File 2764/1904 Pt 2 'Baghdad Railway: General negotiations 1908-10.' [‎177r] (362/799)

BAGDAD RAILWAY.
^ SECRET.
[November 19.]
Section 1,
[43161]
No. 1.
Minutes by Sir C. Hardinge and Sir E. Grey.
Sir E. Grey,
SIR E. CASSEL called last nigbt and talked of the Bagdad and Hit railways.
He regards tlie^ Bagdad-Gulf Railway as the most important of the two, and
believes that foi grain transport the Persian Gnlf route will always be cheaper than
the route across the desert via Hit. He said that it is also absolutely necessary that
we should obtain the Khanikin branch which must start from Bagdad and not from
Sadije. I remarked that the Germans would not be likely to give this up. He replied
that he thought they would give it up, and that we must have it on account of the
Persian trade coming from the Gulf.
As regards the Hit Railway, it would no doubt compete with the Bagdad Railway,
and might in the end be a paying concern. Sir W. Willcocks had told him that you
had suggested the possibility of the Government taking shares in the railway, and that
Sir W. Willcocks had talked a good deal of a Government guarantee, but that he was
opposed to both-ideas, and wished that the two railways should be constructed and run
on purely commercial lines. He thought that the French would not co-operate in the
Hit line, as they have 30 per cent, interest in the Bagdad Railway. The line would
have to be a metre gauge, as nothing less would do for heavy transport. He thought
that Sir W. Willcocks had greatly underestimated the cost of construction. He intends,
therefore, to send an engineer to report. He wishes to know as soon as possible the
views of His Majesty’s Government, and will himself, as head of the National Bank,
negotiate with Dr. Gwinner, whom he knows very well.
He remarked that there must be a conflict between the Germans and the Turks,
since the Germans want the 4 per cent, kilometric guarantees, while the Turks want it
for a large loan as guarantee. That, I remarked, is no concern of ours, if we can get
all we want.
C. H.
Foreign Office, November 19, 1909.
•
I never suggested that the Government should take shares in the Hit Railway ; it
was Sir W. Willcocks who made some suggestion of the kind to me, when I pointed out
the difficulties of a Government guarantee. I made no comment on the suggestion,
which does not differ much from a Government guarantee. If Parliament would agree
to one it would probably agree to the other.
The Khanikin branch may complicate matters with the Russians. We cannot
so
St. Peters burgh.
further with that till we hear the result of our communication of this week to
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