PP/GC/CA/98 Letter from Sir S.Canning to Henry John Temple, third Viscount Palmerston, concerning the state of the Greek finances and the desire for a king, with enclosures concerning reparations to Turkey to compensate for the loss of territory to Greece and Greek resources, 13 January 1832
Letter from Sir Stratford Canning, [British ambassador extraordinary and plenipotentiary on a special mission to Constantinople], Nauplia, [Greece], to Henry John Temple, third Viscount Palmerston: he is at last getting ready to leave Greece but would not mind having stayed there so long if "I had been fortunate enough to succeed in settling the peace of the country. Something indeed is done towards that object, but there is much exasperation between the different parties, mistrust prevails on both sides, and if one is blind and arbitrary, the other, though in part composed of better individuals, is passionate and with some exceptions, far too uncompromising and interested. It is not the least part of the mischief that somehow or other the foreigners, Russian, French and English, are supposed to side with the respective parties." If nothing is done about this situation immediately, Greece will be ruined and even if the residents succeed in completing Canning's work, which is not likely, no agreement will hold for more than a few months. "The new President is acknowledged on every side to be incompetent. He has no knowledge and he is destitute even of that national quickness of intellect which often supplies the want of knowledge." The President's supporters are interested men with no real prospect of power "except by clustering round a name and the remnant of a system agreeable to Russia. [The President] is perfectly hateful to a considerable portion of the men of influence throughout Greece. But such is the jealousy entertained by one Greek of another, that he might still be found, as a foreigner, the least objectionable person to have provisionally at the head of the administration, provided he were sustained by a commission or council of other and less interested men." The President has been signing large bills payable in two months' time, which he may not be able to pay as the funds of the government are wretchedly low. The troops have not been paid and so there is danger of revolt, as occurred at Argos. Parts of Greece are inaccessible to tax collectors and the paper currency is debased by forty five per cent. The government seems to have only kept going for the last three weeks because of a loan of forty thousand francs transmitted by Eynard and an advance of one hundred thousand probably made by the Russians. "All this is the more provoking as I really believe that with a tolerable system of administration the country has resources and elasticity enough to rise from its ruins." Canning encloses a memoir on the state of the Greek finances given to him confidentially by the conseiller de finances, Monsieur de Regny. Regny had been sent to Greece by Monsieur Eynard [to advise on Greek finances] and complains that the Greeks are financially ignorant and his report is overly pessimistic about the current state of the economy; he is, however, quite cheerful about future prospects for the economy and if only half his report is true it would still be worthwhile substantially to help the Greek government. The allies [Britain, Russia and France] must either set up a sovereign for Greece with necessary supplies of men and finances, or leave the Greeks to themselves "under the mere surveillance of the allied squadrons to prevent piracy". Everyone is crying out for a prince except perhaps Colocotronis and Capodistrias. If, however, a prince is appointed but not given adequate funds and men to support a decent administration then he will be "screaming for a successor" before two years are out. Greece does have its own resources, but needs a period of calm and freedom during which to draw them out. The national lands, to be productive, must be sold and agriculture and trade encouraged, neither of which can be done by a prince if he is dependent on local revenue for his expenses. Canning apologises for pressing the point this point [of funding a prince] but if it is not taken seriously by Palmerston it will lead to "nothing but disgrace and ruin to this country, and discredit at least to all concerned with it". Canning appreciates that it will be difficult for a British minister to contemplate paying or loaning a foreign state so much money but it will be essential unless a prince can be found as rich as the reluctant Prince Leopold. The low state of Greece, as Canning leaves it, will increase the difficulties of Canning's negotiations in Constantinople but he will do his best to get the frontier question [respecting the borders of Greece and Turkey] settled at the same time as Palmerston is deciding on a ruler for Greece. Canning encloses a memorandum he has written for Dawkins, suggesting a short cut to the problem of a settlement with Turkey. If, after reading it, Palmerston wishes to change any of Canning's instructions concerning the negotiations, Canning would like to know as soon as possible. Admiral Hotham has lent Canning his steamer and he hopes that it will make a quick journey to the Dardanelles but will take on a Turkish commissioner, "reputed to be full of all manner of knowledge about vacoufs". This "learned Mussulman" lives at Negroport. Canning hopes to have an opportunity of visiting the "promised land" around Thermopylae on the way: the residents are keen that he should, and the delay in doing so will only last a couple of days. The map on which the Greek protocols are based is not much better than the one they enlarged. Monsieur Scalon, the Russian cartographer, has never been in the part of the country he describes but gained his knowledge from native travellers who were without any scientific acquirements. The `Actaeon' sailed two days previously with some of his party and Canning hopes to meet the ship with Captain Grey at the Dardanelles. Admiral Hotham will send up a larger frigate for them to live on, if need be, at Constantinople. Hotham has been extremely considerate and obliging. 13 Jan 1832 This letter is marked: "Private"; it arrived on 26 February 1832, and is docketed: "Disordered state of Greece". There are also pencil notes by Palmerston on the docket: "For circulation returned from Windsor, 7 Mar 1832. Mar 24 read by all the cabinet ministers except ?Viscount Althorp, Chancellor [of the Exchequer], Mr Stanley, [Chief Secretary for Ireland]." Enclosed are: (i) a copy, in the hand of a secretary, of a memorandum from Sir Stratford Canning, [British ambassador extraordinary and plenipotentiary on a special mission to Constantinople], to Edward James Dawkins, British resident and consular agent in Greece: Text enclosed in brackets {} are marginal notes. [Transcript] [f.7r] "When the Conference of London reduced the limits of Greece from the extent marked out by the protocol of March 22 1829 to that which was subsequently decided by the Protocol of February 3 1830, the territory thus reassigned to Turkey was understood be an equivalent for the suzerainty and tribute then withdrawn from the Porte. The principle advantage which would have accrued to the Sultan as suzerain of Greece being an annual revenue of 1,500,000 Turkish piastres, a revenue of that amount may fairly stand for the value of the territory now required to complete the limits allotted to Greece by the protocol of March 22. It is to be remembered at the same time that not the full sum of 1,500,000 piastres, but only a fifth [f.7v] or a third of it, was to be paid till four years after the conclusion of peace; and that an additional sum, amounting to one year's full tribute, was to be paid to the Sultan on the investiture of every successive prince. It would hardly be worth while to insist upon the diminution of the purchase money in virtue of the former consideration; but the circumstance may be justly opposed to any attempt on the part of the Porte to exaggerate the value of the territory in question. The supplementary tribute, on the other hand, though only occasional and contingent, cannot be entirely excluded from our calculation. A yearly interest of 1,500,000 Turkish piastres may be taken to represent a capital of about 4,000,000 French francs. Explanation: the only interest allowed by the Turkish law is in favour of orphans, at 10 per [f.8r] cent. According to the statements furnished by the Greek government at Poros, interest used to vary in Greece from 12 per cent to 30 per cent, as the extremes; from 15 to 18 per cent being the interest given in ordinary cases. It results from these data that 12 per cent would be a fair middle term to adopt in the present case. At 12 per cent interest, a rente of 1,500,000 piastres is equivalent to a capital of 12,500,000. Taking the Turkish piastre at 80 to the pound sterling, and the pound sterling at 25 francs, 3 piastres and 20/100 are equal to a franc. On this supposition the sum of 12 1/2 millions of piastres contains 3,906,250 francs, or in round numbers 4,000,000: in English money about 165,000 [pounds]. To this amount, let a suitable addition be made on account of the year's tribute which was to have been paid by Greece on the investiture of every succeeding prince. In [f.8v] order to estimate with some approach to correctness the proper amount of this addition, it is natural to inquire how often this payment could have been likely to occur. This is a question of average. On looking to the examples of other countries, we find that during the last century, that is between the years 1700 and 1800, the crown demised in Turkey six times, in France twice, in England four times and in Russia eight. These examples, taken from the several courts most immediately concerned in the treaty of London, present an average of twenty years as the term of a reign. This being the case, it only remains to calculate the amount of a capital equivalent to a payment in perpetuity of 1,500,000 Turkish piastres once in twenty years, supposing money to bear an interest of 12 per cent. Or it may suffice more simply to take the twentieth part of a [f.9r] capital covering a rente equal to the annual tribute, and to add it to the amount of that capital. The capital in question is 12,500,000 Turkish piastres: 1/20 is 650,000. Total 13,150,000; or in francs, at the rate already stated, 4,109,375. But the Turks are understood to attach great importance to the vacoufs, for the recovery of which they have applied. It is decided also by the Conference of London that the vacoufs assigned to mosques [MS "moschs"] and to other pious usages in Attica, Euboea, Salona and Thebes should, if necessary, form part of the proposed equivalent. {Note. There can be little doubt of this, although the protocol specifies mosques alone, since the Reis Effendi's demand included both kinds, and both are referred to in the Poros papers to the same principle.} Of the extent and value of these vacoufs the Greek government could furnish no information to the ambassadors at Poros; nor does it appear that any additional [f.3v] means of information on this subject have been acquired since. On the contrary, there is reason to believe that the Turkish government alone possesses the records from which any positive notions thereon can be derived. To trust entirely to 'en parte' evidence would not be safe, and to examine the Turkish claims at once would be to protract the negotiations indefinitely. To avoid these difficulties, let a sum be fixed, upon the basis suggested above, as an equivalent for the territory to be ceded: let the vacoufs be assigned in lieu of this; let the claims to them be settled by commissions formed according to the plan laid down in the protocol of March 22, and let a final term for purchasing them be fixed. [f.10r] If, on the expiration of that term, it be found that the vacoufs do not equal the amount of the sum agreed upon, as above, let the difference be paid by Greece to the Porte out of the intended loan." n.d. Jan 1832: contemporary copy (ii) Copy of a report, in French, [by Henri de Regny], on the state of the Greek government's finances together with suggestions as to how to improve them. It is difficult to give a precise picture of the financial situation of a nation with no regular administration. The calculations are based on the territory actually occupied then by Greece, not that determined by the protocol of February 1830. Greece's population, including the islands, is estimated at 645,000. He gives details of the composition of the public revenues and expenses and the resulting deficit which excludes the public debt and its interest. The Greek public debt is over 128 million phenix. He sets out how the 60 million francs to be loaned by the allied powers will be spent: amongst other things, to establish a mortgage bank to help agriculture and the merchant navy, to buy back the Turkish possessions in Attica and Euboea and to form a reserve for the future repayment to the Porte following a treaty on Greece's new borders. Greece's annual deficit in finances amounts to over four million phenix and the interest and sinking of the public debt is an additional ten and a half million phenix. The national domain is the guarantee to the three allied powers of their loan and as agriculture is developed the income generated from the land will rise. There can thus be no worry [or doubt, added in the margin] to the three powers about a guarantee for their loan of 60 million francs. Although the financial situation is in a deplorable state, there is nothing to worry about for the future as long as a good administrative system can be established. Essential steps for reform are to organise the monetary system, suppress or modify the printing of paper money, establish the bases of public credit and a sink fund, liquidate the public debt and organise the ledgers, take a census of the national domain and of private land to supply the want of a register of surveyed land and to establish a mortgage system. If these various projects are realised, if the promised loan is effected soon, if internal peace allows a regular, careful and well informed administration to operate there can be doubt that the financial state of Greece will flourish within a few years. This document is annotated in pencil by Palmerston. A note on the docket states that copies were sent to Prince Talleyrand and Prince Lieven on 24 March 1832. n.d. Dec 1831: contemporary copy
Ten papers, four of which are tied together with blue ribbon
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Sir Stratford Canning, later first Viscount Stratford de Redcliffe, British ambassador extraordinary and plenipotentiary on a special mission to Constantinople
John Charles Spencer, Viscount Althorp, later third Earl Spencer, Chancellor of the Exchequer
Edward Geoffrey Smith Stanley, later second Baron Stanley and fourteenth Earl of Derby, Chief Secretary for Ireland
Christoph Andreievich, Prince Lieven, Russian ambassador at London
Charles Maurice de Talleyrand Perigord, Prince de Benevent, French ambassador at London
Sulieman Neschib Effendi, alias Suleyman Necib Bey, Reis Effendi or Turkish Minister for Foreign Affairs
Vacouf, alias vakouf or wakf, Turkish ecclesiastical land
Poros settlement of France, Great Britain and Russia, recommending the border of Greece from Arta to Volos or Zeitun, originally including Candia or Crete and Samos as a basis of negotiation, 1828
Greek protocol
London Conference of the three powers: France, Great Britain and Russia
Treaty of London between France, Great Britain and Russia
Greece: civil war
Greek war of independence
Greek borders settlement
Turkey; Ottoman empire; Sublime Porte
Mahmud II, Ottoman Sultan
Agostino, Count Capodistrias, President of the Greek provisional government
Jean Gabriel Eynard, philhellene and campaigner for the liberation of Greece
Henri de Regny, conseiller de finances to the Greek provisional government
Greek government: finances, economy, debt, taxes, money, currency, National Bank, administration, agriculture, merchant navy, landowners
Prince Otto, alias Otho, of Bavaria, later Otto I, or Otho I, King of Greece
Theodoros Kolokotronis, Greek politician and supporter of Agostino Capodistrias in the civil war
Leopold, Prince of Saxe Coburg, later Leopold, King of the Belgians: candidate for the Greek throne
Edward James Dawkins, British resident and consular agent in Greece
Captain Frederick Grey, later Sir Frederick Grey
Vice Admiral Sir Henry Hotham, Commander in Chief of the Mediterranean fleet
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