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

by Edward Mead Earle

The Bagdad Railway Concession Is Granted

It was almost three years after the Sultan’s preliminary announcement of the Bagdad concession that the imperial decree was issued. During the interval the German technical commission was completing its survey of the line; details of the concession were being arranged between Zihni Pasha, Minister of Public Works, and Dr. Kurt Zander, General Manager of the Anatolian Railway Company; Dr. von Siemens was working out plans for the financing of the enterprise. Finally, on March 18, 1902, an imperial iradé of Abdul Hamid II definitely awarded the Bagdad Railway concession to the Anatolian Railway Company.[23]

The Constantinople despatches announcing the Sultan’s award met with a varied reception. In Germany, of course, there was general satisfaction and, in some quarters, jubilation. The Kaiser telegraphed his personal thanks to the Sultan. In Vienna, the semi-official Fremdenblatt expressed the opinion that “the construction of the railway would be an event of the greatest economic and political importance and would materially strengthen Turkey’s power of resistance.”[24] M. Delcassé, French Minister of Foreign Affairs, interpolated in the Chamber, informed the Deputies that, whether one liked it or not, the convention was a fait accompli which France must accept, particularly because French capitalists were associated with the German concessionaires in the enterprise.[25] The Russian Government was silent at the time, although two months before M. Witte had informed the press that he saw no reason for granting financial assistance or diplomatic acquiescence to a possible competitor of Russian trans-Asiatic railways.[26]

In England there was very little opposition, but much friendly comment, on the German plans. Earl Percy expressed the hope that Great Britain would do nothing to interfere with the construction of the Bagdad Railway. “Germany,” he told the House of Commons, “is doing for Turkey what we have been doing for Persia, for the social improvement and material welfare of native races; and in the struggle between the Slavonic policy of compelling stagnation and the Teutonic policy of spreading the blessings and enlightenment of civilization, the victory will lie with those nations which are striving, selfishly or unselfishly, consciously or unconsciously, to fulfil the high aims which Providence has entrusted to the imperial races of Christendom.” Lord Cranborne, Under-Secretary for Foreign Affairs, announced that, although the Government had every intention of maintaining the status quo in the Persian Gulf, it would not otherwise interfere in the project for a German-owned trans-Mesopotamian railway. Lord Lansdowne, Secretary for Foreign Affairs, informed the French and German ambassadors at London that His Britannic Majesty’s Government would not oppose the Bagdad enterprise, particularly if British capital were invited to participate in its consummation.[27] This was taken as a definite promise, for English financiers already had been asked to take a share in the Bagdad Railway Company by purchase, pro rata, of portions of the holdings of the German and French interests.[28]

Although there was a noticeable lack of unanimity in European diplomatic circles, little or no reason existed in 1902 to believe that any determined resistance would be made to the consummation of the plans for the construction of the Bagdad Railway. The chief difficulties of the concessionaires seemed to be not political, but financial and administrative. The year 1902 was one of economic depression; in Germany, in particular, industrial and financial conditions were distinctly unfavorable for the flotation of a large bond issue such as would be required to raise funds for the construction of the Bagdad Railway. Certain of the minor provisions of the convention of 1902, furthermore, were unsatisfactory to the financiers of the project. The concession for the lines beyond Konia had been granted to the Anatolian Railway Company without privilege of assignment to any other corporation. This meant that any participation of outside capital in the new Bagdad Railway would, of necessity, involve participation in the profits of the Anatolian lines already in operation—a prospect by no means pleasing to the original promoters. Furthermore, there was some question as to the advisability of placing under a single administrative head all of the line and branches from Constantinople to the Gulf.[29]

It was because of these difficulties, financial and administrative, that the Deutsche Bank marked time until March 5, 1903, when a revised Bagdad Railway convention was executed and plans were perfected for the financing of the first section of the line. It is to this Great Charter of the Berlin-to-Bagdad plan that we now must turn our attention.[30]

The definitive convention of 1903 provided that the existing Anatolian lines were to continue in the possession of their owners; the construction and operation of the new railway beyond Konia was to be vested—without right of cession, transfer, or assignment—in a new corporation, the Bagdad Railway Company. This new company was incorporated under Turkish law on March 5, 1903, with a capital stock of fifteen million francs, of which the Anatolian Railway Company subscribed ten per cent. Continued Turco-German control of the railway enterprise was assured by a provision of the charter that of the eleven members of the Board of Directors, three should be appointed by the directors of the Anatolian Railway Company, and at least three others should be Ottoman subjects.[31]

It was apparent that the Ottoman Government expected big things of the German concessionaires and their French associates. The new convention provided, first, for the construction of a great trunk line from Konia, southeastern terminus of the existing Anatolian Railways, to the Persian Gulf. This was to be the Bagdad Railway proper, but the concession carried with it, also, the privilege of constructing important branches in Syria and Mesopotamia. With all its proposed tributary lines completed, the Railway would stretch from the Bosporus to the Persian Gulf and from the Mediterranean to the frontiers of Persia. Second, it was stipulated that the Anatolian Railway Company should effect any necessary improvements on its lines to make possible the early initiation of a weekly express service between Constantinople and Aleppo and the operation of fortnightly express trains to Bagdad and the Persian Gulf as soon as the lines should be completed. The Anatolian concessions were extended for a period of ninety-nine years from 1903 to make them coincident with the new concession. The concessionaires were obliged to make all improvements and to complete all new construction by 1911, it being understood, however, that this time limit might be extended in the event of delays by the Government in the execution of the financial arrangements or in the event of force majeure—the latter specifically including, not only a European war, but any radical change in the financial situation in Germany, England, or France.[32]