'British Desiderata in Regard to the Baghdad Railway' [‎154r] (3/6)

of all the Powers, to allow quotation on the Paris Bourse of any issue relating to the
Baghdad Kailway. As such an agreement had not been reached at the time of any
French participation, we should have ground lor arguing that French private
interests had gone behind the back of-their own Government. Such interests must,
therefore, look to the concessionnaires lor indemnification-—with the assistance of
their own Government, if it deemed them worthy. The part played by French
iinanciers and politicians in this business is dealt with at some length in M.
Cheradame's book on the Baghdad Railway. He is especially severe on M. Constans
and M. Kouvier, the latter of whom he describes as an agent of the Deutsche Bank.
M, Delcass^ is equally criticised, and the whole review is most unfavourable.
1 he exact degree of French participation cannot be definitely given, but it may
here be convenient to indicate the stated composition of the £300,000, to which
reference has been made above. Ten per cent, was said to have been subscribed by
the Anatolian Kail way Company, 10 per cent, by the Turkish Government, and 80
per cent, by the Deutsche Bank group of financiers. It is doubtful whether the
subscription of the Anatolian Railway Company was more than nominal. Of the
80 per cent, subscribed by the Deutsche Bank group, 70 per cent, was believed to have
been subscribed in nearly equal proportions by French and German groups, and 10
per cent, by groups of Swiss and other nationalities. Considering these figures with
the composition of the Administrative Council of the Company, it was held clear
that effective control of its affairs was in the hands of the Deutsche Bank group.
It may be added that in 1905 an Austrian, a Swiss, and a Belgian bank were each
represented on the Board of the Company by a director, and there was also an Italian
member, representing an Italian electrical company at Milan. There were also five
directors, who were Frrtich officials of the Imperial Ottoman Bank, and a number
of other prominent Frenchmen as well. There had already been an interchange ot
directors between the French Smyrna-Cassaba Railway and the Anatolian Railway.
Our information was briefly that there was close connection between the French
and German groups, that the interest of the former in the line was considerable, and
that the French holding of shares in the Company was probably between 30
per cent, and 40 per cent, of the whole. It is obvious that this is irreconcilable with
M. Cambon's assurances to Lord Lansdowne, or with the statement of the Com
mercial Controller of the French Foreign Office to Sir F. Bertie, that no negotiation
between French and German groups could take place without the knowledge of the
French Government, who would not give their concurrence without previous com
munication with the British Government.
To revert to the present suggestions for internationalisation. The concession
being surrendered to the Allies collectively, it is suggested that the administration
of the Railway should be placed in the hands of some body analogous to the Danube
Commission. Incidentally it has also been proposed that this body might create
revenue—replacing the kilometric guarantees—by selling the mineral rights,
provided for by the concession, to the national authorities of the territory through
which the line passes. (By article 22 of the 1903 concession permission was granted
to work minerals, which might be found within 20 kilom. on either side of the line,
but this was expressly qualified by the reservation that " no privilege or monopoly
is thereby constituted.")
If the working of different sections were handed over to different managements,
the receipts of the entire system would presumably be pooled and distributed by a
clearing-house managed by a committee from the several Boards. It should not be
forgotten that the commercial values of the various sections will be most unequal,
o -,1 tW, the southernmost section may be the most valuable, especially with the
Khanikin branch. It was originally estimated that the Baghdad-Gulf section ot the
line would alone pay at once as a commercial undertaking without kilometric
guarantees, partly owing to the pilgrim traffic to Kerbela and Nejaf.
Apart from the political evils of internationalisation, there are serious disad
vantages from the railway point of view. For example, the construction of branch
lines and extensions would be a constant source of trouble. The controlling authority
might maintain that it was internationally more important to provide money for
extensions in the French sphere than in ours, and great difficulties might be put in
the wav of development in the British section. Branches not likely to be immediately
profitable would be eschewed, and the opening up of the poorer and more backward
sections would thus be arrested. The same considerations apply to the improvement
of existing lines, and under international control there would always be a tendency
[1057] B 2