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Rh and may not move any tobacco from the place where they cultivate it without the régie's express authority. In order to facilitate supervision, a minimum area of one-half of a deunum (a deunum = about one-fourth of an acre) is fixed for ground upon which tobacco may be cultivated; in the suburban districts of Constantinople and some other towns, and in enclosures surrounded by walls and attached to dwelling-houses, it is altogether prohibited. For its privileges the régie has to pay a rent of £T750,000 per annum to the government (assigned to bondholders), “even if it has no revenues at all,” and after the payment of a dividend of 8% to its shareholders, and certain other deductions, it has to share profits with the government and the bondholders according to a sliding scale agreed upon between the three parties. The régie did badly during the first four years of its existence, owing principally to two causes: (1) its ineffectual power to deal with contraband to which the system described above leaves the door wide open; (2) the admission of other than Turkish tobaccos into Egypt, which deprived it at once of about £T100,000 per annum. So great were its losses that in the year 1887–1888 it was obliged to write them off by reducing its capital from £2,000,000 to £1,600,000. At the same time it was granted an extension of penal powers, and the losses on reftieh (duty on tobacco exported to Egypt) were to be partially borne by the public debt administration. Things went better with it from that time until 1894–1895, when, owing to internal troubles in the empire, and the consequent fear of creating worse disorders, by the strict enforcement of the monopoly, the government withdrew most of its support, and contraband enormously increased. The following table shows the movement of the revenue of the régie from the year 1887–1888 to 1908–1909 inclusive:—

Negotiations were initiated in 1910 for the prolongation of the concession of the tobacco monopoly, which reaches its term in 1913.

Railway Guarantees.—Up to 1888 the only railways existing in the Turkish Empire (exclusive of Egypt) were, in Europe, the Constantinople-Adrianople-Philippopolis line and the Salonica-Mitrovitza line (finished in 1872); and in Asia Minor, the Smyrna-Aïdin (completed in 1866), the Smyrna-Cassaba (completed in 1866), the Constantinople-Ismid (completed in 1872), the Mersina-Adana (completed in 1886). The want of railways in Asia Minor was urgently felt, but no capitalists were willing to risk their money in Turkish railways without a substantial guarantee, and a guarantee of the Turkish government alone was not considered substantial enough. In 1888 it was proposed by the public debt administration to undertake the collection of specified revenues to be set aside for the provision of railway guarantees, the principle to be followed being, generally, that such revenues should consist of the tithes of the districts through which the railways would pass, and that the public debt should hand over to guaranteed railway companies the amounts of their guarantees before transmitting to the imperial government any of the proceeds of the revenue so collected. The government adopted this proposal, and laid down as a principle that it would guarantee the gross receipts per kilometre of guaranteed railways, such gross receipts to be settled for each railway on its own merits. Considerable competition ensued for the railway concessions under this system. The first granted was for the extension of the Constantinople-Ismid railway to Angora to a group of German and British capitalists in 1888. The Germans having bought out the British rights, this concession became a purely German

affair, although a certain proportion of the capital was found in London. Since that time various other concessions have been granted to French and German financial groups, principally the Imperial Ottoman Bank group of Paris and the Deutsche Bank group of Berlin.

The systems of guarantee above described are clearly faulty, since theoretically the railway company which ran no trains at all would, up to the limit of its guarantee, make the largest profits. The concessionnaire companies have, however, wisely taken the view that it is better to depend upon their own revenues than upon any government guarantee, and have done their best to develop the working value of the lines in their charge. The economic effect of the railways upon the districts through which they run is apparent from the comparative values of the tithes in the regions traversed by the Anatolian railway in 1889 and 1898 in which years it so happened that prices were almost at exactly the same level, and again in 1908–1909, when they were only slightly higher. Thus in 1889 they produced £T145,378, in 1898 £T215,470, and in 1908–1909 £T281,919.

A different system, still more uneconomic than the kilometric guarantee pure and simple, was adopted in the case of the Bagdad railway. In January 1902 the German group holding the Anatolian railway concession was granted a further concession for extending that railway from Konia, then its terminus, through the Taurus range and by way of the Euphrates, Nisibin, Mosul, the Tigris, Bagdad, Kerbela and Nejef to Basra, thus establishing railway communication between the Bosporus and the Persian Gulf. The total length, including branches to Adana, Orfa (the ancient Edessa) and other places was to exceed 1550 m.; the kilometric guarantee granted was 15,500 francs (£620). It should be noted that this concession was substituted for one negotiated by the same group, and projected to pass through Diarbekr. This raised strong objections on the part of Russia, and led to the Black Sea Basin agreement reserving to Russia the sole right to construct railways in the northern portion of Asia Minor. The Anatolian railway company, apparently unable to handle the concession above described, initiated fresh negotiations which resulted in the Bagdad railway convention (March 5, 1903). This convention caused much excitement and irritation in Great Britain, owing to the encroachment of German influence sanctioned by it on territories bordering the Persian Gulf, hitherto considered to fall solely within the sphere of British influence. Attempts were made by the German group, assisted by their government, to secure the participation of both Britain and France in the concession. These were successful in France, the Imperial Ottoman Bank group agreeing to undertake 30% of the finance without, however, any countenance from the French government—the “Glarus Syndicate” being formed for apportioning interests. The British government seemed, at one time, rather to favour a British participation, but when the terms of the convention were published, the strongest objection was taken to the constitution of the board of directors which established German control in perpetuity, while it was evident from the general tenor of the convention that a political bias informed the whole; in the end public feeling ran so high that any British participation became impossible.

The financial advantages, however, granted by the Turkish government were singularly favourable to the concessionnaires and onerous to itself. The kilometric guarantee of 15,500 francs (£620) was split into two parts, 4500 francs (£180) being granted as the fixed working expenses of the line, all receipts in excess of which amount were to be credited to the Turkish government in reduction of the remaining 11,000 francs (£440) which took the form of an annuity to be capitalized as a 4% state loan redeemable in 99 years, that being the period fixed for the duration of the concession. The line was to be constructed in sections of 200 kilometres (125 m.) each, and as the complete plans and drawings of each were presented at the times and in the order specified in the convention, the government was to deliver to the concessionnaires government securities representing the capitalization of the annuity accruing to that section. The capital sum per section was fixed, in round figures, at 54,000,000 francs (£2,160,000), subject to adjustment when the section was completed and its actual length definitely measured up. A minimum net price of 81½% was fixed for the realization of these securities on the market. The bonds are secured