File 523/1912 Pt 1 'Persia: Imperial Bank: mint contract' [‎131v] (258/386)

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security of landed property is to be reorganised, and the situation liquidated, but it
transpired in the course of the conversation that he did not see how a stop could be
put to the old-established habit of lending money on mortgage.
This is the root of all the mischief, and it would appear to me that it will be
extremely difficult for the Russian Bank to liquidate a situation which has been baseo
in the past upon loans on mortgage without either having to abandon a very large
number of bad debts, force the Persian Government to make their debtors sell their
properties at a heavy loss, or take over the properties m question, w ic would be
contrary to treaty. It seems to me that if the Russian Government want us to use
our influence with the Imperial Bank of Persia to give the Russian Bank a chance of
doing business, they should at once take steps to put a stop to the growing abuse
of Russians connected with the bank acquiring possession of villages by lease, which
entails Russian protection being extended to the same. It is not indeed merely a
question of leasing a village. The fact that a village is leased to a Russian subject or
protected person means that every person in that village, or employed on the land in
that village, becomes a Russian-protected person, against whom the 'Persian local
authorities are powerless to act. The extent to which this is being carried on to-day
in the Ispahan district will appear in an accompanying despatch.
The manager of the Imperial Bank here is of opinion that it will he impossible
for the Russian Bank to succeed as a financial institution unless the entire system
under which business is carried on is fundamentally changed. Mr. Wood says that
the Imperial Bank is quite ready to co-operate with an institution carried on in a
business manner, but that the methods of the Russian Bank are quite foreign to those
usually employed by bankers.
I have, &c.
WALTER TOWNLEY.