File 930/1912 'Mohammerah - Khoremabad Railway' [‎180r] (366/396)

Lord Morley thinks that this is, on the whole, a reasonable answer. But certain
corollaries appear to follow from it:—
(!•• Whatever the alignment of the rest of the line, it is essential that that
part of it which will be in the British sphere shall be determined solely
with a^ view to Indian interests. The line must therefore, in Lord
Morley’s opinion, enter the British sphere at Bunder Abbas, and not at
Kerman, and run along the coast at Karachi; and there must be a break
of gauge at Bunder Abbas.
(2.) While the through line may be international as regards the financial interests
admitted (and in this connection I am to observe that it will be neither
possible nor desirable to exclude German capital), it is essential that the
actual construction and working of the section in the British sphere should
be entirely in British hands ; but there would be no objection to placing
abroad contracts for a certain proportion of the materials and rolling
stock.
(3.) It is practically certain that British capitalists will not entertain the scheme
unless there is a Government guarantee in some form or another. And
this raises a very important and difficult question of principle. Before
dealing with that I am to observe, on a point of detail, that the proposed
Russian guarantee appears to be illusory. It is true that in Sir E. Grey’s
Despatch, No. 78, to Sir G. Buchanan, dated 14th March, Count
Benckendorff is reported to estimate the profit on increased traffic on
Russian railways at 4,500,000 roubles (about 475,0000) a year. Lord
Morley is unable to conjecture upon what data this estimate is based ;
but it is obvious that, if the view taken above be correct, and the through
traffic be not likely to pay, the increase of traffic in Russia itself must be
of modest dimensions ; and if the Government of India’s Committee are
correct in thinking that the Consortium have enormously over-estimated
the gross earnings of the through line, the Russian Government’s
“ guarantee fund ” will manifestly be inadequate.
But whatever view Russian financiers may take of it, British financiers are likely
to require from their own Government some more substantial consideration. Lord
Morley is not aware what are Sir E. Grey’s views upon this subject, but it will be
seen that the Government of India recommend that any financial responsibility
undertaken by Great Britain should be equally shared between the Indian and
British exchequers.
This recommendation will call for serious consideration in view of the heavy
expenditure already borne by India in providing for the defence of her frontiers.
If those frontiers are made more vulnerable by a scheme of railway extension, which
Imperial policy and the attitude of His Majesty’s Government towards the European
Powers force upon the acceptance of India, her claims upon the Imperial Exchequer
will be strong. But at present the railway project is only under examination, and
it is reasonable to defer a decision in regard to the guarantee until the conclusions
of the experts have been received.
Subject to these remarks his Lordship agrees with the Government of India, and
would suggest that the assent of His Majesty’s Government should be given to the
scheme in principle, and that application should be made for the concessions for
blocking purposes, as soon as the situation in Persia permits. The project can then
be examined in detail by an expert body similar to the Russian societe d'etudes.
1 am to add that Lord Morley is of opinion that it will not survive such an
examination.
I have the honour to be,
Sir,
Your most obedient Servant,
The Dnder Secretary of State, R. Ritchie.
Foreign Office.