File 3047/1909 'Railways: Asiatic Turkey; railway construction in Asia Minor' [‎85r] (174/368)

[This Document is the Property of Hja Eritannic Majesty’s Government.]
L tD510]
No. 1 .
Sir G. Lowther to Sir Edward Grey.—{Received March 29.)
(No. 164.)
Sir,
IN continuation of my despatch No. 155 of the 15th instant, I have the honour
164.)
Per a, March 21, 1910.
to transmit to you herewith a copy of the draft contract between Mr. Chester and
the Ottoman Government which has now received the approval of the Ministry of
Public Works.
Railway concession so involved.
Construction is to be commenced at Youmourtalik, where a port will be established,
whence the line will run up the valley of the Jihun, where it will branch off to Sivas
on the west and Bitlis on the east, passing Harput, Argana, and Diarbekir, whilst a
further branch will carry it vi& Mosul and Kerkuk to Suleimanieh. A period of
fourteen months is allowed within which the preliminary surveys are to be made, and
the option of constructing the line taken or refused. In the latter case, the caution
money, which is fixed at £ T. 20,000, is to be repaid to the concessionnaires in return
for the surveys ; in the former, it is to be increased to £ T. 100,000. The Turkish
Government are to give no concession affecting the scope of the present contract
during the said period of fourteen months; disputes between the concessionnaire and
the Turkish Government are to be decided by the Council of State, and, while the
contract requires approval by law, the concessionnaire will have no right to compensation
if the Turkish Government refuse to ratify it.
The line is to be single, but is to be doubled as soon as the average^ annual gross
receipts per kilometre amount to 30,000 fr. There is to be no kilometric guarantee,
but the concessionnaire is to have the right to work the mines situated within
20 kilom. of either side of the line, enjoying the right of expropriating the proprietors
of existing mines (article 6) at their own cost under the conditions laid down by
law. Six per cent, of the value of the minerals extracted will be paid ^ to the
Turkish Government. A formula is laid down in article 30 fixing the annuity with
which the concessionnaire is to provide for the working expenses of the line and for
the port, and the next charge upon the income of the undertaking is an interest
charge calculated at 5 per cent, upon the cost of the building of the line. If the
total receipts of the line are insufficient to meet these two charges, the deficit will be
paid in the first place out of the 6 per cent, from the mines accruing to the Turkish
Government, and in the second place out of money provided^ by the company ; but
but the sums so paid will only be paid at an advance, bearing interest at 5 per cent.,
and must be repaid from subsequent profits of the line. A scale m fixed for the
division of profits, accruing after these charges have been met, by which the share of
the Turkish Government increases, and that of the company similarly decreases,, as
the profits grow larger. Provision is made for the repurchase of the line by the
Turkish Government on the basis of the net annual proceeds of the previous fRe years,
provided it be not less than 5 per cent, of the cost of construction. The sum thus
arrived at is to be paid annually to the company until the expiry^ of the concession, as
otherwise the Turkish Government can capitalise the payments into a lump sum on a
1 6 You will further notice that the entire route is to be laid down and approved before
a commencement can be made of mining operations (article 21), and though mining
may be begun as soon as the route is approved, yet the minerals extracted may not be
removed till the railway is working in the section in which the mine is situated. These
provisions should be sufficient to prevent the concessionnaires from carrying the line
hither and thither at their w ill in search of remunerative mines. ^
So far as I am able to ascertain, the trend of opinion both m the public and the
Chamber, from having been suspicious and almost antagonistic, is now much more
favourable to the concession. Mahmoud Shevket Pasha An Ottoman title used after the names of certain provincial governors, high-ranking officials and military commanders. told me that he considered it
was better for Turkey to have railways even under severe conditions than none at all.
But it is certain that the proposals will have a troublous time before they arrive at a
On perusal you will observe that the scheme is of a fairly simple and straight
forward character, and devoid of the complicated conditions which render the Bagdad
[2679/-2]
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