Turkey, the Great Powers, and the Bagdad Railway: A study in imperialism

by Edward Mead Earle

Sea Communications are Established

Exports and imports, however, are not the only items which enter into the international balance sheet. As has been so amply demonstrated in the experience of the British Empire, ocean freights may constitute one of the chief items in the prosperity of a nation which lives upon commerce with other nations. It was not surprising, therefore, that upon the heels of German banks and German merchants in the Near East closely followed those other great promoters of German economic expansion, the steamship companies. The success of the Deutsche Levante Linie, established in 1889,[30] indicated that there was room for additional service between German ports and the cities of the Aegean and the Mediterranean. Accordingly, in 1905, the Atlas Line, of Bremen, inaugurated a regular service from the Baltic to Turkish ports. One line was to ply between Bremen and Smyrna, with Rotterdam, Malta, Piraeus, Salonica, and Constantinople as ports of call. Another of this same company’s lines was to carry freight and passengers from Bremen to the Syrian city of Beirut. During the same year the North German Lloyd was responsible for the formation of the Deutsche Mittelmeer Levante Linie, providing service between Marseilles and Genoa and Smyrna, Constantinople, Odessa, and Batum.[31] The considerable increase of trade between Germany and Turkey made a very real place for these lines, especially in the transportation of such commodities as could not be expected to bear the heavy charges of transportation by rail through the Balkans and overland to German cities. These lines were put into operation to provide for a traffic already in existence and waiting for them.

Such was not the case, however, with the establishment of German steamship service to the Persian Gulf. Here British trade had been dominant for centuries. The German railway invasion had not as yet reached Mesopotamia, and German trade in this region was negligible. The establishment of a German steamship service to Basra would be equivalent to the throwing out of an advance guard and reconnaissance expedition on behalf of German trade. Incidentally it would mean the destruction of the practical monopoly which had been enjoyed by the British in the trade of Irak. It was considered of no slight importance, therefore, when, in April of 1906, the Hamburg-American Line announced its intention of establishing a regular service between European ports and the Persian Gulf. An office of the Company was immediately opened at Basra, and in August the first German steamer, with a German cargo, made its way up the Shatt-el-Arab. Soon afterward the Hamburg-American Line inaugurated, also, a service between British ports and Mesopotamia, and it provided a regular schedule of sailing dates, a luxury to which merchants doing business in the Near East had not heretofore been accustomed. With the aid of a government subsidy the German company cut freight rates in half. This rude disturbance of the status quo in the shipping of the Persian Gulf dealt a severe blow to British companies engaged in the carrying trade between European ports and Mesopotamia. After a futile rate war the British lines, represented by Lord Inchcape, came to an agreement, in 1913, with their German competitors, ending a rivalry which had been the cause of considerable concern on the part of their respective foreign offices.[32]

In order to coöperate with the attempts of Germans to have a share in the trade of the Mesopotamian valley, the German Government established a consulate at Bagdad in 1908. The services of this consulate, supplementing the pioneer work of the Hamburg-American Line, had immediate results in the development of commercial relationships with the Land of the Two Rivers. The value of exports from Basra to Germany increased from about half a million dollars in 1906 to slightly in excess of a million dollars in 1913; German goods received at Basra during the same period increased from about half a million dollars to almost nine million dollars. Herr von Mutius, the German Consul at Bagdad, conducted an active campaign of education and propaganda, urging upon business men at home the importance of participating further in the development of the economic resources of the land of the Arabs.[33]

The establishment of steamship communication between Europe and Asiatic Turkey was welcomed by the Bagdad Railway Company. To widen the scope of usefulness—and, consequently, to increase the revenues—of the railway it was essential that every feeder for freight and passenger service be utilized. This was a consideration in the agreement with the Smyrna-Cassaba line and in the purchase, in 1906, of the Mersina-Tarsus-Adana Railway.[34] The establishment of connections with the former system developed a satisfactory volume of traffic with Smyrna. The acquisition of the latter line provided direct connections with the Mediterranean coast.

Nevertheless, the promoters of the Bagdad Railway were by no means satisfied with their terminal ports. Constantinople was at a disadvantage as compared with Smyrna in the trade of Anatolia. Smyrna was within reach of the Bagdad system only over the tracks of a French-owned line which might not always be in the hands of well-disposed owners. The prospects that the Railway soon would reach Basra were not very bright. Mersina was limited in its possibilities of development—shut off by the mountains from Anatolia, on the north, and Syria, on the south, it was the natural outlet only for the products of the Cilician plain.

The port which the company sought to bring under its control was Alexandretta, on the Mediterranean, seventy miles from Aleppo. Article 12 of the concession of 1903 assured preference to the Bagdad Railway Company in the award of a “possible extension to the sea at a point between Mersina and Tripoli-in-Syria.” The construction of a branch from the main line to Alexandretta would provide the Railway with sea communications for the valuable trade of northern Syria and the northern Mesopotamian valley, then almost entirely dependent upon the caravan routes centering in Aleppo. Accordingly, negotiations were begun in the spring of 1911 looking toward the building of a branch line to Alexandretta and the construction of extensive port facilities at that harbor.

Serious financial difficulties were encountered, however, in the promotion of this plan. The Young Turk budget of 1910 had announced that no further railway concessions carrying guarantees would be granted. Even had the Government been disposed to depart from its avowed intention, it would have been unable to do so. Suffering from the usual malady of a young government—lack of funds—it was running into debt continually and finding it increasingly difficult to borrow money. Early in 1911 the Imperial Ottoman Treasury addressed a request to the Powers for permission to increase the customs duties from eleven to fourteen per cent. ad valorem. Great Britain immediately announced its determination to veto the proposed revision of the revenues, unless the increase were granted with certain important qualifications. Sir Edward Grey informed the House of Commons, March 8: “I wish to see the new régime in Turkey strengthened. I wish to see them supplied with resources which will enable them to establish strong and just government in all parts of the Turkish Empire. I am aware that money is needed for these purposes, and I would willingly ask British trade to make sacrifices for these purposes. But if the money is to be used to promote railways which may be a source of doubtful advantage to British trade, and still more if the money is going to be used to promote railways which will take the place of communications which have been in the hands of British concessionaires [i.e., the Lynch Brothers], then I say it will be impossible for us to agree to that increase of the customs duty until we are satisfied that British trade interests will be satisfactorily guarded.”[35] This clear pronouncement of British policy made it plain that no increased Turkish customs revenues could be diverted to the proposed Alexandretta branch. It was even doubtful if further funds would be forthcoming for the construction of the main line beyond El Helif.

This complicated domestic and international situation led to the conventions of March 21, 1911, between the Imperial Ottoman Government and the Bagdad Railway Company. One of these conventions provided for the construction of a branch line of the Bagdad Railway from Osmanie, on the main line, to Alexandretta, but without kilometric guarantee or other subsidy from the Turkish Government. A second convention leased for a period of ninety-nine years to the Haidar Pasha Port Company the exclusive rights of constructing port and terminal facilities at Alexandretta—including quays, docks, warehouses, coal pockets, and elevators. As in the case of the Bagdad Railway itself, public lands were to be at the disposal of the concessionaires without charge, and private lands were to be subject to the law of expropriation if essential for the purposes of the Company. Within the limits of the port the Company was authorized to maintain a police force for the maintenance of order and the protection of its property.[36]

Because of the refusal of the Powers to permit an increase in the customs, the Turkish Government was unable to assign further revenues to the payment of railway guarantees. The Bagdad Railway Company thereupon agreed to proceed with the construction of the sections from El Helif to Bagdad without additional commitments from the Imperial Ottoman Treasury. The Company likewise renounced its right to build the sections beyond Bagdad, including its concession for the construction of port works at Basra, with the proviso, however, that this section of the line, if constructed, be assigned to a Turkish company internationally owned and administered.[37] This surrender by the Bagdad Railway Company of its rights to the pledge of additional revenues by the Ottoman Treasury and its surrender of its hold on the sections of the railway beyond Bagdad are by far the most important provisions of the conventions of March 21, 1911.

German opinion, as a whole, considered these self-denying contracts of the Company an indication of the willingness of the Deutsche Bank and the German Government to go more than half way in removing diplomatic objections to the construction of the Bagdad Railway.[38] There were Englishmen, however, who felt that the conventions of 1911 were a mere gesture of conciliation; in their opinion the renunciation of these important rights was bait held out to win foreign diplomatic support and to induce the participation of foreign capital in the Railway and its subsidiary enterprises. Lord Curzon, for example, expressed to the House of Lords his belief that technical and financial difficulties made it impossible for the German bankers to proceed with the construction of the Bagdad line without the assistance of outside capital. He was firmly of the opinion that no railway stretching from the Bosporus to the Gulf could be financed by a single Power.[39]

The unsettled political conditions in Turkey, meanwhile, had delayed, but not halted, construction of the Bagdad Railway. The years 1910 and 1911 were marked by progress on the sections in the vicinity of Adana. From that Cilician city the railway was being laid westward to the Taurus Mountains, eventually to pass through the Great Gates and meet the tracks already laid to Bulgurlu. Eastward the line was being constructed in the direction of the Amanus mountains, although there seemed to be little chance for an early beginning of the costly tunneling of the barrier. During 1911 and 1912 attention was concentrated on the building of the sections east of Aleppo, which in 1912 reached the Euphrates River. The branch line to Alexandretta was completed and opened to traffic November 1, 1913.[40] Financial difficulties in the way of further construction of the main line were overcome in the latter part of 1913, when the Deutsche Bank disposed of its holdings in the Macedonian Railways and the Oriental Railways to an Austro-Hungarian syndicate. The funds thus obtained were re-invested in the Bagdad Railway, and the necessity was obviated for a further sale of securities on the open market.[41] In 1914 the Amanus tunnels were begun, a great steel bridge was thrown across the Euphrates, the sections east of Aleppo were constructed almost to Ras el Ain, in northern Mesopotamia. In addition, rails were laid from Bagdad north to Sadijeh, on the Tigris, before the outbreak of the Great War.[42]

Thus far we have considered the Bagdad Railway almost entirely as a business undertaking. In its inception, in fact, it was generally thus regarded throughout Europe. As time passed, however, the enterprise overstepped the bounds of purely economic interest and entered the arena of international diplomacy. The greatest usefulness of the Bagdad Railway was in the economic services it was capable of rendering the Ottoman Empire and, further, all mankind. Its widest significance is to be sought in the part it played in the development of German capitalistic imperialism. Its greatest menace was its consequent effects upon the relations between Turkey, Germany, and the other Great Powers of Europe. The succeeding chapters will deal with the political ramifications of the Bagdad enterprise.