'PERSIAN LOAN. TELEGRAMS, 20TH JANUARY - 1ST APRIL.' [‎158r] (17/22)

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From Marquess of Lansdowne to Sir A. Hardinge,
28 ^ March 1903 .
(No. 31 Secret.) Your telegram No. 42.
The following objections have been mentioned in different quarters to
proposal to purchase Bank shares :—
1. Bank is said to be concerned in transactions which, from an English
point of view, would be regarded as usurious and somewhat shady.
2. If such transactions were discontinued shareholders’ profit would be
largely diminished, and they would have a grievance.
3. Result of confidential inquiries is to show that it would be extremely
difficult to secure a large number of shares. Price of shares would certainly
rise if it became known that British Government was a buyer.
4. Prospect of the Imperial Bank being wound up is said to be remote.
Upon what do you base your statement that its disappearance is a constant
danger ?
As under the Charter majority of the Directors must be British subjects,
we are fairly protected from predominance of foreign interests.
If, on the other hand, the Government acquire the right of nominating a
majority of the Directors, the Government would become responsible for the
management of the Bank both towards the shareholders and to Parliament.
(Repeat to India.)
From Sir A. Hardinge to Marquess of Lansdowne^
2^th March 1903.
(No. 43. Secret.) Russian Government have consented to make Caspian
Fisheries Loan, but on conditions which Persian Government is unwilling
to accept, and which are, therefore, I suspect, political, since the Russian
bank’s financial terms are usually better than those of Imperial Bank of
Persia. M. Naus has to-day applied to Imperial Bank of Persia for an
advance from 200,000/. to 300,000/. (latter preferred), which can only be
effected if the money is provided or some sort of guarantee given by Ilis
Majesty’s Government. Grand Vizier has sent to ask your Lordship’s
assistance, and to beg you, on occasion of this first operation, to make no
political conditions which may alarm or be misunderstood by Shah, and so
upset arrangement. I venture strongly to urge this opportunity should
not he lost ; if we haggle, and the thing falls through, it may not recur
again.
Rapidity and secrecy are essential. Caspian fisheries by themselves
cannot be regarded as a sufficient security, since it is in the powder of Russia
to diminish their value by higher duties under new tariff. The southern
customs must therefore be made a collateral, and it would probably be more
advantageous in view of our interests in the south that they should become
the main security. Interest "would have to be at L mdon rates, and should
not exceed 4 to 5 per cent., including agent’s commission. I believe that if
His Majesty’s Government will assist this transaction, it may be first step
to recoverv of our political position here, and pave way for all the other
concessions you desire. But it is essential that it should be in form of a
business and not of a political transaction, and that Imperial Bank of Persia
should be nominal principal, though precaution suggested in your telegram
No. 29 might be adopted.
(Addressed to Foreign, Simla. Repeated to Foreign, with Viceroy.)
S. 19.
E