilty of conniving at this. He also claims that it is in the interests of the Ottoman Treasury itself that the goods should be forced to pay income [import?] duty at Smyrna, thus putting a stop to the above mentioned dishonest practice. I asked His Excellency if he could not permit certain stocks of American, goods, now at Constantinople, which had honestly paid duty, to come on to Smyrna without further Customs Charges; but he said that he could not make any exceptions as he would be immediately importuned by all my colleagues to grant them the same privileges.

I have protested as vigorously as possible and done everything that seems possible at this end.

I am submitting to the Department the Greek point of view and I wait for further instructions.

I have [etc.]

George Horton