CO885(1-2) — Page 35

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PUBLIC RECORD OFFICE

Reference :-

TLC.O.

885

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which one and a half per cent. are appropriated to the road fund. The duties on the expor- tation of oil and currants from Greece are six per cent. ad valorem on exportation, and ten per cent. of the production in kind when at maturity, whether exported or not, which, taken together with the fertility of the soil, and the inferior cost of production there, gives considerable advantages in the markets of the United Kingdom, to the productions of a country which is already formidably competing with these States.* From this tithe the Ionian growers being free, the reduction of duties necessary to permit exportation to take place from hence on such terms as may enable the productions of this country to compete in price in the markets of the United Kingdom with those of Greece (so far as the export duties affect the price) would only be about three and a half per cent.

Turning to the other end of the voyage, the duty on oil imported into the United King- dom is four pounds four shillings a ton, equal to fifteen per cent. on its value, calculated at the present price of eight dollars a barrel, which, together with the nineteen and a half per cent, export duty, is thirty-four and a half per cent.

The duty on currants imported into the United Kingdom is twenty-two shillings and two-pence per hundred weight, equal to ninety-one per cent., on the value of the article, calculated at the present price of fifty dollars per thousand pounds; which, together with nineteen and a half per cent. export duty, makes a hundred and ten per cent. on the value! Nothing but the peculiar facilities which this climate affords for the production of oil, and for the growth and drying of currants, but more particularly the present high price, could enable the inhabitants of this country to send to market an article so heavily taxed both in the exporting and consuming country. But should price decline to what may be a fair remunerating price in Greece, before these Islands shall have multiplied their resources, by cultivating other branches of industry, and before an essential change shall have been made in their financical system, by which the revenue may not depend, or at least not so greatly rely upon ad valorem duties on the exportation of her vegetable productions, par- ticularly currants, it is plain that both proprietors and cultivators must be plunged into great distress, and the finances of the country be thrown into great embarrassment.

Greece already produces such quantities of currants, as to control price to a consider- able extent in the markets of the United Kingdom; and the competition of that country is making such progress, by additional cultivation, as must cause prices to decline; and, as I have shown on another occasion,t must be met by opening other sources of revenue. the duties on oil, currants and wine, were reduced in both countries, it would be mutually advantageous to the consumers in the United Kingdom, and to the growers in this country, and in the end not hurtful to the revenue of either,

If

The increased consumption in the United Kingdom, would occasion an increased demand for British produce and manufactures in these Islands. The actual value of those consumed is at present trifling; but is rapidly increasing even under these disadvan- tages. It has doubled within the last fifteen years, and would increase in a much higher ratio were the duties materially lowered on the exportation and importation of the productions of these Islands.

For these reasons I am of opinion that it would be highly expedient to begin, as soon as possible, to make a gradual transition, from the present vicious system of taxation, by proposing to the legislature to modify it in such manner as may maintain the revenue nearly at its existing rate: by substituting duties on the importation of some articles of general con- sumption, and remitting, by so much, the export duties on the natural productions of the country.

Grain is the only article upon which this might be done. I would not, however, venture to recommend that a duty should be laid on grain for revenue purposes, leaving the other duties as they are, but that raising a sum in this way equivalent to the loss that would be sustained by remitting three or four per cent, of the duty on exportation, would be highly advantageous to the country.

Your Lordship will thus perceive that concurring entirely with you, as to the objections which generally attach to an impost on the importation of grain, it is not my wish, under any circumstances, to see that measure resorted to in these Islands, excepting as a substitute for other more injurious duties, which I have explained to be in their nature partial, and to weigh heavy upon industry and production. Nor do I think that even this, as a measure of substitution, should be resorted to, until a very rigorous system of retrenchment be brought into operation, by which to supersede, if possible, the necessity of any fresh impost.

The measures necessary to effect as great a retrenchment as can be at present made, without impairing the efficiency of the several departments of the State, have been adopted, and will speedily come into full operation; but I have endeavoured to show in this paper, that, even with these reductions the revenue will be insufficient to pay the contribution to Great Britain and to meet all the demands upon it, and at the same time to provide for the various important objects which now remain neglected for want of funds.

Calculating the produce of currants in the Ionian Islands, at 18,000,000 of pounds,

Despatch Home. No, 106, 28th January, 1836.

* Preceding Despatch.

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and the price at fifty dollars per thousand pounds, the loss to the revenue, by reducing the duties to an equality with those paid in Greece, would be as follows:-

Two per cent. on 18,000,000 of currants at fifty dollars per thousand One and a half per cent. Road Tax

Loss to Revenue, sterling

£3,900

2,925

6,825

Taking the export of oil from the Ionian Islands one year with another at 75,000 barrels, and the average price at eight dollars per barrel, the annual loss to the revenue by reducing the duties to a level with those of Greece, would be as follows:- Two per cent. on 600,000 dollars, being at the rate of eight dollars One and a half per cent. Road Tax

per barrel £2,600

-

1,950

4,550

Thus the total loss caused by a reduction of three and a half per cent. on the duties

Loss paid on the exportation of currants and oil, would be, on currants

On oil

£6,825

4,550

£11,375

A very trifling duty on grain would make good this defalcation; and I am decidedly of opinion that the transition would be generally approved by the proprietors and cultivators of these articles, and readily adopted by the Government and Asseinbly.

The revenue of these States, raised as at present, has already attained, or perhaps passed its maximum (because the price of the productions, on the export duties of which so large a portion of the revenue depends, has attained or rather passed its height,) unless by considerable reductions of the heavy duties levied on their exportation, and particularly on their importation into the United Kingdom, they should be brought into so much greater demand for consumption there, as to make the aggregate of reduced duties more productive than the present high rate which enhances the price of the article so much as to amount more or less to a prohibition. Contemplating the probability of a falling off of the revenue from the decline of price; the difficulty of resorting at once to a productive system of revenue; and seeing the expediency of diminishing the duties on exportation here, as necessary on our part, towards such a reduction of price in the British market as may bring the articles into additional demand, it is clear, that the current expenditure of these States, applied as well to the payments made to Great Britain on account of military protection, as to other disbursements, must be considerably reduced, in order that an efficient surplus of income over expenditure may be realized for the execution and completion of those public works and institutions which the state of the country so urgently demands.

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Your Lordship having stated in your despatch No. 87 of 14 April last, that you are unable, as yet, to hold out to me any expectations that the Lords Commissioners of Her Majesty's Treasury will feel themselves warranted in making the concessions, for which I have applied in favour of the Ionian Islands in my despatch No. 3 of 18th January last, and by despatch No. 191 of 24th April, 1838, the Treasury having objected to the principle adopted in favour of the Cape wines, and likewise to my proposition of a well-regulated ad valorem duty, as involving arrangements of a very extended and difficult character, I shal! not at present again press upon your Lordship that recommendation in an official shape; but I trust the statements contained in this paper will satisfy your Lordship of the expediency and necessity, at a more convenient season, of urging both the concessions recommended in my despatches to the favorable consideration of their Lordships.

I have thus endeavoured fully to lay before your Lordship, the ways and means of the Ionian States, and to place in a clear light their various sources, and the impossibility of increasing the revenue by any other means than a grain tax, until other and less objectionable sources of revenue become available, and this may serve, in some respect, as an answer to the inquiries contained in your despatch above referred to, (No. 87, 14th April, 1838.)

But whether Her Gracious Majesty may or may not be advised to adopt fully, the generous and inagnanimous course which I have ventured to suggest with respect to the contribution, I would, here again, most earnestly recommend, that, in consideration of the falling off of the revenue during the last year, and the consequent suspension of all public works, at least the sum of £10,000 should be remitted from the payment of the contribution for the present year.

But, however gratefully such a measure of temporary relief would be received in consideration of unproductive seasons, and applied to the execution of those public works which have in consequence of a deficient revenue been suspended, the paternal and indulgent consideration of IIer Majesty's Government should, nevertheless, be given to that munificent act of grace, which I most earnestly recommend, as essential to the internal improvement of these Islands, material to consolidate our connection with them in its present forin, and indispensable to bring about a more intimate union with these States, by divesting our tenure of the very burthensome and subversive condition which I have explained.

The possession of these islands, in case of war more particularly, is of vital import- ance to British maritime supremacy in these seas; and to her moral and political influence in the territories adjoining.

1PUBLIC RECORD OFFICE, LONDON

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