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393. Colonel Meade, after consul ling Major Cox personally, proposod that
the arrears of the indemnity should not ho deducted from the arrears of the
subsidy, Bince the burden of paying tho indemnity would shift from the guiltv
tribes to the Sultan and the improved attitude of His Highness would not
justify suoh a measure (Resident'sNo. 12-T., dated 2nd December 1899).
394. Tho Government of India considered that arrears of subsidy" had
been forfeited by tho conduct of the Sultan, that oven the application of arrears
to tho discharge of the Sulian's liabilities was exceptional gonerosity of Govern,
ment towards him and that the whole balance of tho loan of 1897 should bo paid
out of arrears and, ns regards indemnity, quarterly instalments of balanco for
September and December 1899, if owing, should he deducted from tho arrearsof
the subsidy, similarly interest at 6 per cent, on unpaid balanco from February
1899; hut tho balanco of the capital sum of indemnity, Its. 34,000, might, for
political reasons, coutinuo to be paid olf hv instalments. Hopes were, how­
ever, hold out that the Sultan might possibly obtain mitigation of these orders
by proper attitude to tho representative and representations of the British
Government, and it was ordered that immediate liquidation of the loan might
be abandoned in return for substantial concession by Sultan in regard (e.y.)
to management of customs ; hut that monthly instalments must of course be
paid from December 1S9S till the debt was extinguished (letter No. ll-E. A.,
dated 9th January 1900).
395. The Government of India accepted $4,564, paid by the Sultan as
proceeds of punitive tax between June and December 1S99, in place of the
full instalments for quarters ending September and December; no deduction
from subsidy arrears, therefore, was to be made on this account.
396. The matter was further discussed in the Foreign Department. Obli­
gatory deductions remaining were arrears of monthly repayments of loan
(Ks. 20,000) and interest on unpaid bal­
8ocrct E., June 1BC0, Nos. 70-72.
ance of indemnity from February 1899
to date (about Us. 216). This left about Us. 49,835. The question was whether
this sum should be devoted to extinction of the loan, or of the indemnity, or of
both, or of neither ? In the last contin­
Secret E , Juno 10C0, No*. 70*72.
gency should not any return be exacted
for these favours? Any balance left in any case would be retained by Govern­
ment, unless tho Sultan made concession in matter of customs or the Maskat
flag. Captain Cox was asked to report on these points (No. 10S6.E.A., dated 21st
May 1900).
397. The Sultan had behaved well in the matters of partition of Makalla
cove, restoration of e#-Wazir Savvid Said, spirited action in re French flag
our request to have scurrilous Franco-Arabio leaflets suppressed and his offer to
place quarantine arrangements in charge of Agency Surgeon : Captain Cox,
therefore, recommended that only Us. 20,090, tho arrears of monthly instalments
for loan and Rs. 27,000 entire balance (with interest to September) of the in­
demnity should he deducted from arrears of subsidy, and the rest of arrears
(Rs. 25,000) should he handed to Sultan ; the rest of the loan (Ks. 17,000 duo on
2nd September) to he paid off by monthly instalments of Rs. 2,000 as formerly.
The Government of India ordered set-off against Ks. 72,000 in hand of Rs. 20,000
(arrears of loan instalments) and Rs. 27,000 (arrears of indemnity) and
Rs. 17,090 (balance of loan) aud payment of Rs. 8,000 to the Sultan, provided
his loyal action had received no cheok (telegram to the Resident, dated 12th
September 1900).
398. The account as settled by Captain Cox after consulting the Comp­
troller, India Treasuries, was—
8ecret E, December 1900, Nos, 1*6.
Rs.
(1) Due on account of loon, principal and interest, up to 1st October 1900 ... 35,340
(*2) Due on acoount of indemnity to British subjects, with interest, from 9tb
February 1898 ... *7,026
(3) Balance payable to the Sultan Mt ... »,G37
Total ... 72.000