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Asiatic Quarterly Review,


APRIL, 1900.



It was, I think, in the time of Edward I. that our first formal intercourse with Persia commenced, and it continued, partly commercial, partly diplomatic, through the time of Elizabeth and Charles I., down to the commencement of this century, when the relations of England with Persia became closer and more intimate. They have since fluctuated, now more cordial, now less so; now inspired by an eager interest, and now showing a most lamentable apathy; but, nevertheless, friendly, often cordial, relations with Persia have been the rule ever since the commencement of the present century. It is especially with India that the destinies of Persia must. remain bound up, as closely, or nearly as closely, as those of Afghanistan on her one border, and Siam on the other.

My object is not to give a description more or less picturesque of Persia itself, its inhabitants, its institutions, or its Government-but to remark on several of those questions which have lately attracted public attention, and the effects of which have been unduly exaggerated or overestimated.

It is not my intention at the present moment to refer to political matters when there is so much agitation

* Vide "Proceedings of the East India Association," elsewhere in this Review.-Ed.



in all parts of the world. I would rather attempt, so far as I may, to relieve the tension which now exists with regard to the relations of England, Russia, and Persia, and avoid saying a single word which might inflame passions which have already been too carelessly excited. My object is to stimulate an interest in Persia among the financial and mercantile classes in England, and to encourage them to take a more active interest in the commercial development of the country, an interest that has been very largely shown of late years by Russia, France, Germany, and Belgium. England, the great commercial country of the world, is hanging strangely back, and this is in a great measure due to a want of co-operation amongst its financial and mercantile classes. It is true that English commerce covers so large an area, and our interests are so numerous in every part of the world, that there is a certain plausibility in the argument that we may safely neglect one particular country or one special interest. But this is not the case, and when hostile tariffs are closing door after door to English industry in every quarter, Englishmen, and especially English merchants, should second and encourage their Government in a consistent and determined effort to keep those doors open. Politics and political considerations are, of course, inseparable from any question in the East, and especially is it so with Persia.

Since I proposed to write this paper, the Russian loan to Persia has caused much perturbation in financial circles, and many excited articles have been written, both in this country and on the Continent, with the design of persuading the public that it constitutes an event of the first magnitude; that it practically places the whole foreign policy and finances of Persia for all time in the hands of Russia, and that it is a great and permanent blow to English interests in the East. Although some feeling of nervousness and suspicion is not unnatural when we look abroad and see the persistent and malignant way in which we are attacked in the press of so many countries, yet it is as well for Englishmen, who

have the reputation of being cool and level-headed, to look things in the face like men of the world, and not to be frightened by shadows, or fancy that an ordinary financial incident of no great importance is a national misfortune.

In order to estimate this question fairly, it is necessary to consider the past history of Persian finance. If this loan were the blow that it has been represented to English interests, then indeed the object of my paper would be stultified, for it would be idle to stimulate the interests of English financiers in the development of Persia if the financial control of the country had already passed out of the hands of its Government. But this is in no way the case. When His Imperial Majesty the late Shah, whom many of you have seen in London, last came to England, Persia was in the enviable position of possessing no foreign debt whatever; but the Shah, who was an exceedingly able man, unfortunately discovered an amusement which is as fatal to a Government as gambling at Monte Carlo is to an ordinary individual: this was the game of granting concessions, by which you are able, if lucky, to obtain a great deal of money with no exertion. The consequence of this The discovery was that with both hands he distributed concessions on all sides, and very soon came into conflict with the London money-market. One of his adopted schemes, known as the Lottery Concession, was especially unfortunate, and its memory is still odious to the Stock Exchange of to-day. Another concession, that of the Tobacco Monopoly, the Régie, was nearly as unfortunate, because, falling into inexperienced and rash hands, it excited such a fierce opposition on the part of the Persian people, and especially the Persian priestly class, the Mullahs, that the Shah was not only compelled to abandon the concession for the monopoly of tobacco purchase, sale, and manufacture in Persia, but had to pay large compensation to the company to which he had granted the concession. This necessity. for the first time brought Persia into the loan market, and the Imperial Bank of Persia, which is the principal British

institution in that country, and of which I happen at the present moment to be Chairman, issued for His Majesty a loan which satisfied his liabilities, and which is now about to be paid off, with the proceeds of the new Russian loan, to the advantage of all those who originally took the bonds. After this there was a lull, and then the Persian Government, again falling into difficulties, applied to the Bank of Persia to supply funds. The London financiers were quite ready to advance the money on the security of the Customs of the Gulf ports collected and administered by the Imperial Bank, which made an advance to the Persian Government on these terms, holding the Customs collections of Bushire and Kirmansháh. The negotiations for the issue of a larger loan of one million and a quarter sterling on the security of the Southern Customs collected by Bank officials were completed, but were at the last moment broken off by the present Prime Minister, who had been in exile at Kum, and who was recalled to power. For reasons which it is unnecessary to discuss here, the Prime Minister opposed the continued administration of the Customs by officials of the Imperial Bank, and offered instead control in the event of default in payment of the instalments of the loan. Although I personally consider that this security was amply sufficient for the Gulf customs, the English money market would not grant a loan on these terms. Russia was not then disposed to assist, and the English Foreign Office was unwilling to guarantee a loan. Long negotiations ensued, and attempts by the Persian Government to raise money in France and Belgium. At last the Russians have come forward, and practically guaranteed £2,400,000, thus relieving the stress of the Persian financial position, which was exceedingly great. His Majesty the Shah was anxious to visit Europe, and to see the French Exhibition. His health is not good, and it was necessary for him to visit baths in the Caucasus and Europe. He will also visit St. Petersburg and London. Large sums are now due to civil officials and the army for long unpaid salaries, and

for many other purposes, and it is obvious that it was essential for the Persian Government to obtain money somewhere. As they could obtain it nowhere else, they had no option but to take it from Russia, which has given it on conditions much the same as the London money-market refused. If the loan did not come to England, I do not think that anyone is to blame except the London financiers themselves. They insisted upon control, and they would not give anything unless England had the Customs collection in its hands. Russia has taken it without control, and although you may say that the difference in the two positions is that the loan is virtually guaranteed by the Russian Government, yet no guarantee was virtually necessary either by England or Russia, as the revenues on which the loan is secured are amply sufficient to meet the interest, which would be paid direct to the State creditor, the balance alone going to the Persian treasury. paying off of all foreign loans, which is a part of the contract, is a clause which was equally found in our own loan proposals. This was an integral part, and was the principal justification for the loan, which was ostensibly incurred in order to pay off a 6 per cent. loan, by one at a lower rate of interest. The only clause to


which exception can be taken is that which forbids the Persian Government to borrow elsewhere without the previous consent of the Russian Bank in Teheran until their advance has been repaid. I may state that this condition is apparently an onerous one, but Persia is now entering the ranks of civilized nations. As its resources and revenues increase, as they will increase, as its wants become more numerous, and as the Government discovers that, if it is to prolong its existence, it must reform its administration, increase the productiveness of the country, build public buildings, irrigation works, roads, and railways, so undoubtedly will it require to come into the European money - market for the capital required. Then it will appear that the condition preventing the Persian Govern

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