'File 73/7 I (D 19) Status of Kuwait & Baghdad Railway, and Anglo-Turkish negotiations 1911' [‎189r] (411/631)

[This Document ig tue Properly of His Britannic Majesty s Government.
EASTERN DEPARTMENT. [April 8.]
SECRET SERIES. S uction 1.
[12979] No. 1.
Board of Trade to Foreign Ofice.—(Received ( April 8.)
(Secret.) . , • - -
' r * ai ' B 0a vd of Trade, April 7, 1911.
I AM directed by the Board of Trade to advert to your letter of the t6th March,
and enclosures, with regard to participation m tlie Bagdad Railway and' other matters,
and to the Board's re£ly of the 22nd March, and also to a letter, dated the 29th March,
from 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. to the foreign (Mfice, of which the BoaiXi' have heen favoured
with a copy.
With reference to the main question addressed to them by the Foreign Office, viz.,
what steps could be devised to ensure equality of treatment for British commerce if a
system of internationaiisation were arranged for the Gulf sections of the Bagdad Railway
such as would not allow of preponderating control in capital and on the railway board
to this country, I am now directed to inform you that the whole matter of the s£eps
necessary to secure British trade from adverse discrimination on the railways of Asiatic
Turkey has received the very careful attention of the Board. As a result, they have
caused to he prepared the enclosed rough heads of two forms of agreement having the
proposed object in view, and applicable respectively to the two cases in which Great
Britain has or has not control to the extent of at least 50 per cent, of the southern
section of the railway. It will be observed that the form and contents of the two draft
heads of agreement differ fundamentally. In the first case supposed, the desired object
could probably be attained without serious difficulty by an agreement as to the con
ditions of through traffic between the new railway company, the Bagdad Railway
Company, and perhaps the Anatolian Company. This aim would be materially
facilitated if, in addition, one or two British directors were admitted to the boards
of one or both of the last-named companies. The draft heads of such an agreement are
enclosed (marked (A) ).
In the second case supposed (which is the case assumed for the purpose of
Sir Edward Grey s question), the Board consider that nothing short of a formal treaty
between Great Britain and Turkey would be of any use, and as we should, ex hypothesi,
have no controlling power on either of the boards of management to prevent dis
crimination, the only means of enforcing the treaty would be diplomatic pressure at
Constantinople backed possibly by a threat of withdrawing consent (if given) to the
4 per cent, increase of customs duties.
In the opinion of the Board of Trade, the articles of such a treaty, in order to be
effective and to prevent evasion, would have to be drawn in a form not less stringent
than those contained in the draft enclosed herewith (marked (B) ). They cannot, how
ever, conceal from themselves that insistence on such drastic conditions would be likely
to hamper the ordinary commercial development of railway enterprise in Asiatic Turkey,
and that it would be difficult to justify them from the point of view of British railway
practice.
On the other hand, diplomatic pressure at Constantinople, with its inevitable
delays and uncertainty, does not appear to the Board to be a satisfactory mode of
preventing or remedying, as they arise, cases of alleged differentiation, cloaked as they
usually would be under various forms of adverse classification, delay of traffic, or other
indirect methods of discrimination, without the adoption of a nominally differential
tariff.
For the above and other reasons, the Board cannot recommend this course, which
does not appear to them to give to British trade any satisfactory recompense for our
consent to the increase of Turkish customs duties ; while, on the other hand, if such
consent were refused, we should be deprived of any effective lever to secure attention to
our representations to the Turkish Government.
Such study of this question as the Board have been able to make from a purely
railway, commercial, and financial point oQview has led them to the conclusion that
there are only two practicable policies :—
[1969 h—i] B