SOUTH-EASTERN EUROPE. March 12, 1928.

CONFIDENTIAL.

[C 1955/42/7]

Mr. Kennard to Sir Austen Chamberlain.—(Received March12.)

(No. 91)

Sir, Belgrade, March6, 1928.

WITH reference to my despatch No. 70 of the 16th February I have the honour to transmit herewith a copy of a report, which His Majesty's vice-consul at Skoplje has prepared at my request, as to the practical means of improving conditions in South Serbia, as opposed to the theoretical arguments adduced in this connexion.

• 2. I had to-day my first interview with Dr. llija Shumenkovitch, who is acting as Minister for Foreign Affairs ad interimduring M. Marinkovitch's absence abroad. His Excellency is Macedonian by birth, his family having lived at Struga on Lake Okhrida during the past 300 years, and he is Deputy for the Okhrida District. Being a Democrat, he may be expected to take a more broadminded view of the Macedonian question, and I, therefore, took the opportunity of discussing it frankly with him. I expounded the views which I have expressed in recent despatches and private letters as to the most practical mode of redressing the grievances of the local population, more especially those connected with the economic side and with the local maladministration.

• 3. M. Shumenkovitch expressed his entire agreement with these views, and stated that he thought it essential that a portion of any foreign loan should be devoted to useful expenditure on public works and the betterment of general conditions in South Serbia.

• 4. As regards the tobacco monopoly his Excellency pointed out that, owing to the improvement of prices some three or four years ago, the peasants had put an increasing area under cultivation for tobacco. The monopoly had bought large stocks and now held a considerable quantity over and above their requirements. He considered personally that the producer should be permitted to export the surplus and obtain the market price ruling abroad. This would involve the modification of certain laws, which might prove difficult. As regards public works, he had recently spoken to the Minister of Agriculture on the subject, and he understood that a large reclamation scheme in the neighbourhood of Skoplje is about to be put in hand. He also referred to the works in the Struga region, which I visited two years ago and which are proceeding very slowly.