Coll 30/9 'Persian Gulf: Administration Reports 1926-1938' [‎343v] (691/1028)

Krans which any reduction of the official rate necessarily entailed. If to x
practical considerations be added the acute national prestige complex which t
present actuates all Persian policy, it is not altogether surprising that this C t t ^
of affairs should have continued so long, nor in fact that it should continue f 6
some considerable time to come. The Persian is notoriously long-sufferin» wh'? 1
the Government can always point to world trade depression as° the cause of 1 11
their troubles.
The combined effect of the fall in the price of silver, the slump in trade throucffi
out the world and the injudicious methods adopted by the Government to d° i
with the situation have resulted in a drop of the exchange rate from 65 in Janua v
to 120 in December ; a heavy increase in taxation ; an enormous rise in the cost of
jiving ; a total disorganization of trade ; and a consequent falling off in revenue in
spite of the new taxes imposed.
. As regards the particular effect in Bushire of the Government’s activities
m the field of economics, there is little to be said. Month after month the market
remained dull and depressed. Small traders were forced to fall out of foreion
trade which tended more and more to become the monopoly of the bmaest mer
chants having holdings of foreign exchange abroad. These latter devoted them
selves to an ever increasing extent to the import of tea and sugar, which by April
we re showing a considerable advance in price which continued progressively to
the end of the year when sugar prices were some 40% and tea nearly 90% above
January levels, and by the middle of the year speculation in tea and su^ar became
the dominant factor in the bazaar.. °
ine uncertainty prevailing was much enhanced by the policy of the Russians
who alone would appear to have derived benefit from the general situation. EDht
Russian ships visited Bushire as compared with five the previous year and lame
quantities of sugar and piece-goods were imported, as a consequence the Sharq
Companies control of the market increased. Sometimes selling for sterling only
at other time for Krans, now extending credit, now withholding it, their chief
policy seemed to be to upset the market as much as possible. In the main how
ever^ they were obviously desperately keen to-obtain foreign exchange, only selling
for rans when in need of currency to finance their exports of gum, almonds, etc.
St w e affa ^ S j s t0 be con tinued it seems inevitable that their
to adorn-’ ton r r r atlVely hT/ 11 , be enormously improved. Persia cannot afford
mainK to thp r bend r § an a f lt . ude wbere Ru ssia is concerned. The latter, thanks
exchaLe on h roPo7 S f barter ’ ^ tbe firSt eXem P t from sellm g an 7
to believe that th^ 11 ° + ^ ir ln the North, while there seems every reason
the Gulf ^ ^ Parted Wlth n ° f0relgn exctan € e in aspect of shipments from
of which th?R.!« p0rtS ° f C ° tt0n Cl ? til t)lrou g l1 Bushire totalled 23 million krans
milhons fOT 3 million - Ttis y^r, on a total of 22
true signifirinee F ? r , krans. In order to give these figures their
entrvX InH^n p„Tp v ^ ^ that Bush ire, while the natural port of
Furthermore the P n 18 P iece 'g° 0( ts, is far from being so for the Russians,
year whereas in tho tTTn C,m)ta ac t ua % represents goods imported during th«
ordered durinxr thp ° a a - g 111,6 a ver y considerable percentage is made up of goods
months thus^nop } ear an d not cleared from the customs for many
ffiece-t S oodk l Sorip P t e ipp in rl coa ]93 ° ^ UreS -. 0ne bi g ^porter of Manchester
there were nmnv tl^ 16 ti ° r f ome ^ m iliion krans worth in this manner and
truly represent" the Russian share'** 1161 ^ tWenty Per Cent W0Uld P robabI y more
millions TFiooq* 11 ! b° tal fi §r res ’ of 98 m iHion krans as opposed to 117
“count and ali™r.pp p fh 19 f l] lo ns-the above factor must be taken into
of increasing all custn m \ e °P be i n exc l ,an ge rate (which has had the effect
trui rTcture of the ^p t n n gUTeS l0T 1939 byXome 15%), if anything like a
therefore is deduetpd fr +1 a inp rS £ 1S be drawn from comparison. If 10%
shifting of the custom G f °i 0 % ures 5 to allow for their being swollen by the
krans becomes 29 miZn? ° f Calcidatlon ^m 55 to 60, the dmp of 19 million
Furthermore a percent™ j 0 a drop of nearl 7 25% on the 1929 figures,
the 1929 figures in resneot rZ j ded ! 1< k ted ^ roin the 1930 figures and added to
‘“P goods which normally would have been cleared and