Year: 1875

cHANdE-sHoRT AND SUMMARY METHOD OF


GETTING OUT OF FINANCIAL DrFFIcULT1Es-


"A NEW WAY TO PAY OLD DEBTS"


From the Pail Mall Gazette, October Ill


To make panic il is not always necessary resort
10 surprise The panic that tho Exchange
on Thursday, continuing 10 rage with increasing
hemence till Sunday IN 10 suspend operations,
was certainly due TO any unexpected shock or to
the discovery OF any circumstance OF danger thereto
fore concealed. The announcement which has made
havoc in the European stock markets was undoubtedly
more sudden and untmcy than II need have been
in the ordinary or circuHstanceseven OF such
circumstances embarrass the Turkish government;
and therefore suppose there must be something to
account for the precipancy OF this act of repudaon
But whatever the explanation may be, It is not
likely 10 be Of nature consolng to
tho holders OF Turkish bonds. Indeed,
there is nothing whatever TO console them,
that wc can sec except their forcknowlcdgc of the
catastrophe as thing absolutely inevitable, sooner or
later and the reflection that the air is moro or less
clear above the devastation occasoned by the disaster
We know now that there Is less to get out OF Turkey
but We can form assured estimate Of how much
less she will pay certain period Partial rcpudi-
alton today is better than total reputation little
while hence and 1t is quite certain that II Turkey had
succeeded in carrying for afew years longer the
financial operations OF the last decade she must have
fallen into sudden and utter insolvency. From re-
formed administration nothing could be hoped and
nothing DO hoped lnasmuch as litllc or
no money can be borrowed any the af-
fairs OF Turkey will doubtless improve The
spendthrft who no longer resort to the Jews Is


likely cast about him seriously at last for means OF
retrcnchment But for any large, well planned, Wig
and long continued effort TO develop resources 10
organize taxation to cut of the prodgious waste OF the
civil list 1t is impossible TO harbor any expectation OF
It, II tho country could bo given over for these miser-
able five years to the peaceful and undisturbed admin
stration of a few picked Indian officials, If (Which
would be to the purposc it could be taken IN
hand by Of those pachas who from time to time act
prodgies of good government in some distant province
and are then recalled all would go well
enough The country might then be easily
brought into such a condition as ought at least
TO satisfy creditors who, by the very terms
OF tho bargain consented the enjoyment Of far less
security for their money than absolute sovency sign-
ncs But no such rule, we are afraid, VIII ever 90
be Turkish city. II is even doubtful whether Turkey
would be allowed to prosper indeed for our own part,
we all doubt that she would not be allowed 10
prosper Her difficulties the desire of Powers too
Christian and polite to rejoice at them openly but
in any small way that opportunity may pre-,
sent To inner corruption, extravaganza and
FOLLY OF an apparently inourabe kind must
be added the prospect OF series Of
costly disturbances from without OF which the
rcction in the Herzegovina is an example Positive
encouragement they may not have; but there are
rcasous in the policy OF certain powerful States which
convince us that the danger of their repetition IS in
creasng.





But in reference to the matter Immediately before
there two points in the case which suggest
little further inquiry and which have not yet been sats
factory considered In the first place the announce
ment seems show that Turkey more heavily in
debt than had been supposed. The ''Statesmans Year
Book tor the present year places the nominal capital
the Turkish debt at f1S5 600 000 and the interest


including the guarantee 70 the railways at 80 900 Ooo
in "Whitakers Almanac the amount OF the debt is
placed f15 600 000 but the interest Is not stated
while, in article published last February on the
debts OF the world ourselves placed the capital of
the G15 600 000 and the interest at 60 500 600
\ II looks very much II all these amounts had
\ been under.estimated We are told that the rcpudia
ton OF half the OF the debt will the Turkish
government 1000 600 Turkish pounds f6, 6,0o0, 900
annually this be true the amount of the interest
the Turkish debt must have becn e. 800 600 higher
\ than any English critic had imagined; and all the
Turkish accounts which have reached this country
mnst have been erroneous to this extent 1t is pos
sole of course. that the saving to the Turkish gov
/ rrnmcnt may have been purposey exaggerated, and
That il may not reach 60 ooo 600 The Turkish budget
was known TO show deficit Of g., 600 oOo and Turk
ish fnancer might very naturally, If he had made up
his mind step Of this sort, desire to make deficit
/ now THE CREDITORS STAND.


The second point more important one IL is s1id
in effect that the different creditors of Turkey stand
in very different position Some have had certain
revenues specially hypothecatcd TO them while others
| have lent their money on the general credit TO the
country. To place creditor with special security for
his money the same footing unsecured creditor
is obviously offensive to every principle OF equity.
Whatever pretencc there may be for repudating the
general debt there be for overthrowing the
arrangement by which certain assigned
security particular bondholderS. There is doubt
whatever that this argument is sound in principle Tn
fortunately, however, there is difficulty the way
OF securing adhesion to IT, The Turkish government
want to save f6 900 900 year and the interest OF tho
! general Turkish debt only amounts, far can
make out TO f3 800 600 annually IL the entire interest
on the general debt cancelled an equilibrium would
not even nomnaly be restored in the Turkish budget
If Turkish nanciers rcpudiate annually f6 00000 OF
the liabilities of their country they necessarily
con1scatc portion OF the stock which appeared
I be secured particular revenues.


or course the bondholders will protest and, espcc-
ally as other governments have already intcrcred they
may possibly persuade Lord Derby 10 indorse their
protests but II Is scarcely likely that they will have
any substantial success They will have TO make the
best OF tho matter IL stands, we afraid and 1t is
not quite so bad as IL looks.