'File 73/7 V (D 38) Status of Kuwait, Anglo-Turkish Convention' [‎15r] (42/216)

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The original idea of securing the ap
pointment of two British directors was
to guard against discrimination in rates;
subsequently the German Government
pointed out that in practice this could
only be arranged by such directors
representing British shareholders, and to
this His Majesty's Government agreed.
I am, however, doubtful as to whether
this text should be adopted. The words
4 ' as representatives of a group of British
shareholders " appearing in the body of
the convention appear to lend the official
support of His Majesty's Government to
active British participation in the Bag
dad Railway—and such an attitude
might, in view of the past history of the
question, be difficult to defend.
It is indeed matter for consideration
whether, as the German Government
suggest, clause (c) of article 1 should not
be left out of the convention and put in
the note explicative. As very great im
portance is not, I believe, attached by
the Board of Trade to the appointment
of British directors at all (so far as dis
crimination against British trade is con
cerned) it might be best to omit all men
tion of such appointments even in the
note explicative, thus leaving it open to
British financiers to participate on their
own terms as regards representation on
the board. Thit would enable us to
resist the German claim as embodied in
the last paragraph of article 2, clause
(c), and its insertion either in the con
vention or in the note explicative; that
claim is one which the India Office The department of the British Government to which the Government of India reported between 1858 and 1947. The successor to the Court of Directors. are
anxious should be resisted.
The expression " ground-floor terms "
can seldom have been so flagrantly mis
applied. Herr von Gwinner proposed to
Sir H. Br.bington, Smith, as regards Bri
tish participation, terms far less ^' v ® ur "
able than those conceded to the Bagdad
Railway Company by their convention of
1903. It was this which prompted the
remr.rks in the British note of 18th Sep
tember, and in the reply these considera
tions should be emphasised. At the same
time it is true that, owing to the war and
other causes, the 1903 concession is finan
cially less attractive than it was at the
date of signature.
Instead of 50 per cent, in the port of
Basra, we are offered " not less than 20
percent.," which includes participation
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141
to see that British capital should be
admitted to the Bagdad Railway
Company under fair and reasonable
terms. The clause would then read
as follows ;—
" The Imperial German Govern
ment declare that they will use their
best endeavours to secure that two
British directors agreeable to His Bri
tannic Majesty's Government shall be
admitted as representatives of a group
of British shareholders to the Board
of the Bagdad Railway Company."
The Imperial Government is of opi
nion that this clause might be left out
altogether if a group of British share
holders can be formed before the sig
nature of this agreement. As for the
election of the British directors, I am
glad to see that the arrangements sug
gested in Prince Lichnowsky's note
are satisfactory to His Majesty's Gov
ernment.
The German Government considers
that clause (c), article 1, in its amended
form should better be left out of the
convention and put in the note ex
plicative. If, however, His Majesty's
Government could not agree to this,
but insisted on retaining this clause in
the convention, the Imperial Govern
ment would agree to this, provided
the second section of clause (c), article
2, which, according to Pr nee Lich
nowsky's note of the 16th July, 1913,
was to be put in the note explicative,
would be restored to the text of the
convention.
The prospects laid by Herr von
Gwinner before Sir H. Rabington
Smith on the 14th June, 1913, were,
to use a financial expression, ground-
floor terms as favourable as could be
offered at that period. The Bagdad
Railway Company will try to obtain
from the Turkish Government more
favourable terms. Any concession
which they might be able to secure
will be offered as a matter of course to
the British group.
In article 2, clause {d), the words
" 50 per cent." should be replaced by
" not less than 20 per cent."
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