'Adminisistration [Administration] Reports 1931-1935' [‎173r] (345/416)

SECTION 8. ' !
Trade and Trade facilities.
General State of Trade. —No improvement in trading conditions was
noticeable in 1935 as compared with the previous year. Business eenerX
was still severely hampered by Government restrictions and the evlr grow
ing number of monopolies created by the Government is slowly but surX
driving the small trader out of existence. ' y surely,
The unfortunate consumer suffers under the weight of this regime of
monopolies and prohibitions as the cost of living rises in proportion The
import of certain articles is prohibited withoSt warning irrespective of
whether a local substitute is available. Even if it is the quality is poo
and the cost high Everything is being sacrificed to the rapid industrmli-
financia 0 ! dominaGon 7 ^ emanC1 P ation from economic and
The smuggling of goods into Iran continued on a considerable scale
during the year. Every month the preventive authorities seized consignments
of such goods but failed to stop the traffic. The maintenance of high import
duties puts a correspondingly heavy premium on the traffic and the
smuggler sees in it a golden goose waiting to be plucked. In an effort to
stop the smuggling at least of sugar the retail price was reduced and a
syndicate of Bushire merchants formed to market it. This has the effect of
practically stopping the smuggling of this article by making it unremunera-
tive to do so. Nevertheless the practice continues to flourish and represents
a considerable loss to the revenue.
Exports fell off greatly in the spring owing to the sudden and sharp
appreciation in the value of the rial and in order to counteract this as far
as possible the price of export certificates which had up to then been 9 per
cent, buying and 13^ per cent, selling was raised to 25 per cent, buying and
30 per cent, selling. In August the cost of these certificates fell to 10 per
cent, and 15 per cent, respectively when the rial again depreciated. These
sudden variations in price exposed both exporters and importers to increased
risk of loss and rendered private trading practically a gamble.
United Kingdom trade continues to decline mainly in the piece goods
line at the expense of Japan. It is likely to diminish still further in the
future as a result of the import monopoly instituted by the Government.
Imports from British India are also on the down grade. They had already
been hard hit by Japanese competition in the piece goods section and to
make matters worse the import of these goods is now a Government mono
poly. Moreover the import of cotton yarns the bulk of which India used
to supply is now prohibited. Imports of tea still come mainly from India
but the quantity has decreased lately at the expense of the Dutch a,nd
Japanese. As a result of these factors the future prospects for Indian
trade with the Gulf area are not bright.
Japan continued to dominate the market with her cotton piece goods
and is steadily increasing her imports of other goods as well such as glass
ware, haberdashery, cement etc., Japan's greatest attacking weapon in her
campaign of commercial penetration in Iran is of course cheapness and in
this respect her position appears to be unassailable. That is the crux of
the whole situation from the point of view of British exporters. The
balance of trade however is preponderantly in favour of Japan as she buys
practically nothing from Iran. But this difficulty may soon be overcome
to a certain extent by the exploitation by Japan oi the salt mines on Qishm
Island. It will certainly help to solve the question of return freights for
Japanese steamers.
As a result of the trade agreement between fran and the Soviet Union
which was concluded in August it is expected that Soviet imports into Iran
"will increase. They had been steadily decreasing for some years previously
owing to economic disputes between ithe two countries. Imports of cotton
Piece goods from the Soviet Union are likely to increase probably at the
expense of Japan since there is no marked difference in price between them.
225(0) F&PD