File 2764/1904 Pt 2 'Baghdad Railway: General negotiations 1908-10.' [‎124v] (257/799)

cmarantee from His Maiesty’s Government would, if publicly known (as pointed out m
No: 946, of the 5th prove
fatal to the chances of the concession being passed by the Ottoman Parhament On
the other hand to keep such a transaction secret or to veil it so as to be moliensive V
Turkish sX’tibihtL P seems almost impossible, so it remains to be seen whether s
group could not be formed to finance the scheme without a guarantee. The commercial
prospects of the line as a whole are intimately connected with the development of
Mesopotamia under irrigation, and it may be taken for granted that if Sir William
Willcocks’s predictions as to the future of that country are but half fulfilled the line
under discussion would eventually prove highly remunerative. The Lussorah-Bagdad
section, however, would probably do something more than pay its way from the very
start and would certainly be immediately benefited by the ^ irrigation works, and it is
by no means inconceivable that the Porte, in view of the immense advantages which
the scheme as a whole offers, might be induced to allow that section to be built first.
In that case the promoters of the railway would be getting some return_ on their
invested capital for a few years, during which it might be expected that the irrigation
works would have made sufficient progress to make the financial success of the western
part of the line a certainty in the very near future. .
The concessionnaire company would of course have to enter into an engagement
to complete the Bagdad-Homs section within a reasonable time, but always provided
that the Turkish Government on its side carried out the irrigation schemes with due
& But even in these circumstances, it is evident that it will be no easy matter to find
a group of capitalists able and willing to invest a large amount of capital without any
guarantee, and with the prospective profits, considerable as they probably would be,
dependent on the capacity and energy of the Turkish Government to execute and work
a large and complex scheme of irrigation. In London the interest taken m lurkish
affairs appears to be so languid that a purely British group -even if it were esira e—•
is probably an impossibility, and if co-operation is to be sought it will probably be^most
easily found in Paris among the financial houses in relation with the National Banx.
In spite of these difficulties it would, it is suggested, be our best policy to make
the acquisition of a Homs-Bagdad—Gulf Hallway concession our immediate^ objective,
and to decline Dr. Gwinner’s proposals. If we can secure it, we should realise all our
aims—except that of conciliating British and German interests in Turkey—we should
have a fair opportunity of bringing about the fusion of British and French financial
interests, which M. Pichon’s recent speech in the Chamber _ shows would be welcome m
Paris, and we should be in a position, while satisfying Bussia, to safeguaro our monopoly
of transit trade vik Bagdad to Persia. Moreover, the Homs-Bagdad-Gulf scheme is
the one which apparently has caused the greatest misgivings to the Germans, and there
is everv prospect that if we made it our avowed policy to carry it through, the Germans
would accept any reasonable terms that we might formulate in our own and Turkish
interests as a condition of our participation in the Bagdad Badway.
Enclosure 2 in No. 1.
Memorandum by Mr. Whittall.
A Solution of the Bagdad Railway Question: Broad Lines and Objects of the Scheme.
A CHANGE from normal gauge to narrow gauge (1‘05 metre) of the w 7 hole railway
system from Bulgurlu (the present terminus of the line) to Bagdad and on to the
Persian Gulf The historical term used to describe the body of water between the Arabian Peninsula and Iran. , and the extension of this narrow gauge system by a new line from
Alexandretta on the south, to the Black Sea, at Samsoon, on the north, and to Erzeroum
on the east, thus opening up the whole of Asia Minor.
2. The transfer to this extended narrow gauge system of the total lump sum which
would have been payable to the Bagdad line under its present convention in annuities
for the service of construction loans.
3. An equitable and satisfactory regulation of the kilometric guarantees per kilo
metre for working expenses.
4. A change in the conditions regarding curves and gradients, speed, &c., and also
with respect to the division of the gross receipts over the minimum guaranteed so as to
permit of the concessionnaire company always receiving at least 50 per cent, thereof.