File 2764/1904 Pt 3 'Baghdad Railway: general negotiations 1910-1912.' [‎196r] (402/544)

[This Doeunrent is the Property of His Britannic Majesty’s Government.]
BAGDAD RAILWAY.
[September 16.]
SECRET.
Section 1.
[33592]
Sir F. Bertie to Sir Edward Grey.—(Received September 16.)
(No. 349. Confidential.)
Sir, Paris, September 14, 1910.
I HAD the honour to receive last night your telegraphic instructions No. 315 of
yesterday, and this morning I had an interview with M. Louis at the Quai d’Orsay.
His Excellency had not seen any report from the French Ambassador in London of the
observations made to him by Sir Charles Hardinge and of your views in regard to
the financial condition of Turkey, recorded in your despatch* No. 225 of the 30th April
last to me. He therefore took notes of its contents so that he might be in a position to
discuss with M. Pichon, who will be in Paris to-morrow for a few hours, the representations
which you had instructed me to make and which I communicated to the Ambassador.
His Excellency entirely concurred in your opinion of the advisability of co-operation
between the British and French Ambassadors at Constantinople in impressing upon
the Turks the absolute necessity of maintaining their financial stability and of
developing the country on progressive lines, and in your opinion that, in the event of
their continuing a reckless course of expenditure, they would find it hard to find
money in Paris or London to meet their requirements. The attitude which the French
Government have taken in regard to the projected Turkish loan of 6,000,000Z. is,
M. Louis states, as follows :—
Inasmuch as French investments in Turkey and the Turkish debt amount to
.about 100,000,000Z., it is the bounden duty of the French Government to scrutinise the
necessity for and the security for any further charges on the Turkish revenues. They
are not satisfied with the present conduct of Turkish finance, and desire to see proper
reforms and control instituted by the Turks themselves, and that there should be no
concealment in regard to the expenditure of the funds at the disposal of the Porte.
Mahmoud Shefket Pasha An Ottoman title used after the names of certain provincial governors, high-ranking officials and military commanders. desires to obtain as much money as possible for the army
regardless of the necessity for economy and for expenditure in other services of the
State. The Young Turk party wish to have command of funds to assure a continuance
of their influence and the predominance of their views. The French Government are
not at all pleased with Djavid Bey. His great object seems to be the concealment of
past expenditure and the obtaining of money for unavowed purposes. The French
Government do not desire, as Djavid Bey asserted, to establish a French control.
They will be content that the control shall be Turkish, provided that it be effective and
that there be a proper budget. M. Louis regrets that the Turkish Government do not
adopt the financial system which answered so well in Macedonia under Emin Pasha An Ottoman title used after the names of certain provincial governors, high-ranking officials and military commanders. .
With regard to the question of the Bagdad Railway, M. Louis said that political
conditions had not been introduced into the discussions as to the terms on which a
quotation of a loan of 6,000,COOL would be allowed on the Paris market. The French
Government attached importance on not, by refusing financial assistance to Turkey at
the present moment, appearing to be in opposition to the Young Turk party, and
seeming to throw obstacles in the way of an improvement in the Turkish army. The
sum of 6,000,000k would not suffice for the needs of the Turkish Government. They
would soon require a further loan, and the question is whether it would not be
advisable to let them have the 6,000,000k on reasonable financial and without political
conditions and bring the latter forward when they applied for a further loan.
I suggested to M. Louis that the Porte might manipulate part of the 6,000,000k in
such a manner as to set free certain charges which might then be utilised for the
purposes of the Bagdad Railway and the advancement of the interests of Germany
and to the detriment of those of France and England whose duty it is to defend their
political as well as their financial interests. M. Louis having referred to the threats of
the Turkish inspired press that Turkey might obtain money elsewhere than on the
Paris market, I said that, though His Majesty’s Government have not the power in
regard to a quotation of loans possessed by the French Government, I thought that
Sir Ernest Cassel, who had been mentioned as willing to undertake a loan, would not
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