File 6391/1928 'Persia and the Persian Gulf: method of counteracting Soviet activities on Persia and the Persian Gulf' [‎31v] (63/157)

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shipping and trading agents in the Gulf to upset and cut the freig 1 e ’
fixed solely to give a business return, of the British and German t nee
lines from and to Europe, and the British India Steam Na\iga ion
Company (Limited) via India, and also to lower prices of sales in an
So far this year the British and German lines in agreement have met tftem
by a corresponding cut, but further cuts might be considered unjustina
by the companies. . j '
(ii.) It will be remembered that the British Legation, Tehran, communicateci
by Circular No. 15 of the 15th April, 1928, an extract from t^F
“ Anglo-Russian News " of the 9th March the following :
“ A recent letter by the Commissar of Trade published in the Moscow
press The Soviet of Labour and Defence has decided to force
exports by cheapening them. The Commissariat of Trade proposes to
‘ separate certain undertakings working for the export trade, which will
be so equipped as to produce commodities able to compete with foreign
goods on foreign markets.’ A sum of £4 million will be given to certain
departments to prepare agricultural produce for export; further sums
will be given to other departments. Hie aim is that, by means of these
subsidies, Soviet goods will be exported, even at a loss, as long as some
foreign currency is obtained in exchange for them.”
4. Since the winter of 1927—28 the Russian cotton prints have almost entiiel)
captured that branch of the piece-goods trade formerly supplied by Manchester and
Bombay mills alone. The quality and colour of these are undoubtedly superior to
the British and India manufactures, but the prices are put so low as to cut those of
the coarsest Indian prints, and cannot cover costs of manufacture and transport to
Stura 2 . .
In sugars, in particular crystal sugar, which—and not loaf sugar—is that torm
in which it is consumed on the shores of the Persian Gulf The historical term used to describe the body of water between the Arabian Peninsula and Iran. , considerable disturbance
of the market in Shiraz has already been effected by the prices and methods and pro
paganda of the Sharq selling agency An office of the East India Company and, later, of the British Raj, headed by an agent. . Their crystal sugar is understood to be of
Polish or Hungarian refining, and is of superior quality to the Java sugar
re-exported from India and sold by British and Indian merchants; but the subsidy
paid to cover cost of steamer-freight with the funds, which the Soviet Government
have allotted to finance their dumping of goods in South Persia, can alone enable this
brand to compete with and undersell Java sugar. It appears from the cargoes of
the first two sailings of the Soviet vessels that the Soviet organisations will con
centrate on sugar to drive a wedge into the British position; and it is a potential
danger that this Soviet-imported crystal sugar may be worked into the Arab ports of
the Gulf.
Though less successful with their unloading of Russian petrol and kerosene in
this area, it is significant that the Soviet agency An office of the East India Company and, later, of the British Raj, headed by an agent. in Shiraz did not hesitate to cut
down the prices of the Anglo-Persian Oil Company (Limited’s) brand of 2 krans per
man to 7-36 lb., when the cost of transport by road from the Caspian to Shiraz was
almost as much as the cost of sale at Shiraz.
5. The branch of the Soviet Bank opened at Shiraz in July seems so far to be
handicapped for want of funds, but it has made a special feature of offering to buy and
sell rupee drafts, and is understood to have funds with Lloyds’ Bank in Karachi or
Bombay, or to deal through that British bank. Part of its propaganda is to insinuate
in the minds of possible Persian clients that Persia and Persian trade is exploited
and fleeced unmercifully by the British, as typified by the Imperial Bank of Persia.
Possibly too little attention has been paid to the arrangement, confirmed by His
Majesty’s Chargd d’Affaires to you in his despatch No. 64 of the 1st August, by
which the Soviet authorities have obtained from the Persian Government that all
customs duties on goods landed from the Russian steamers in South Persian ports
are payable in Tehran, and a credit of 250,000 tomans 10,000 Persian dinars, or a gold coin of that value. has been given for the purpose.
It gives—and, if continued, will give—the Soviet Government an unfair advantage
in pushing their subsidised scheme in more than one direction. It relieves the Soviet
Bank of heavy expense in placing funds in South Persia, or exposing itself to the
charges that the Imperial Bank might make on such remittances. It presumably
permits the Soviet Government to pay duties on all imports into South Persia direct
from the subsidy mentioned in paragraph 3 (ii), and its trading organisations,
e.g., the Sharq, to manipulate their competitive prices of sale to their clients without
bothering themselves as to the amount or incidence of duty or obliging their clients