File 2764/1904 Pt 2 'Baghdad Railway: General negotiations 1908-10.' [‎293r] (600/799)

to the four sections but to the whole line, and will therefore apply to the remaining
five sections from lielit onwards. »
This general condition which is confirmed by the letter of the Ministry of
fTioo aaa’ 6 De i Vui 1 f° f ^ tl ’ a A t du rroc^s-yerbal ”) means that even when the
& T. 420,000 is available from the Government’s share in the surplus of the Debt
revenues all further surpluses will be applied to the remaining five sections-or,
m other words a further sum of, say, £T. 550,000 will have to come out of the
G-overnment s share m the surplus.
To-day £ T. 420,000 are required annually and there is only £ T. 235,941 available,
and that only after payment of floating charges on the surplus—namely, it will be
available in 1913 only. ^
After that the Government s share in the surplus, as it increases, will go to
provide the balance of the £ T. 420,000, namely, £ T. 184,059, and then for the
£ T. 550,000 for the remaining five sections—a total of £ T. 734,059.
Supposing the increased customs duties give, as above shown, £ T. 1,284,000 •
of the Government’s share of £T. 963,000, the sum of firstly £ T. 184,059 for the
four sections, and secondly £ T. 550,000 for the remaining five sections, or in all
£ 1. 734,059, will have to be deducted for the railway construction loans, leaving
only £ T. 228,941 for the Government from the increased duties, to be applied to a
new loan, or to cover ordinary current expenditure, unless some arrangement is come
to with the Bagdad Railway Company.
There is still another point in the “ Convention Additionnelle ” which again
affects the surplus revenues to the prejudice of the Government, and prevents the
latter from the free usufruct of any increase in the new duties. Paragraph 3 states:
“Quant aux frais d’exploitation, ils seront garantis en premier lieu par les recettes
brutes de ces 840 kilom., etant entendu que si les recettes brutes de cette ligne
6taient inferieures au chiffre de 4,500 fr. par kilom.” (which they must be for years to
come) “ stipule a 1’Article 35 de la Convention de Bagdad, la difference qui sera
constatee a la fin de 1’annee sera reglee, elle aussi, sur Texcedent des revenus concedes
a la Bette Publique Ottomane affecte a la garantie de la ligne, si le dit excedent y
suffit, et dans le cas contraire la difference sera, de meme que I’insuffisance de la
garantie, comblee par les premieres recettes des Aglmams des trois vilayets en question
de 1’annee suivante.”
This means that, assuming that the gross receipts do not attain 4,500 fr.
per kilometre, and only attain, as is probable for the present, 2,500 fr. per
kilometre, the Government must find the balance out of the surplus of the ceded
revenues. Por the four sections this means 1,680,000 fr., or £T. 73,920, and for
the remaining five sections 2,000,000 fr., or £ T. 88,000, or in all £ T. 161,920,
which has again to come out of the surplus revenues of the Debt, and the Government’s
share in the increase in the customs, originally £ T. 963,000, of which I have shown
only £ T. 228,941, is already left, will be further reduced to £ T. 67,021, unless an
arrangement is come to with the Bagdad Railway, on the ground that the assignment
at this moment to the railway annuities of the new customs revenues will so cripple
the finances and render reform so problematical, that the very existence of the
country is in danger. I have left out of the question altogether any possible normal
increase of the ceded revenues, since there would seem to be a tendency for these
revenues to decrease for the moment, owing to the effects of the last tw T o harvests
and to the contraband in salt and tobacco. These are passing and temporary
difficulties, but it is not prudent to count upon any immediate increase in the six
revenues.
January 20, 1909.