File 2764/1904 Pt 2 'Baghdad Railway: General negotiations 1908-10.' [‎126r] (260/799)

} ' ' Under the extended scheme, the conditions as to curves and gradients
speed &c., will be less costly, and a working basis of 50 per cent, of the gross receipts
v ovei the guaranteed minimum will render it unnecessary to place any part of the
^instiuctLon pronts into reserve, as in the case of the Bagdad convention.
We have tried to show in the preceding lines that the probable profits on the
construction or the 3,600 kilom. narrow gauge system would be on a par with those
estimated to result from the present normal gauge line.
Let us now compare the two schemes from the point of view of the probable results
to be derived from the actual working of the lines.
Under the Bagdad convention the Government guarantees an average minimum of
4,500 fr. per kilometre of gross receipts. Anv deficiency has to be paid to the company
at the end of each year in cash.
All gross receipts over 4,500 fr. up to 10,000 fr. average per kilometre go to the
Government. Over 10,000 fr., 60 per cent, goes to the Government, 40 per cent, to
the company. This implies that when the receipts average 10,000 fr. the company
will have to work the line, cover all the expenses, and make their profit (?) on 45 per
cent, of the gross takings ! Over 10,000 fr., the company’s margin for working
expenses and profit becomes still further reduced. This is the eventuality which
necessitates the putting aside as a reserve fund of 10,000 fr. out of the construction
profits, previously referred to. The proposal under the new scheme is that the
Government’s guarantee minimum of gross receipts for working expenses should be
reduced to 4,000 fr. average per kilometre on the 3,600 kilometres. That the gross
receipts over 4,000 fr. up to 8,000 fr. should go to the Government, and that any
surplus gross receipts over 8,000 fr. should be divided equally between the company
and the Government. In this way the company would always have a 50 per cent,
minimum of the gross receipts for working expenses and profit.
Would the exploiting company be a loser by the change from 4,500 fr. for normal
gauge to 4,000 fr. for narrow gauge ?
No; for the cost of working and upkeep, including interest on rolling stock and
depreciation, would be fully 500 fr. less per kilom. for the narrow gauge line.
Would the Turkish Government be a loser or a gainer by guaranteeing 4,000 fr.
over 3,600 kilom., as compared with 4,500 fr. over 2,500 kilom. ?
Undoubtedly a gainer, as whether the gross receipts are above (1), or below (2)
the guaranteed average minimum.
1. Under the new scheme the Government receives the surplus over 4,000 fr. from
3,600 kilom. of line, whereas in the Bagdad convention it receives the surplus over
4.500 fr. on only 2,500 kilom. of line. The advantage is clear.
2. Let us consider the case of the average receipts over both systems being only
3.000 fr. per kilom. The Government would have to pay the company at the end of
the year under the Bagdad convention 4,500 fr.— 3,000 fr., i.e., 1,500 per kilom.,
2.500 kilom. X 1,500 fr. equals 3,750,000 fr.
Under the new scheme the result would be that the Government would have to
pay 4,000 fr.—3,000 fr., ie., 1,000 fr. per kilog. or 3,600 kilog. at 1,000 fr. equals
3.600.000 fr.
Thus on a very low r basis of tbe average gross receipts the cost to the Turkish
Government under the two schemes would be almost identical, whereas on any higher
average there would be increasingly handsome advantage in favour of the extended project,
together with a much more rapid reduction of liabilities assumed by the Government.
Lurther, the concessionnaire company itself would in no way suffer.
It will be argued that the narrow gauge system breaks the continuity of the
through line from Constantinople to Bussorah ; that the change of gauge at Bulgurlu
would interfere with through traffic, entail delays and extra expense for transhipment,
and, lastly, that a double supply of rolling stock will be necessitated.
At first sight these objections may appear to be really serious, but a careful study
of the actual conditions will soon dissipate this fear. A glance at the map will show
that the Taurus constitutes, so to say, a trade water shed south and north.
All produce must inevitably trend towards the nearest seaport, and the nearest
port to the consuming centre must receive the imports. The southern Taurus and all
the eastern trade must find its outlet and inlet by the Mediterranean or Persian Gulf The historical term used to describe the body of water between the Arabian Peninsula and Iran. ,
and the northern Taurus trade by Smyrna or the Marmora. ^ i p i m
No through goods traffic worth speaking of can ever exist from south of the laurus
to north, nor from north to south.
The change of gauge, therefore, at Bulgurlu could not have any serious con-