File 2764/1904 Pt 5 'Baghdad Railway: Anglo-Turkish negotiations; concessions proposed in respect of Kowait; negotations with Hakki Pasha in London; Anglo-Turkish agreement.' [‎251r] (526/536)

in all circumstances of the entente, commercially and financially
(French finance, for example, is notoriously beyond the control of
its Government;; while politically it may be a serious source of
weakness elsewhere (as pointed oat by the Viceroy in his
telegram of 29th May see Appendix) that we should have important
commercial interests bound up with the permanence of the
entente in Mesopotamia.
(/) As a financial proposition it is to be feared that 20 per cent, in an
international railway 350 miles long costing less than 3,000,000L to
construct, will not be considered worth looking at. On the other
hand the facts that (1) the German Company has first of all to
be compensated ; (2) rolling stock has to be provided and ports to
lie built; (3) the expenses of international management will be
unnecessarily heavy; (4) the railway will have no prospect of
paying for many years (until, in fact, Mesopotamia is irrigated and
developed); (5) in the meantime there will be no guarantee (for
it may be taken as certain that the Government of India, at all
events, will give no guarantee) ; will be further disastrous to its
flotation. The British share will simply not be taken up : and
where is the Russian share to come from, when the Russian
Government cannot find money for its favoured project, the Trans-
Persian Railway, and Russian unofficial finance is concentrated
on that enterprise ?
(y) If, therefore, participation on these terms is of no value as a financial
proposition, and if we have not sufficient control to prevent the
Bagdad Railway interest from preponderating, there is no apparent
commercial advantage in participation over non-participation.
(h) The Gulf section would be a most valuable political asset if it were
all British. It would still be valuable if it were British controlled,
but it loses in value by leaps and bounds as British participation
diminishes, until a point is reached where prestige will suffer less
and dignity be better consulted if the country ’which owns 70 per
cent, of the trade and 85 per cent, of the shipping stands aloof
altogether, rather than participates on an equality with three other
Powmrs wdio have practically no material stake in the country at all.
(?) No attempt has been made to show r how the joint arrangement is to
work in practice, e.g., is the actual working agency An office of the East India Company and, later, of the British Raj, headed by an agent. to be
international, and is it seriously thought that that would be
workable ?
Again, in order that the commercial interests of the line may be
effectively safeguarded, it must be w r orked independently of, and to
some extent in opposition to, the Bagdad Railway : but it is
extremely doubtful whether any arrangement with this object
would be found workable in practice.
III. The view therefore supported is that of the Board of Trade in their
letter of 7th April 1911—that the only alternatives are to participate on a
50 per cent, basis (to which it should be added that, in that case, the
Chairman must be British), or not to participate at all.
(a) The view that British control on the Gulf section is useless without
a convention to prevent differential rates on the rest of the system
has already been dealt with. It has also been pointed out that