'Military report on Tehran and adjacent Provinces of North-West Persia (including the Caspian Littoral)' [‎147v] (299/610)

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of her own protected markets to certain Persian products, i.e. r
raw 1 cotton and rice, by a preferential tariff which admitted
these commodities to Russia from Persia, at lower duty than
from other countries.
In 1903 she secretly concluded a Customs Convention with
Persia cancelling the 5 per cent, ad valorem tariff, which had
existed since the treaty of Turkomanchai in 1828, and imposing
a new tariff by weight, 2 the incidence of which fell three times
heavier on the staple articles of British than on the staple
articles of Russian trade.
The detrimental effect of this tariff to British trade probably
fell below Russian expectation, as actually the extra tax was
paid by the consumer. Enhanced prices, however, mean
reduced consumption and so lessen trade.
The Russian 3 “ Banque D’Escompte De Perse ” used its
position as the creditor of the Persian state to oust British
enterprise.
It advanced large loans to the Persian Government at 6 per
cent, which it had itself borrowed in Paris at 4 per cent., and
also, by virtue of the Russian Government support, was enabled
to deal in a way impossible to the Imperial Bank of Persia, a
British institution conducted on ordinary business lines.
The Russian Bank habitually advanced loans and issued
drafts at slightly more favourable rates than the Imperial
Bank, and lent money to Persian merchants trading with Russia
at abnormally low interest.
The result of these natural advantages and of these methods
was a great expansion of Russian trade in Persia, while the trade
of the British Empire and other countries remained almost
stationary.
The total foreign trade in Persia increased from some
£8,000,000 in 1880 to £17,000,000 in 1913, the increase being
most marked after 1900. The total value of Russian trade with
Persia in 1889 was £2,189,000 and of British trade £3,697,000.
In 1913 the value of imports from the British Empire into Persia
1 The duty on cotton from Persia was 40 kopeks per poud (36 lbs) while cotton
from other countries was taxed 4 roubles 16 kopeks per poud, i.e. Persian cotton
in Russia had an advantage of 3 roubles 75 kopeks per poud or about 2.\d per
pound.
2 The new duties worked out at an average of 9 per cent, ad valorem on the
principal articles of import from the British Empire and at 31 per cent, on
those from Russia, and 3 per cent, on the principal articles of export to-
the British Empire and of 1 per cent, on those to Russia. .
The duty on tea, which was nearly all imported from India, was raised to
95 per cent.
• See “ Eoreign Interests ” para, (c) below, page 271.