Annotated Copy of Persia and the Persian Question by George Curzon, with Inserted Papers [‎445r] (892/1814)

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THE BAGHDAD RAILWAY
SCHEME.
‘I
ai The Berlin correspondent of the Times writes
p as follows under date August 8th:—I am enabled
to communicate the contents of some documents
d of considerable interest relating to the applica-
9 tion of the German Anatolian Railway Company
^ or, rather, of the Anatolian Company and the’
rV French Smyrna-Kassaba Company together, for
the concession which is to enable the two com-
01 panies to extend the Anatolian railway system
' to Baghdad and eventually to the Persian Gulf The historical term used to describe the body of water between the Arabian Peninsula and Iran. .
’ ‘ It will be remembered that the directors of the
v Deutsche Bank, which finances the Anatolian
Railway, after the failure of their attempt to
c come to a satisfactory agreement with the
[( English Smyrna-Aidin Company, finally came
I to terms with the French Smyrna-Kassaba
Company, whose line connects the Konieh
branch of the Anatolian Railway with Smyrna.
This agreement, which was settler) in Berlin
on May 6th after negotiations between
Messrs. Siemens, Gwinner, and Iluguenin on
i the part of the Deutsche Bank and the Anatol-
r ian Railway, and Messrs. Berger, Auboyneau,
de Sarty. de Biedermann, and Count Vitali,
acting as representatives of the Imperial Otto-
PIONEER, SUN 04
£20,000,000 sterling. It is then that in agree
ment with the Imperial Government and in cas^
of need the funds accumulated in the Imperial
Ottoman Bank will serve to guarantee ar
interest of 3 per cent on this new issue.
The company is convinced that after the
completion of the line the traffic will be sufficient
to free the Imperial Government of its obligations
and that the funds accumulated at the Imperial :
Ottoman Bank will be at its disposition.
The proposal to do without a guarantee was
made, as the memorandum itself suggests, ir |
order to cut away the ground from all competi
tors, more especially from the English syndicate
connected with the name of Mr. Rechnitzer,
whose application for a line from Konieh, vie
Adana to Alexandretta, at the head of the-
Mediterranean, and from Alexandretta, via.
Aleppo, to Baghdad and Basra is looked on with;
considerable favour by the Turkish authorities
It yet remains to be seen whether the Sultan
will be taken in by the somewhat transparent
device of not asking for a kilometric guarantee
in the new line, but only asking for the
guarantees on the existing lines to be paid
up to their full limit for six years to serve
as a guarantee fund—in other words, for a
subvention of some £3,400,000, to be paid in six
annual instalments. There are various reasons
(5{5>)
- THE PIONEER, SUNDAY, S EPTEMBER si
THE BAGHDAD RAILWAY
SCHEME.
The Berlin correspondent of the Times writes
as follows under date August 8 th :—I am enabled
to communicate the contents of some documents
of considerable interest relating to the applica
tion of the German Anatolian Railway Company
or, rather, of the Anatolian Company and the’
French Smyrna-Kassaba Company together, for
the concession which is to enable the two com
panies to extend the Anatolian railway system
to Baghdad and eventually to the Persian Gulf The historical term used to describe the body of water between the Arabian Peninsula and Iran. .
It will be remembered that the directors of the
Deutsche Bank, which finances the Anatolian
Railway, after the failure of their attempt to
come to a satisfactory agreement with the
English Smyrna-Aidin Company, finally came
to terms with the French Smyrna-Kassaba
Company, whose line connects the Konieh
branch of the Anatolian Railway with Smyrna.
This agreement, which was settled in Berlin
on May 6 th after negotiations between
Messrs. Siemens, Gwinner, and Jluguenin on
the part of the Deutsche Bank and the Anatol
ian Railway, and Messrs. Berger. Auboyneau,
de Sarty, de Biedermann, and Count Vitali,
acting as representatives of the Imperial Otto
man, Bank, the Kassaba Company, and the
“ Rfigie generate des chemins de fer,” provided
that the two financial groups should undertake
the construction of a line to Baghdad and
Basra. In this undertaking the participation
of the Ottoman Bank group was fixed at
40 per cent, the remaining 60 per cent
being left to be raised by the German group.
In order to secure harmony in the working-
management of the two companies it was agreed
that each should appoint two directors on
the board of the other. It was further provided
that if any other financial group or company
such as, e. g., the smyrna-Aidin Railway, subse,
quently joined in the undertaking, its share
should be taken proportionately out of the
shares of the other two. On June 10th, Dr. Zander
the chairman of the Anatolian Railway present
ed a memorandum to the Sultan. The docu
ment in question after shortly summarising the
history of the Ana f olian Railway, and adverting
to the fact that the guarantees paid by the Im
perial Government had been greatly reduced in
consequence of the successful working of the
line refers to the negotiations undertaken
with the other railway companies in Asia
Minor with a view to co-operation in the exten
sion of the Anatolian Railway system to the
Persian Gulf The historical term used to describe the body of water between the Arabian Peninsula and Iran. . The failure of the negotiations
with the Smyrna-Aidin Railway the memo
randum ascribes wholly to the English company’s
unwillingness to be absorbed :—
All the efforts and even the financial
guai’antees offered by the Anatolian Company
have only led to an evasive reply, amounting, in
fact, to a non-acceptance. The Anatolian
Company, basing itself on the high protection
of His Imperial Majesty the Sultan, considers it
its duty to continue its endeavours by suggest
ing fresh proposals. giving all possible
guarantees to the English shareholders, and
hopes sooner or later to arrive at an agreement
or a fusion.
THE TERMS OF AGREEMENT.
The memorandum then gives the agreement
with the Kassaba Company mentioned above,
adding, however, that the Deutsche Bank would
only take up 40 per cent of the shares in the
new undertaking, leaving, in accordance with
the Sultan’s wishes, 20 per cent to be subscribed
by Ottoman financial houses. On the grant of
the concession the companies concerned would
unite into a single company under the title of
The Imperial Ottoman Company of his,
Imperial Majesty Sultan Abdul Hamid II.”
The lines for which the concession is requested
are— {a) A line from the present terminus of
the Antolian Railway at Angroa, via Tuzgat,
Kaisarieh, and Marash to Aintab, with a branch
from the latter place to Alexandretta. From
Aintab the main line is to continue via Urfa,
Diarbekr, Mardin, and Mosul, to Baghdad ; (b) a
line from the terminus of the southern branch
of the Anatolian Railway at Konieh, via Adana,
Marash, and Aintab, to be continued to Baghdad
as above. The concession is also to include the
permission to extend the railway from Baghdad
to Basra, via Kerbela and Nejef. Which of the
two routes to Baghdad will be taken in hand—
provided always the concession is granted at
all—will depend on the results of the surveying
expedition which is shortly leaving Constan
tinople. In any case, Dr. Zander declares his
readiness to modify the plans given above to
suit the wishes of the Sultan. The memorandum
conc’udes with a request for an trade sanc
tioning the undertaking en principe.
On June 18th Dr. Zander presented a further
memorandum giving the final conditions under
which the new combination proposes to carry
out the concession to be granted to them. The
memorandum begins with an account of the
financial position of the Anatolian Company,
and continues :—
The company, basing its past, on its right of
preference, and on the actual prosperity of its
existing lines, relying on the technical reports
of its engineers who have already studied the
extension to Baghdad, on the richness and
fertility of the region which would be traversed
and especially on the reports of the commercial
agents it has sent hitherto into the interior, and
having at its disposal all the means necessary
for commencing operations at once, has decided
in order to avoid all possibility of competition
to ask for the Baghdad and Basra line without
any kilometrical guarantee whatsoever.
The company solicits His Imperial Majesty the
Sultan in his high solicitude to take the folloVing
suggestions in consideration :—As the exten
sion in question, with its branch lines and
rolling stock, requires a capital of £10,COO,000
sterling, the company will be able to give
assurance to its group by merely letting the
fact weigh wdth it that His Imperial Majesty,
having full confidence in the company's ability
to realise the Baghdad project at the very
earliest moment of his own initiative has grant
ed anew the kilometric guarantees already
granted on the lines in existence.
The amount of these guarantees is to be paid
into the Imperial Ottoman Bank for a period of
six years, in which time the company under
takes to complete the line to Baghdad in three
sections, as indicated in the plans presented.
After the completion of the* line the shares and
bonds of the company—those of the Kassaba
Company as well as the capita! raised for the
extension, are to be exchanged for a new issue
of bonds which, it is calculated, will not exceed
£20,000,000 sterling. It is then that in agree
ment with the Imperial Government and in case
of need the funds accumulated in the Imperial
Ottoman Bank will serve to guarantee an
interest of 8 per cent on this new issue.
The company is convinced that after the
completion of the line the traffic will be sufficient
to free the Imperial Government of its obligations
and that the funds accumulated at the Imperial
Ottoman Bank will be at its disposition.
The proposal to do without a guarantee was
made, as the memorandum itself suggests, in
order to cut away the ground from all competi
tors, more especially from the English syndicate
connected with the name of Mr. Rechnitzer,
whose application for a line from Konieh, via
Adana to Alexandretta, at the head of the
Mediterranean, and from Alexandretta, via
Aleppo, to Baghdad and Basra is looked on with
considerable favour by the Turkish authorities.
It yet remains to be seen whether the Sultan
will be taken in by the somewhat transparent
device of not asking for a kilometric guarantee
in the new line, but only asking for the
guarantees on the existing lines to be paid
up to their full limit for six years to serve
as a guarantee fund—in other words, for a
subvention of some £8,400,000, to be paid in six
annual instalments. There are various reasons
which may possibly lead the Sultan to reject
these proposals in favour of the English project
—quite apart from any preference for the route
chosen or the financial proposals made. The
Sultan is at the present moment credited with a
strong desire to do something to regain English
good will. Nor can the complete absorption of
all the r always in Asiatic Turkey by a syn
dicate wholly meet w'th the approval of a
sovereign whose favourite policy is one of
balancing contending interests.
RUSSIA AS A FACTOR.
The Vienna correspondent of the same organ
supplements these disclosures up with the fol
lowing comments :—
The scheme for a railway from the Mediter
ranean to the Persian Gulf The historical term used to describe the body of water between the Arabian Peninsula and Iran. put forward by Count
Vladimir Kapnist on behalf of an international
syndicate having been dropped, there are only
two serious proposals left for the consideration
of the Turkish authorities. The first of these to
be submitted to the Porte is that promoted by
Mr. Ernest Rechnitzer, a Hungarian subject,
settled in London, who is acting on behalf of
English capitalists. His project differs in some
material respects from Count Kapnist’s scheme,
of which particulars were given in the Vienna
correspondence of the Times on December 17dh,
1898. Mr. Rechnitzer’s scheme provides for a ter
minus at Alexandretta on the Mediterranean
and a branch line to Konieh connecting with the
existing German railway. This is a condition
sine qua non of any Euphrates Valley railway,
owing to the strategic requirements of the
Porte, which naturally insists upon direct com
munication with the Turkish capital. This pro
ject has received the sanction of all competent
departments in Constantinople and only awaits
the ratification of the Sultan.
When it was realised in Germany that the
question of the Euphrates railway had been re
vived and that the line was not unlikely to be
built by English capitalists, the railway interest,
apparently apprehensive of a diminution of in
fluence in Asia Minor and of losing its chance
of acquiring a footing on the Persian Gulf The historical term used to describe the body of water between the Arabian Peninsula and Iran. ,
brought forward tne well-known rival scheme
to which reference has frequently been made in
the Times. The terms of the British proposal
being more advantageous to the Turkish Gov
ernment from a financial standpoint than that
of their German competitors, it would on that
account alone seem to have a better chance of
being ultimately adopted. Moreover, the Su'tan,
who has latterly shown signs of a more friendly
disposition towards England would certainly
be inclined to promote an improvement of
relations with Great Britain if a means could be
found for doing so without alienating German
sympathies.
Russia has for years past viewed with grow
ing jealousy the progress of German influence
in Asia Minor. Her commercial interests are
opposed to the opening up of a new granary
such as the Euphrates Valley, capable of com
peting with her own corn in the markets of the
world. Therefore, if unable to secure the
control of the line for herself, she would wel
come the failure of both schemes. In case
the new railway were to be built, however,
she would prefer to see it in English hands.
She has a strong and natural objection to the
addition of Germany as a new factor in
the problem which she has to solve in
the Persian Gulf The historical term used to describe the body of water between the Arabian Peninsula and Iran. . If the line were to be con
structed and controlled by English capital,
Russia would, in the eventuality of a future con
flict, have to deal with England alone. Were
it in German hands, she would have to reckon
with two Powers instead of one, and might
perhaps be forced into a position of antagonism
towards the German Empire, which in different
circumstances could be regarded as at least a
possible ally. These considerations probably
account for the attitude now taken by Russia in
Constantinople, where she opposes the German
scheme while regarding the rival English
project with comparative indifference.
Russia’s overbearing attitude.
This is what the same authority says a day
later
The conflict between Russian, English, and
German influence in Constantinople in the mat
ter of the rival railway schemes for connecting
the Mediterranean with the Persian Gulf The historical term used to describe the body of water between the Arabian Peninsula and Iran. fs
followed with keen interest in Vienna. There is
a disposition to regard the altered attitude of
the French Embassy, and the marked progress
latterly made by M. Constans in the good graces
of the Sultan, as an important counter in the
diplomatic game. According to a St. Peters
burg despatch published here to-day, the Eng
lish and German efforts, which were at first
looked upon in Russia with comparative in
difference, probably due to a well-founded con
fidence in Turkish dilatoriness, have now given
rise to a remarkable Press campaign directed
against both projects. The language of the
Novae Vremga, which is devoting a series of
articles to the subject, is said to be tantamount
to a formal warning not to trespass upon ground
staked out by Russia. The time has come, it
says, to moderate the zeal of the rival railway
promoters by a positive veto. The Porte is a t
the same time reminded that the Turkish deb
to Russia will not be paid off before the end of the
20 th century, and that consequently until then
the construction of railways in Asia Minorcan
only be undertaken with the approval of St.
Petersburg. The Novoe Vremya adds that this
fact should also be brought to the notice of those
concerned in England and Germany. It will be
observed that the tone of the Russian journal
towards Turkey bears a striking resemblance
to that adopted by official Russia in her dealings
with China.
These energetic protests would seem to indi
cate that the realisation of one of the compet
ing railway schemes is now looked upon as a
not very remote possibility. Another explana
tion of the hostility which finds expression in
the Russian Press may be the recognition that
in the race to the Persian Gulf The historical term used to describe the body of water between the Arabian Peninsula and Iran. Russia is for the
moment seriously handicapped. A combina
tion of financial with technical difficulties of
exceptional gravity will postpone the de
sired extension of the Trans-caspian Railway
system fora long time to come. The disinclina
tion of certain foreign money markets to make
new loans, together with the constant and heavy
drain upon the Russian Treasury for the Siberian
Railway, the Far East, and the further develop
ment of the army and navy, will necessarily
cripple and delay the operations in Persia. In
these circumstances it is quite conceivable that
the progress of such powerful and wealthy
competitors as Germany and Great Britain
should excite a little jealousy in St. Petersburg.
Nevertheless, the construction by the Russian
contractor, M. Poliaoff, who built the Varna-
Rustchuk Railway, of a military road from
Resht to Teheran shows that Russia is determin
ed to lose as little time and as few opportunities
as possible in advancing her Persian schemes.
This road from Resht, the chief town of the
Persian Province, of Ghilan, on the southern
shore of the Caspian, to the Persian capital,
will serve a double purpose, strategic and com
mercial. Persia will participate in the economic
benefits which may be expected to accrue from it,
inasmuch as a highway practicable for artillery
will doubtless facilitate trade in that mountain
ous region. In view of Russian aspirations in
those quarters, it may be of interest to recall
the fact that as long ago as the seventies a pro
posal was made to construct a railway between
Teheran and Resht, which, in addition to a
highly favourable situation some 16 miles from
the Caspian port of Enzeli, is one of the most
flourishing and important manufacturing and
commercial centres is Persia. The difficulties,
however, were found to be so great that neither
this project nor a subsequent one for which a
concession was granted in 1882 came to anything.
The improvement of communcations over the
Elburz range which separates Resht from
Teheran will doubtless strengthen the growing
tendency of Persian trade to take this route
which has been observable since the completion
of the Transcaspian Railway.
DEPUTY COLLECTORS, N.-W. P.