BULGARIAN STABILISATION LOAN€¦ · Geneva, October 8th, 1928. LEAGUE OF NATIONS BULGARIAN STABILISATION LOAN PROTOCOL AND ANNEXES approved by the Council of the League of Nations

[Distributed to the Council and the Members of the League.] O. 338. Rfi. 96.1928.11.

[F-547]

Geneva, October 8th, 1928.

LEAGUE OF NATIONS

BULGARIAN STABILISATION LOAN

PROTOCOL AND ANNEXES

approved by the Council of the League of Nations and signed on behalf of the Bulgarian Government on March 10th, 1928.

WITH THE

RELEVANT PUBLIC DOCUMENTS.

Publications of the League of Nations

II. ECONOMIC AND FINANCIAL1928. II. 32.

CONTENTS.

Page

1. Preface by Sir A rthur S a l t e r ................................................................................................ 5*

2. Protocol signed by the Bulgarian Minister of Finance on September 8th, 1926 . 9

3. Decision of the Reparation Commission, dated Ju ly 23rd, 1926, and Schedule . 12

4. Letter from the Bulgarian Government to the President of the Council of theLeague of Nations, dated September 12th, 1 9 2 7 ............................................... 13

5. Report of the Financial Committee, December 1927...................................................... 14

6. (a) Report of the Financial Committee, March 1 9 2 8 .................................................. 14(6) Resolution adopted by the Council on March 10th, 1 9 2 8 .................................. 17

7. PROTOCOL signed by the Bulgarian Minister of Finance on March 10th, 1928,with the Modifications contained in the Additional Act signed by him on September 8th, 1 9 2 8 ................................................................................................. 18

Annex I. — Amendments to the Present Statutes of the BulgarianNational Bank (Final T ex t)............................................... 22

Annex I I . — Transformation of the Bulgarian National B a n k ................. 31

Annex I I I . — Statem ent showing Budget Liabilities to be repaid out ofthe Proceeds of the L o a n ................................................... 32

Annex IV . — Funds which may be exempted from Incorporation in theBudget under Article VI, 6 (a).......................................... 32

8. Report of M. Regnoul on the Improvement of Means of Communication in Bulgaria,dated May 19th, 1928................................................................................................. 33

9. (a) Report of the Financial Committee, June 1 9 2 8 ....................................................... 53(b) Resolution adopted by the Council on June 8th, 1 9 2 8 ............................................ 53(c) Resolution adopted by the Council on June 9th, 1 9 2 8 ............................................ 53

10. Decision of the Reparation Commission of June 23rd, 1 9 2 8 ............................................ 54

11. Report of the Financial Committee, September 1928...................................................... 54

12. Resolution of the Inter-Allied Commission, Sofia, dated September 24th, 1928 . . 55

13. Protocol signed by the Bulgarian Government and the Inter-Allied Commission, Sofia,on September 24th, 1928, and approved by the Reparation Commission,Paris, on October 6th, 1 9 2 8 ..................................................................................... 55

14. (a) Resolution adopted by the Council on September 17th, 1 9 2 8 ............................... 57(b) Resolution adopted by the Assembly on September 20th, 1 9 2 8 .......................... 57

s'û. N. 150 (F ). 200 (A). (épr.) 9/28. + 1.375 (F .) 1.200 (A.) 10/28 I m p . K und ig .

1.

PREFACE.

T h e S c h e m e f o r t h e S e t t l e m e n t o f R e f u g e e s .

The League occupied itself for the first time with the finances of Bulgaria in 1926. The problem at th a t time was a limited one, namely, to assist Bulgaria in the settlement of its refugees, a task beyond the financial means at the disposal of the Government. In the thirteen years from the outbreak of the Balkan wars up to 1925, more than 200,000 refugees had entered the country, a large number of whom had not been absorbed in normal occupations and were u tterly destitute. The Bulgarian Government estimated th a t approxim ately 33,000 refugee families could usefully be settled on the land. After an enquiry on the spot by M. Charron, who was subsequently appointed Commissioner for the Refugees, the Financial Committee came to the conclusion th a t a sum of £2,250,000 would be required for rural settlement and purposes connected therewith.

The Council of the League, on September 7th, 1926, authorised this am ount to be raised by a loan under the auspices of the League. The details of the scheme were laid down in a Protocol approved by the Council and signed on the next day on behalf of Bulgaria (Document 2).

The loan was successfully issued in December 1926. Before the actual settling of the refugees could be started on a large scale, long and difficult preparatory work had to be accomplished. No exact statistics existed of the refugees to be settled, of their numbers, their whereabouts, and their requirements; nor was sufficient land available for their immediate settlement. Clear legal titles had to be obtained : the land had to be surveyed, allocated and often prepared for agriculture by mechanical ploughing.

These preparatory measures occupied a large part of the year 1927 and delayed the actual work of settlement. Substantial assistance has, however, been given to the refugees and the work of definite settlem ent is now advancing rapidly. By the beginning of August 1928, 588,583 decares of land had been allotted to 16,467 families ; contracts had been concluded for the b u ild in g of 2,221 houses ; and live-stock and m aterial had been distributed to the refugees, including 6,353 carts and wagons, 9,227 ploughs, 2,207 harrows, 12,579 head of cattle, also 3,678 tons of seed to 8,640 families. By this autum n, 40,000 decares of land will have been mechanically ploughed. The survey and allocation of land are expected to be completed by the end of this year, except for those refugees who are to be settled on drained marshland.

The work of settlement includes several public works on a large scale, such as the draining of marshes, the construction of dikes and of a railway line. These public works have the double advantage of reclaiming cultivable land for the settlem ent of the refugees or making habitation possible in districts which are a t present very sparsely populated and of increasing to a considerable extent the area of cultivable land in Bulgaria and consequently the agricultural production.

I t should finally be noted th a t the Council, in agreement with the Bulgarian Government and the three neighbouring States (Greece, Roumania and the Kingdom of the Serbs, Croats and Slovenes) has adopted certain provisions with regard to the settlem ent of refugees in frontier districts designed to secure more completely th a t pacification which was one of the Council’s main objects in giving its patronage to the work.

The feature of the refugee settlem ent scheme which most directly touches the new loan scheme is the appointment of the Commissioner1. In accordance with Article I of the Protocol of September 8th, 1926, Bulgaria accepted the appointm ent by the Council of the League of Nations of a Commissioner for the Settlement of Refugees. The Commissioner is responsible to the Council and m ay be removed by it. He has to submit a report to the Council a t least every three months upon the settlement operations. The Bulgarian Government can only use the loan proceeds with his agreement and in accordance with plans approved by him. The functions of the Commissioner are to be term inated by the Council when the proceeds of the settlement loan are expended and the Council decides th a t the services of a C o m m iss io n e r are no lo n g e r required. This C om m issioner, whose chief function is the supervision of the execution of the settlement scheme, is given severa

new tasks in connection with the new loan, as will be specified below.Another point of the refugee settlement scheme which should be referred to briefly is the

decision taken by the Reparation Commission with regard to the transfer of Bulgarian re p a ra t io n

payments. This decision of the Reparation Commission of Ju ly 23rd, 1926 (see D ocu m en t 31 authorises the Bulgarian Government to request a t any time during the existence of the settlemen

1 For further details of the refugee settlem ent scheme, see the complete description in document C.56g.i926- '̂ the quarterly reports of the Commissioner, the reports of the Financial Committee and the Council Minutes.

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loan, i.e., up to 1967, “ that, in the interest of the stability of the Bulgarian exchange, purchases of foreign currency necessary for the payment of reparations under the Protocol signed at Sofia on March 21st, 1923, be suspended either in whole or in part If the Bulgarian Government makes such a request, a special Transfer Committee 1 will be set up, which will make transfers for reparation payments only to such an extent as will not compromise the stability of the Bulgarian exchange.

H i s t o r y o f t h e N e w L o a n S c h e m e .

On September 12th, 1927, the Bulgarian Ministers of Foreign Affairs and of Finance addressed a letter to the Council (Document 4) requesting th a t the organs of the League should study a plan for the financial reconstruction of Bulgaria through the issue of a foreign loan. The Council, on September 15th, 1927, decided to ask the Financial Committee and the Secretariat to undertake an examination of the financial position of Bulgaria. A delegation of the Financial Committee, consisting of Sir O tto Niemeyer (Chairman), M. Alberti (replacing M. Bianchini), M. de Chalendar, M. Janssen and Dr. Pospisil, accordingly paid a visit to Sofia and, with the help of members of the League Secretariat, made an examination on the spot. The information obtained was discussed by the Financial Committee during its meeting of December 1927. Considerable progress was made towards a plan of reconstruction but, as no agreement could then be reached with the Bulgarian Government with regard to the transform ation of the Bank of Issue and negotiations had to be pursued further, the Committee only made a short formal report to the Council (Document 5).

In March 1928, it was found possible to come to a definite agreement on all questions, including the transformation of the Bank (see pages 6, 19 and 31) and the Financial Committee was able to present a complete reconstruction scheme to the Council in its report (Document 6a). The scheme which is summarised below, was embodied in a Protocol, which was approved by the Council on March 10th (Document 66) and signed on the same day on behalf of Bulgaria by the Bulgarian Minister of Finance (Document 7).

Article VII of the Protocol provides th a t £1,250,000 out of the proceeds of the loan shall be employed for the Bulgarian system of communications and th a t an enquiry shall be made on the spot as to the exact m anner in which this sum is to be used. This enquiry was made by M. Regnoul, Chief Engineer of the Paris-Lyons-Mediterranean Railway. His report (Document 8) was examined in June 1928 by the Financial Committee and the Council, which approved the programme of expenditure proposed by M. Regnoul (Documents 9a and 96).

At its June session, the Council, in view of the serious earthquakes which had occurred, also authorised the Financial Committee — after the latter had already dissolved — to increase the total of the loan and to approve such modifications of the Protocol of March 10th as would be necessary for this purpose (Document 9c). In September, the Financial Committee decided that, in connection with the earthquakes, the net to tal of the loan could be increased from £4,500,000 to £5,000,000. The necessary additions to the Protocol of March 10th are laid down in an Additional Act2, which was approved by the Financial Committee (Document 11) and signed by the Bulgarian Minister of Finance on September 8th, 1928.

The reaction of the earthquakes on the financial situation of Bulgaria had in the meantime also been examined by the reparation authorities, who decided to postpone the reparation payments for one half-year during 1928 and, moreover, declared themselves prepared to make a similar postponement if necessary during 1929 (Document 10).

A last series of measures had to be taken in order th a t the Customs revenues which, under Article II of the Protocol of March 10th, 1928, were to secure the new loan, could be liberated from various previous charges. These charges were two in number :

(а) Under Article 132 of the Peace Treaty of Neuilly, the payments for reparations and other Treaty obligations are secured by a general charge on all Bulgarian State assets and revenues.

(б) Moreover, by two Protocols signed at Sofia on March 21st, 1923, and March 28th, 1924, respectively, the Bulgarian Government and the Inter-Allied Commission agreed th a t the payments for reparations and costs of occupation should be secured by a special charge on the Customs.

The general charge on the Customs for reparations and other T reaty obligations was raised by a resolution of the Inter-Allied Commission of September 24th, 1928 (Document 12). As to

1 The Transfer Committee is to be composed of:(а) A member to be appointed by the unanimous decision of the Reparation Commission, a national of the

United States of America or of a country which was neutral during the war of 1914-19, as Chairman. If theReparation Commission shall not have reached a unanimous decision for this purpose within one month from the date of the request above referred to, the President for the tim e being of the Permanent Court of International Justice at The Hague shall be requested to appoint the Chairman of the Transfer Committee ;

( б) A member appointed by the Trustees of the Bulgarian Refugees Loan;(c) A member appointed b y a decision of the Reparation Commission, taken, if necessary, by a majority

vote, after consulting the Inter-Allied Commission of Bulgaria.These three members must be chosen from persons who are experts on questions of exchange.

2 The modifications of the Protocol contained in the Additional A ct have been inserted in the text of the Protocol published in the present volum e (Document 7).

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the special charge on the Customs for reparations and costs of occupation, this was removed in favour of the • new loan by the signature of a Protocol, also on September 24th, 1928, by the Bulgarian Government and Inter-Allied Commission (Document 13). This Protocol was approved by the Reparation Commission on October 6th, 1928.

The German Diskontogesellschaft, which had already advanced a claim to a charge on the Customs which is contested by the Bulgarian Government — in virtue of contracts of Ju ly 1914 for a loan which was never issued — has postponed in favour of the new loan any charge which it m ay have on the Customs.

The various obstacles to the loan have thus been removed. In anticipation thereof the Council and the Assembly of the League of Nations were able, on September 17th and 20th respectively, to express to the Bulgarian Government their best wishes for the successful issue of the loan at an early date (Documents 14(a) and (b)).

On September 15th, the Council decided, in accordance with Article IV, sub. 1, of the Protocol of March ioth, 1928, to nominate M. René Charron, the Commissioner for the Refugees, for appointment by the Bulgarian Government as adviser to the National Bank.

S u m m a r y o f t h e S t a b i l i s a t i o n S c h e m e .

The Bulgarian stabilisation scheme closely resembles in its general aspects the stabilisation scheme which was successfully put into execution in Greece during the spring of this y e a r1. As in the case of Greece, the Government is to obtain through a foreign loan the necessary means to proceed to stabilise, im portant parts of the loan are earmarked to reinforce the Bank of Issue and to pay off budget arrears, the Statutes of the Bank are improved and the Government undertakes to carry out such reforms as are essential for budget equilibrium.

The loan will be for a to ta l of £5,000,000 net, divided as follows :

National B a n k ........................................................................ £1,500,000Agricultural Bank ............................................................... 500,000Central Co-operative B a n k ................................................... 150,000Budget a r r e a r s ........................................................................ 1,100,000Means of c o m m u n ic a t io n ................................................... 1,250,000Earthquake e x p en d itu re ....................................................... 500,000

T o t a l ...................................... £5,000,000

The conditions of the loan, the method of issue, etc., have to be approved on behalf of the Financial Committee (Article I of the Protocol of March io th , 1928). The Committee has delegated this task to its present chairman and to its chairman of last year respectively, M. de Chalendar, Financial Agent in London of the French Government, and Sir Otto Niemeyer, of the Bank of England.

The loan is secured by a first charge on the Customs duties. The yield of these duties during the last few financial years and the estimates for the present year are as follows :

1926-27 1927-28 192S-29

Results EstimatesLeva (000,000’s omitted)

Import duties, e t c .............................. 973 1,087 1,050Export duties, e t c .............................. 138 108 105Ad valorem t a x e s ............................. 23 19 20Bonding, statistical and sealing

charges, and other Customs charges 74 67 70

T o t a l .......................... 1,208 1,281 1,245

The present yield of the Customs duties is therefore well above £1 % million (£1 = about 675 leva).

If at any tim e the total yield of these duties should fall below 150 per cent of the annual service of the loan, other additional revenues will be assigned, sufficient to assure the immediate restoration of the yield to th a t percentage (Article II). The Inter-Allied Commission has agreed to take the necessary action in such a case (Document 12). The assigned revenues will be paid into a special account under the control of trustees to be appointed by the Council of the League

(Article X).The rest of the Protocol deals with the employment of the loan.A sum of £1,500,000 will be used for strengthening the position of the Bulgarian National Bank

by repaying to th a t Bank a considerable part of the advances it has made to the State or to the Agricultural and Central Co-operative Banks (which are State Banks) or under the guarantee of the State.

The existing Statutes of the National Bank have been amended so as to bring them into line with the best principles of central banking. These changes, which take effect immediately, are

1 The Greek Stabilisation Scheme was based on a Protocol signed at Geneva on September 15th, 1927. The text of this Protocol and a general description of the Greek scheme m ay be found in document C.556.M.198.1927.II.

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contained in Annex I of the Protocol. They are chiefly inspired by the Statutes of the new Bankof Greece, which may perhaps be considered to be the most modern of their kind 1. Most of the changes relate to the activities of the Bulgarian National Bank (which have been carefully limited), the calculation of the gold and foreign exchange reserve, the convertibility of its notes, the form of the weekly returns, the nomination of the governors, the settling of disputes between the Bank and the State and the appointment of an adviser.

No immediate change has been made in the constitution of the Bulgarian National Bank, which is a State Bank. The Bulgarian Government has, however, undertaken in the Protocol to protect the independence of the Bulgarian National Bank from any political influence whatsoever. For this purpose the Government has accepted the appointment of an adviser by the Council of the League of Nations, which, as mentioned above, has appointed M. Charron. Moreover, the Bulgarian Government has recognised th a t it is desirable to transform the Bulgarian N ational Bank into an independent corporation with a private capital. The principles of this transformation are laid down in Annex II to the Protocol. The Council and the Bulgarian Government will fix the details of the transform ation and the date at which it will be put into effect. The functions of the adviser will continue until at least two years after the transform ation has taken place.

As soon as the loan is issued, the Bulgarian currency will be legally stabilised in relation to gold, and within six months after stabilisation all restrictions upon the foreign exchange market will be abolished (Article IV).

The Agricultural and Central Co-operative Banks, which belong to the State, will receive new working capital (£500,000 and £150,000 respectively), which will restore them to a sufficient degree of liquidity (Article V).

As to the Budget, Bulgaria undertakes obligations very similar to those undertaken recently by Greece, e.g. “ to make, and persist in making, every effort ” to keep the budgets for the present and the next year within specified limits and to maintain thereafter a complete equilibrium between current revenue and current expenses. A sum of £1,100,000 from the loan will be employed under th e control of the Commissioner for Refugees to pay off the budget arrears which are enumerated in Annex III. During a period of five years the Bulgarian Government will make quarterly reports on its financial situation to the Council of the League. The Bulgarian Government has further undertaken to take a series of measures to improve the control of public expenditure by the Treasury and through better publicity. The Government will make every effort to reduce the number of State employees by 10,000 in a period of two years. Finally, it has been decided th a t all future borrowings — both internal and externâl — of public authorities will have to be approved by the Minister of Finance, who will consult the Governor and the adviser of the National Bank on these as well as on all other measures of a general character in m atters of money and credit (Article VI).

A sum of £1,250,000 (about 845 million leva) will be employed for means of transit in accordance with the detailed proposals of M. Regnoul, which received the general approval of the Council on June 8th, 1928. This sum will be divided as follows :

Railways : Leva Leva

U p k e e p .................................................... 239,233,000Im p ro v e m e n ts ....................................... 329,255,000Construction of new lines . . . . 72,312,000

------------------- 640,800,000P o r t s ..................................................................................... 31,500,000R o a d s ..................................................................................... 172,700,000

Total . . . 845,000,000

The expenditure from this sum will be under the supervision of the Commissioner for Refugees (Article VII).

In his report, which was agreed to by the Bulgarian Government, M. Regnoul has pointed out that greater elasticity was required in the railway administration. By its above decision the Council has authorised the Commissioner to liberate money for the means of transit only after the necessary reforms in the administration of the railways have been carried out.

Finally a sum of £500,000 is available to replace losses due to the recent earthquakes for purposes approved by the Commissioner (Article V II A).

If any balance remains from the sums earmarked for budget arrears, or for means of transit, or in connection with the earthquakes, the Financial Committee may authorise a transfer from one head to another (Article VIII).

As is shown by this summary, the Commissioner for the establishment of the refugees, who was originally appointed under the Protocol of September 8th, 1926, has received several new duties under the new Protocol of March io th , 1928. It has, therefore, been provided that, in his quarterly reports to the Council, he shall also report on the progress made in the execution of the second Protocol (Article XI).

1 See document C.536.M.198.1927.II, p. 7.

Article X II provides th a t th is Protocol shall not become binding upon the Bulgarian Government as long as the la tter should not be able to give to the new loan a first charge on the Customs duties. The Bulgarian Government is now able to give a clean first charge as the Inter- Allied Commission has postponed both its general and its special charges on the Customs duties and the Disk.ontogesellschaft has done the same with regard to its disputed claim to a charge on these duties.

C o n c l u s i o n .

In Bulgaria, therefore, as in Greece, a scheme for the settlem ent of refugees has been followed by one of financial stabilisation. In both cases, assistance to the refugees was the more urgent. There was no disorganisation of the public finances as there has been in Austria and in Hungary, and neither drachma nor lev was fluctuating when the refugee work was undertaken. In each case, however, it was soon realised tha t, if the refugee settlem ent was the first, it was not the final, task in which the League and its Financial Committee could assist. The drachma fell in value in 1925-1926 and it became necessary to proceed with the general Greek stabilisation scheme, which was successfully put into operation in the spring of this year.

The Bulgarian lev has, indeed, throughout retained a de facto stability, but anxiety has been felt during the last few years, and both the Government and the Financial Committee came to the conclusion th a t it was desirable to consolidate the whole financial position by measures covering both the bank of issue and the budget and assuring the foundations on which a monetary stabilisation can be not only continued but secured. The scheme described in this paper has been devised by the Financial Committee, after local enquiry and long subsequent examination of the problem in all its features, as appropriate and adequate for the purpose.

A rthur S a l t e r .

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2 .

PROTOCOL SIGNED BY T H E BULGARIAN M INISTER OF FIN A N C EON SEPTEM BER 8 t h , 1926.

Whereas the Bulgarian Government has requested the Council of the League of Nations to approve the issue by th a t Government under the auspices of the League of Nations of a loan, the yield of which shall be applied, under the control of a Commissioner responsible to the Council, for the purpose of promoting the settlem ent on the land of certain refugees at present in Bulgaria 1 and of thereby transforming them into productive citizens of the Bulgarian State,

And whereas the Council has approved for this purpose the provisions of the present Protocol,

The undersigned, duly authorised for the purpose, accepts on behalf of Bulgaria the following provisions :

Article I . —- Appointment of a Commissioner.

1. Bulgaria accepts the appointm ent by the Council of the League of Nations of a Commissioner for the settlem ent of refugees, who shall carry out the functions ascribed to him in the present Protocol. He shall be responsible to the Council and removable by it. The Council may give any necessary instructions to the Commissioner as to the performance of his functions within the terms of this Protocol and the scheme of settlement as laid down in the reports of the Financial Committee of the League of Nations dated June gth, Ju ly 23rd, and September 6th, 1926, approved by the Council.

2. The Commissioner may provide himself with the necessary technical staff. His expenses and those of his office shall be approved by the Council and defrayed by Bulgaria. The Commissioner and his substitute (if any) shall enjoy diplomatic privileges and immunities.

3. The Commissioner shall submit to the Council of the League of Nations not less frequently than once every three months reports upon the settlem ent operations.

4. If the Bulgarian Government considers th a t the Commissioner has abused his authority, it may appeal to the Council of the League of Nations.

5. The Commissioner m ay appoint a substitute to replace him during any period for which he is himself unable to act, subject to confirmation by the President of the Council for any period exceeding th irty days.

6. The Council shall term inate the functions of the Commissioner as soon as it decides that the services of the Commissioner are no longer required, but in no case before the proceeds of the Settlement Loan have been expended for the purpose contemplated, without prejudice to the control over the assigned revenues hereinafter provided.

Article I I . — Settlement Loan.

1. For the purpose of the intended settlem ent of refugees, the Bulgarian Government may issue a settlem ent loan yielding an effective sum equivalent to not more than two and one- quarter millions sterling. The expenses of issue, negotiation and delivery shall be added to the capital of the loan as fixed above. The amount mentioned is also exclusive of any part of the loan which it m ay be necessary to include in order to satisfy the claim (referred to in sub-paragraph 2 of the second paragraph of Article 139 of the Treaty of Neuilly) of the holders of the Bulgarian Treasury Bills issued in France in 1912 and 1913.

2. The yield of this loan m ay not be employed except in conformity with the provisions of the present Protocol.

3. The capital and interest of the loan contemplated under paragraph 1 above shall be paid by the Bulgarian Government free of all deduction in respect of taxes, dues or charges for the benefit of the Bulgarian State.

4. The conditions of the loan, the issue price, the rate of interest, the amortisation, the expenses of issue, of negotiation and of delivery, shall be submitted for approval on behalf of the Financial Committee of the League of Nations to a person appointed by the Committee for this purpose ; the amount of the annuity necessary for the service of interest and amortisation of the loan shall likewise be so approved.

5. The Bulgarian Government may raise tem porary loans in advance of and repayable out of the settlement loan.

6. The yield of the settlement loan or any tem porary loans (paragraph 5 above) shall be paid as directed by the Commissioner into a special account or accounts which he alone may control. Interest on any outstanding balances shall be added to such account (or accounts).

7. If the terms on which the loan is issued include a stipulation th a t the issuing house shall retain any part of the proceeds of the loan for the purpose of the service of the loan, a

1 This is to be considered as including persons who before December 31st, 1924, had made declarations to the Mixed Commission set up under the Convention between Greece and Bulgaria respecting Reciprocal Emigration, signed at Neuilly-sur-Seine November 27th, 1919, in order to be transferred to Bulgaria under that Convention even if they have not left Greece at the date of the signature of this Protocol.

IO -

corresponding amount shall be paid forthwith from other sources by the Bulgarian Government into the settlement account under the control of the Commissioner.

Article I I I . — Securities and First Charge.

1. The Bulgarian Government will furnish as securities for the settlement loan contemplated under Article II the following revenues :

(1) The excise duty on salt.(2) The excise duty on alcohol.(3) The net receipts of the m atch monopoly.(4) All sums received after the expiry of two years from the appointment of the

Commissioner in respect of rent or interest due from persons assisted out of the yield of the settlement loan. Sums received from such persons as payment for the purchase of land, building or material, or as repayment of advances in cash or in kind, shall be applicable to amortisation of the loan.

(5) Such other revenue or revenues (if any) (excluding the Customs) as may from time to time be assigned in accordance with paragraph 5 below.

2. The amounts required for the service of the settlement loan shall be, and shall remain, a first charge upon the revenues mentioned in paragraph 1 above, and the Bulgarian Government acknowledges th a t such revenues shall stand charged accordingly.

3. The revenues mentioned in the preceding paragraph shall not be used as a security for any new loan without the consent of the Trustees of the settlement loan.

4. The Bulgarian Government will not take any measures which, in the opinion of the Trustees, would be such as to diminish the aggregate value of the revenues mentioned in paragraph 1 to such an extent as to threaten the security of the bondholders.

All decisions taken by the Trustees in virtue of this paragraph shall require confirmation by the Council if within 14 days of the notification of any such decision by the Trustees to the Bulgarian Government the la tter shall have lodged an appeal against it with the Council.

5. If a t any time the to tal yield of the revenue referred to in paragraph 1 should fall below 150 per cent, of the annual sum required to meet the service of the loan, the Trustees m ay request the Council to call upon the Inter-Allied Commission established under Article 130 of the Treaty of Neuilly to release from the charge laid down in Article 132 of the T reaty of Neuilly, in accordance with the decision taken by the Inter-Allied Commission on Ju ly 22nd, 1926, such additional revenues (other than the Customs) as m ay be sufficient to assure the immediate restoration of the yield to the above percentage, and such additional revenues, so released, shall be forthwith assigned to the service of the settlement loan.

Article IV . — Trustees.

1. The Council of the League of Nations will appoint Trustees to represent the interests of the bondholders of the settlem ent loan, and the Bulgarian Government accepts that the Trustees shall fulfil the functions and perform the acts assigned to them in this Protocol until the loan, and every part thereof, and every claim in respect thereof, shall have been completely discharged.

2. The revenues mentioned in Article III, paragraph 1, will be paid into a special account, as and when collected for the purpose of assuring the service of the settlement loan. The Commissioner and, after the term ination of his functions, the Trustees, m ay alone control this account.

Any balance of the account not retainable in accordance with the following provisions or with the terms of issue of the loan shall be reimbursed to the Bulgarian Government, subject, however, to the powers conferred on the Trustees in the event of a default under paragraph 3 (c) below.

3. The terms on which the loan is issued shall include, among other provisions:

(a) Provisions as to amounts which, a t the intervals fixed by such terms, shall be paid out of the special account provided for in the preceding paragraph by the Commissioner to the Trustees, and during such times as the Trustees m ay be in control of the account, set aside by the Trustees themselves and retained for the service of the loan, including interest, amortisation and all charges, commissions or other payments to be met by the Bulgarian Government in connection therewith.

(b) Provisions for the constitution and for the maintenance by the Bulgarian Government in the hands of the Trustees of the reserve fund applicable at their discretion to make good any default or deficiency on the part of the Bulgarian Government in providing th e sums required for the service of the loan.

(c) Power for the Commissioner a t the request of the Trustees, or for the Trustees themselves if they shall be in direct control of the account mentioned in Article IV, p a r a g r a p h 2,

to retain, collect or otherwise provide out of the said revenues (including such other r e v e n u e s

as may be brought into charge under the provisions of Article III) sufficient sums to remedy

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and make good any default of the Bulgarian Government in whole or in part in carrying out any of its obligations contained in the conditions of the loan.

Article V. — Employment of Settlement Loan.

The yield of the settlem ent loan shall be apphcable to and the Commissioner shall permit payments to be made therefrom for the following purposes only:

(1) Supplies in kind to refugees of agricultural implements and other requirements for their sett ement on the land;

(2) Housing of refugees to be settled on the land;(3) Drainage and in general reclamation of land to be used for the settlement of refugees ;(4) Such improvements in communications as are required for the contemplated

settlement of refugees;(5) In exceptional cases, loans in cash to refugees for the purpose of th en settlement

on the land provided by the Bulgarian Government in accordance with Article V III below;(6) Such other purposes connected with the settlement of refugees on the land as the

Commissioner may approve.

All assistance given to refugees out of the loan shall be on terms of repayment and no part of the loan m ay be used for any charitable purposes or for the acquisition of land. Nevertheless, when settlements on a large scale are established, e.g., when villages are created, such disbursements of a general or social nature may be made on such terms as the Commissioner may approve as may serve to promote the development of these settlements and improve the health conditions of the population.

Article VI. — Centralisation of Organisation.

The Bulgarian Government undertakes to centralise all its existing services and organisations at present dealing with refugees under one authority, in such manner as to establish to the satisfaction of the Commissioner the organisation necessary for the proper utilisation of the settlement loan.

Article VI I . — Work of Settlement.

1. The settlem ent of refugees contemplated by this Protocol and the expenditure of the settlement loan for this purpose shall be effected by the organisation contemplated by Article VI in agreement with and under the supervision of the Commissioner. A general plan of settlement shall be drawn up as soon as possible by this organisation, shall be submitted for the approval of the Commissioner and published.

2. All plans for settlement and for expenditure out of the settlem ent loan shall be drawn up and executed by the organisation contemplated in Article VI subject to the approval of the Commissioner. He shall release money from the settlement account only for purposes approved by him, and he m ay a t any time refuse to release money from the settlem ent account if he is not satisfied th a t monies previously released have been expended in accordance with his authorisation.

3. Annual accounts of the expenditure of the settlement loan shall be drawn up and audited in such m anner as the Commissioner shall direct and be submitted through him to the Council of the League of Nations and be published.

4. The Bulgarian Government undertakes to give to the Commissioner a t its own expense every facility in the execution of this task and to give him all information concerning the work of settlement which he m ay require. The Commissioner shall a t all times be entitled to make enquiries as to the m anner in which any part of the loan has been expended; in particular, he shall be entitled to communicate directly with the services carrying out the settlem ent work. He shall also be entitled to obtain such expert advice as he m ay require, the expenses of experts being defrayed by Bulgaria.

Article VI I I . — Land assigned for Settlement.

1. The Bulgarian Government undertakes to provide not less than 132,000 hectares of land which is or m ay be made suitable for agricultural settlement (exclusive of pasture land) and the character and situation of which must be approved by the Commissioner for the purpose of settling refugees. The land shall be land which is already the unencumbered property of the Bulgarian Government or land of which the Government has acquired the unencumbered property for the aforementioned purpose.

2. The Bulgarian Government undertakes th a t it will secure the capital payments due m respect of any instalm ent of purchase price or of any advances in cash or kind by means of mortgages created either by contract or the operation of law on the land occupied by the refugees.

Article I X . — Designation of Refugees.

Persons settled on the land or assisted with grants or loans out of the proceeds of the loan or loans contemplated by the present Protocol shall be persons who have been certified to the

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Commissioner by the Bulgarian Government to be Bulgarian nationals and to have declared in writing that they will consider themselves in future exclusively as such.

Article X . — Protocol Article.

1. Any difference as to the interpretation of this Protocol shall be settled by the Council of the League of Nations.

2. All decisions to be taken by the Council in execution of this Protocol shall be taken by a m ajority vote.

3- This Protocol shall be ratified by Bulgaria and the ratification shall be deposited at the Secretariat of the League of Nations as soon as possible, and in any case not later than one month from the date of its approval by the Council of the League of Nations.

In faith whereof the undersigned, duly authorised for the purpose, has signed the present Protocol.

D o n e a t Geneva in a single copy on t h e eighth day of September 1 92 6 , which shall be deposited with the Secretariat of the League of Nations and be registered by it without delay.

(Signed) Wl. M o l l o f f ,

Bulgarian Finance Minister.

3 .

DECISION OF TH E REPARATION COMMISSION DATED JU LY 23RD, 19 2 6 .

Translation."

3314. L o a n f o r t h e S e t t l e m e n t o f B u l g a r i a n R e f u g e e s .

The Reparation Commission, considering:

(a) The scheme approved on June io th , 1926, by the Council of the League of Nations for the issue of a loan by Bulgaria for the purpose of the settlem ent of Bulgarian refugees ; and

(b) The telegram addressed on Ju ly 22nd to the Reparation Commission by the Inter-Allied Commission for Bulgaria worded as follows:

“ Inter-Allied Commission for Bulgaria unanimously decided to grant derogation to the first charge established by Article 132 of the T reaty of Neuilly for revenues re q u ire d as securities for loan intended for settlem ent of Bulgarian refugees. Inter-Allied Commission for Bulgaria further decided to recommend th a t Reparation Commission should take all necessary measures of a nature to protect securities assigned to this loan against any loss of value which might result from instability of exchange. Report and tex t of decisions follow. — ClNTERDED ” \

Agrees so far as it is concerned to give effect as hereinafter provided to the proposals of the Financial Committee of the League of Nations approved on June io th , 1926, by the Council of the League with a view to protect the securities assigned to the loan against any loss of value which might result from an instability of the exchange caused by reparation transfers:

(a) The Bulgarian Government will have the right a t any tim e during the existence ot the said loan to make to the Inter-Allied Commission a request that,.in the interest of the stability of the Bulgarian exchange, purchases of foreign currency necessary for the paym ent of r e p a r a t i o n s

under the Protocol signed at Sofia on March 21st, 1923, be suspended either in whole or in part.(b) The Bulgarian Government will undertake to accept, as from the date on which such

a request is made and from the very fact of its being made, the regulations for the operations of transfer contained in the attached schedule, which the Reparation Commission also on its p art accepts, and to co-operate with the Reparation Commission in the fullest m a n n e r ior establishing and keeping in force those regulations.

(c) This decision shall be void and of no effect if, before December 31st, 1926, the R e p a r a t i o n

Commission has not received :

(1) A notification from the League of Nations th a t the entire scheme ap p roved on

June io th , 1926, has been carried into effect ; and(2) A notification from the Bulgarian Government th a t it accepts fully and u n r e s e r v e d ! )

all the provisions of the present decision and of the schedule with which it is concerned.

(Signed) S. A. A r m i t a g e - S m i t h ,

General Secretary.

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S c h e d u l e t o t h e D e c i s i o n o f t h e R e p a r a t i o n C o m m i s s i o n .

1. As from the date on which the Bulgarian Government addresses to the Inter-Allied Commission of Bulgaria a request for the suspension in whole or in part in the interests of the stability of the exchange of the purchase of foreign currency necessary for reparation payments, an organisation under the name of the Transfer Committee, entrusted with the obligation of operating reparation transfers, will be constituted in m anner hereinafter provided.

2. If, before the Transfer Committee enters upon its duties, any reparation payments fall due, the Bulgarian Government will have to meet them in the same manner as heretofore.

3. The Transfer Committee shall consist of:

(а) A member to be appointed by the unanimous decision of the Reparation Commission* a national of the United States of America or of a country which was neutral during the war of 1914-1919, as Chairman. If the Reparation Commission shall not have reached a unanimou5 decision for this purpose within one m onth from the date of the request above referred to. the President for the time being of the Permanent Court of International Justice at The Hague shall be requested to appoint the Chairman of the Transfer Committee ;

(c) A member appointed by the Trustees of the Bulgarian Refugees Loan ;(б) A member appointed by a decision of the Reparation Commission, taken, if necessary,

by a m ajority vote, after consulting the Inter-Allied Commission of Bulgaria.These three members must be chosen from persons who are experts on questions of exchange.

4. Account A of the Bulgarian Treasury at the National Bank of Bulgaria established under Article 3 of Ukase No. 10 annexed to the Protocol of Sofia shall be transferred into the name of and managed by the Transfer Committee.

5. The Transfer Committee will make, through the National Bank of Bulgaria, to the extent to which it considers th a t the stability of the Bulgarian currency allows the purchases of foreign exchange requisite for reparation payments.

6. If it should have proved impossible to transfer in cash all the sums to the credit of the account of the Transfer Committee, the Committee will authorise the employment of such amounts for such purposes, other than the purchase of foreign currency, as may be proposed by the several creditor States and as the Committee does not consider likely to compromise the stability of the Bulgarian exchange.

7. The Transfer Committee shall have a right to demand all information of utility for the discharge of its duties, especially as to the preparation and carrying into effect of the budget, the situation of the Treasury and the management of the National Bank of Bulgaria.

The Committee in particular will have a right to examine without restriction into the exchange m arket and the establishment of the statistics of foreign commerce.

8. If the Transfer Committee, by a decision which m ay be taken by a m ajority only, provided that the President is among the m ajority, finds th a t concerted financial manœuvres have been made either by the Bulgarian Government or by any group for the purpose of preventing reparation transfers, the Bulgarian Government undertakes to take any measures which the Transfer Committee might require from it to defeat the effect of the manoeuvres which have been detected and to prevent their repetition (including the appointm ent by the Transfer Committee of a Counsellor a t the National Bank of Bulgaria with the powers necessary to supervise the execution of any such measures).

9. The expenses of the Transfer Committee and in particular the remuneration of its members shall be fixed by the Reparation Commission and charged against the Bulgarian Government.

The members of the Committee shall not be entitled to any remuneration except for periods during which the Committee is in operation.

10. If the Transfer Gommittee, after having been called into operation, a t any time decides th a t the conditions of the Bulgarian exchange are such th a t reparation transfers can thenceforth in all probability be effected without danger to the stability of the exchange and if at the same tim e the Bulgarian Government undertakes to carry into effect reparation transfers in future, the Transfer Committee will suspend its operations w ithout prejudice to their resumption at any time when, contrary to expectation, the Bulgarian Government presents a new request for the to ta l or partia l suspension of reparation transfers.

11. Any question of interpretation of the present schedule shall be decided by the Transfer Committee w ithout appeal.

(Signed) S. A . A r m i t a g e -S m i t h .

C.476.1927.1 . (F-434-)-

4 .

LETTER FROM TH E BULGARIAN GOVERNMENT TO TH E PRESIDENT OF TH E COUNCIL OF T H E LEAGUE OF NATIONS, DATED SEPTEM BER 12TH, 1927 1

[Translation.]The Bulgarian Government, having settled, with the valuable help of the League of Nations,

the serious and urgent problem of the settlement of Bulgarian refugees, is continuing its policy of peace and stabilisation, and considers the fixing of its finances on a firm basis as an essential

1 In view of this letter the Council decided, on September 15th, 1927, to ask the Financial Committee and the Secretariat to undertake an examination of the financial position of Bulgaria.

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step in this direction. In this work, however, the Government is encountering considerable difficulties.

Having very carefully examined the country’s financial and economic possibilities, the Government has come to the conclusion that this task can only be accomplished with the help of a foreign loan.

As the League of Nations has, on several occasions, given its valuable patronage and assistance to similar work for the consolidation and reconstruction of countries whose finances have been undermined by the war, we venture to ask the Council to be good enough to instruct its organs to study a plan for the financial reconstruction of Bulgaria through the issue of a foreign loan.

The Bulgarian Government is confident that its request is entirely within the scope of the great work of the League and hopes that it will be favourably received by the Council.

(Signed) A. B o u r o f f ,

Minister of Foreign Affairs.

Wl. M o l l o f f ,

Minister of Finance.

5 .

REPORT OF TH E FINANCIAL COMMITTEE, DECEMBER 1927 V

On September 15th, 1927, the Council — at the request of the Bulgarian Government — asked the Financial Committee and the Secretariat “ to undertake an examination of the financial position of Bulgaria ” .

In consequence of this decision, a delegation of the Financial Committee, consisting of Sir Otto N i e m e y e r (Chairman), M. A l b e r t i (replacing M. Bianchini), M. d e Ch a l e n d a r , M. J a n s s e n and Dr. P o s p i s i l , paid a visit to Sofia, in order to investigate on the spot the financial and economic problems of Bulgaria. Preliminary information had been obtained by members of the Secretariat who had arrived in Sofia some weeks earlier. The Bulgarian Government and the Bulgarian National Bank have given all possible assistance in this enquiry.

The information obtained in Sofia has been discussed during the present session of the Financial Committee. During its discussion the Committee had the advantage of hearing on more than one occasion the representatives of the Bulgarian Government, M. B o u r o f f , Minister of Foreign Affairs, and M. M o l l o f f , Minister of Finance, and a lso M. I v a n o f f , the Governor o f the National B a n k .

While considerable progress has been made towards a plan of reconstruction, there are certain questions which still require elucidation. The Financial Committee proposes therefore to consider the m atter further in collaboration with the Bulgarian Government and to report a t its next session.

(a) REPO RT OF TH E FINANCIAL COMMITTEE, MARCH 1928.

As stated in the last report of the Financial Committee, the request of the Bulgarian Government of September last for an examination of the financial position of Bulgaria was followed by a visit of a League delegation to Sofia.

On the basis of the information so obtained, a scheme of reconstruction has been discussed with the Bulgarian representatives, both at the last session of the Committee and at the present one. The scheme is described below, and the obligations it involves are specified in a Protocol (see 7 below). The Bulgarian representatives are in agreement with the scheme and with the terms of the Protocol, which it is understood th a t they are ready to sign on approval by the Council.

By way of preface to the scheme, it is enough to recall that, the leva having been stable and the budget in approximate equilibrium for some years, the League in 1926 authorised the issue of a loan under its auspices solely for the purpose of refugee settlement without a t th a t time undertaking a responsibility for general financial reconstruction. Subsequent experience showed that, if the financial position was to remain on a safe basis and i f the stability of the currency was to be m aintained, it was necessary for the refugee scheme to be supplemented by one of financial reconstruction.

1 The Council noted this part of the Financial Committee's report at its meeting on December gth, 1927.

The present scheme is the result.I t will be seen th a t it contemplates a loan of £414 millions sterling, to be used for the following

purposes :

National B a n k ..............................Agricultural B a n k .........................Central Co-operative Bank . . .Budget A r r e a r s ..............................Roads and R ailw ays.....................

£1,500,000500,000150,000

1.100.0001.250.000

£4,500,000

The loan is to be secured by a first charge on the Customs revenues if this security can be released for the purpose. The independence of the Bank is to be assured; it is to be transformed, under the conditions described below, into a private share bank ; and a foreign bank adviser, with extensive powers, is to be appointed and to remain for a t least two years after this transform ation has been effected. The sums devoted to roads and railways will be expended in accordance with a plan drawn up with the aid of a foreign expert, who will make a survey in the country, and both this expenditure and th a t upon budget arrears will be supervised by the present League Commissioner in charge of the Refugee Settlement, M. René Charron.

W ith this preface, the problem and the solution recommended may be described in more detail.

The exchange rate of the leva has been approximately stable for over four years. There would appear to be a prima facie sufficient basis for proceeding now to a definite legal stabilisation of Bulgarian currency, provided that the measures described later in this report are adopted.

When the Financial Committee considered the question of the issue of the refugee loan in 1926, the latest available results were those for the financial year 1924-25, which gave a surplus of 548 million levas. In the following financial year, characterised by a severe economic crisis, revenue collections were reduced, while the expenditure figure was increased, the accounts closing with a deficit of 741 million levas1. As the result of a compression of expenditure effected by the newly instituted Budget Commission, the deficit was reduced to 393 million levas in the year 1926-27, making a to ta l for two years of 1,134 million levas. This deficit was partly m et by surpluses from previous years; but on April 1st, 1927, the budget arrears amounted to 767 million levas (about £1,100,000).

The budget estimates 1927-28 were: revenue, 6,993 million levas ; expenditure, 7,085 million levas. But, on the basis of the results of the period April-December 1927, the actual results for the year 1927-28 m ay be estim ated a t: revenue, 6,600 million levas ; expenditure, 6,540 million levas ; or a surplus of 60 million levas. This result has been obtained by a stringent control over expenses; and it is very necessary th a t this should continue. .

In the next two years there will be certain increases in expenditure, partly for liquidation of outstanding pre-war and war charges and for the considerable sums due in respect of compensation payable under the awards of the Mixed Greco-Bulgarian Emigration Commission, but the Bulgarian Finance Minister has informed the Committee th a t in his opinion the ordinary and extraordinary budget expenditure (including any new loan service) can be kept approximately within 6,750 million levas in 1928-29 and 7,000 millions in 1929-30, excluding in both cases receipts and expenditure accounted for in special funds and such capital outlay as is met from the loan. The Committee believes tha t these results should be realised bu t th a t they will need certain financial reforms, including a reduction in the number of officials by 10,000 to be effected over the next two financial years.

But it will be necessary to clear off from special resources derived from the proposed external loan the existing dead weight of past arrears and some of the tem porary borrowings from which such arrears have been for the moment met. The Committee proposes th a t a sum of £1,100,000 should be devoted to these purposes. I t considers th a t with this assistance any other arrears can be met from the budget within the limits indicated above.

Supervision over the expenditure of any loan monies for the payment of arrears as well as for other purposes should, in the opinion of the Committee, be exercised by the League Commissioner for the Settlement of Refugees.

Certain other technical measures are also essential: inter alia, complete unity of the budget (including the incorporation therein of a large number of the existing funds) ; maintenance of the system of monthly budgets and of the present Budget Commission, and establishment of a complete

The Reconstruction Scheme.

Budget.

1 £ — 675 levas ; $ = 138 levas; 1 Swiss fr. = 26.70 levas.

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and permanent system of Treasury control; regular publication every month, under appropriate heads, of returns of actual receipts and expenditure ; centralisation of cash balances in the Treasury account; control by the Minister of Finance, after consultation with the Governor of the National Bank, over borrowings by public authorities.

National Bank.

A considerable sum will be required from the loan to reduce the liabilities of the State to the Bank and to relieve it of various other illiquid assets, as well as to increase its unencumbered foreign exchange reserve to a more satisfactory percentage of its to ta l sight liabilities.

The Committee proposes th a t a sum of £1,500,000 shall be devoted to paying off in part the advances of the National Bank to or on behalf of the State and to relieving the National Bank of the advances to the two other State Banks, namely, the Agricultural Bank and the Central Co-operative Bank.

Various changes will also be required immediately in the Bank’s statutes to define more accurately its proper sphere of action and to establish its complete independence on surer foundations. These changes are shown in Annex I to the Protocol.

Independence is above all essential. On this depends the prospect of monetary stabilisation which is necessary for any sound scheme of financial reform. In the opinion of the Committee, independence can be best secured by constituting the Bank as an independent corporation with shares carrying a limited dividend as widely distributed as possible throughout all classes of the population. This is the solution which has been adopted in the case of all recently founded Central Banks and will enable the National Bank of Bulgaria to take its proper position among the Central Banks of the world to-day. The Committee annexes an outline of a scheme embodying this principle, by which it thinks, taking into consideration the special conditions of Bulgaria, such a reorganisation could be secured.

I t will be observed th a t the scheme does not contemplate th a t the shares or voting power should be in the hands of persons other than Bulgarian nationals. Nor would the National Bank be dominated by any particular group or class or by a few persons only, the share units being intentionally fixed at a low figure and the maximum voting power of the holder of any number of shares being strictly limited. The National Bank of Bulgaria would remain in the truest sense the property of all classes of the Bulgarian people. Further, the Committee realises that, as in other cases, a certain lapse of time will be necessary before the proposed reorganisation can be fully completed.

The Bulgarian Government fully recognises the desirability of the proposed reform and has undertaken to safeguard the complete independence of the National Bank. In all the circumstances., the Committee agrees that, subject to the appointment forthwith of an expert adviser a t the National Bank with the powers indicated in Annex II of the Protocol, the final decision as to the date of transformation may be deferred.

The Committee is glad to record th a t agreement on this question has been reached. I t is embodied in the following passage of the Protocol (Article IV, paragraph 1) :

“ The Bulgarian Government undertakes to safeguard the independence of the Bulgarian National Bank from any political influence whatsoever.

“ The Bulgarian Government agrees, w ith this intention and for this purpose, to the appointm ent by the Council of the League of Nations of a technical adviser to the Bulgarian National Bank, whose powers shall be those defined in the amendments to the Statutes of the National Bank (Annex I).

" The Bulgarian Government fully recognises th a t for the definite consolidation of the financial situation of Bulgaria it is im portant to transform the Bulgarian National Bank in accordance with the plan laid down in Annex II, in order to bring it into conformity with the other Central Banks, and undertakes to effect this transform ation a t a date to be fixed by agreement between the Council of the League of Nations and the Bulgarian Government. The details of this transformation shall be fixed by agreement between the Council and the Bulgarian Government on the advice of the Financial Committee.”

Agricultural and Central Co-operative Banks.

I t will, moreover, be desirable to provide new working capital for these two Banks : to the extent of £500,000 for the Agricultural Bank and £150,000 for the Central Co-operative Bank.

Communications.

The position of the State railways requires very careful consideration, and the Committee thinks th a t the Bulgarian Government has been wise in securing, on the advice of the Transit Organisation of the League, a foreign expert to advise them on this problem. This expert will doubtless advise on the relative economic advantages to Bulgaria of railway or road construction ; on the degree to which repairs are essential on the existing railway system ; on the railway

— I f —

accounting system ; and on th e desirability or otherwise of reorganising the railways on an autonomous basis.

The Committee proposes th a t a sum of £1,250,000 should be provided in the loan for expenditure on communications, in accordance with a programme to be approved after the advice of the expert has been received.

Amount of Loan.

The Financial Committee is of opinion th a t Bulgaria should not a t present borrow any sum that is not absolutely indispensable. The present resources of the country are limited, and its foreign liabilities are relatively considerable, though the present foreign payments do not, including reparation charges, exceed in gold value the pre-war budget charge for foreign debts. The Committee thinks it would be unwise to expect th a t a larger sum than £4,500,000 could now be raised; and it believes th a t the necessary requirements outlined above could be met within th a t sum.

Provided th a t adequate measures are taken to establish budget equilibrium and monetary stabilisation is carried out and maintained by the working of a satisfactory Central Bank, a loan of this size does not exceed the financial capacities of the country.

Securities.

The Committee has discussed a t length what revenues could be pledged for the service of such a loan. After examining in detail the various possibilities, the Committee has been forced to the conclusion th a t the charge which, from a m arket point of view, would justify confidence in a successful issue of the loan would be a first lien on the Customs revenues. These are at present subject to a first lien for reparation and other trea ty charges. There m ay also be certain private claims on these revenues. But it might be possible to arrange th a t the Inter-Allied Commission at Sofia (whose assent in any case would be necessary for a release from the general charge for reparations on all Bulgarian revenues and assets) should allow the Customs revenues now specifically pledged for reparations to be pledged in the first place for the service of the contemplated new loan, and, while retaining a second charge on the Customs, accept an alternative charge for what they release on some other satisfactory revenue.

These are the general aspects of the scheme which is embodied in the attached Protocol and which the Committee submits for the approval of the Council.

The Committee wishes to draw attention to the importance for the success of this scheme of an early settlement of certain outstanding questions, such as the possibility of securing a first charge on the Customs revenues and sufficient progress in the settlement of various pre-war private debts of the Bulgarian State.

(b) RESOLUTION ADOPTED BY TH E COUNCIL ON MARCH i o t h , 1928.

The Council:

(1) Approves the Financial Committee’s report and the draft Protocol attached thereto concerning the Bulgarian Stabilisation Loan ;

(2) Congratulates the Bulgarian Government and the Financial Committee on the preparation of this plan and hopes th a t it can be put into operation very shortly;

(3) Appoints the Chairman of the Financial Committee to discharge temporarily the duties of the Trustees as specified in Article X of the Protocol, until the Council session following the issue of the loan.

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7.

PROTOCOL

S i g n e d a t G e n e v a b y t h e B u l g a r i a n M i n i s t e r o f F i n a n c e o n M a r c h i o t h , 1928, w i t h t h e M o d i f i c a t i o n s c o n t a i n e d i n t h e A d d i t i o n a l A ct s i g n e d b y h im a t G e n e v a

o n S e p t e m b e r 8 t h , 1928.

Whereas the Bulgarian Government desires to issue, under the auspices of the League of Nations, a loan the yield of which shall be applied for the purposes of stabilising the Bulgarian currency and improving the situation of the Bulgarian National Bank, the Agricultural Bank and the Central Co-operative Bank, of liquidating budget arrears of the Bulgarian State for certain urgent expenditure on means of transit; and in connection with the earthquakes of April 1928.

And whereas the Council has approved for this purpose the provisions of the present Protocol,The undersigned, duly authorised for the purpose, accepts on behalf of Bulgaria the following

provisions :Article I . — Issue of a Loan.

1. The Bulgarian Government m ay issue a loan yielding an effective sum equivalent to not more than five millions sterling for the purpose of providing the means to carry out the plan of financial and m onetary reconstruction set out in the report of the Financial Committee to the Council annexed hereto l. The whole of this amount shall be integrally made available as hereinafter provided. The expenses of issue negotiation and delivery shall be added to the capital of the loan as fixed above.

2. The capital and interest of the loan mentioned in paragraph 1 above shall be paid by the Bulgarian Government free of all deductions in respect of taxes, dues or charges present and future for the benefit of the Bulgarian State or of any municipal or local authority.

3. The conditions of the loan, the method of issue, the issue price, the rate of interest, the amortisation, and the expenses of issue, of negotiation and of delivery shall be subm itted for approval on behalf of the Financial Committee of the League of Nations to a person or persons appointed by the Committee for this purpose ; the amount of the annuity necessary for the service of interest and amortisation of the loan shall likewise be so approved. He shall also approve the term s of reference to the League of Nations in any prospectus of the loan.

Article I I . — Securities.

1. The Bulgarian Government will furnish as securities for the loan the following revenues:

(а) Receipts obtained from all import and export duties, including ad valorem taxes,bonding, statistical and sealing charges and other Customs charges ;

(б) Such other revenue or revenues (if any) as m ay from time to time be assigned in accordance with paragraph 6 below.

2. The amounts required for the service of the loan shall be, and shall remain, a first charge upon the revenues mentioned in paragraph 1 above, and the Bulgarian Government acknowledges th a t such revenues shall stand charged accordingly.

3. The revenues mentioned in the preceding paragraph shall not be used as security for any new loan without the consent of the Trustees of the loan.

4. The Bulgarian Government will not take any measures which, in the opinion of the Trustees, would be such as to diminish the aggregate value of the revenues mentioned in paragraph1 to such an extent as to threaten the security of the bondholders.

5. All decisions taken by the Trustees in virtue of paragraphs 3 and 4 shall require confirmation by the Council if within fourteen days of the notification of any such decision by the Trustees to the Bulgarian Government the latter shall have lodged an appeal against it with the Council.

6. If at any time the to ta l yield of the revenues referred to in paragraph 1 should fall below 150 per cent of the annual sum required to meet the service of the loan, the Trustees may request the Council to call upon the Inter-Allied Commission established under Article 130 of th e Treaty of Neuilly to release from the charge laid down in Article 132 of the said Treaty such additional revenues as may be sufficient to assure the immediate restoration of the yield to th e above percentage, and such additional revenues so released, shall be forthwith assigned to th e sérvice of the loan.

Article I I I . — Employment of the Loan.

The Bulgarian Government undertakes th a t the yield of the loan shall be applied only for the purposes and in strict accordance with the procedure set out in Articles IV, V, VI, V II, VII A and V III below.

1 The Financial Committee’s Report on the Bulgarian Stabilisation Loan (see document 6 (a)) is an annex to the original signed text of the Protocol.

— ig —

Article IV . — Bulgarian National Bank.

x. The Bulgarian Government undertakes to safeguard the independence of the Bulgarian National Bank from any political influence whatsoever.

The Bulgarian Government, with this intention and for this purpose, agrees to the appointment by the Council of the League of Nations of a technical adviser to the Bulgarian National Bank, whose powers shall be those defined in the amendments to the Statutes of the National Bank (Annex I).

The Bulgarian Government fully recognises that, for the definite consolidation of the financial situation of Bulgaria, it is desirable to transform the Bulgarian National Bank in accordance with the plan laid down in Annex II in order to bring it into conformity with other Central Banks, and undertakes to effect this transformation at a date to be fixed by agreement between the Council of the League of Nations and the Bulgarian Government. The details of this transformation shall be fixed by agreement between the Council and the Bulgarian Government on the advice of the Financial Committee.

2. The existing Statu tes of the Bulgarian National Bank shall be amended forthwith in conformity with the provisions contained in Annex I, subject to the final tex t for this purpose being approved by the Financial Committee or by such members as the Committee may nominate for the purpose. The amendments to the Statutes shall enter into force on the date on which the payment mentioned in paragraph 5 below has been completed.

The Bulgarian National Bank shall perform the functions assigned to it in the Statutes, as amended, and, in particular, it shall effect and maintain the stabilisation of the Bulgarian currency in relation to gold and the centralisation at the Bank of all the receipts and payments of the State and the State enterprises.

3. The Bulgarian Government shall appoint as Adviser, under paragraph 1 above, to the Bulgarian National Bank such person as m ay be nominated by the Council of the League of Nations.

The functions of the Adviser shall continue until such time as the Council shall have ascertained that the financial and m onetary stability of Bulgaria is assured, and in any case, for not less than two years after the transformation of the Bulgarian National Bank shall have been completed in the m anner described in paragraph 1 above.

4. For the purpose of stabilising the Bulgarian currency, a sum of £1,500,000 from the yield of the loan shall be employed by the Bulgarian Government for strengthening the position of the Bulgarian National Bank in the m anner stated in paragraph 6 below.

5. The Bulgarian Government shall, in accordance with Article V III below, request the issuing houses to pay the said sum directly to the Bulgarian National Bank.

6. The said sum shall be allocated :

(a) To the repaym ent of such part of the advances made by the Bulgarian National Bank to the Agricultural Bank and the Central Co-operative Bank respectively as the Bulgarian National Bank may decide, in agreement with the Adviser to the Bulgarian National Bank ;

(b) To the repayment of all advances, other than those made to the Agricultural Bank and the Central Co-operative Bank, made by the Bulgarian National Bank under the guarantee of the State, such advances to be thereupon transferred to the Agricultural Bank ; and

(c) To the repayment of part of the State debts to the Bulgarian National Bank, to be applied in the first place to the immediate repayment of three Treasury bills of 50 million levas each.

7. The State will further apply the undermentioned funds annually towards the extinction of the remainder of its debt to the National Bank of Bulgaria:

(a) The sum of 100 million levas from its current budget resources ;(h) All seignorage profits of the State derived from the issue of subsidiary coinage ;(c) The whole of the S ta te’s participation in the profits of the National Bank.

8. The Bulgarian Government will take all necessary steps to effect the legal stabilisation of the Bulgarian currency in relation to gold as from the day on which the payment mentioned in paragraph 5 above has been completed.

9. The decisions fixing the maximum amount of subsidiary coinage which may at any time be in circulation, the method of its issue, and the amount for which such coins shall be legal tender, shall be taken by the Government in agreement with the National Bank of Bulgaria, provided that no such decisions shall be in contravention of the provisions of the S tatu tes of the National Bank as amended by this Protocol, and provided th a t such coinage shall be put into circulation only through and at the request of the National Bank.

10. All restrictions upon the purchase or sale of foreign exchange shall be abolished within six months of the day mentioned in paragraph 8 of this article or within such further period as may be approved by the Adviser to the Bulgarian National Bank.

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Article V. — Agricultural and Central .Co-operative Banks.

1. The Central Co-operative Bank shall remain under the direct authority of the Minister of Finance, and the general financial policy of the Agricultural Bank shall be determined by agreement between the Minister of Finance and the Minister of Agriculture.

2. For the purpose of providing new working capital for the said banks, the Bulgarian Government shall pay out of the yield of the loan £500,000 to the Agricultural Bank and £150,000 to the Central Co-operative Bank.

3. The Bulgarian Government shall, in accordance with Article V III below, request the issuing houses to pay the sums mentioned in paragraph 2 above directly to the Bulgarian National Bank. The Bulgarian National Bank shall transfer the counter-value of the said sums in Bulgarian currency to the Agricultural Bank and the Central Co-operative Bank, respectively.

4. W ith the exception of a sum of 100 million levas which shall constitute permanently a share of the State in the capital of the Central Co-operative Bank, the sums received by the Agricultural and Central Co-operative Banks, in accordance with Article IV, paragraphs 6 (a) and (&), and Article V, paragraphs 2 and 3, shall be reimbursed to the State by the said Banks in accordance with an agreement to be made between them and the State.

Article V I. •—• Budget.

1. The Bulgarian Government undertakes to make, and to persist in making, every effort to keep the ordinary and extraordinary budget for 1928-29 within the limit of 6,750 million levas, and th a t for 1929-30 within the limit of 7,000 million levas, excluding in both cases such capital outlay as is met out of the loan and receipts and expenditure accounted for in special funds, and to m aintain thereafter a complete equilibrium between the current revenue and current expenses of the State, current expenses being taken to mean all expenditure except such capital outlay for productive purposes as m ay be provided for from sources other than current revenue.

2. The Bulgarian Government undertakes to reimburse forthwith out of the loan the budget liabilities set out in Annex III .

3. The Bulgarian Government shall, in accordance with Article V III below, request the issuing houses to pay the part of the loan mentioned in paragraph 2 above directly to the Bulgarian National Bank for the account of the Bulgarian Government.

4. The Bulgarian National Bank shall hold the sums to be used in accordance with paragraph2 above in a special account for the Bulgarian Government. All drawings from this account shall require the counter-signature of the Commissioner appointed in accordance with Article I of the Protocol signed at Geneva on September 8th, 1926.

The Commissioner shall satisfy himself th a t such drawings are in respect of and are used for paying the liabilities described in paragraph 2 above.

5. The Bulgarian Government undertakes to transm it, every three months during a period of five years after the date of the signature of this Protocol, to the Council of the League of Nations, a report on its budget situation and Treasury liabilities, and in particular, as to the employment of the proceeds of the loan.

6. The Bulgarian Government undertakes :

(a) To proceed to the creation of a new system of public accounting in conformity with the principle of the unity of the S ta te budget, and to include in the budget all special funds except those described in Annex IV ;

(b) To m aintain the existing system of m onthly budgets;ic) To establish a complete and permanent system of Treasury control, and until such

system is established to m aintain the existing system of control by the Budget Commission :{d) To publish regularly every m onth under appropriate heads returns of receipts and

expenditure provided for in the budget, the cash position and the liabilities of the Treasury and the position of the public debt.

The form of these returns shall be determined by agreement between the Bulgarian Government and the Commissioner of the League of Nations.

7. The Bulgarian Government will make every effort to reduce the employees of the State and of State undertakings within a period of two years from Ju ly 1st, 1928, by a t least 10,000.

8. The Minister of Finance shall co-ordinate and approve all borrowings, whether external or internal, on the part of all public authorities. He shall ask the advice of the Governor, and, during the term of his office, of the Adviser of the Bulgarian National Bank on these questions and on all legislative and other measures of a general character in m atters of money and credit.

Article VI I . •— Means of Transit.

1. A sum not exceeding £1,250,000 out of the proceeds of the loan m ay be employed for means of transit. The purposes for which it is to be employed and a general scheme of expenditure for these purposes shall be subm itted for the approval of the Council of the League of N ation s , after the report of the railway expert to be appointed by the Bulgarian Government has becom e available.

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2. The Bulgarian Government shall, in accordance with Article V III below, request the issuing houses to pay the part of the loan mentioned in paragraph i above into a special account or accounts as directed by the Commissioner appointed in accordance with Article I of the Protocol signed a t Geneva on September 8th, 1926.

3. AD drawings from such special account or accounts shall require the counter-signature of the said Commissioner and shall be made only for the purposes mentioned in paragraph 1 above and in conformity with detailed plans approved by him, within the general scheme contemplated in paragraph 1. The Commissioner shall satisfy himself th a t such payments are used only for the purposes for which he has authorised them to be made.

Article V I I A . — Earthquakes.

1. A sum not exceeding £500,000 out of the proceeds of the loan m ay be employed, as the Commissioner appointed in accordance with Article I of the Protocol signed at Geneva on September 8th, 1926, m ay approve, in connection with the earthquakes which ravaged parts of Bulgaria during the spring of 1928.

2. The Bulgarian Government shall, in accordance with Article V III below, request the issuing houses to pay the part of the loan mentioned in paragraph x above into a special account or accounts as directed by the Commissioner.

3. All drawings from such special account or accounts shall require the counter-signature of the said Commissioner and shall be made only for the purposes mentioned in paragraph 1. The Commissioner shall satisfy himself th a t such payments are used only for the purposes for which he has authorised them to be made.

Article V I I I . —• Miscellaneous.

1. The several instalments of the loan issues shall be allocated for the purposes contemplated by the present Protocol in agreement with the President of the Financial Committee, and instructions to the issuing houses shall be given accordingly by the Bulgarian Government.

2. If any balance remains under either Article VI, Article VII or Article V II A, the Financial Committee m ay authorise a transfer from one head to the other.

3. Any sums which have become available from the yield of the loan and have not been allocated shall be temporarily retained on a blocked account or accounts, as the Commissioner, appointed in accordance with Article I of the Protocol signed a t Geneva on September 8th, 1926, m ay decide in agreement with the National Bank of Bulgaria, and under the control of the said Commissioner.

Article I X . — Issue of Treasury Bills.

The Bulgarian Government undertakes not to seek short-term advances or to issue Treasury bills or other similar short-term obligations in excess of 600 million levas.

Nothing in this article shall prejudice the existing rights of the Inter-allied Commission established under Article 130 of the Treaty of Neuilly.

Article X . — Trustees.

1. The Council of the League of Nations will appoint Trustees to represent the interests of the bondholders of the loan, and the Bulgarian Government accepts th a t the Trustees shall fulfil the functions and perform the acts assigned to them in this Protocol until the loan, and every part thereof, and every claim in respect thereof, shall have been completely discharged.

2. The revenues mentioned in Article II, paragraph 1, will be paid into a special account, as and when collected for the purpose of assuring the service of the loan. The Commissioner appointed in accordance with Article I of the Protocol signed at Geneva on September 8th, 1926, and, after the term ination of his functions, the Trustees, m ay alone control this account.

Any balance of the account not retainable in accordance with the following provisions or with the terms of issue of the loan shall be reimbursed to the Bulgarian Government, subject, however, to the powers conferred on the Trustees in the event of a default under paragraph 3 (b) below.

3. The terms on which the loan is issued shall include, among other provisions:(а) Provisions as to amounts which, a t the intervals fixed by such terms, shall be paid

out of the special account provided for in the preceding paragraph by the Commissioner to the Trustees, and during such times as the Trustees may be in control of the account, set aside by the Trustees themselves and retained for the service of the loan, including interest, amortisation and all charges, commissions or other paym ents to be m et by the Bulgarian Government in connection therewith.

(б) Power for the Commissioner at the request of the Trustees, or for the Trustees themselves if they shall be in direct control of the account mentioned in paragraph 2 of this article, to retain, collect or otherwise provide out of the said revenues (including such other revenues as m ay be brought into charge under the provisions of Article II) sufficient sums to remedy and make good any default of the Bulgarian Government in whole or in part in carrying out any of its obligations contained in the conditions of the loan.

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Article X I . — Commissioner.

1. The Commissioner appointed in accordance with Article I of the Protocol signed at Geneva on September 8th, 1926, shall, in the reports submitted by him to the Council of the League of Nations in accordance with paragraph 3 of Article I of the said Protocol, report also as to the progress made in the execution of the present Protocol, and the Bulgarian Government shall furnish him with all information necessary for this purpose.

2. Notwithstanding the provisions of Article I, paragraph 6, of the Protocol signed at Geneva on September 8th, 1926, the functions of the Commissioner under the present Protocol shall continue until the Council is satisfied tha t his services are no longer required for the purposes specified in Articles VI, V II and VII A of the present Protocol.

Article X I I . — First Charge.The obligations assumed by the Bulgarian Government under the provisions of this Protocol

shall not become effective unless and until the Bulgarian Government is able to give the first charge contemplated under Article II.

Article X I I I . — Protocol Article.1. Any differences as to the interpretation of this Protocol shall be settled by the Council of

the League of Nations.2. All decisions to be taken by the Council under the terms of this Protocol shall be taken

by a m ajority vote.3. This Protocol, of which the French and English texts are both authentic, shall be ratified

by Bulgaria, and the ratification shall be deposited a t the Secretariat of the League of Nations as soon as possible, and in any case not later than three m onths from the date of its approval by the Council of the League of Nations.

In faith whereof the undersigned, duly authorised for the purpose, has signed the present Protocol.

Done a t Geneva on the 10th day of March, 1928, in a single copy, which shall be deposited with the Secretariat of the League of Nations and be registered by it without delay.

(Signed) Wl. M o l l o f f ,

Bulgarian Minister of Finance.

A nnex I.

AMENDMENTS TO THE PRESENT STATUTES OF THE BULGARIAN NATIONAL BANK

(Final tex t approved on behalf of the Financial Committee in accordance with Article IV, 2, of the Protocol signed at Geneva on March 10th, 1928 1.)

I. Article 2: The words " The convertibility into gold of paper money (banknotes) will be governed by a special law ” to be deleted.

II . The following article to be inserted after Article 2:

Article A .To ensure the convertibility of its notes :1. The Bank, on the requisition of any person who makes a demand or offer to th a t effect

a t the head office of the Bank in Sofia, shall be bound to sell to, or to purchase from, such person in exchange for legal-tender currency of Bulgaria, a t the rates defined in Sections 2 and 3 of this article respectively, the legal-tender currency of such foreign gold-standard country or countries as is by law and in practice convertible into exportable gold, and such as may be notified in the Official Gazette, for immediate delivery in such foreign country or countries.

Provided th a t no person shall be entitled to demand or offer an amount of foreign currency of less value than 50,000 levas of legal-tender money of Bulgaria.

2. For the purpose of determining the rate applicable to the sale of foreign currency under this article, the amount in levas which represents 1,000 grammes of fine gold in accordance with the stabilisation rate shall be deemed to be equivalent to such sum in th a t foreign currency as is required to purchase 1,000 grammes of fine gold in th a t foreign country, a t the rate a t which the principal currency authority of th a t country is bound by law to sell gold in exchange for currency,

1 It is understood that the articles of the Statutes will h a v e to be renumbered in connection w ith these a m e n d m e n t s

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after deduction from such of an amount to be fixed by the Bank representing the normal cost per 1,000 grammes of transferring gold bullion in bulk from Sofia to th a t foreign country, including interest and insurance of its value during transit.

3. For the purpose of determining the rate applicable to the -purchase of foreign currency under this article, the amount in levas which represents 1,000 grammes of fine gold in accordance with the stabilisation rate shall be deemed to be equivalent to such sum in th a t foreign currency as is realised by the sale of 1,000 grammes of fine gold in th a t foreign country a t the rate a t which the principal currency authority is bound by law to purchase gold in exchange for currency, after addition to such sum of an amount to be fixed by the Bank representing the normal cost per 1,000 grammes of transferring gold bullion in bulk from th a t foreign country to Sofia, including interest and insurance on its value during transit.

4. On the date on which the provisions of this law become operative, the Bank shall notify in the Official Gazette a t least one foreign gold-standard country for the purposes set forth in Section 1 of this article. The Bank shall similarly notify any additions or changes of the foreign gold-standard countries to which Section 1 of this article is to apply. The Bank shall also from time to time determine the equivalent rates in accordance with the provisions of Sections 2 and 3, and shall notify in the Official Gazette the rates so determined.

III . Article 3, 2nd sentence :“ The original capital of the Bank amounts to 1,000 million levas ” to be replaced by: “ The

capital of the Bank amounts to 500 million levas. The amount by which the capital exceeds this sum, a t the time when this amendment comes into force, shall be carried to the reserve.”

IV. Article 7: 2nd and 3rd paragraphs to be replaced by:

" So long as the debt due by the State to the Bank has not been repaid in its entirety, that portion of the net profits of the Bank which is due to the State Treasury shall be retained and used for the amortisation of the debt. Furthermore, the Minister of Finance shall provide annually in the Budget of the State Expenditure a sum amounting to 100 million levas to be applied to the repayment of the debt and shall devote all seignorage profits of the State to this purpose.”

V. Articles 8, 9 and 10 to be replaced by the following articles:

Article B.

The Bank shall m aintain a reserve of not less than 33 '/3 per cent of the amount of its notes in circulation and other demand liabilities. By banknotes in circulation are to be understood all banknotes issued to the public and not returned to the offices of the Bank or written off under Article 59.

Article C.

The term “ reserve " in the preceding article shall include only :

(a) Gold coin and bullion 1 in the unrestricted ownership of the Bank, and either in the custody of the Bank or deposited in another Central Bank, or in any Mint, or in transit ;

(b) Net foreign gold exchange in the unrestricted ownership of the Bank, provided th a t it be either :

(i) On a country the currency of which by law and in practice is convertible on demand a t a fixed price into exportable gold ; or

(ii) On a country the currency of which by law and in practice is convertible on demand a t a fixed price into foreign exchange as defined in [i).

For the purpose of this article the term “ net foreign gold exchange ” shall be taken to consist of the following kinds of claims on the currency of a country as defined in the preceding paragraph (6) :

(1) Balances standing to the credit of the Bank a t the Central Bank of such a foreign country.

(2) Bills of exchange drawn on and payable in the currency of such a foreign country, m aturing within three months and bearing at least two good signatures.

(3) Treasury Bills, Treasury Certificates of indebtedness or similar obligations of the Government of such a foreign country m aturing within three months :

Less all liabilities in foreign exchange. All such liabilities shall be included in the figures of the weekly statement.

1 See also transitory Article Q for silver.

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In calculating the amount of the reserve, should it be found th a t the liabilities in foreign exchange exceed the to tal of the assets enumerated in the paragraphs numbered (i), (2) and (3) of this article, the excess shall be deducted from the to ta l of the other assets of the reserve.

Article D.

At the request of the Bank, the Government may suspend the operation of Article B subject to the payment by the Bank to the Government of a tax.

Suspension may be granted for a period of not more than th ir ty days in the first instance and m ay be renewed for further periods not exceeding fifteen days a t a time. The tax shall be levied on the amount by which the note circulation and other demand liabilities of the Bank exceed the maximum sum which would be admissible under Article B.

The tax shall be calculated on the daily amount of the excess a t the following rates :

1 y2 per cent per annum above the published minimum current discount rate of the Bank for three-months bills if the reserve, while less than 331j 3 per cent, is not less than 30 per cent. .

2 per cent per annum above such minimum current discount rate if the reserve, while less than 30 per cent, is not less than 25 per cent.

3 per cent above such minimum current discount rate if the reserve is less than 25 per cent.

Article E.

Whenever the reserve falls below the 331/3 per cent referred to in Article B, the Bank shall immediately add to its minimum current discount rate a percentage a t least equal to the percentage of tax leviable in accordance with Article D above.

VI. Article 11: Delete all words after “ media of exchange ’’ and add: “ otherwise than as provided for in Article M ”.

VII. Article 12 to be deleted.

V III. Article 13, paragraph 2, to be replaced by the following paragraphs :

“ The Governor and the Deputy-Governors shall be appointed by Royal Decree on the recommendation of the Minister of Finance, the Governor for seven years, the Deputy-Governors for five years. These term s of office m ay be renewed.

“ If the Governor, any Deputy-Govemor or any Director be guilty of a breach of these Statutes, or abuse his position for private or business purposes, he can be removed from office by a decision of the Sobranie, to whom the Minister of Finance shall submit a reasoned report, to which should be annexed a statem ent by the Governor, the Deputy-Governor or the Director in question of their point of view. ”

The following paragraph to be inserted at the end of Article 13:“ Persons who come within the categories mentioned in Article 25 shall not be eligible for

election as Directors.”

IX. Article 15, 1st paragraph: Delete “ to a plenary session ” .

X. Article 17: 1st sentence to read: " The Board of Directors shall administer the affairs of the Bank and lay down the general principles of its policy ”.

From clauses 1, 2, 3 and 4 delete : " in plenary session ”.

X I. Article 18: The first words to read:

“ The Governor manages the affairs of the Bank.”

X II. Article 28: Delete 2nd sentence and substitute:" Members of the Discount Committees m ay receive in return for their services a remuneration

to be fixed a t the discretion of the Board of Directors.”

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X III. Article 29: 2nd sentence to be replaced by the following:

“ The Discount Committees fix the total amount of credit which may be accorded in any form to each customer of the Bank and from time to time revise these limits.”

XIV. Article 32: 1st sentence to be replaced by the following :

“ The President of a Discount Committee has the right to veto any decision of the Discount Committee.”

XV. Articles 34 to 37 inclusive, Article 38, paragraph 1, Article 39, Articles 40, 43 to 45 inclusive, Article 46, paragraphs 2, 3 and 4, Articles 47,53, 54 and 55, paragraph 1, to be deleted.

The following articles to be inserted after Article 33 :

Article F.

The business of the Bank shall be restricted to the following operations. The Bank may:

(1) Make and issue banknotes.

(2) Issue demand drafts made payable a t the Bank’s head office or branches. N o such drafts or bills drawn by the Bank on itself shall be made payable to bearer.

(3) Buy and sell gold coin or bullion.

(4) Deliver cheques, drafts and letters of credit to order or to bearer, payable in levas at sight and effect transfers by telegram, by letter or otherwise.

(5) Accept money on current or deposit account.

(6) Discount, purchase or sell inland bills of exchange and promissory n o te s a r is in g out of bona-fide commercial transactions bearing not less than two good s ig n a tu r e s a n d m aturing within three months.

(7) Discount bonds and coupons of loans of the State or of loans guaranteed by the State, provided th a t these bonds and coupons m ature within three months.

(8) Discount, purchase or sell bona-fide inland agricultural bills and notes bearing not less than two good signatures and maturing within nine months, provided that a t the tim e of discount or purchase this category of bills and notes does not exceed one-third of the Bank’s portfolio of inland bills and notes acquired by discount or purchase. In the case of agricultural bills discounted for the Agricultural Bank and Central Co-operative Bank, the National Bank of Bulgaria shall have the same special rights of recourse against the parties to the bills as those possessed by the Agricultural Bank and Central Co-operative Bank.

(9) Discount for the tem porary requirements of the State for expenditure authorised in the Annual State Budget, Treasury Bills of the Bulgarian State with a m aturity of not more than three months, up to an amount of 400 million levas, provided th a t the whole amount be repaid not later than at the end of the quarter following the close of the fiscal year in respect of which such accommodation is afforded. The rate of discount for such Treasury Bills to be 2 per cent below the current ta n k rate for the discount of three m onths’ bills with a maximum of 7 per cent.

(10) Discount, purchase or sell Treasury Bills of the Bulgarian S tate with a m aturity of not more than three months which are endorsed by a bank, person or firm whose name has been approved by the Board of Directors. Provided th a t the to ta l amount of Treasury Bills acquired in accordance with this paragraph or accepted as collateral in accordance with paragraph (14) (c) below m ay not together a t any time exceed 200 million levas.

(11) Undertake the issue and management of the State Debt and loans of a public utility character and such other services as are laid down in Articles 68, 69 and J.

(12) Buy and sell a t home and abroad, for immediate or forward delivery, foreign currencies stabilised on gold, telegraphic transfers, cheques, bills of exchange (including Treasury Bills) and drafts drawn in or on any place in a country whose currency is stabilised on gold, and m aturing within three months, and keep balances with banks in such currencies.

(13) Act as agent for or correspondent of any other bank in Bulgaria or abroad.

(14) Grant advances for fixed periods not exceeding three months against the following security:

(а) Gold coin and bullion.(б) Bulgarian State Bonds or bonds guaranteed by the Bulgarian Government

quoted on the Sofia Stock Exchange, provided th a t no advance shall exceed 80 per centof the m arket value of any such bonds.

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(c) Treasury Bills of the Bulgarian State within the limitations specified in paragraph (10) of this article.

(d) Warehouse certificates (warrants) expressed in Bulgarian currency, on condition tha t these certificates bear the signatures of two persons well known to be solvent, and that they be payable in Bulgaria within a maximum period of three months. The warehouses whose warrants may be accepted as security for an advance at the Bank shall be selected by the Board of Directors, who will also determine the nature of the commodities to which the warrants may relate. The Board of Directors will also fix the amounts which m ay be pledged. No advance, however, shall exceed 60 per cent of the current value of the commodities in question. All stipulations set out above regarding commercial bills shall apply equally, mutatis mutandis, to warrants.

(e) Bills of exchange payable in Bulgaria or abroad in the national currency or foreign gold exchange with not more than three months to run, and conforming to the stipulations of paragraphs (6) and (12) above, but only up to 80 per cent of their face value.

The rate of interest on all advances shall be not less than 1 per cent above the Bank’s current official discount rate for three-months bills.

(15) Accept the custody and management of monies, securities and other articles of value.

(16) Undertake on behalf of th ird parties the purchase and sale, collection and payment of securities, currencies and credit instruments a t home and abroad and the purchase or sale of gold and silver.

(17) Invest an amount not exceeding 20 per cent of the paid-up capital and reserves in Bulgarian State Bonds or bonds guaranteed by the Bulgarian Government quoted on the Sofia Stock Exchange.

(18) Deliver guarantee certificates for use with departments of the public service. These certificates to be delivered against payment or against promissory notes payable to order or on demand signed by the debtor and by two solvent persons as guarantors. The maximum amounts of these certificates and the conditions of issue shall be determined by the Board of Directors. The Bank may, when it thinks necessary, demand a replacement of the promissory note by a marketable security authorised by these Statutes or may enforce the payment of the note by the process of forced execution. Certificates of guarantee m ay also be delivered against securities or commercial bills surrendered in pledge.

(19) Do ail such things as m ay be incidental to the transaction of the Bank’s legitimate business, as defined in these Statutes.

Article G.

In the case of advances against bills of exchange, the Bank shall have the right to examine the books and also the portfolio of the depositor when it thinks necessary.

Article H.

The Bank shall not:

(1) Issue notes of a denomination less than 200 levas ;(2) Directly or indirectly make advances to the State except as provided in Article F

or undertake any transactions for the State not specified in Article F ;(3) Directly or indirectly make advances, in any circumstances whatever, to

departments, municipalities or other bodies of the same nature;(4) Engage in trade or otherwise have a direct interest in any commercial or industrial

undertaking;(5) Make unsecured loans or advances ;(6) Advance money on mortgage or engage in any similar transactions, or

make advances for periods longer than those specified in Article F ;(7) Become the possessor of immovable property except so far as is necessary for its

own business and with the exception provided for in Article 42;(8) Purchase the shares of any other bank or of any company ;(9) Pay interest on money placed on deposit or current account with the Bank except

as provided in Article I, and except tha t interest a t the rate of not more than 1 per cent perannum may be paid on the deposit or current accounts of other banks;

(10) Draw or accept bills payable otherwise than on demand ;(11) Discount for or accept as security further bills from any one party (unless from

the Government under Article F) whose total liabilities to the Bank as a bill acceptor, drawer or endorser already equal or exceed one-tenth of the paid-up capital of the Bank unless on the authority of a special resolution adopted by a three-quarters majority vote of a meeting of the Board of Directors.

(12) Allow the renewal of maturing bills of exchange purchased or discounted by the Bank.

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Article 38: Last paragraph to be replaced by the following :

“ The Bank’s minimum current discount rate, which must be publicly displayed a t the offices of the Bank and published in the Official Gazette, shall be the same at all the establishments of the Bank.”

XVI. Article 58 to be replaced by:

“ At the end of the financial year the accounts of the Bank, supported by the necessary vouchers, shall be verified by a committee appointed by the Minister of Finance and composed of a Counsellor of the High Court of Accounts, nominated by the President of the said Court, an Accountant nominated by the Sofia Chamber of Commerce and a representative of the Ministry of Finance. This committee shall also make a special report to the High Court of Accounts on the general expenses of the Bank.”

XVII. Article 59: For “ two y e a rs” substitute “ five y e a rs” .

X V III. After Article 60, sub 1, add:

" These statements shall be in the form set out in the Annex to these Statutes and shall include all foreign exchange liabilities valued at the market rate upon the day to which the statem ent relates.”

Delete Article 61.

X IX . Article 62: The words “ the other gold assets or liabilities” to be replaced by the words “ the other assets ” .

XX. After Article 69, insert the following articles :

Article I.

No interest shall be paid by the Bank on such accounts, except th a t the Bank may pay on funds held abroad interest a t a rate lower by not less than 1 per cent per annum than the average rate earned by the Bank on all funds held abroad.

Article J .

The Government shall entrust the Bank with all their money, remittance, exchange and banking transactions in Bulgaria and elsewhere.

X X I. After Article 71, insert the following article :

A rticle K.

The Bank shall not grant accommodation to the State, S tate undertakings or public authorities, directly or indirectly, by way of discounts, loans, advances or overdrafts, otherwise than is provided in Article F. The Bank shall not guarantee Treasury Bills or other obligations of the State, State undertakings or any public authorities, neither shall the Bank effect payments for the State, State undertakings, or any public authorities for which funds are not immediately available a t the Bank, nor enter into contracts in the name of the Bank for their account.

X X II. Article 73: Replace 1st paragraph by the following :

“ Together with the annual balance-sheet the National Bank shall submit to the Minister of Finance a report on the business transacted within the year. In order th a t he m ay have an opportunity of satisfying himself on any question arising out of the report, the Minister of Finance may take the advice of the Committee appointed in accordance with Article 58, but only as regards any questions as to whether the balance-sheet and the profit-and-loss account are in conformity with the books of the Bank.”

2nd paragraph : For " any questions” substitute “ any such questions” .

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X X III. Add to Article 74 the following sentence :

“ The Government Commissioner shall observe strict secrecy in regard to the affairs of the Bank. ”

XXIV. Article 76 to be replaced by the following :

“ The Government Commissioner has the right to protest against any decision of the Board of Directors or of the Executive Committee which he considers contrary to these Statutes.

“ Any such objection shall have the force of a suspensive veto until the question in dispute has been decided by a Commission of three persons to be named within seven days on a request to th a t effect being made either by the Bank or the Government Commissioner, and to report within seven days of nomination. The Commission shall be composed of one nominee of the Government, one nominee of the Board of Directors and a chairman who shall be chosen by the Government and the Board of Directors, or who, failing agreement between the parties, shall be the President of the High Court of Administration.”

XXV. After Article 76, add the following article:

Article L.

Any question in dispute between the Government and the Bank other than those leading to a suspensive veto of the Government Commissioner shall also be settled by arbitration in the same m anner as is laid down in Article 76.

XXVI. Article 77 to be replaced by the following:

" The National Bank shall not be subject to any regulations made by the Government or its subordinate authorities except as provided in these Statutes. The Internal Regulations of the National Bank, drawn up by the Board of Directors in accordance w ith these Statutes, shall have full legal force as though they formed an integral part of these S tatutes.”

X X V II. After Article 77, insert the following article:

Article M.

The Bulgarian Government binds itself not to issue or re-issue money of any type whatever other than subsidiary coins of denominations not higher than 100 levas, and these only to the Bank and at its request and in accordance with the law.

X X V III. After Article 78, insert the following article :

Article N .

The Governor, D eputy Governors and the Directors shall give guarantees of an amount to be fixed by the Minister of Finance. These guarantees shall be retained and released by the Ministry of Finance.

The officials and employees of the Bank shall furnish guarantees, the nature and amount of which shall be fixed by the Board of Directors. These guarantees shall be retained and released by the Board of Directors. All existing guarantees of present and former officials and employees shall be transferred to the National Bank.

A special regulation approved by the Board of Directors shall determine the administration of the guarantees.

— 29 —

X X X I. After Article 79, insert the following article:

Article 0 .

The Bank shall be exempt from all taxes or duties levied by the State ; in particular, from the payment of any tax or du ty on its note issue other than the tax to be imposed in certain contingencies as provided in Article D.

T r a n s i t o r y A r t i c l e s .

XXX. Add to Article 80 the following:

“ Nevertheless, the Bank shall use every endeavour to free itself as quickly as possible from its mortgage business and, within three years from the coming into force of this amendment, chall divest itself of all other business of a nature contrary to the provisions of the Statutes.”

X X X I. After Article 80, insert the following articles :

Article P.

For a period not exceeding two years from the time this article shall come into force, the Bank may grant advances and open current accounts against the pledging of commodities for a period not exceeding nine months.

Article Q.

W ithin a period not exceeding three years from the date of signature of the Protocol to which these amendments to the Statutes are annexed, the Bank shall sell the silver in its possession ; but in the meantime such silver m ay be included in the Bank's reserve (Article C) a t its m arket value.

Before disposing of its silver elsewhere, the Bank shall offer the Bulgarian Government the opportunity of purchasing such amount as it m ay require in respect of silver coinage. The Bank shall be perm itted by the Bulgarian Government to export any balance which i t may desire to dispose of on the open market.

Article R.

During the first three years from the date on which th is article come into force, the Bank may issue notes of a denomination less than 200 levas, notwithstanding the provisions of Article H.

X X X II. At the end of the Statutes, add the following chapter :

A p p o i n t m e n t o f a n A d v i s e r .

Article S.

An Adviser to the National Bank of Bulgaria shall be appointed by the Government on the nomination of the Council of the League.

On entering on his office, the Adviser will give an undertaking in writing to perform his duties faithfully in the interests of the Bank and in conformity with its S tatutes, and to preserve secrecy with regard to the business of the Bank.

Article T.

In exercising his functions, the Adviser shall as far as possible work through, and in consultation with, the Governor. The Governors, managers and all employees of the Bank, whether a t the head office or a t the branches, shall render the Adviser all the assistance in their power, as well as furnish him w ith any information or documents which he may require.

— 30 —

Article U.

The Adviser shall have the right to attend in a consultative capacity all meetings of the Board of Directors, the Executive Committee and the Bodies constituted under Article 21. In the event of his being of the opinion th a t a decision taken by the Governor, the Executive Committee or the Bodies constituted under Article 21 is contrary to these Statutes, he m ay require that the question be subm itted forthwith to a meeting of the Board of Directors.

Should he be of the opinion th a t a decision taken by the Board of Directors is contrary to these Statutes, he shall exercise a suspensive veto, and no action shall be taken on the decision until either an agreement has been reached between the Board of Directors and the Adviser on the question or it has been decided by a third party to be m utually agreed upon, or, failing such agreement, by the President of the High Court of Administration.

Article, V.

Any alteration of this law shall require the specific approval of the Adviser during the period of his office.

X X X III . At the end of the Statutes add the following annex :

Annex.

N a t i o n a l B a n k o f B u l g a r i a : W e e k l y R e t u r n .

v4ssez!s.1. Gold coin and bullion. i(«). S ilver1.2. Foreign gold exchange (Article C of Statutes).3. Other foreign exchange.4. Subsidiary Bulgarian coins.5. Inland bills and notes:

(a) Commercial bills and notes :(£>) Treasury bills.

6. Advances :

(t) Repayable in levas :

(a) Government;(b) Others.

(2) Repayable in foreign exchange.

7. State debt.8. Investments.9. Bank buildings and equipment.

10. Other assets.

Liabilities.

11. Capital paid up.12. Reserve funds :

(a) General Reserve Fund;(b) Other Reserve Funds.

13. Banknotes in circulation.14. Other sight liabilities in levas :

(1) Current and deposit accounts •

(а) Government accounts ;(б) Bankers' accounts;(c) Other accounts.

(2) Demand drafts.

1 See Article Q.

_ 3 t —

15. Deposits in levas a t notice :

(a) Government accounts ;(b) Bankers’ accounts ;(c) Other accounts.

16. Foreign exchange Uabilities :

(a) Foreign gold exchange (Article C of Statutes) ;(b) Other foreign exchange.

17. Other liabilities.

Proportion of gold, silver and net foreign gold exchange to sight liabilities.

Gold.Silver.Net foreign gold exchange (No. 2 less No. 16)

Total (a)Reserve (as laid down in Article C of Statutes)

NotesOther sight liabilities in levas

Total (6)

Proportion of Total (a) to Total (6) = %

A nnex II.

TRANSFORMATION OF THE BULGARIAN NATIONAL BANK.

1. The Bank to have a paid-up capital of 500 million levas, divided into 500,000 shares of1,000 levas each, carrying a limited dividend.

2. The whole of the shares to be offered for public subscription through the National Bank. The allotment to be made by the National Bank and, in the case of over-subscription, preference to be given to small subscribers. Shares which have not been subscribed to be sold by the National Bank whenever application is made for their purchase.

3. All monies obtained by the issue and sale of the shares to be used for the reduction of the State debt to the National Bank.

4. The shares to be registered in the name of the holder. Only Bulgarian nationals to be allowed to register as shareholders. Ten shares to entitle their owner to one vote, but a grouping of shareholders holding less than ten shares to make up this number for the purpose of exercising their vote a t the General Meeting to be permissible.

No shareholder to be entitled to more than twenty-five votes in respect of shares registered in his own name. As proxy, his right to be limited to another twenty-five votes.

5. The General Meeting of shareholders to be the supreme authority of the Bank and represent the whole body of shareholders.

6. The Board of the Bank to consist of eleven members, namely, the Governor, two Vice-Governors and eight other Directors.

The Governor of the Bank to be appointed by the King, on the recommendation of the Minister of Finance, for a period of seven years. The Vice-Governors to be similarly appointed, but for five years each. These term s of office to be renewable for like periods. The Governors to be of recognised competence in financial and m onetary affairs.

Four of the remaining eight directors to be elected freely by the General Meeting of shareholders. The other four to be elected by the General Meeting, one from each of four panels containing three names each. The four panels to be established respectively by bodies representative of commerce, of industry, of agriculture and of urban co-operative societies.

7. After making provision for bad and doubtful debts, depreciation in assets and such other contingencies as are usually provided for by bankers, and appropriations to the Staff Pension Fund, a dividend not exceeding a fixed percentage to be paid to the shareholders. Of the surplus, one-half to be allocated to the General Reserve Fund and the other half to the Government. After the Reserve Fund has become equal to the capital, one-quarter of the surplus to be paid to the shareholders and the balance to the Government.

— 32 —

8. In the event of liquidation of the Bank, its assets and liabilities to be valued by three experts to be appointed — one by the Government, one by the Bank and one in agreement by the Government and the Bank. The nominal value of the shares to be paid to the shareholders and any surplus to be divided in the proportion of one-third to the shareholders and two-thirds to the Government.

A nnex III.

STATEMENT SHOWING BUDGET LIABILITIES TO BE REPAID OUT OF THE PROCEEDS OF THE LOAN.

Levas (000,000’s om itted)

t. Debt to the National Bank arising from the fact th a t the amount due to the150.-

56

40 40 12 10

— 1 5 8 . -

3. Paym ent in respect of the debt due to the Pension Fund on account ofnon-payment of subsidy in past y e a r s .................................................................... 100.-

4. Arbitral tribunals, internal liability to railway contractors....................................... 1 6 0 -5. Arrears of interest due to Agricultural B ank ................................................................. 90.-6. Paym ent in respect of supplementary guarantee for the refugee l o a n ................... 84.2

T o t a l .................................. 742.2

= (say) £1,100,000

A nnex IV,

FUNDS WHICH MAY BE EXEMPTED FROM INCORPORATION IN THE BUDGETUNDER ARTICLE VI, 6 {a) :

1. Donation funds;2. State Officials’ Pension Fund;3. Social Insurance Fund;4. Fund to cover losses by the State on loans for refugees;5. Fund to supply loans to Municipalities for irrigation and electricity works;6. Municipal roads fund ;7. Funds for housing, hospitals and pensions of railway employees ;8. Construction and upkeep of sanatoria and health resorts for postal employees ;9. Construction of offices and purchase of postal vehicles ;

10. Epizootic Fund.

Funds which are merely suspense accounts — i.e., accounts through which revenue only passes to the general budget — are not contemplated by Article VI.

Bank under the S tatu tes was not paid in the financial year 1927-28

Repayment of loans from special funds :

Social insurance f u n d .................................................................................Fund to provide loans to Municipalities for irrigation works, electri

city w o rk s ..............................................................................................Municipal roads f u n d .................................................................................Fund for housing, hospitals and pensions of railway employees . . Fund for war victims, e tc ............................................................................

— 33 -

8.

C ,232.1928.II. (F.526)

REPORT OF M. REGNOUL ON TH E IMPROVEMENT OF MEANS OF

COMMUNICATION IN B U LG A R IA 1.

OBJECT OF TH E PRE SE N T MEMORANDUM.

Translation.]

The first paragraph of the Protocol signed at Geneva on March 10th, 1928, to settle the conditions of the Bulgarian Stabilisation Loan lays down th a t “ the yield of this loan shall also be applied for certain urgent expenditure on means of transit. ”

Article V II defines this provision as follows :

" A sum not exceeding £1,250,000 (one million two hundred and fifty thousand pounds) 2 out of the proceeds of the loan m ay be employed for means of transit. The purpose for which it is to be employed and the general scheme of expenditure for these purposes shall be submitted for the approval of the Council of the League of Nations, after the report of the railway expert to be appointed by the Bulgarian Government has become available. ”

It is in execution of the above th a t the present report has been prepared, after an enquiry in Bulgaria and an examination of documents as complete as the short time at m y disposal — less than five weeks in all —- allowed.

The means of communication in question are :

1. The railways — the special importance of which is shown by the fact th a t the Protocol requires an expert's report on the m atter;

2. Subsidiarily, the ports, which form the railheads and which are fortunately in Bulgaria, under the same Director-General ;

3. Road communications, which at the present time, owing to the facilities afforded by motor-transport, are becoming more and more closely bound up with the railways as they supply the latter with passengers and goods, and even compete with them, especially for short-distance traffic.

In the general interest it is im portant th a t such competition should be limited to cases in which communications by road are obviously better than by rail.

The above considerations will explain the m anner in which the present report had been divided into headings of varying importance.

CH APTER I. — RAILW AYS.

C o n d i t i o n s w h i c h s h o u l d g o v e r n t h e P l a n n i n g a n d U t i l i s a t i o n o f t h e S y s t e m .

The Present System. — The Bulgarian railways, which are entirely single-track lines, include 2,367 kilometers standard gauge (1.45 m.) and 488 kilometers narrow-gauge, of which there are 138 kilometers of 0.76 m. gauge, and 350 kilometers of 0.60 m. gauge.

The 0.60 m. tracks are mainly military lines laid down during the war; they may be regarded as provisional.

The narrow-gauge system is therefore of small importance ; in addition, it seems in most cases to be hopelessly insolvent.

A part from one or two rare exceptions, it would be preferable not to extend this system and even to transform into normal gauge those 0.60 m. gauge lines which have sufficient traffic to w arrant their retention as against good roads.

I therefore propose to consider only the broad-gauge system, upon which all efforts to effect improvements should undoubtedly be concentrated.

General Plan. — Most of the routes followed by Bulgarian railway lines are imposed by the configuration of the country (see map, Annex 1). They are as follows :

{a) In South Bulgaria the railway follows the valley of the Maritza between the Balkan and Rhodope ranges across the fertile plains of Thrace. This is the international line, with a branch from Philippopolis to the port of Burgas on the Black Sea ;

(b) In Northern Bulgaria it runs as far as Varna across the high plains a t the foot of the Balkans, which are equally fertile and which gradually descend to the Danube ports, being connected with this northern line by a number of branch lines.

The most im portant of these — the Rustchuk branch line — continues with many climbs and descents across the Balkans as far as the Burgas branch. I t thus connects the southern and northern lines, which also meet at Sofia, whence a trunk line runs to the Serbian frontier and beyond.

1 The annexes to the report axe a t the Secretariat, at the disposal of the members of the Council and of the Financial Committee. The programmes of expenditure are appended to the present report.

2 Or at the present rate of exchange about 845,000,000 paper levas.

3-1 '

The southern line from the Serbian frontier via Sofia and Philippopolis is 360 kilometers long. I t is the oldest line of all — 201 kilometers from the Turkish frontier were built in 1873; the rest of the line dates from 1888.

A part from a few short lines, the rest of the Bulgarian railway system is of more recent date (1890 to 1910}.

The line which crosses the Balkans is one of the most recent, having been constructed between the years 1910 and 1913.

Over .these lines Varna is 540 kilometers distant from Sofia; Rustchuk, 540 kilometers, and Burgas, 450 kilometers.

These lines as a whole (see map, Annex 2) were built with every regard for economy, the object being to secure a complete railway system throughout the country in as short a time as possible. On all these lines, therefore, we meet w ith steep gradients, up to 25 millimeters per meter 1. These gradients might easily have been avoided in certain cases and in some cases they certainly increase the difficulty of operation. Again, even on the main line, we find very sharp curves, with a radiusof 275 meters and 300 meters, which will be an obstacle in the way of increasing speed to any extent. Also for reasons of economy, these lines were lightly laid with 31-kilogramme rails (in a few cases 35-kilogramme rails). They were provided, if not with insufficient, a t least with very low-grade ballast, some of the bridges, etc., are barely strong enough to support the heavier modern rolling-stock, while the stations possess in most cases only rudim entary equipment.

Traffic. — The commercial traffic is small; it is, however, increasing; in fact, both the goods and the passenger traffic have doubled since 1910 (the year which preceded the first Balkan war), and it is still increasing a t a fairly steady rate.

Number of kilometer passengers Number of kilometer tons of Year carried per kilometer in goods carried per kilometer

operation 2 in operation 21 9 0 0 ..................................................... 5 9 ,2 2 0 4 6 ,3 8 0I 9 ° 5 ..................................................... 8 5 ,3 0 0 1 0 3 ,2 4 01 9 I O ..................................................... 1 1 9 ,7 0 0 III.QOOI 9 1 9 ..................................................... 1 8 8 ,2 5 0 1 2 0 ,2 7 01924 ........................................... 248,530 238,750192 5 .......................................... 233,490 208,260

The figures for 1925 as regards certain foreign systems are as follows

Kingdom of the Serbs, Croatsand S lovenes................. 176,000

R o u m a n ia .............................. 313,830H u n g a ry .................................. 333,7SoB e lg iu m .................................. 1,292,000

These figures show th a t traffic in Bulgaria is not very large.As regards both passengers and goods, traffic reaches its lowest point in January.In the case of passengers, it reaches its highest point in August, i.e., 50 per cent above the

January minimum.The goods traffic reaches its highest point in October, when it is twice as intense as in January.There is nothing abnormal in these variations.On examining the Bulgarian railway statistics it will also be seen that the goods traffic consists

of about :(1) 27 per cent agriculture and stock-breeding products, carried on an average over

250 km. ;(2) 18 per cent coal, coke and briquettes, carried on an average over 130 kms. ;(3) 26 per cent various building materials, carried on an average over 120 kms.

Thus, three-quarters of the goods traffic is accounted for by three categories of goods, of which the first, which is the largest, both as regards the tonnage and the distance covered, should in normal circumstances greatly increase as a result of the strenuous efforts now being made in Bulgaria (schools of agriculture, model farms) to improve the agricultural yield. This yield is at present poor owing to defective agricultural methods and the lack of fertilisers ; experts consider th a t it could be more than doubled.

The second category of goods carried, namely, fuel, included practically unlimited quantities of lignite. The develoment of the lignite industry depends mainly on the progress of industrial expansion in Bulgaria. Hopes have been expressed th a t in the future there m ay be mining products to transport, mainly metals (iron, copper, lead and zinc) and manganese, almost all situated in the eastern half of Bulgaria. About th ir ty concessions have already been granted, but their value is as yet uncertain.

There is no reason why the th ird category (building materials) should not maintain its present level, or even increase ; the same is the case with passengers in a country whose population is increasing rapidly (roughly 2 per cent per annum ).

As regards the future, it should also be remembered th a t Bulgaria, owing to her geographical position, is a country of transit between Europe and the Near and Middle East. The Bulgarian southern line (Dragoman-Svilengrad) therefore seems destined to carry an important transit traffic as soon as the Black Sea and the East are again fully open to trade.

223,120324,850322,400

1,728,400

1 Fifteen per cent of the Bulgarian railways are on gradients of from 15 to 25 millimeters.2 For a population of about five and a-half millions over an area of 103.146 square kilometers.

— 35 —

Material. — The traffic passes through 210 stations and 124 halts for passengers only, i.e., a total of 334 stopping-places separated by an average distance of 7 kilometers; in other words, the number of stopping-places is ample.

The services are maintained by means of the following rolling-stock :

440 steam locomotives with 3 to 6 coupled axles, of which 114 are engines with tendersweighing from 20 to 75 tons empty, the others weighing 56 to 76 tons empty without tender ;

458 passenger coaches or saloons, 78 with bogies;133 brake-vans,9,541 goods wagons of 10, 15 and 20 tons, not including load,42 mail vans,54 service wagons.

The rolling-stock for passengers is provided with H ardy continuous vacuum brakes. With a view to attaching them to international trains, certain passenger carriages are also being provided with Knorr pneumatic brakes.

These are the main characteristics of the Bulgarian railway system. The lines can hardly be run at a profit and the traffic is small, though it may increase. The system has accordingly to be run as economically as possible, but this is not very easy owing to the somewhat primitive way in which it was originally constructed.

A n o m a l i e s r e v e a l e d b y t h e S t a t i s t i c s .

W ith a view to forming an idea of the present state of the system, I first examined the statistics, which are abundant and efficiently prepared.

Accidents. — The to ta l number of accidents was:

In 1 9 2 1 ........................................................... 368192 2 ............................................................ 659192 3 ............................................................ 3431 9 2 4 ..................................................................................... 3 1 11 9 2 5 ................................................................................. 1 9 1

The analysis of the 1925 figures is as follows :

Derailments :

In stations . . . . 1x1 (108 during shunting operations).On the open track . 12 (9 due to the defective state of the rolling-stock).

Total . . 123Collisions :

In stations . . . . 29 (25 during shunting operations).On the open track . 1

Total . . 30

Miscellaneous :38, including 22 collisions with persons, animals or carriages acting in disregard of the

railway police regulations, and 9 runaways.

This distribution, which is similar to that of previous years, betrays first and foremost the fact that the tracks are not properly maintained in the stations and th a t the operation of the points is defective.

Incidents in connection with the running of the Trains. — I have been able to obtain a list of these for 1927 (Annex 3). This list shows 22 incidents, including 13 partial derailments, the cause of which is not mentioned or which were the result of faults in the rolling-stock not due to any serious negligence in overhauling.

Rail Breakages. — The statistics (Annex 4) show:

99 rail breakages in 1924 54 -, „ ,, 192545 „ ,. „ 1927

For a system of 2,400 kilometers these figures are extremely low.

Traffic Movement. — In 1925, the locomotives covered a to ta l distance in haulage of 8,632,000 kilometers and running light 281,000 kilometers, which is little when we take into account the numerous occasions on which two locomotives are required to haul trains up steep gradients in order to avoid breaking bulk.

These data give a daily average of about 60 kilometers covered by each locomotive, which seems to be rather a low figure.

A wagon in service is loaded on an average every nine or ten days, and covers with its load an average distance of 177 kilometers. This represents an inadequate utilisation of rolling-stock, and,

— 36 —

in the absence of an abundance of wagons, shows th a t they are held up too long in the stations. On the P.L.M. system, for instance, wagons are loaded on an average every seven days, every load being carried for an average distance of 233 kilometers.

Finally, whereas the regularity of the passenger trains is satisfactory, out of 20,000 goods trains which passed over the lines in 1925, more than 4,000 fell behind schedule time in the stations, mostly in those in which the trains were made up.

In short, the statistics only reveal defects in respect of the stations, the upkeep of the permanent way in these stations, their shunting arrangements and their inadequate equipment.

S t a t e o f P e r m a n e n t W a y a n d E n g i n e e r i n g W o r k s .

An enquiry on the spot, however, immediately showed th a t the permanent way and engineering works on the open track also called for serious attention; we will deal with this question immediately, as it is of great importance from the point of view of the safety of traffic.

Permanent Way. — The permanent way in the open is, on the whole, kept in good condition and the engineering works in metal are carefully inspected. I t is only owing to these careful measures and by reducing the speed of the trains — which never exceeds 40 kilometers per hour on the old lines, nor 60 kilometers anywhere — th a t safety has been assured and th a t the breakage of rails has been m aintained a t a low level.

Indeed, on the old lines, and even on the more recent ones with steep gradients (such as the line crossing the Balkans, which was only built between 1910 and 1913), a very pronounced wearing-down of the rails has occurred, which amounts in some places, where the gradients are heavy, to nearly one centimeter, i.e., the point a t which the rails should be scrapped. As in these places the rails have, in m any cases, been turned round in order to allow the wheels to run on their non-wom side, they will soon become too narrow and weak, and very m any of them will have to be changed.

In making these changes, 41, 35 or 31 kilogramme rails might still be employed, according to the lines and according to the Bulgarian Railway Adm inistration’s present plan for the m aintenance of the permanent way (Annex 5), which takes into account the density of the traffic on each line (Annex 6) and is well thought out.

Although on the main lines some of the old sleepers have been replaced by new ones during the last few years, in m any places the sleepers are not in good condition. The sleepers are made of local timber, oak or beech; the quality of the tim ber seems to be good, bu t it has not always been properly squared, so th a t the sleepers are sometimes irregular in form, to the detriment of permanent-way stability.

The beech sleepers are soaked in creosote by a m ethod which, technically, leaves much to be desired, while the oak sleepers are not soaked at all. Consequently, neither last very long —never more than ten to twelve years.

The life of the sleepers could certainly be doubled if they were carefully squared and thoroughly creosoted : in the long run this would prove to be a great economy.

In the meantine, one twelfth of the to ta l number of sleepers — 250,000 — ought to be replaced each year; an operation that is already long overdue.

The rails should be fixed more securely to the sleepers. Except in a very few places wherenew heavy rails (41 kilogrammes per meter) have been laid, the rails are fixed down by means of earth-spikes. Screw-rings should be employed on a far larger scale ; in fact, in such a mountainous country they ought to be employed almost exclusively in place of earth-spikes. Metal chairs between rails and sleepers might also be more widely used, if only to delay the wearing of the sleepers — a very im portant point when a long life has been assured them in other respects.

These chairs should be two-pronged a t any rate on steep gradients (15 millimeters and more)and on sharp curves (with a radius of 300 meters and less).

I t is also essential th a t a sufficient number of rail-stays should be employed wherever the rails show a tendency to slip. Slipping, which is undoubtedly rendered more frequent by the use of earth spikes, should be dealt with periodically, particularly before the summer.

The ballast also needs urgent attention. In m any places it is inadequate and of mediocre quality (too soft, broken stone or round pebbles) ; sometimes it is saturated with m ud and is worn out.

In many instances, therefore, the ballast will have to be renewed. We strongly recommend th a t the stone be carefully selected, and that adequate arrangements be made to ensure the drainage of any water which might otherwise collect on the subgrade, making it soft and muddy. The drainage of the sub-grade surface is very im portant from the point of view of the conservation of the ballast, and indeed of the whole perm anent way.

In the stations, where most trains stop, whilst others reduce their speed to 20 kilometers an hour, most of the permanent way m ight be improved, and the other tracks kept in better condition. All the tracks he on metal sleepers, since wooden sleepers perish very quickly in defective ballast, and on the large station sub-grades where rain-water collects.

I t is quite possible th a t drainage, and, above all, more efficient repairing of the wooden sleepers, would render this complication unnecessary in the future.

Furthermore, a considerable number of points are in a bad condition, and should be replaced. Their bad condition is one of the causes of the numerous accidents which occur in the stations.

Engineering Works. -— The m etal bridges have been constructed on normal lines and are well looked after. In some of these, however — for instance, in the bridges on the older parts of the Sofia-Svilengrad and Philippopolis-Burgas lines — the metal is no longer able to stand the strain, and has had to be reinforced by wooden scaffolding, which hinders the flow of water in times of flood.

— 37 —

This situation cannot be allowed to continue and these constructions will have to be replaced.Many of the metal bridges, moreover, although they are in good condition, are now not strong

enough to bear the ever-increasing weight which modern traffic entails.Almost all these bridges were planned to carry axle-weights of 13 to 15 tons, whereas a t the

present time the axles of Bulgarian locomotives weigh up to 17 tons.These bridges will have to be divided into two categories : those which must be replaced, and

those which can be satisfactorily strengthened by encasing the stays in reinforced concrete or by some other method.

This difficult work can only be done by an auscultation with special apparatus —- for instance, the R abut apparatus used in France — of the expansion of the various metal parts under the action of the weights to be borne.

In any case, both new and reinforced bridges will have to be calculated according to the ordinary rules, but for locomotives of the 20-ton-axle type and an absolutely normal employment of the m etal used. The present calculations made by the technical Departments of the Bulgarian Railways which are based on 18-ton-axles, and maximum tensions of 1,000 to 1,200 kilogrammes per square centimeter according to the span for metal ordered from a distance (the quality of which is not constant), seem to give results of insufficient strength from the point of view of future requirements, since the steepness of the gradients will involve the use of very heavy engines.

P rogram m e A .

A d d i t i o n a l M a i n t e n a n c e W o r k r e q u i r e d .

In the light of the above considerations, I have prepared with the Bulgarian Railways Department the attached Programme A of work for the maintenance of the permanent way and engineering works to be paid for out of the Stabilisation Loan. I am of opinion th a t this work is necessary, and will suffice to make up for the arrears in normal maintenance work, which it has been impossible to carry out in the last few years owing to lack of funds.

To this I have added the thorough overhauling of the 35 locomotives still awaiting repairs, out of those which suffered exceptional wear during the war. They ought to be made available as soon as possible, since they are included among the 440 locomotives given above as the to tal strength of the locomotive rolling-stock.

This, with certain repairs to be effected in the case of passenger stock, is the only work for the maintenance of the system which, to m y mind, calls for an exceptional effort. The work need only be carried out once ; as soon as it has been completed, the rolling-stock can be maintained in proper condition by normal regular methods.

There is, however, one essential point to be borne in mind with regard to the permanent way and engineering works. The exceptional effort to be made in this m atter, the object of which is to make up for lost time, will only be of use provided th a t now and in the future regular and adequate provision be made, every financial year, for the funds necessary to ensure normal reconditioning, including the renovation of lines and ballast.

I t is difficult to estimate the exact sums required. As, however, there are about three million sleepers in the system, each sleeper lasting a t present about twelve years, as the average hfe of the rails is about th irty years, and as there are about three million cubic meters of ballast, of durability varying considerably with the quality of the material, b u t averaging about twenty-five years, I calculate that, to keep the permanent way in proper condition, there will be required each year (in addition to labour for current work, and apart from the work involved in carrying out Programme A) :

1. 3,000,000 ^gc2 == 250,000 sleepers;2. A double set of rails for 2,400 kilometers -f 30 = 80 kilometers ;3. A t least 100,000 cubic meters of ballast.

The total estimated expenditure for carrying out Programme A amounts to 239,233,000 levas.

P o s i t i o n w i t h r e g a r d t o S t a t i o n I n s t a l l a t i o n s .

On inspecting the stations, we found th a t the cause of the difficulties revealed by the statistics was as we had expected. The installations in m any stations have not been changed since the pre-war period, and have now become entirely inadequate because since th a t period the total traffic has, as we have seen above, increased by fully 100 per cent.

The tracks are now too short and too few in num ber; this means th a t more trains have to be despatched without full loads, a tiresome procedure which causes encumbrance.

The shunting yards at the junctions, particularly a t Sofia, Gorna-Orchovitza and Philippo- polis, are quite inadequate, if not non-existent.

As soon as the points have been improved — as laid down in Programme A — the method of operating them will also have to be modernised. The present system is defective and is the cause of numerous accidents. Generally speaking, there are too m any scattered pointsmen and not enough point-lockings.

The only apparatus used is the small point-locking board, situated in the station buildings, with levers making it possible to lock various points by wire transmission. This apparatus is overcomplicated; it is consequently so costly th a t it cannot be employed on a general scale. We think that a much more economical arrangement, such as the Bouré locks now employed on a number of systems, would be preferable, at any rate in medium-sized stations.

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In the large stations, particularly a t Sofia, it will eventually become necessary to instal complete sets for point-locking, and the operation of points and signals ; but first of all the signalling system will have to be revised. In its present rudim entary state it cannot cope with the traffic.

In small and medium-sized stations, economies in staff could probably be effected by abandoning the operation by hand of the switches changing from single to double line (entry and exit) on the main lines. I t would be sufficient for this purpose so to arrange the switches as to reserve the left-hand line for trains coming into the station and to provide these switches with a counterweight lever which would be operated automatically by trains leaving the station.

This is a device which has long been in use on the P.L.M. system and is widely employed elsewhere. To this arrangement should be added a simple electrical apparatus, by means of which the correctness of the switches could be verified beyond all doubt from the main building.

Finally, the number of passing places should be increased on certain sectors where the traffic has now become so dense as to render the present number of passing places insufficient. At certain periods there are running over these lines a t least fifteen trains a day in each direction — quite a considerable amount of traffic for single-track lines.

P o s i t i o n w i t h r e g a r d t o R o l l i n g - S t o c k i n W o r k s h o p s a n d D e p o t s .

The rolling-stock, locomotives, passenger and goods wagons — the figures for which we have already quoted — is sufficient, on the whole, to cope with the present traffic. There are, however, only just enough wagons, while certain special wagons are lacking, namely, tank wagons, cold- storage wagons, wagons for the transport of small live-stock and poultry, large timber, etc.

Though it cannot be said th a t the state of this rolling-stock is absolutely unsatisfactory (since, as we have seen, its condition is seldom responsible for accidents) it might be improved.

The main cause of imperfections is, apart from financial difficulties, the comparative scarcity of workshops able to carry out im portant alterations and improvements in equipment.

As a m atter of fact, the rolling-stock is held up for repairs to an extent which varies according to the season of the year (because as m any repairs as possible are carried out in winter when traffic is light), b u t is often more than 20 per cent for locomotives, passenger wagons and goods wagons. This figure is certainly excessive.

I t might be preferable to entrust part of the repairs a t least to private firms. The railway administration has begun to adopt this policy, which might well be extended, if the costs are carefully scrutinised and the execution of the work strictly verified.

A number of depots will also have to be built and others enlarged.

P r o g r a m m e B .

I m p r o v e m e n t s t o b e e f f e c t e d w i t h r e g a r d t o R a i l w a y S t a t i o n s , R o l l i n g - S t o c k ,

W o r k s h o p s a n d D e p o t s .

In view of the above, we have also prepared with the Bulgarian Railway Department a Programme B which includes :

(a) Railway-station extensions in more urgent cases due to increased traffic or traffic congestion at present caused by the inadequate size of stations.

For the main stations of the system we found th a t the Bulgarian railways administration was in possession of extension plans, carefuUy prepared and capable of execution by easy stages w ithout great inconvenience.

(b) The installation or extension of various safety devices which m ay be modified according to the view taken of the solutions suggested above.

(c) The provision of twelve new passing places for trains, four of these being on the open track. As the number of stations open to the public is sufficient, these four points will be merely service halts until the need of opening them to traffic is clearly proved.

(d) The purchase, in addition to the normal annual requirements, of the following rolling stock :

83 passenger wagons,100 special type goods wagons.

To these we have added the installation in a number of locomotives of steam super-heaters and apparatus for reheating the feed-water, which will lead to a considerable economy in fuel.

(e) The enlargement of several particularly inadequate workshops, or workshops in which upkeep work is carried out in the open air under conditions which cannot be allowed to continue and the enlargement or construction of certain engine depots.

The to ta l estim ated cost of carrying out Programme B is 329,255,000 levas.

S u m m a r y a n d G e n e r a l O b s e r v a t i o n s .

In short, the system has been kept in as good a condition as could be expected in view of the lack of funds. I th ink th a t the extra maintenance work suggested above will make it possible to return to a perfectly normal situation.

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In the m atter of the work to be undertaken, necessary improvements have, by force of circumstances, been completely neglected, and these improvements should now be effected without delay, in order to enable the Bulgarian railways to deal with the traffic on a sound economic basis.

I therefore propose for the re-conditioning of the present system — apart from the question of additional lines, which I shall consider later — two programmes :

Levas

1. Programme A, with an expenditure o f .............................. 239,233,0002. Programme B, with an expenditure o f .............................. 329,255,000

T o t a l ....................................... 568,488,000

to be spread over a maximum period of five years.But there is an essential difference between the expenditure proposed under the two

programmes.Under Programme B, the money would be spent on real improvements which would increase

the present installations of the system, augmenting its value and efficiency. I t would, in fact, be a case of additional establishment expenditure ; if the money is spent carefully, the operating economies should more than repay the capital outlay.

The expenditure in Programme A, on the other hand, will not alter the actual constitution of the system. The money will be spent on current work for maintaining existing installations, or on renewals, which are but maintenance in another form. This expenditure is necessary because maintenance work has fallen behindhand in the last few years. The system must make up for this lost time if it is to avoid disaster. The expenditure in question is not, however, productive; it is simply working expenditure.

This distinction is not merely theoretical. The additional capital outlay will produce profits and will therefore eventually pay for itself. I t is an advance, and as such should logically be met by a loan. The working expenditure, on the other hand, will not be offset by any profit, and must be deducted from the net earnings of the system.

R e o r g a n i s a t i o n o f t h e R a i l w a y s B u d g e t .

The above difference is an essential factor in deciding which funds should be employed. We have emphasised this point because the difference is not shown in the Bulgarian railway budget, in which all items of expenditure are met, without any distinction, out of the national budget.

I t would be desirable therefore tha t the railway budget should be drawn up so as to show clearly:

[a) A capital outlay account (construction of new lines, additional work on existing lines, purchase of material) provided with special resources (loans, earmarking of certain receipts in the national budget, use of reserve funds, etc.), of which only the annual charges will have to be met out of earnings, and which are really in the nature of advances.

(b) A working account, including all useful expenditure on station and train staff, on the upkeep of the permanent way, buildings and material and in general on all matters coming under the Railways Administration. This expenditure would be met out of traffic receipts and various other sources of income (rentals, interest on working capital, etc.).

The introduction of these definite headings into the budget will necessitate corresponding alterations and readjustments in the accounts of the railway system itself. These alterations might perhaps be based on the tried accountancy methods of some specially selected system — for example, those of the P.L.M. system, a copy of whose accounts is attached (Annex 1). If certain paragraphs which do not apply to the case in point are omitted, these accounts might be taken as a basis.

But there is another particular aspect of the Bulgarian railways budget which calls for special comment.

The budget, as submitted to Parliament at the beginning of each financial year (April 1st) for the following financial year, is never applied and, indeed, never could be applied.

The budget is inapplicable because, apart from the fact th a t receipts cannot possibly be estimated in advance, it enumerates down to the smallest detail all working expenses, even going so far as to define the staff to be employed in each station. Though it may be possible to form an estimate of the to tal expenditure which will be somewhere near the tru th provided nothing unforeseen occurs — it is quite impossible to decide in advance and in detail how the expenditure is to be allocated, since expenditure is affected by all local variations of traffic and by many other local circumstances.

Also, the budget is not applied because all the credits thus approved by Parliament are not, as a result of budgetary difficulties, actually forthcoming.

In addition, the reductions thus made in the credits by the financial administration in the course of the year, under pressure of events, and naturally without adequate technical competence, are liable, in some cases, to produce serious consequences, entailing heavy responsibility.

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N e e d f o r M o r e E l a s t i c M e t h o d s a n d h o w T h e s e m a y b e a t t a i n e d .

This absolute rigidity in the allocation of expenditure, and the uncertainty as to what sums will be available, are quite incompatible with the efficient management of a railway system, which is an industrial and commercial undertaking and must, if it is to produce profits, be run on commercial and industrial lines.

No manufacturer or trader could carry on his business unless he were sure that, he could modify his plans to a large extent and at any time, to suit the needs of the moment and allocate his expenses and employ his funds according to necessity. This is the way in which a railway system should be managed.

B ut such relative liberty should, in the case of an undertaking where the managers are not the owners — be counterbalanced by an enlightened and efficient supervisory body to take im portant decisions. The management should be allowed ample initiative, but should be responsible to the supervisory body at all times for its direction of the undertaking.

The relationship in fact would be th a t of a Board of Directors towards the shareholders of an ordinary company; the task of the supervisory body would be the same as th a t of the various railway committees which exist in one form or another in connection with State-owned railway administrations.

These general conditions, which do not in any way detract from the full ownership of the State over its railways, are imposed at the present time wherever financial difficulties have made it necessary for Governments to obtain a positive yield from their systems; as, for instance, in France, which possesses a State system of over 9,000 kilometers, in Belgium, in Germany, in Switzerland, in Austria, etc.

In some cases the organisation takes the form of a civil company in which the State is the principal shareholder (Belgium, Germany), in others (France, Austria) there is no change in the direct method of State operation other than the special arrangement broadly indicated above.

For Bulgaria, we would advocate the second solution, while leaving the Bulgarian Parliament the right to adopt the preliminary budget as heretofore, contrary to the practice in France, where — as is the case with shareholders in a civil company — Parliament is only called upon to pronounce, at the end of the financial year, upon the results of the S tate’s management.

N e e d f o r s u b m i t t i n g a B a l a n c e - S h e e t a t t h e E n d o f t h e F i n a n c i a l Y e a r .

I t would be extremely useful if results could be correctly drawn up and published at the end of each financial year.

When I say " correctly drawn up ”, I mean th a t they should be entirely separate from the figures of the ports and should include:

1. All items of receipts to which the railways are entitled, including payment, at areduced price, but one sufficient to cover expenditure, for transport effected for other Departments, in particular the Post Office, which ought to pay to the railways annually about30,000,000 levas according to the transport statistics and the running costs;

2. Also, among other items of expenditure :

(a) Sums representing interest on and redemption of the capital invested in constructing existing and future lines. This capital m ay be estimated for 1925 at303,000,000 gold levas. But the charges on the various loans — mostly pre-war loans —are no longer paid entirely in gold. We might therefore allow, for the past, an annual lump sum of about 200,000,000 paper levas, an amount which will gradually diminish as the loans are repaid.

(b) As regards the future, in addition to the above annual payment, the sum s representing interest on and redemption of capital invested in additional capital outlay and in increasing rolling-stock (that is to say, in the purchase of material), after deducting the cost price of the scrapped rolling-stock which should be debited to the operation account.

W ith these rectifications, the large profits shown in the present statistics would disappear; they were given:

Levas

In 1922 as 329,000,0001923 as 255,000,0001924 as 320,000,000

The running expenses, given as 51, 65 and 64 per cent respectively, would also undergo a considerable change. The present figures are quite inadmissible and are due to the fact that the execution of necessary maintenance work is long overdue.

But, given good normal receipts, i.e., 900,000,000 levas, and adding to this as indicated above for conveyance of mails, etc., repaid by the Post Office, 30,000,000 levas, making in all 930 , 000,000 levas, and given running costs of from 80 to 85 per cent, which would appear to be the actual cost and would give us a running cost of about 800,000,000 levas, there would remain a surplus of 130,000,000 levas, which would not be sufficient to meet the charges on the invested capital, amounting to 200,000,000 levas.

This, of course, is a very rough estimate, b u t it shows tha t the Bulgarian railways, far from producing any profits, d o not yet repay the charges on the capital outlay for their construction , in spite of the large reductions in these charges resulting from the war.

In any case, the preparation, as suggested above, of a really accurate balance-sheet would give an exact idea as to the yield of the railways, and would also — the most important point of all — provide a reliable gauge of the efforts still required to produce a really positive yield and so contribute to the financial reconstruction of the country.

How t h e s e P r o p o s a l s m i g h t b e p u t i n t o E f f e c t .

The above comments prove that, from a technical point of view, it is absolutely necessary to reorganise the accounts of the Bulgarian railways and to make their administration more elastic in order th a t the exceptional expenditure to be made out of the yield of the Stabilisation Loan may not remain unproductive but m ay form the starting-point of an era of regular profits.

I conclude th a t the above observations should be taken into account by the adoption of the following measure :

The supervision of the management of the Bulgarian Railways should be entrusted to a Railway Committee of nine members. This Committee should also keep an eye on national interests in so far as they are affected by the railways administration.

All the members of this Committee should be appointed by the Government ; they should be Bulgarian nationals, well known as experienced business men or experts in the m atter of communications ; they should be persons of independent means.

These members should be appointed for three years; one-third of the Committee should be renewed each year, though every member should be eligible for re-election.

They should receive no fixed renumeration.The Government should appoint one of the members as Chairman.The Railway Committee should consider the proposals of the Director-General in all cases

in which it has not given him discretionary powers.I t should take a decision on these proposals or forward them to the Minister of Railways

in the rare instances in which the Minister may either have to take action himself or request the Government or Parliament to do so.

The latter procedure m ust be followed in the following instances: the establishment of new rates or the modification of old rates ; the approval of the annual railway budget ; any modifications in this budget which m ay become necessary in the course of the financial year; the approval of the balance-sheet a t the end of each financial year; any credit transactions which may be suggested, and the execution of additional work or increases in the rolling-stock.

The railway budget should be prepared on sufficiently broad lines to allow of its practical application. For this purpose it would be enough merely to enumerate the various headings in the accounts (specimen of which is given in Annex 7) and allocate a lump sum to each.

The budget should be drawn up in this form by the Director-General and should be submitted by the Railway Committee to the Minister of Railways for approval and submission to Parliament.

But, as Parliam entary approval will give the budget force of law, the latter should be submitted to the Legislature in a summarised form. This would avoid all necessity for legislation in the course of the financial year to sanction transfers between the various headings which do not affect the total.

The best way in which the budget could be subm itted would be as follows :

1. Total expenditure on capital outlay;2. Total expenditure and to ta l receipts under the working account.

Details of the various items approved by the Minister would be submitted as an annex to the general budget for the information of Parliament.

The Director-General of Railways should be appointed by the Government. The Railway Committee should be entitled to call for his dismissal, but m ust state its reasons. He wouldbe responsible for the efficient operation of all the railway services and their branches.

In view of this responsibility, the Director should be allowed all possible freedom in managing the system itself, subject to the supervisory duties and the task of safeguarding the public interests entrusted to the Railway Committee and subject to the S ta te’s right of sovereignty.

In particular, the Director-General should have the right to nominate all railway officials and employees appointed by the Minister of Railways on his proposal as transm itted through the Railway Committee.

W ith the aid of his staff he should ensure the internal control of the system, including that of receipts; the Minister of Finance should, however, be entitled, on behalf of the State as owner, to supervise the financial administration and accounts.

In order to ensure the necessary elasticity and speed in technical management, the Director- General should — subject to the authorisation accorded him, in cases in which he has not full authority, by the Railway Committee or the Minister of Railways on the Committee’s recommendation — have all the necessary funds a t his immediate disposal.

For this purpose, all railway receipts should be paid, as a t present, into the National Bank; but into a special railways account which, until the final settlement of the accounts for the year, should only be drawn upon to meet the needs of the system; all working expenses should be entered by this account. Expenses under the capital outlay account, including additional works, should, as I have explained above, be covered by the yield of loans or sums from special sources and only the charges for interest and redemption should be m et out of the working account.

Finally, I suggest th a t any deficits which m ay be found to exist a t the end of each year, when the balance-sheet has been drawn up, should not be treated as final losses to be made good

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out of the National Budget, but th a t the charges (interest and redemption) on the sums (allocations or loans) from which the deficits have been paid should be carried over to the working account of subsequent years.

This would provide permanent evidence of the general financial progress of the railways and would constitute a further incentive to making the railways productive.

On the other hand, it would be equitable, when profits are obtained, to deduct a certain percentage — say 5 per cent -— to constitute a reserve fund before these profits are paid into the National Budget.

If Programmes A and B are to be effectively carried out, all the proposals indicated above must be put into effect as soon as possible, at the latest on April is t, 1929, the date on which the 1929-30 financial year begins.

On this occasion, it may be necessary to provide the special railway account with an initial working fund which might be done by paying into this account as an advance the railway receipts from the last three months previous to the date in question.

E c o n o m i e s t o b e e f f e c t e d i n t h e O p e r a t i o n o f t h e S y s t e m .

Having indicated the work to be carried out and the various other steps which should be taken to enable the system to carry on satisfactorily on its own resources and to utilise these resources in the most advantageous manner, I will now, to term inate this report, enumerate the various points to which, apart from the measures already proposed above, special attention might be directed with a view to improving working results.

General Organisation. — The general organisation of the central and local services is, on the whole, satisfactory. The various grades are logically arranged so as to ensure the execution of orders and the assignment of responsibility.

There can be no question of reducing salaries. These were by no means high before the war and they are a t present : For minor employees, about twenty-five times the pre-war salary ;for intermediate and higher grade staff, twelve times.

The leva is at present worth about 1/26Ü1 of its pre-war value and the cost of living index is roughly 30.

In these circumstances, it would be necessary rather to consider an increase in the salaries of intermediate and higher officials.

The eight-hour-day law is conscientiously applied.Pensions are normal; i/4o th per year of service of the average salary for the last six years, with

a maximum of 40 per cent of this salary. Officials contribute to the fund, 8 per cent being deducted from their salaries for this purpose.

All officials are entitled every year to one m onth 's leave and a maximum of 180 days sick leave on full pay, an unw arrantably long period.

I should add th a t constant attention is paid to the welfare of the staff. Subsidies are granted to large families and the railway adm inistration constructs houses for its officials. I t is assisted in this work by a special 10 per cent increase on ordinary passenger rates levied for the purpose.

Permanent Way. — The staff employed in maintaining and supervising the permanent way is 2.32 officials per kilometer. The staff is well distributed, but is perhaps rather numerous in view of the relatively light traffic. The supervisory staff is separate from the maintenance staff. We think th a t in this case some reductions might be made. Reductions might also follow as a result of the adoption of more m odem equipment and more economic processes, such as the chemical destruction of weeds.

Circulation of Trains. — The main economy to be effected in this m atter is in regard to points, which are too numerous and are also responsible for a large number of the accidents occurring in stations. We have indicated above the steps which might be taken to improve this service by employing Bouré locks and autom atic points.

The utilisation of trains is normal — 41.5 per cent for passenger wagons, 61 per cent for goods wagons in 1925. As I have already observed, the period which elapses between each successive loading of rolling-stock, more than nine days for an average run of 177 kilometers, is excessive and is mainly due to inadequate installations in the stations'.

The train service could probably be replaced to advantage by a rail m otor service on several lines where the passenger traffic is small and regular. In view of technical difficulties, this is a solution which can only be contemplated for the future.

Haulage. — In the course of m y rapid inspection I did not detect any particular defects in the organisation of the haulage service ; the same, however, cannot be said of the workshops, which are inadequate and unsuitable for the most part because they are inadequate; in addition, in view of their output, they would seem to be over-staffed. Methodical re-organisation should be undertaken in this branch, in order to ensure the execution of maintenance work, which will continue to be carried out by the railways themselves.

D i r e c t i o n s i n w h i c h R e c e i p t s c o u l d b e I n c r e a s e d .

Commercial Service. — The Central Railway Administration is rightly anxious to develop its commercial service to the fullest extent. W hatever economies m ay be realised under the previous headings, it is essential th a t receipts should be m aintained and increased.

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Naturally, the first possibility to be considered is th a t of raising rates.We should observe, first of all, th a t in Bulgaria transport rates are not subject to any taxation.Passenger rates are, according to class, from twenty to twenty-five times as high as pre-war

rates, including the 10 per cent increase for the construction of employees' houses, as mentioned above. I do not think tha t these rates could be much increased without diminishing the volume of traific. The number of permits and price reduction (50 and 75 per cent) a t present enjoyed by one-tenth of the passengers carried, should, however, be greatly cut down.

Taken all round, the goods rates have been increased in the same proportion; they therefore remain slightly below pre-war gold prices. But large reductions (generally 35 per cent) are granted to certain categories of goods in order to encourage Bulgarian industry and trade. I think that in this direction some increases might be made without affecting the volume of traific. These are, however, very delicate points on which a final opinion given cannot be given until the problem has been more closely examined.

In any case, if the railways still show a loss after the above improvements and economies, it would be quite a normal procedure to make the users pay for the loss without having recourse to the general budget.

The second m ethod of increasing receipts, which is always the most desirable one, is to develop the traific and facilitate the conveyance of passengers and goods.

I t is not always possible for a railway administration to develop its traific. The Bulgarian railway administration can do little more than watch and encourage the efforts of the Ministry of Agriculture and pay careful attention to the possible yield of the mining concessions.

The administration, however, can and does actively encourage the conveyance of passengers and goods.

Apart from measures of detail and the maintenance of railway rates in constant harmony with clients’ needs, a very im portant part of the problem is, in the case of passengers, how to facilitate their access to the stations, and, in the case of goods, how to convey goods from the place of their departure to the point at which they are loaded or unloaded by the railway.

As regards goods, no action has yet been taken, except th a t plans have been considered for organising a lorry service in Sofia.

For passengers, numerous independent motor services have been established (as shown on the map in Annex 8), which in most cases serve as useful tributaries to the railway.

But these services are not subject to any regulations, either as regards their organisation or their prices, which vary according to circumstances.

They will only fulfil their purpose when they are properly regulated and in return are placed on the same footing as the railways by being allowed to sell tickets on which they will obtain a commission or by receiving a small subsidy, either as a lump sum or as a guarantee of minimum receipts.

An attem pt might be made to organise the more im portant of these services on the above basis. Different services which run to the same station might also be encouraged to combine.

B ut certain services definitely compete with the railways and there can be no doubt th a t in the future, when the roads have been restored to normal condition, this form of competition,both for goods and passengers, will tend to grow, particularly in view of the short distances in Bulgaria and of the fact tha t, in Bulgaria as elsewhere, motor traific, unlike the railway, runs free of charge over a network of roads constructed and m aintained a t the expense of the community.

Motor transport, therefore, allowing for depreciation on the m aterial employed, can be worked at a price of from six to seven levas per ton per kilometer; another advantage is th a t goods are conveyed from house to house without the costly and sometimes delicate operation of breaking bulk and with a consequent saving of packing material.

As it would be not only unjust but also harmful to the community to reduce motor transport to impotence by voluntarily leaving the roads in bad condition or by other arbitrary methods, the only policy to adopt, while reacting commercially against motor competition by modifying rates and improving the railway service, would be to secure systematic co-operation between road and rail transport.

The solution now being generally adopted (e.g., in France, America, and Switzerland) is as follows: large combines of motor transport services are formed; they undertake not to compete with the railways and to act merely as feeders to the railways. For this they receive remuneration proportionate to the services rendered, for instance, a percentage of the traffic receipts due to their co-operation.

In Bulgaria, I repeat, this question will only arise in the fu ture— a future which, however, is not so far distant as to warrant our neglecting the problem of ensuring connections between the motor or other services already competing with the railways.

Co n s t r u c t i o n o f N e w L i n e s .

The new lines under construction or projected will be seen on the map of Bulgarian railways (Annex 9).

These lines constitute a very im portant extension of the present system, with which we do not think it would be wise to proceed, at any rate for the present.

The lines which are essential to serve the main economic requirements of the country and to suit its outstanding geographical features are already in existence.

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The projected extensions are, on the whole, of distinctly less value, and we do not think that Bulgaria would, in her present financial condition, have anything to gain by pressing on their construction.

Another factor in support of this view is th a t the communications in question are already assured by roads, so tha t, in view of modem m otor progress, the situation might, in a number of cases, be left as it is indefinitely.

I t would be a p ity if Bulgaria, as she increased the net yield of her railways, were to addthereto, for no imperative reason, a number of new lines run a t a loss.

Though extensions may later on prove to be absolutely necessary, there can be no doubtthat, in the present circumstances, Bulgaria should, in the public interest, wait until the need has been clearly demonstrated for constructing a railway to replace a road.

I t should be remembered that, in other countries in which the railway system was entirely completed before the development of motor transport — in France for instance — there is a tendency at the present time to replace certain subsidiary lines by road transport.

A definite portion of the national budget receipts has been set aside to provide a fund forconstructing new railways and ports. I t consists mainly of 10 per cent of the proceeds of theland tax and the proceeds of taxes levied in lieu of compulsory labour; it amounts to about100.000.000 levas per annum.

W ith these funds, and by employing some of the compulsory labour in levelling work andin executing the more simple engineering works in connection with the permanent way, theconstruction of a certain number of new lines has been undertaken, or at any rate sketched out. I th ink th a t these efforts should be diminished, if not suspended, and th a t in the present state of the railway system it would be preferable to consolidate the results already achieved and later improve these results, rather than engage in a policy of construction which might, I repeat, in part a t least, prove useless in view of the progress of road motor transport.

I think th a t the public would be better served by devoting some part of the funds for the construction of new railways to the reconditioning of roads — an urgent task to which I will refer later.

I would, however, make an exception for the two following lines already being constructed : Radomir-Dubnitza and Yambol-Elhovo, which not only serve thickly populated and productive areas, but are intended to replace 0.60 m. gauge fines run at a heavy loss.

R a d o m i r - D u b n i t z a L i n e .

The Radomir-Dubnitza section, which is 44 kilometers long, forms part of the Radomir- Dubnitza-Simitly-Petrich route a t present served by a steam traction fine with a 0.60 m. gauge comprising gradients of 30mm. per meter, and curves w ith a radius of 30 meters. This line is operated with m aterial in bad condition and there is an annual deficit of 10,000,000 levas, of which about 3,000,000 levas are imputable to the Radomir-Dubnitza section.

This section is being constructed over a distance of 38 kilometers, beginning at Radomir, the terminus of the present normal-gauge line from Sofia.

To complete this section, including buildings and sleepers but not rails or the minor track material, which will be mentioned later, a sum of 30,420,000 levas would be required. To complete in the same conditions the last six kilometers as far as Dubnitza, which would necessitate engineering works of some importance, a sum of 18,250,000 levas would be required, making a total of48,670,000 levas.

The estimates of working receipts and expenditure, made as accurately as possible on the basis of railway and Chambers of Commerce statistics, seem to show th a t there would be a surplus of 4,000,000 levas, which, added to the elimination of the present deficit of 3,000,000 levas, would give a to tal of 7,000,000 levas to remunerate a capital of 65,000,000 levas excluding rails, or about80.000.000 levas including rails.

The operation would thus become financially self-supporting without placing any new burden on the country.

Y a m b o l - E l h o v o L i n e .

This stretch, 44.5 kilometers in length, is a t present served by a horse-traction 0.60 m. gauge line and shows an annual deficit of about 800,000 levas.

I t takes a particularly wealthy agricultural district.The construction of the normal-gauge line begun in 1922 is quite far advanced, thanks to

the assistance of the population, which is making the earthworks.I t involves the building of a large viaduct over the Tunja, which is nearly finished.The sum necessary to complete this fine, under the above conditions, would be 23,640,000

levas.An approximate estimate shows th a t receipts and expenditure would more or less balance.

We should therefore only have the extinction of the annual deficit of 800,000 levas to set off against the charges on the capital outlay, which would amount to about 55,000,0000 levas, including rails.

This is a case where it would perhaps have been preferable to have relied, for the present, on the already existing road, especially as all the transport required (passengers and agricultural produce) could be effected by motor-car.

I t is true th a t the cost of motor transport, amounting to about 6 levas per kilometer-ton of goods, as stated above, and to 3 % to 4 levas per passenger and per kilometer according to the figures of the French motor services, is five or six times greater than th a t of the railway.

The distance, however, is small.

For the benefit of a comparatively small population, the taxpayers of the country are to be burdened with an annual charge of 4,000,000 or 5,000,000 levas, a policy which is open to discussion. It will be scarcely possible, however, to leave unfinished a line which serves an undoubtedly important district, seeing th a t great efforts have already been made to complete it and that a large viaduct has already been constructed.

O b s e r v a t i o n s r e g a r d i n g t h e A c c o u n t a n c y o f t h e N e w L i n e s .

To conclude my observations on the new lines, special attention must be drawn to the practice of supplying these lines with rails and minor track material derived from the renewal of the old lines. When the track of the latter is reinforced, the value of this transferred material is disregarded.

From an accountancy point of view, the practice can hardly be defended.The rails cannot thus disappear from the old lines without leaving a trace. If they are

fictitiously regarded as worn out, which is a grave irregularity, their original value, less their sale price as old material, should be entered in the working accounts of the system. But in th a t case their use on a new line under the heading of discarded rails becomes inadmissible.

If they are regarded as good — which m ust be the case since they are re-utilised — they must be included in the stores of the line, from which they cannot be taken out to be placed on a new line unless the stores account is credited, and the construction account of the new line debited, with their value.

This second solution is evidently the correct one, bu t it involves an additional credit in the construction account, corresponding to the actual expenditure.

We consider that, on the Radomir-Dubnitza and Yambol-Elhovo lines, this additional sum, which would amount to approximately fifteen million levas for each line, could easily be found, e.g., out of the fund for the construction of new railways and ports — if, as we have suggested, this construction be more or less completely suspended — or out of other funds, without interfering with the administrative accounts of the lines in operation.

In estimating the cost of the two new lines, no mention has been made of rolling-stock or of the necessary equipment and furniture.

Owing to the short length of these lines, it would be easy to supply them with material, tools and furniture already possessed by the system.

This nevertheless constitutes a second omission, which invalidates the estimates of the actual expenditure required.

P rogram m e G.

Co n s t r u c t i o n o f N e w L i n e s .

On the basis of these data, I have drawn up Programme C attached, providing for the a ttribution of a to tal sum of 73,300,000 levas for the completion of the Radomir-Dubnitza and Yambo- Elhovo normal-gauge lines.

This sum, which corresponds to the estimates made by the Bulgarian Railway Department, does not, as I have explained, include the cost of rails and minor track material, and should be completed by an appropriation from another source.

This, like the similar sums in Programmes B and C, should be expended within a maximum period of five years.

c h a p t e r 11, — p o r t s

Bulgaria possesses :

(а) On the Black Sea, eight ports, including two im portant ones served by railwaysviz., Varna, Burgas;

(б) On the Danube, ten ports, five of which are also served by railways, the mostim portant being Lom and Rustchuk.

B l a c k S e a P o r t s .

The ports of Burgas and Varna were completed in 1903 and 1906 respectively. Burgas has a basin of twenty-five hectares with a depth of 7.50 meters and Varna a basin of thirty-one hectares with a slightly greater average depth.

Before the war, Varna was the more im portant port; but to-day the port of Burgas, which is more conveniently situated in regard to the Bulgarian hinterland, has a larger traffic, amounting in 1925, to 227,000 tons, consisting of 112,000 tons of exports and 115,000 tons of imports ; whereas Varna, which has to compete with the port of Constanza and the Danube, had, in 1925, a total traffic of 170,000 tons, consisting of 126,000 tons of exports and only 44,000 tons of import.

In the last four years, the to ta l traffic has remained more or less stationary. I t amounts to about two-thirds of the pre-war traffic.

The warehouses call for improvements, especially a t Burgas, where one of them has not yet been completed.

The dock pavements are in very bad condition for want of proper upkeep and will have to be largely replaced.

Plant is practically non-existent and large electric or steam cranes should be installed at both Burgas and Varna.

Lastly, a t both ports, the piers have settled to the extent of over two meters at certain points; they will have to be underpinned as soon as possible.

- 4 6 -

D a n u b e P o r t s .

The Danube ports are, as a rule, of more recent creation than those of the Black Sea ; b u t their upkeep has also been much neglected during the last few years.

Those which are served by rail and have by far the largest traffic are the following, in geographical order :

Tonnage loaded Tonnage unloaded Total in 1925 in 1925

Tons Tons Tons

V i d i n ...................................... 9,000 16,000 25,000L o rn .......................................... 25,000 68,000 93,000R u s t c h u k .............................. 11,000 97,000 108,000S is to v ...................................... 2,000 26,000 28,000S o m o v it .................................. 2,000 29,000 31,000

As in the case of Varna and Burgas, this traffic flows, almost exclusively, to or from the railway. For this reason, and also in order to avoid dispersing efforts over a very large number of points

to the detriment of efficiency, it would be preferable not to utilise any portion of the Stabilisation Loan on work in the other Danube ports.

Furthermore, the traffic of the two Black Sea ports is, on the whole, decreasing, whereas that of the five ports mentioned above is in nearly every case increasing. Rustchuk has recovered its pre-war traffic, and Lom has largely exceeded it.

The Danube ports also consist of a rough stone embankment on an incline of one in one, built along the banks and flanking a level area accessible to carriages and wagons.

They are more or less protected against the break-up of the ice by natural defences, islets or sandbanks, and their equipment, sheds and stores are generally speaking inadequate.

The sheds as well as the condition of the embankment should be improved.The port of Lom, where traffic is increasing very rapidly, requires thorough reconditioning

and preparations should be made for its enlargement.Lastly, the following general measures would seem to be indicated.

1. The replacement of the service tug employed by the Danube ports; this tug was hired from its owner, who is resuming possession of it.

2. The installation of beacons along the river in accordance with international undertakings ; this has not yet been done in the Bulgarian sector owing to lack of funds. A few signals must also be installed along the coast of the Black Sea, it being understood th a t the buoyage of the Danube should take precedence.

P rogram m e D.

I m p r o v e m e n t o f t h e P o r t s .

In view of the above situation, I have drawn up, in agreement with the Railways and Ports Department, the attached Programme D.

The heading ‘^Danube Ports ", twice repeated in th is programme in respect of work the details of which have not yet been determined, refers only to the ports of Vidin, Lom, Rustchuk, Sistova and Somovit.

This programme will involve a to tal expenditure of 31,500,000 levas and will have to be completed within the maximum period of five years provided for the execution of the other programmes.

This sum is small compared with the needs to be m et; ports are means of communication the state of which only directly affects the finances of a country in a minor degree, and we have still to consider the road system, which calls for very heavy expenditure.

c h a p t e r i i i . — r o a d s .

The Bulgarian road system comprises 8,000 kilometers of Government roads, 1,000 kilometers of which have not been completed.

The system, was m aintained in good condition in 1911, bu t was neglected during the war; despite the subsequent efforts made with absolutely inadequate funds, the roads are now in a condition which calls for most serious attention.

Bulgaria was justified in having an extensive road system, and she would be justified in developing i t still further; but, in view of the situation I have myself observed, which is indeed a m atter of public knowledge, in this case also extensions must be delayed if not entirely d isc o n tin u e d until existing roads have been repaired and their future upkeep is assured.

In far too m any places even the most im portant roads have degenerated into tracks, whose traffic is diverted on to the neighbouring ground.

One-tenth of the length of the principal arteries, the Sofia-Svilengrad and Sofia-Varna roads, is in this state ; four-tenths are in a very poor condition and five-tenths m ay be regarded as norm al. The situation is still worse on the m ajority of the other Government roads, particularly in the mountainous districts, where good roads are especially necessary owing to the scarcity and costliness of railways and to the necessity, in m any cases, of meeting the requirements of forestry undertakings and quarries in addition to the needs of the population.

— 47 —

The bridges too often consist of wooden constructions which wear very badly and must be regarded as essentially temporary.

The communal roads, which in themselves constitute a system of 12,000 kilometers, are maintained by the communes and are in better condition owing to the relatively large local funds which can be devoted to them.

The situation being as it is, the roads are at present hardly more than feeders to the railways ; intensive long-distance transport which might compete with the railways is thus practically impossible.

In the general interests of the country, it would be extremely desirable to improve the Government road system, even at the risk of arousing in the future a certain amount of competition with the railways.

The national budget includes an item of about 100,000,000 levas for the upkeep of Government roads.

To this must be added the payments in labour (five da; s a year) required of each householder, together with the assistance of the compulsory labour service which is largely assigned to the roads, and comprises a permanent corps of about 15,000 young men mobilised for one year for the purpose of carr > ing out public works.

These various resources would appear to be sufficient for the upkeep of the roads, but in reality the funds provided have in the past few years been reduced, often to only a quarter of their original amount. Thus it has only been possible to execute a few repairs here and there a t the most urgent points. These repairs, which are usually carried out with excessive parsimony, are very far from lasting for a normal length of time.

To restore the road system to a condition in which it could be maintained with the funds provided for in the budget, it is estimated by the public works administration th a t a total sum of about 1,000,000,000 levas would be required, and this appears a plausible figure.

Unfortunately, after deducting the sums necessary for the needs of the railways and ports, all th a t remains a t our disposal is a sum of 172,700,000 levas.

Owing to her financial difficulties, Bulgaria has neglected her road system much more than her railways ; a policy which is j ustified from a financial point of view.

I t is true tha t if, as would have been logical, the roads had been under the same Ministry as the railways and ports, as was previously the case, the distribution of funds would perhaps have been different. Perhaps, too, a single administration, being better able to judge of the relative importance of the different economic factors, would have set aside funds so as to make less inadequate provision for the needs of the roads.

As, however, it is impossible to carry out in full the programmes for the improvement both of roads and railways, I have thought it essential to avoid the incomplete execution of both undertakings. I have concluded th a t it is preferable, first of all, in pursuance of the aims of the Protocol of March 10th, 1928, fully to restore the railways, since these may be either an important financial asset or a very heavy liability, according to their state and their working conditions.

I t is therefore only the balance of the sum available, viz., 172,700,000 levas, which can be assigned to the road system.

W ith this sum it will not be possible to execute more than the most urgent work, and to inaugurate a system of repairs to be continued w ith other funds.

Too frequent examples of repairs carried out with excessive economy and with no lasting effect make it essential for me to follow certain rules (with which indeed the Public Works Department is well acquainted) in order to guarantee the durability of the improvements effected, failing which any money expended is sheer waste.

A first operation, which not only fulfils this condition bu t is a t the same time an undoubted necessity, is the replacement of the wooden bridges and the construction of bridges in a few places where none exist a t present.

I consider th a t a to ta l sum of 72,000,000 levas should be assigned to this work. Of the balance, 55,000,000 levas should be assigned to the completion of n o kilometers of roads, distributed as follows :

Kilometers

On the Sofia-Varna road . . .,, Burgas-Kaibelair road .

,, ,, Yambol-Kaibelair road .,, Lubimetz-Ortakeui road ,, Sofia-Lom road . . . .

T o t a l ..................... . n o

The balance of 45,700,000 levas should be utilised in carrying out the first stage of the general work of restoring the road system. This first stage should comprise 130 kilometers, as follows:

KilometersOn the Sofia-Varna r o a d ....................................... 40

,, ,, Philippopolis-Pashmakli road . . . . . 60,, ,, Belovo-Nevrokop r o a d .............................. 30

T o t a l ......................... 130The general repair of the roads should be undertaken on the following basis, so as to ensure

the best utilisation of the sums expended :

10303035

5

” 48 -

Each partial repair should apply to an uninterrupted stretch of road of at least 20 kilometers, which should usually include sections already in good condition before the work began and sections newly repaired. The latter should be reconstructed completely and with the greatest care.

Where no special arrangements to meet exceptionally heavy traffic are required, the roadway should comply with the following conditions after the substructure has been formed with the necessary slope to allow for the drainage of surface water:

(a) I t should have a foundation of rubble of a thickness suitable to the nature of the ground, but at no point less than 0.15 m. ;

(b) It should have a layer of macadam consisting of hard material (very hard limestone or granite of good quality or porphyry) uniformly broken, with a maximum dimension of0.06 m. and a minimum thickness of 0.15 m.; the upper surface should, after the last rolling, have a uniform convexity of from i/6oth to i/5o th verified by level.

(c) After the macadam has been well pressed down by a steam-roller, the roadway should receive a layer of binding material (sand) containing no soil, of sufficient quantity to fill in all interstices between the stones. I t should then be rolled a second time and liberally watered so as to make the binding material penetrate into the interstices of the macadam.

(d) The side channels of the road and its borders should be arranged all along the section, both in the old and new parts, so as to make sure th a t all the water will flow away from the road.

(e) In sectors in the vicinity of towns which will have to stand heavy motor traffic, the roadway must be continually kept up, protected by a thick coating of tar and covered before drying with heavy sand or gravel.

As soon as it has been completed, each section thus repaired should have a regular annual sum set aside sufficient for its upkeep. This sum would probably not be less than 15,000 levas per kilometer and should not be available for any other work or any other part of the road system.

This condition is essential if the repairs are not to be wasted. The inclusion of a fund for this purpose in each annual budget with definite conditions as to its allocation seems to be one of the best means of achieving this result.

On this basis I have drawn up the attached Programme E for the improvement of the road system, involving a to ta l expenditure of 1-72,700,000 levas to be incurred within a minimum period of five years.

CHAPTER IV. — G ENERA L SUMMARY.

Apart from the administrative measures to be carried out not later than April 1st, 1929, which I have demonstrated to be necessary for the purpose of securing a better financial operation of the railways by means of a clear and ample system of accountancy, and a greater elasticity in the management, I propose the execution of the five attached programmes of work essential to the reconstruction or improvement of the railways, ports and roads. The estimated cost of each of these programmes is as follows:

Levas Levas

Railways: Programme A ( u p k e e p ) ................................................ 239,233,000Programme B ( im p ro v e m e n ts ) ................................... 329,255,000Programme C (construction of new lines) . . . . 72,312,000

------------------- 640,800,000Ports: Programme D .......................................................... 31,500,0011Hoads: Programme E ................................................................................................... 172,700,000

T o t a l ............................................... 845,000,000

a sum representing in paper levas the whole of the 1,250,000 pounds sterling set as a limit to my proposals, to be spent within a maximum period of five years from the date on which it is made available.

The sums indicated in these various programmes are based on the estimates of the administrations concerned, which I am unable to verify with any exactitude.

If spent with care, the sums thus fixed upon seem to me, as far as I can judge, to permit of the complete execution of the work to which they refer. I t will be for the administrations concerned, who have made these estimates, to see tha t this is the case.

Sofia, May 19th, 1928.

(Signed) A. R e g n o u l .

Programme A.

UPKEEP.

Supplies, Construction, etc.

Expenditure in levas

(a) Track.

To beech sleepers, 200,000 pieces at 80 l e v a s .............................................................. 16,000,000Creosote,3,000 tons at 7,500 levas per t o n ............................. .......................................... 22,500,000To ballasts for track, 375,000 cubic meters at 80 levas per cubic m e t e r ................. 30,000,000

To material for renewal of track:

Rails and minor material, type 41/d, for the following lines: Platchkovtzi- Dobovo, Cherven Breg-Houmata, Ressene-Polikraichté, Borissovo- Popovo, for side-tracks, in all about 80 kilometers or 8,885.68 tons 61,922,000

Minor material, type 31 kg. for completion of minor material withdrawnon renewal of 80 kilometers of track, in all about 76.1 tons . . . . 852,000

Rails for 50 switches, type 31, in all 1,271 tons .......................................... 6,991,000

Switches type 41 kg., 50 pieces for replacement of switches on lines renewedwith material, type 41 kg., a t 90,000 levas per p i e c e .......................... 4,500,000

Switches type 31 leg., 300 pieces for replacement of obsolete switches,65,000 levas per p i e c e .............................................................................. 19,500,000

T o t a l ................................................... 162,265,000

(b) Engineering Works.Metal parts for bridges:

Line: Tzaribrod-Sarambey,203-9 tons ....................................................... 3,262,500Svilengrad-Sarambey,670 tons ........................................................... 10,768,000Philippopolis-N Zagora-Burgas, 234.9 t o n s ...................................... 3-758,4°°Sofia-Varna, 289.2 to n s ............................................................................ 4,622,400

Masonry for bridges:

Line: S v ilen g rad -S a ram b ey ............................................................................ 6,032,000Philippopolis-N .Zagora-Burgas........................................................... 1,152,800Sofia-Varna ............................................................................................. 2,371,900Rakovski-Maritza mine ........................................................................ 10,000,000

T o t a l ................................................... 41,968,000

(c) Repairs.

Engines and wagons having undergone exceptional wear during the war . . 35,000,000

Recapitulation :

(a) Track ................................................................................................................... 162,265,000(1b) Engineering w o r k s .............................................................................................. 41,968,000(c) Repairs of engines and w a g o n s ........................................................................ 35,000 000

Total 239,233,000

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P ro g ram m e B.

IMPROVEMENTS, ENLA RG EM EN TS, PURCHASE OF ROLLING-STOCK.

S u p p l i e s , C o n s t r u c t i o n , e t c .Expenditure

in levas

(a) Extensions and Improvements in Stations.

Material for the extension and improvement of the following stations : Gorna- Oréshovitza, Cherven Breg, Burgas (partially), Varna, Rutschuk (goods station and sorting station), Plevna (town), Philippopolis (passenger station partially, goods station partially), improvement of the passenger station at Sofia, tem porary sorting station at Nadejad (Sofia), sorting station at Pernik:

Switches, type 31 kg., 275 pieces a t 65,000 levas ...................................... 18,070,000Rails for switches, 1,016 tons at 5,500 levas .............................................. 5,590,000Rails and minor material, type 31 kg., for track in stations amounting to

61 kilometers, 4,630 tons at 6,000 le v a s ................................... 27,800,000Switches, type 41 kg., 2 pieces at 112,000 l e v a s .......................... 224,000Rails for two switches, type 41 kg., 81.94 tons at 5,500 l e v a s . 450,670Rails, type 41 kg., 4,100 kilometers, or 336 tons at 5,500 levas . . . . 1,847,000Minor material,type 41 kg., 119 tons at 11,000 l e v a s .................. 1,320,000Ballast, 76,250 cubic meters (61 kilometers) at 80 levas . . . . . . . . 6,100,000Impregnated oak or beech sleepers, 76,250 pieces (for 61 kilometers) at

180 levas ............................. 13,725,000For the laying of track, switches, platforms, subways, masonry construc

tions, earthworks, etc.................................................................... 10,399,930Weigliing-bridges in stations 20 pieces a t 160,000 l e v a s ............. 3,200,000Swaying-bridges for locomotives, 4 pieces at 1,000,000 le v a s ..... 4,000,000For the construction of mechanical installations for loading coal on

locomotives in seven s t a t i o n s ................................................... 5,600,000Consignment office and shed, station of Philippopolis............................. . 6,180,000Goods offices and sheds at Burgas, Rustchuk, St. Z a g o r a ......... 6,090,000Building for passengers : Sofia (improvement), Podouéné, Rutschuk-Port,

Kaspichan (enlargement), Plevna, T . Pazarjik (improvements) . . 20,000,000New water-supply stations at Rakovski, St Zagora, Kaspichan, Aitos,

Mazdra, and completion of the water-tower at S o f i a .......... 10,700,000Supply of hydraulic cranes of 200 mm, for stations, tubes of 200 mm.,

special pieces and tubes of different diam eters...................... 7,067,400Paving in the stations of Vidin, Philippopolis, Varna, Gorna-Oréchovitza

and B u rg a s ..................................................................................... 3,200,000Bridges over the railway at Burgas, Gorna-Oréchovitza, Philippopolis. 5,800,000Passages under the railway at P e r n i k ........................................... 1,000,000Platform and subways at G orna-O réchovitza .............................. 1,000,000Canalisations at Sofia and Gorna-Oréchovitza.............................. 3,800,000

T o t a l .............................. 163,164,000

(b) Safety Apparatus.

Installation for centralising the operation of points and signals a t the stations onthe Sofia-Mezdra line (purchase, fixing, e t c . ) ....................................................... 6,200,000

Ditto for the stations on the Sofia-Pernik and Sofia-Sarambey l i n e s ..................... 6,800,000

T o t a l .............................. 13,000,000

(c) Construction of New Passing-places.

For the construction of new passing-places as follows :

Sofia-Varna Line: Lukovo (19 kilometers), Zvérino, Rebarkovo,Resseletz, Ruptzi, Plokraichté, Razdelna, Mirovo.

Sofia-Philippopolis line: 133 kilometers (between Stambolovo and K. Bania), 164,500 kilometers (between Belovo and Sarambey), 209 kilometers(between Krichim and Philippopolis), and at the Maritza halt:

Switches, type 31 kg., 25 pieces at 65,000 l e v a s ........................................... 1,625,000Rails, type 31 kg. for 25 switches, 88.8 tons at 5,500 l e v a s ..................... 488,000Rails, type 31 kg., and minor m aterial for 7.6 kg. in all, or 576 tons at

6,000.l e v a s 3,460,000Ballast 9890 cubic meters at 80 levas .......................................... 791,000Beech sleepers, impregnated, or oak sleepers, 9,500 pieces a t 180 levas . 1,710,000For the laying of track, switches and miscellaneous w o rk .......................... 150,000

T o t a l .............................. 8,224,000

_

— 5i —

(d) Purchase and Improvement of Rolling-stock.Expenditure

in levas

Purchase of 3 bogey passenger wagons, 1st and 2nd class (Series AB.f4) . . . . 8,400,000of 6 bogey passenger wagons, 1st, 2nd and 3rd class (Series ABC.<4) . . 12,000,000of 10 bogey passenger wagons, of 3rd class (Series C.f4 ) ........... 18,000,000of 36 three-axle passenger wagons, 3rd class (Series C.(3 ) .......... 25,200,000of 4 bogey baggage vans (Series D.f4 ) ............................................ 4,000,000of 42 three-axle baggage vans (Series D.f3 ) .................................... 16,800,000of 20 covered wagons for bulky goods (Series E ) ....................... 4,000,000of 20 cage-wagons for poultry (Series F G ) .................................... 3,600,000of 10 cold-storage wagons for fresh meat (Series F M ) ............... 2,500,000of 10 tank wagons (Series P W ) ......................................................... 1,800,000of 10 covered wagons for the conveyance of small livestock (Series G) . 1,800,000of 43 compressed-air brake-fittings for lo c o m o tiv e s ................... 4,128,000of 50 water-heating apparatus to increase the efficiency of the locomotive

boilers............................................................................................... 7,500,000,, of 10 superheater apparatus for the same p u rpose ....................... 1,500,000

Total ...................................... 111,228,000

(e) Enlargement and Construction of Workshops and Depots.

Enlargement of the locomotive and wagon workshops a t Sofia and Rustchuk . . 7,650,000Construction of a workshop for the upkeep of bridges and track, and the supply

of machines, tools, etc. :

B u ild in g ................................................................................................................... 4,250,000Machines and t o o l s ............................................................................................. 3,939,000

Construction of locomotive sheds at Rustchuk, Svilengrad and B u r g a s . 10,200,000Construction of a workshop for the impregnation of s l e e p e r s .................. 7,600,000

T o t a l ................................................... 33,639,000Recapitulation :

(a) Extension and improvements in s ta t io n s ...................................................... 163,164,000(b) Safety a p p a r a tu s ................................................................................................ 13,000,000(c) Construction of new passing-places .......................................................... 8,224,000(d) Purchase and improvement of rolling-stock .............................................. 111,228,000(e) Enlargement and construction of workshops and depots............................. 33,639,000

T o t a l ................................................... 329,255,000

P rogram m e C.

CONSTRUCTION OF N E W LINES

(a) Line from Radomir to Dubnitza.Expenditure

in levas1. Section under construction from Radomir to kilometer 37,500:

For the completion of the substructure ....................................................... 12,400,000For the construction of b u i ld in g s .................................................................... 4,520,000Miscellaneous works ......................................................................................... 2,000,000For the purchase of s l e e p e r s ............................................................................ 11,500,000

T o t a l ....................................................... 30,420,000

2. Section from kilometer 37,500 to Dubnitza:

E a r th w o r k s .......................................................................................................... 3,400,000Engineering w o r k s ............................................................................................. 2,120,000Protection w o r k s ................................................................................................. 1,080,000Tunnels .............................................................................................................. 7,150,000B u i l d in g s .............................................................................................................. 2,000,000S le e p e rs .................................................................................................................. 1,500,000

T o t a l ....................................................... 18,250,000

Total (1 + 2 ) .......................... 48,670,000

— 52 —Expenditure

(b) Line from Jamboli to Elhovo. in levas

For earthworks ................................................................................................................... 1,120,000For engineering works ...................................................................................................... 2,718,000For the construction of essential buildings........................................................................ 6,628,000For the purchase of s l e e p e r s .............................................................................................. 13,176,000

T o t a l .......................................... 23,642,000Recapitulation :

Radomir-Dubnitza line .............................................................................................. 48,670,000Jamboli-Elhovo line .................................................................................................. 23,642,000

T o t a l .......................................... 72,312,000

P rogram m e D.

TABLE OF SU PPLIES, ENLARG EM ENTS AN D IM PROVEM ENTS ESSENTIAL TO T H E O PERATION OFT H E BULG ARIAN PORTS.

S u p p l i e s , E n l a r g e m e n t s a n d I m p r o v e m e n t s .Expenditure

in levasReconstruction of the outer breakwater of the Port of Varna; enlargement of

this port and of the port of Burgas (dredging, earthworks, enroc ments, masonry) as well as enlargement and equipment of the repair workshops for the upkeep of the material required for the aforesaid works :

For Varna ................................................................................................................. 7,000,000For B u rg a s .......................................................................................... 3,500,000

Construction of new sheds and improvement of existing sheds in the Black Sea andDanube p o r t s .............................................................................................. 4,000,001

Repair of pavements on the docks and embankments of the ports with pavingstones from the “ Athia ” syenite quarries near Burgas .......................................... 3,000,000

Installation of beacons for the Danube and Black Sea, light and sound buoys, together with an apparatus for the compression of the gas required forthese b u o y s .............................................................................................. 4,300,000

Enlargement of the port of Lom, construction of quay-walls, embankments,basins, breakwaters, etc. (dredging, earthworks, enroc ments, masonry, etc .). 4,000,000

Purchase of a small tug for the Danube s e r v i c e ....................................... 1,000,000Purchase of cranes to facilitate the unloading of goods at Varna, Burgas and Lom. 4,700,000

T o t a l .......................................... 31,500,000

P rogram m e E.

PROGRAMME FOR T H E IM PROVEM ENT OF T H E STATE ROAD SYSTEM.

I. C o n s t r u c t i o n o f R o a d s .Length to be constructed

Road. (kilometers)

S o f ia - V a r n a ................................................................................................................... 10B u rg a s-K a ib e la ir .......................................................................................................... 30Y am bol-K aibelair............................................................................ ......................... . 30L u b im e tz -O rta k eu i...................................................................................................... 35Sofia-Lom ................................................................................................................... 5

T o t a l ........................................... n o

II. R e p a i r o f R o a d s .Road. Length to be repaired

(kilometers)

S o f ia - V a r n a ................................................................................................................... 40Philippopolis-Pashm akli............................................................................................. 60Belovo-N e v ro k o p .......................................................................................................... 30

T o t a l ........................................... 130

III. R e p l a c e m e n t a n d C o n s t r u c t i o n o f B r i d g e s , a c c o r d i n g t o a D e t a i l e d P r o g r a m m e

n o t y e t d r a w n u p .Estimated expenditure Levas

Construction of n o kilometers of road at 500,000 levas . . ................................. 55,000,000Repair of 130 kilometers of road at 350,000 l e v a s ........................................................ 45,700,000Replacement and construction of b r id g e s ........................................................................ 72,000,000

Total 172 ,700,000

53 —

9 .

(a) REPORT OF TH E FINANCIAL COMMITTEE, JU N E 1928.

Report of M . Regnoul.

The Committee has examined the very clear report of M. Regnoul, Chief Engineer of the Paris- Lyons-Mediterranean Railways, who made an enquiry in Bulgaria, in accordance with Article VII of the Protocol signed on March 10th, 1928, as to how the £1,250,000 which is earmarked foi- communications from the proceeds of the new loan should be employed. The article mentioned provides that the general scheme of expenditure has to be approved by the Council.

In his report, M. Regnoul proposes that the £1,250,000 — equivalent to about 845 million levas — should be employed as follows :

Raihmys :Levas Levas

U p k e e p ............................................................... 239,233,000Im p ro v e m e n ts ................................................... 329,255,000Construction of new l in e s .................................. 72,312,000

--------------- 640,800,000P o r t s ......................................................................................................... 31,500,000R o a d s ............................................................................................................. 172,700,000

T o t a l ....................................................................... 845,000,000

M. Regnoul proposes a detailed programme of expenditure for each of these five purposes. These programmes have been approved by the Bulgarian Government, and the Committee recommends to the Council to approve them in general also.

In his report, M. Regnoul points out th a t certain reforms are desirable with a view to greater elasticity of railway administration. These include reorganisation of accounts with a view to including in them all charges properly chargeable to the railways, and reorganisation of general administration by the introduction of an Administrative Council w ith considerable autonomous powers. There are certain other m atters with regard to the financial relations of the railway administration and the Treasury, which the Committee thinks should be further discussed in detail between the Bulgarian Government and the Commissioner.

The Committee believes th a t in these circumstances the best procedure would be for the Council to approve the proposed programmes of expenditure on communications, and to authorise the Commissioner to liberate moneys for such expenditure in accordance with Article V II of the Protocol, subject to his being satisfied, after consultation (if necessary) with the Financial Committee of the League, th a t the Bulgarian Government has sufficiently effected the necessary reorganisation of the railway administration.

(b) RESOLUTION ADOPTED BY TH E COUNCIL ON JU N E 8 t h , 1928.

The Council gives its general approval to the programme of expenditure on communications contained in M. Regnoul’s report and authorises the Commissioner to liberate the necessary monies for such expenditure in accordance with Article V II of the Protocol of March 10th last, subject to his being satisfied, after consultation (if necessary) with the Financial Committee of the League, tha t the Bulgarian Government has sufficiently effected the necessary reorganisation of the railway administration.

(c) RESOLUTION ADOPTED BY TH E COUNCIL ON JU N E 9TH, 1928 .

The Council authorises the issue of the reconstruction loan under the auspices of the League of Nations as soon as the Chairman of the Financial Committee, after such consultation of his colleagues on the Committee as may be necessary, is satisfied th a t the conditions requisite for the issue of the loan exist.

The Council further authorises the modification of the Protocol so as to allow an increase in the to ta l to such extent and under such conditions as to control and expenditure as the Financial Committee may decide C

1 It was agreed during the Council discussion that an increase in the loan under this resolution could only be made in connection with the recent earthquakes.

— 54 —

10.

DECISION OF TH E REPARATION COMMISSION OF JU N E 231m, 1928.

1. I t was decided:

(a) That the eleventh payment of 5 million gold francs, which, according to the schedule of Bulgarian reparation payments appended to the Protocol signed at Sofia on March 21st,1923, would be due on October 1st, 1928, should be postponed to April 1st, 1929;

(b) That the twelfth payment, which would be due on April ist,ig29, should be postponed to October 1st, 1929, and so on, the due date of each payment provided for in the said schedule of payments being postponed for six months.

2. In so far as concerned the further postponement in regard to one-half of the Bulgarian reparation annuity payable in 1929, envisaged in the letter of June 16th, 19281, the Commission was prepared favourably to consider any proposal subm itted to it unanimously by the Inter- Allied Commission in Sofia.

(Signed) S . A . A r m i t a g e - S m i t h ,

Secretary- General.

1 1 .

REPORT OF TH E FINANCIAL COMMITTEE, SEPTEM BER 1928.

1. Stabilisation Loan.

On June 9th, 1928, the Council authorised the Financial Committee to increase the total of the Bulgarian Stabilisation Loan and to arrange the conditions as to control and expenditure. The Council agreed th a t the Protocol for the Stabilisation Loan, signed on March 10th, 1928, might be modified for this purpose.

The Financial Committee accordingly has approved an increase in the net to tal of the Loan from 4 y2 to 5 millions sterling, the additional sum to be employed in connection with the earthquakes which ravaged parts of Bulgaria during the spring of 1928. The exact employment of the money will be supervised by the Commissioner for Refugees. The detailed provisions are laid down in an Additional Act to the Protocol of March 10th. This Additional Act will be signed on behalf of the Bulgarian Government.

The Financial Committee has learnt with great satisfaction that, in relation to the earthquakes, the Reparation Commission has decided to postpone for one half-year the payment of reparations by Bulgaria and is prepared to consider favourably any proposal subm itted to it unanimously by the Inter-Allied Commission at Sofia with regard to a further similar postponement in respect of next year.

The Committee is glad to record th a t the Disconto-Gesellschaft has definitely postponed, in favour of the new Stabilisation Loan, any charge which i t m ay have on the Bulgarian Customs. The Committee further understands th a t the Reparation Authorities are completing an agreement which will enable the Loan to receive a first charge on those Customs. On the ratification of this agreement, the required assets will be free, and no further question will remain as to the revenues necessary as security for the Loan.

Certain measures of a legislative character have still to be taken: the agreed changes in the Bank Law which are contained in Annex I of the Protocol of March 10th require formal adoption by the Bulgarian Parliament. A Stabilisation Law, in which the rate of stabilisation is fixed, will also have to be passed.

The Committee takes this opportunity of expressing to the Bulgarian Government its best wishes for the successful isssue of the Loan at an early date.

2. Budget.

The Committee was glad to learn th a t the Bulgarian Government is already applying the provisions of the Protocol of March 10th with regard to the Budget. The regular publication of m onthly budgets and closed accounts, which has already been started, should, in particular, prove most useful to the Governmental machinery and to the credit of the country, both a t home and abroad. The provisions concerning the incorporation of special funds in the budget have still to be applied more rigorously.

The Financial Committee hopes th a t the Government will cary out at an early date the reform of the excise duty on alcohol, which has been needed for some time.

The Committee understands th a t the recent increase in the import duties was made for tem porary reasons only.

1 In this letter, the Inter-Allied Commission declares that it is “ unanimously prepared, if necessary, to propose in due course a further postponement with regard to half of the annuity of Bulgarian reparations due in 1929. "

— 55 —

12.

RESOLUTION OF TH E IN TER-A LLIED COMMISSION, SOFIA,

DATED SEPTEM BER 24™, 1928.[Translation.]

The Inter-Allied Commission :

Having taken cognisance of the resolutions adopted on March ioth, 1928, June 8tli, 1928, and September 17th, 1928, by the Council of the League of Nations concerning the issue by the Bulgarian State of a loan of £5 million net, the yield of which is to be employed in stabilising the Bulgarian currency, improving the position of the National Bank of Bulgaria, of the Agricultural Bank and of the Central Co-operative Bank, liquidating the budget arrears of the Bulgarian State, meeting urgent expenditure on communications and covering the cost of operations due to the earthquakes of April 1928, this loan to be secured by a first charge on the revenue from the Customs and possibly on other revenues if the above-mentioned revenues from the Customs should fall below 150 per cent of the sums required for the service of the loan, and

Unanimously deciding, by virtue of the powers conferred upon it by Article 132 of the Treaty of Neuilly-sur-Seine, to grant exceptions to the first charge laid down by this T reaty and all the assets and revenues of Bulgaria for the settlement of reparations and all other costs and by virtue of all other powers which it m ay possess to this effect :

Releases from the general charge laid down in the said Article 132 for the settlement of reparations and all other costs arising out of the Treaty of Neuilly-sur-Seine or any treaties or agreements supplem entary thereto, or under arrangements concluded between Bulgaria and the Allied and Associated Powers during the Armistice signed on September 29th, 1918, and from the special charge laid down in the twx> Protocols signed at Sofia on March 21st, 1923, and March 28th,1924, concerning reparations and the recovery of the cost of the armies of occupation respectively, for a period to be determined for the redemption of the said loan, which shall not be more than fifty years from the date of the present decision:

AH revenue accruing from all import and export duties, including ad valorem duties, percentage taxes, bonding, statistical and sealing charges, and other Customs charges.

Furthermore, the Inter-Allied Commission undertakes, in case the returns from the above revenues for any year fall below 150 per cent of the sums required for the service of the said loan, to release from the same general charge other sources of receipts to be selected by it on the proposal of the Council of the League of Nations, to whom the question shall be referred by the Trustees, in so far as it m ay be necessary to make up the 150 per cent referred to above.

The said release being granted on the express condition th a t no part of the said securities shall be assigned to any use other than the proposed loan or the advances granted on this loan until the complete extinction of the charges under the Treaty of Neuilly, and in particular reparations and the cost of the armies of occupation, which shall retain a second charge on the revenue from the Customs and on all other revenues which m ay be released from the above-mentioned general charge in pursuance of the provisions of the previous paragraph ;

The object of the said release being to ensure the repayment of the above-mentioned loan during the period it remains in force, the Inter-Allied Commission agrees tha t, if, during this period, any part of the said loan, or the interest on it, is not entirely liquidated, th a t part of the loan or of the interest shall, until complete redemption, continue to enjoy a first charge on the revenue from the Customs and on all other resources which m ay be or m ay have been assigned as security for the said loan to cover, up to 150 per cent, the service of the said loan:

I t being hereby understood and declared that, if the Inter-Allied Commission has not before December 31st, 1928, received notice from the League of Nations th a t it has been possible to put the plan for the said loan into execution, the present decision shall be null and void, without prejudice, however, to the first charge of any advance th a t m ay have been made or of any shortterm loan tha t may have been negotiated in anticipation of the said loan.

Sofia, September 24th, 1928.

13.

PROTOCOL SIGNED BY TH E BULGARIAN GOVERNMENT AND TH E INTER-ALLIED COMMISSION, SOFIA, ON SEPTEM BER 24TH, 1 928 , AND APPROVED

BY T H E REPARATION COMMISSION, PARIS, ON OCTOBER 6 t h , 1928 .

[Translation.]

The undersigned :M. André L i a p t c h e f f , Prime Minister of the Kingdom of Bulgaria, Minister of the

Interior, of the one part,And, of the other part, Count Alessandro F a l l e t t i d i V i l l a f a l l e t t o , President of the

Inter-Allied Commission for Bulgaria, representing the Kingdom of Italy,M. François D e s t a i l l e u r , Minister Plenipotentiary, representing the French Republic, Mr. William D o l l , representing the British Empire,

duly authorised by their respective Governments;

- 56 -

Referring to the two Protocols signed at Sofia by the representatives of the same Powers on March 21st, 1923, and March 28th, 1924, concerning respectively the payment of the reparations provided for in Article 121 of the Treaty of Neuilly-sur-Seine, and the recovery of the cost of maintenance of the armies of occupation provided for in Article 133 of the same Treaty;

Having taken note of the report of the Financial Committee of the League of Nations dated March 7th, 1928, and of the resolutions adopted on March io th , 1928, June 8th, 1928, and September 17th, 1928, by the Council of the League of Nations with regard to the plan for a Bulgarian State loan of £5 million net, the yield of which is to be employed in stabilising the Bulgarian currency, improving the position of the National Bank of Bulgaria, of the Agricultural Bank and of the Central Co-operative Bank, liquidating the budget arrears of the Bulgarian State, meeting urgent expenditure on communications and covering the cost of operations due to the earthquakes of April 1928 ;

Considering th a t the said Financial Committee is of opinion th a t the most suitable security to facilitate the floating of the projected loan would be a first charge on the Customs revenues which, by the two above-mentioned Protocols, have already been assigned as security for reparations and for the cost of the armies of occupation :

Have agreed on the following provisions :

Article 1.

The Customs revenues, th a t is to say, the receipts obtained from all import and export duties including ad valorem duties, percentage taxes, bonding, statistical and sealing charges, and other Customs charges, shall be released from the first charge specifically established by the said Protocols of March 21st, 1923, and March 28th, 1924, for the settlement of reparations and the cost of the armies of occupation, in order th a t all th e sums necessary for the service of the proposed Loan m ay be made a first charge on these revenues as provided in the Protocol signed a t Geneva on March io th , 1928, by the Bulgarian Minister of Finance.

Article 2.The reparations and the recovery of the cost of maintenance of the armies of occupation, due

by Bulgaria, shall henceforth be a second charge on the Bulgarian Customs revenues.

Article 3.

In conformity with Article 2 above, subject to the first charge established by the present Protocol for the service of the said Stabilisation Loan and of any advances in connection with th a t Loan, including interest, amortisation, and all fees, commissions, and other charges relative thereto, the Customs revenues shall continue to be assigned as security for the’reparations and the cost of the armies of occupation, provided for in the Protocols of March 21st, 1923, and March 28th, 1924, and in the schedules of payments appended thereto.

Article 4.

In exchange for the surrender made in Article 1 of the present Protocol by the Inter-Allied Commission, the Bulgarian Government shall assign the direct taxes enumerated in Chapter I

of the State Revenue Budget for the financial year 1928-29, and designated in paragraphs 2, 3, 4 and 8 of th a t chapter, th a t is to say:

The tax on professions,The supplem entary tax on to ta l income,The tax on companies,The tax for exemption from compulsory labour,

as security for reparations and for the recovery of the cost of maintenance of the armies of occupation, which shall accordingly be a first charge upon the above-mentioned revenues and a

second charge upon the Customs revenues.

Article 5.

The details of the procedure for the assignment of the securities mentioned in Articles 2, 3

and 4 above to the service of reparations and the cost of the armies of occupation are specified in the Regulations jointly drawn up, which supersede the Regulations drawn up in August 1923.

Article 6.All such provisions of the Protocols of March 21st, 1923, and March 28th, 1924, as are not

incompatible with the provisions of the present Agreement shall remain in force.

Article 7.

The Bulgarian Government undertakes to submit the present agreement to the Sobranye for its approval at the same time as the contract for the flotation of the proposed Loan.

Article 8.The validity of the present Protocol shall be conditional upon the approval of the Reparation

Commission.

— 57 —

Article 9.Should the Inter-Allied Commission not have received from the League of Nations by

December 31st, 1928, notice th a t the plan for the said Loan has been put into effect, the present Protocol shall be null and void, and all the provisions of the Protocols of March 21st, 1923, and March 28th, 1924, shall remain intact, without prejudice, however, to the priority of any advance which m ay have been made upon the said Loan.

Article 10.The present Protocol has been signed at Sofia on September 24th in four copies, one for each

of the Contracting Parties.

(Signed) A. L i a p t c h e f f . (Signed) A. F a l l e t t i d i V i l l a f a l l e t t o .F. D e s t a i l l e u r .W. A. M. D o l l .

1 4 .

(a) RESOLUTION ADOPTED BY TH E COUNCIL ON SEPTEM BER 17TH, 1928.

The Council :

(2) Takes note of and approves the report of the Financial Committee (document 11);

(3) Expresses to the Bulgarian Government its best wishes for the successful issue of the loan at an early date.

(6) RESOLUTION ADOPTED BY TH E ASSEMBLY ON SEPTEM BER 20TH, 1928.

The Assembly :

(b) Takes note of the stabilisation scheme involving the issue of a loan of £5 millions sterling to be devoted to the repayment of the State debt to the National Bank in connection with the stabilisation of the currency, to strengthening the position of the Agricultural Bank and the Central Co-operative Bank, the liquidation of budget arrears, the construction of certain roads and railways, and work in connection with the damage caused by the earthquakes which ravaged parts of Bulgaria during the spring of 1928;

(c) Congratulates the Financial Committee and the Bulgarian Government for having, in the preparation of this scheme, made one more valuable contribution to the progressive financial and economic stabilisation of Europe, and expresses the hope th a t the issue of the loan necessary for the execution of the scheme m ay meet with complete success.