Coll 30/9 'Persian Gulf: Administration Reports 1926-1938' [‎131v] (267/1028)

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f
In fact the Soviet Union expects to recapture under this agreement tie
trade previously lost.
Of the other countries importing goods into Iran Germany is main
taining her position. She competes with British importers in most lines.
Her trade with Iran is expected to be facilitated by an agreement concluded
with Iran in October regarding commercial payments by means of a
clearing office. Under this agreement import licences will be issued for
German goods without the production of the corresponding export certi
ficates. At the moment however Germany's proportion of the total imports
into Iran is small.
Italian trade with Iran has received a severe blow from the imposition
of an embargo by the Iranian Government on all imports from .Italy, This
embargo was imposed towards the end of the year in connection with the
Italo-Abyssinian conflict. It is likely however to prove a two edged
sword in the event of Italy retaliating in view of the fact that the balance
of trade is considerably in favour of Iran. Other countries especially Japan
may be expected* to take advantage of this factor to capture Italy s trade
with Iran.
Financial. There is no improvement in the financial situation com
pared with the previous year and money continues to be scarce. The
population still has to bear the burden of crushing taxation of all kinds
which together with the restrictive effect on private enterprise of the
foreign trade monopoly effectively rules out all possibility of investments
in private industrial and business ventures, and no relief from this burden
is in sight. On the contrary the tendency appears to be in the direction of
a still heavier burden in view of the continued high cost of the trans-Iran
railway now under construction which swallows up more and more money
as time goes on, as well as increasing expenditure on military equipment.
Importers find it increasingly difficult to carry on successfully under
such circumstances and there is a growing tendency on their part to invest
their working capital in state monopolies as being a better paying proposi
tion and in order to lessen the risk of loss.
The situation was complicated still further in April by the high price
of silver which rose to 36| pence per ounce in that month as a result of the
action of the United States of America in offering 71 cents per ounce. This
had the effect of forcing the rial-sterling exchange rate to 52 rials to the £ 1 .
Exports at such a rate became almost impossible and the smuggling abroad
of silver rials took place on a large scale. In fact it is estimated that about
400,000 to 500,000 silver rials had been illegally exported from Bushire
and district by the end of the year. As if their actual worries were not
enough merchants and others were thus faced with a scarcity of small
change in the market and still more money was withdrawn from circulation.
The situation was however ultimately eased by the issue of copper coins of
small denomination.
In spite of all these difficulties there were no bankruptcies in Bushire
during the year. Bushire merchants for the most part limited their
activities to forwarding business which probably enabled them to remain
solvent.
Opium .—Shipments of opium during the year were as follows:—
f
J anuary
February
March
April
May
Nil
200 cases.
150 „
June
10 cases.
41 „
July .
August
September
October
November
550
201
1,173
291 cases.
Total . 2,638 cases.