From another point of view, the fact that foreigners living in the Ottoman Empire are exempt from taxation, in accordance with the capitulations, makes it impossible for the Sublime Porte to procure the indispensable means for the carrying out, not only of the reforms but of its everyday needs.
The impossibility of increasing the indirect taxation is bringing about the increase of direct taxes, and therefore makes the burden on the Ottoman tax-payers all the heavier. The fact that foreigners who enjoy in the Ottoman Empire every protection and every privilege as well as freedom in their business transactions are exempt from taxation constitutes in itself an intolerable injustice and creates at the same time a situation detrimental to the independence and prestige of the Government.
While the Imperial Government was firm in its resolution to continue its efforts regarding the reforms, the general war broke and increased the financial difficulties of the country in such a degree that all the innovations and all the reforms which have been decided upon and actually begun are threatened to remain without effect.
The Sublime Porte feels convinced that the only way toward salvation for the Ottoman Government lies in the realization of the necessary reforms in the least possible time. In the same way the Porte feels that every encouragement will be shown her in the decisive steps to be undertaken for this end.
Convinced of this, the Imperial Government has decided to abolish, on Oct. 1, 1914, the capitulations, and all conventions, concessions, and privileges emanating therefrom, which have become an iron ring around the State, making it impossible for it to progress.
At the same time the Ottoman Government engages to treat with foreign countries in accordance with the rules of international law. While I have the honor of communicating to your Excellency this decision, which opens a new and happy era in the life of the Ottoman Empire, an event which undoubtedly will please your Excellency, I consider it my duty to add that the Porte in abolishing the capitulations does not harbor any hostile feeling against any of the foreign States, but is acting solely in the highest interests of the empire. At the same time, the Porte is ready to begin pourparlers for the conclusion of commercial treaties in accordance with the principles of international law.