ment from applying elsewhere for loans is one which is absurd, and which will be inoperative, and cannot be enforced. This loan will not last very long. The claims now against it are exceedingly large, and Persia will soon be again in want of money. If, then, Russia prefers to lend her more money, I do not see why anyone should object to it. If Russia chooses, when her own vast empire is still entirely undeveloped, to waste her money by putting it into Persian roads and railways, I do not think that any objection can be taken. But it will really be a question of European competition. In England, where there is an immense superfluity of wealth, and where we have practically financed half the bankrupt States as well as the flourishing States of Europe and America, there is every reason for English financiers and merchants to assist a country which is, in my opinion, developing, which will give a fair return for their investments, and which will before very long take a more prominent part in the history of the world. It is not to be supposed that countries like England, Germany, and France will consent to Russia obstructing and preventing the industrial development of Persia, and neither the Shah nor his Prime Minister could desire such a result.

One question that might be asked--but to this I am not prepared to give a complete reply-is: Why did not Her Majesty's Government guarantee the loan which was proposed to us, and which then would have been willingly taken up by the London market? It is at present not my intention to criticise or defend Her Majesty's Foreign Office; I know by my own experience that their interest in Persian affairs is great and constant, and I have often, on behalf of the Bank of Persia, to express my sense of their vigilance on our behalf. I do not think they want any apology from me, but I should like to suggest two considerations which generally govern the decisions of Her Majesty's Government in such matters. The first is thisthat the English Government is a constitutional one, and

that every foreign loan must be the subject of public criticism, and sanctioned, or at any rate approved, by Parliament. The position is altogether different with a country like Russia, where the will of the Tzar, or his Ministers, is sufficient, and where no public opinion, in the proper sense of the word, exists. Foreign loans, as is well known, are not popular with the House of Commons, and exceptional circumstances are required for the Government to be able to justify them. There have, indeed, been cases where such loans have been approved. One was a sum advanced to Morocco, and the Customs were there assigned as security for repayment under a Commissioner, and the money was duly paid. There was also a brilliant exception, due to the genius and courage of Lord Beaconsfield, when the Suez Canal shares were purchased. There was also the case which, perhaps, the Government are now beginning somewhat to regret, of the China Loan, but these are exceptions, and the policy of the Government is against guaranteeing loans in foreign countries. The basis on which this policy rests is undoubtedly sound. England owes its commercial supremacy to Free Trade, and although there are politicians of standing who may question this, the great majority of Englishmen admit the principle of Free Trade to be one of the bases of our national prosperity. I may say, money is like all other commodities. There are a great many people who seem to think that money is a different commodity from sugar or salt, but it is nothing of the sort. England is now the great banker and the great clearinghouse of the world simply because this is the country in which there is Free Trade in money. Directly the Government intervenes by loans to foreign countries or by guaranteeing capital invested in foreign countries there is an interference with Free Trade in money, and if such a policy were habitual England would lose the monetary position which her financial independence and impartiality have given her. At the same time, I do not conceal my personal opinion that Her Majesty's Government might with advantage have

made Persia an exception to their general policy of noninterference, and have guaranteed Persia a loan secured on the Customs of the Gulf ports. If this had been done several years ago, the position of England in Persia would to-day be stronger, and no pecuniary liability worth consideration would have attached to the British Government.

That is all, I think, I need say at present about this question of the loan. I do not consider it a triumph for Russian diplomacy, which I have always held to be of a crude and simple type, but an ordinary financial arrangement, the conclusion of which I have been expecting for several months; while the influence of Russia in the North of Persia is so undoubted and unquestioned that I do not believe that this loan will affect it in any particular. The gratitude of nations for money lent to them is short-lived, especially when the loans are granted on terms advantageous to the lender; and the influence of England at Teheran will only be temporarily diminished by the interested generosity of Russia. I do not desire to discuss on this occasion the kind or degree of influence which is exercised by England and Russia respectively in Persia; but that of England is great, and has certainly increased during the last ten years, rather than diminished. All that is needed in Persia is a strong, consistent policy, determined beforehand, and followed with resolution, when we should find it easy to come to friendly arrangements with Russia and the Persian Government.

But although the position of Russia in the North is exceedingly strong from her conterminous frontier and her restless activity, I do not think that, beyond keen commercial rivalry, we have anything to complain of. That rivalry we have, and feel, and it is successful, allow me to say, very much because Russia fully understands and consistently carries out her policy of furthering in every way her trade interests, which in England are neglected both by the Government and commercial classes. Very little is done in England compared with what is done by Russia in the northern provinces of Persia. Take as an instance the

carriage-road which has just been completed from Enzeli, with its seaport Resht, to Kasvin, on the Teheran road, the company which has constructed it having the right to continue it from Kasvin to Hamadan, and to improve the existing road from Kasvin to Teheran. The first and most difficult part of this scheme has been completed, to the great advantage of traffic and the great convenience of travellers. Russia is to be congratulated on such a work, which primarily benefits her own trade, but is of advantage to all the travelling and trading world. This excellent carriage-road, crossing a difficult range of mountains, has cost about £340,000, of which half was found by the Russian Government. This road is paying a moderate dividend, and will pay a good dividend from the tolls which are now being levied upon it. There is much for England to do before it can show any expenditure like that with equal results. The great want of Persia at the present time is roads. The Imperial Bank of Persia has a concession for a road from Teheran to Ahváz, on the Karun River, going through some of the most valuable and cultivated parts of Persia. But road-making is not the legitimate work of a bank, and it was decided to suspend work further than keeping up its bridges and caravanserais, and so far as it is in working order it more than pays in tolls the expenditure which is made upon it. This road should be taken up by an English company as of supreme importance to the trade of the Persian Gulf.

I would now like to add a few words on the subject of railways in Persia. I hardly think that the time has come when railways can, on a large scale, be constructed with. advantage. It is possible that some might pay, but the present necessity is good carriage-roads to supplement, and in some directions supersede, the mule tracks which at present constitute the only lines of communication in the greater part of Persia. The railway lines which promise well I would put, in order of their commercial importance, as follows:

1. Khanikin to Teheran via Hamadan.

2. Ahváz to Shuster, Burujird and Hamadan. 3. Baku, along the Caspian to Resht.

The first, which would join the Asia Minor Railway at Baghdad, would catch a large portion of international trade, and would pass through a rich and well-populated country. The second would follow a great part of the line of road already conceded to the Imperial Bank, and would attract the British sea-borne trade to the Karun port of Muhamarah, which would at once become of more importance than Bushire. The third line, from Baku to Resht, would chiefly benefit Russian trade, owing to prohibitive duties, but it would probably pay, for the Caspian navigation is tedious and difficult from the shallowness of water and the prevalence of strong northerly winds. The natural limit of Russian railway construction is Northern Persia, for their commercial policy, rightly or wrongly, being founded on exclusiveness and prohibitive tariffs against other nations, they have no commercial reason to construct a line which would touch a seaport or any frontier except their own. They could not, therefore, be presumed to favour the lines from Khanikin to Teheran, or that from Ahváz to Hamadán. In the same way, the idea, which some Continental papers are so fond of circulating for interested motives, of a Russian railway through Khorasan and Sistan to some port on the Persian Gulf may be dismissed as chimerical. am referring to commercial and not to political considerations, and it is obvious that such a line would be a financial failure, while the trade which would benefit by its construction would be English and not Russian.

I

But it is more than doubtful whether Russia desires any railways in Persia. The late Shah, who had an instinctive and not unreasonable suspicion of railways and their results, agreed to grant a ten years' prohibitory concession against railway construction in favour of Russia, who had no money to spend on foreign railways, and did not wish other nations to do so. This agreement expires in November of the