File 2764/1904 Pt 2 'Baghdad Railway: General negotiations 1908-10.' [‎152r] (312/799)

BAGDAD RAILWAY.
[December 20.]
SECRET.
Section 2.
[40237]
No. 1.
SV h. Cass el to Sir C. Hardinge.—{Received December 20.)
mge ’ u . 21 ’ ° ld Broad Street, London, December 20, 1909.
M Arthur vn • ei>eW1 rp, ?°py of a memorandum of my conversations with
. A thur von Gwinner. This memorandum was partially drafted by M von
Gwmner, and the whole has been approved by him. 7
Yours very sincerely,
E. GASSED.
Inclosure in No. 1.
Memorandum of Conversation between M. Arthur von Gwinner and Sir Ernest Cassel
December 13, 14, and 15, 1909.
follow!'- GWINNEK formulated his ideas on behalf of the Bagdad Company as
With the consent of the Ottoman Government a separate company, English or
wVdTL’ b f tak ® ove r ^at part of the concession ot the Bagdad Company
which relates to the line from Bagdad to the Persian Gulf The historical term used to describe the body of water between the Arabian Peninsula and Iran. . 1 ^
The capital of the new company to be 300,0001. nominal (150,000/. paid upl or a
less amount as may appear sufficient for working the line.
. -, A construction company to be formed, in Switzerland or elsewhere, upon lines
similar to those of the construction companies formed by the Bagdad Company
, y jh these companies an interest of 50 per cent, is claimed, which is to be
distributed as follows :—
30 per cent, for the Bagdad Company,
IP >> for the Anatolian Railway, and
IP for the Turkish Government.
^M. von Gwmner says that he has discussed the question of the distribution of the
participations with Hussein Hilmi in the presence of Djavid Bey; Hussein Hilmi
wished the English participation not to exceed 50 per cent. So far as the Bagdad
Company was concerned, they would have no objection to the English interests having
a controlling proportion. &
. ^ I on Dwinner stated that the origin of this idea was Hussein Hilmi’s remark
asking him to come_to an understanding with the English. Owing to the refusal on
the part of the British Government to sanction the 4 per cent, additional customs unless
an undertaking were given that the proceeds should not be pledged to the Bagdad
Railway, there might now be a moderate deficiency in the provision of the security for
the 3rd series of Bagdad bonds which are to be issued for the purpose of completing the
line up to Helif. _ This security is based upon the excess at the public debt to which
the Government is entitled, and which would be increased immediately if an augmenta
tion of tbe Customs tariff were agreed to. It is not expected that this issue will have
to be made for several years yet, when the other income will cover all requirements, but
both the Turkish Government and the Bagdad Company recognise that it would be an
advantage to all parties if a definite arrangement relating thereto could be come to
without much delay, and the Germans distinctly object to a change of the existing
contract and bonds. Accordingly, the Grand Vizier, in the presence of the Minister of
Finance, suggested to M. von Gwinner to see whether arrangements could not be
made by the Bagdad Company with English interests. The discussion of the terms
was confined to the respective participations.
M. von Gwinner explained that he had verbally informed the Turkish Government
that the Bagdad Company would not insist upon the application of the 4 per cent,
additional customs beyond the Bagdad loans series 2 and 3. Their contract entitled
them to this ; but as they were anxious to meet the wishes of the Turkish Government
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