'File 60/20 I (C 93) Imperial Bank of Iran: Bahrain, etc' [‎97v] (195/409)

11th Wust 1932. Now that the question has waited so long, there is some
advantage in'letting it wait until the 10th May, 1936, when the Tariff Autonomy
Treaty expires and the necessity of negotiating a new tariff agreement on the
lines of those ordinarily negotiated with other countries will almost certainly
arise It will be remembered that nothing ever came of the long negotiations ,
with the Persian Government over the interpretationofthe protocol attached to
article 2 of the treaty in so far as it might be affected by the imposition of a
customs barrier on the Indo-Persian frontier. The last proposals suspended in
1931 and never resumed, were for an exchange of notes, in which the Government
of India would declare in effect that a customs barrier was not likely to be
imposed, but that, if it were, the right of the Persian Government to raise then
customs tariff on the principal articles of exportation from India would be
submitted to arbitration. Since then it has been assumed that, provided he
customs barrier were established on all land frontiers alike the basis of the
obiections of the Persian Government would disappear. Although 1 am not
convinced that they would accept the change without a protest, the ensuing
difficulties should be theoretical rather than practical, for the amount ot duty-
collected in a year on this frontier on Persian products destined to remain m
India would probably not be very large. In any case, I am m favour of taking a
decision first and informing the Persian Government afterwards.
6. As against the treaty position, the loss of revenue to the (jovernment 01
India appears a compelling reason for taking action, but this is a point on wmcn
it is hardly for me to express an opinion. There are also other reasons, such as
the desirability of being able, if necessary, to appl\ the same restrictions to
Persian consuls in India as are applied to British consuls in 1 eisia m the mattei
of customs procedure. The ideal solution would no doubt be, an aiiangement b}
which customs duties could be imposed on all goods, except those pioduced in
Persia or other limitrophe countries, but it would be difficult, I fancy, to put such
an arrangement into force without infringing the most -favouied-nation lights of
other countries
7. I have digressed somewhat far from the affairs of the Imperial Bank of
Persia. Though the importation of silver into India over the land frontiers is
perfectly legal, it is a business in which, in the circumstances, a leputable
institution naturally hesitates to engage without an assurance that the Govern
ment of India would approve. I therefore suggest that, if possible, urgent steps
be taken to stop the importation of silver through Baluchistan, either by the
imposition of a customs barrier or otherwise. Failing this, I submit that the
Imperial Bank of Persia should be given a clear indication that the Government
of India see no objection to their undertaking this business when it comes their
way, and should also be told in confidence, in advance, when any measures to stop
the traffic are about to be put into force. The present position is that a reputable
British institution is penalised by its own sense of propriety, while its rivals,
including the National Bank of Persia, take the profit.
8. I am sending copies of this despatch to the Foreign Secretary to the
Government of India and to His Majesty's consul-general for Khorasan (No. 32).
I have, &c.
R. H. HOARE.