The outcome of these negotiations, the decree of Muharrem, also established a set of concessions which could not be revoked before the extinction of the debt, and organised the administration of the Ottoman Public Debt, which was to collect and administer, on behalf of the Ottoman bondholders, the revenues conceded as guarantee of the debt.
The Ottoman Government pledged itself to allocate to the payment of the interest and to the amortisation of the reduced debt till its extinction the following revenues: the monopolies in salt and tobacco; the Six Contributions (tobacco, salt, spirits, stamps, fisheries, silk); any increase in the customs duties resulting from the modification of the commercial treaties; any increase of the revenues resulting from new regulations affecting patents and licences (temettu); the tribute of the principality of Bulgaria; any surplus of the Cyprus revenues; the tribute of Eastern Rumelia; the produce of the tax on pipe tobacco (tumbeki); any sums which might be fixed as contributions due from Greece, Serbia, Bulgaria, and Montenegro for the service of the debt.
The administration of the Ottoman Public Debt was entrusted to “the Council for the Administration of the Ottoman Public Debt,” commonly known as “the Public Debt,” consisting of delegates of Ottoman bondholders of all nations. The French owned by far the greater part of the debt. The English represented the Belgians in the Council, the shares of these two countries in the debt being about equal.
This international council, who attended to the strict execution of the provisions of the decree, deducted all the sums required for the interest and the sinking fund, and made over the balance to the Imperial treasury.
The decree of Muharrem also entrusted to the Public Debt the control of the cultivation and the monopoly of the sale of tobacco throughout the Turkish Empire. Later on, in 1883, the Public Debt farmed out its rights to an Ottoman limited company, the “Régie Co-intéressée des Tabacs de l’Empire,” formed by a financial consortium including three groups: the Imperial Ottoman Bank, which was a Franco-English concern; the German group of the B. Bleichröder Bank; and the Austrian group of the Kredit Anstalt with a capital of 100 million francs. Only one-half of this capital was paid up—i.e., 50 million francs—which was cut down to 40 million francs on November 28, 1899, to make up for the losses of the first three years. It is thought in French financial circles that half this capital—viz., 20 million francs—is French, and the rest chiefly Austrian.
The “Régie,” whose activities extend throughout the Empire, may be looked upon as one of the most important financial concerns of the Ottoman Empire. It has branches in all the chief centres, controls the cultivation of tobacco, records the production, buys native and foreign tobaccos, issues licences for the sale of tobacco, and advances money to the growers; its chief factories are at Samsun, Aleppo, Adana, Smyrna, etc. In return for the monopoly it enjoys, it owes the Public Debt a fixed yearly payment, and has to divide a fixed proportion of its net profits between the Public Debt and the Ottoman Government.
The share of France in the Council of the Public Debt, in which French was the official language, gave her a paramount influence and prestige in the Ottoman Empire. Owing to the importance and extent of the part played by the Council of the Debt, in which the influence of France was paramount, the latter country indirectly acquired an influence in the administration of the Malié—i.e., in the administration of the Turkish treasury—and in this way Turkey was obliged on several occasions to call for the advice of French specialists for her financial reorganisation.
But the Ottoman Government, in order to consolidate its floating debt, which had not been included in the previous liquidation, was soon compelled to borrow money abroad. Besides, it wanted to construct a system of railways at that time.
The loan guaranteed by the customs duties in 1886, the Osmanie loan in 1890, the 4 per cent. Tombac preferential loan in 1893, the Eastern Railway loan in 1894, the 5 per cent. 1896 loan, and the 4 per cent. 1901 loan, were all floated in France, and the English had no share in the financial operations between 1881 and 1904.
During the same period Germany, through the Deutsche Bank, took up the Fishery loan in 1888 and the 4 per cent. Baghdad Railway loan in 1903. Later on the German financial companies, together with the Deutsche Bank, gave Turkey as much support as the French banks, in order to promote Pan-Germanism in the East and oust French influence. The chief financial operations carried on by these companies were the Baghdad Railway loan, the Tejhizat loan for the payment of military supplies, and the 1911 loan, which were both a guarantee and an encouragement for the German policy of penetration in Turkey, and paved the way to a Germano-Ottoman understanding.