During the opening years of the twentieth century, however, the situation was materially changed. Although there was a continuance of the cordial relations between the British and German Governments, there was an undercurrent of hostility to Germany in England (as well as to England in Germany) which was to be disastrous to the hopes for an Anglo-German agreement on the Near East. By 1903, the year of the definitive Bagdad concession, German diplomacy and German business were under a cloud of suspicion and unpopularity in Great Britain.
The underlying reason for the increasing estrangement between England and Germany was, as far as the British were concerned, the phenomenal rise of Germany as a world power. The commercial advance of the German Empire disturbed the complacent security and the stereotyped methods of British business. The colonial aspirations of German imperialists rudely interfered with British plans in Africa and appeared to be threatening British domination of the East. The German navy bills of 1898 and 1900 constituted a challenge to Britannia’s rule of the waves. German criticism of English procedure in South Africa had aroused widespread animosity, in large part because the British themselves realized that their conduct toward the Boers had not been above reproach. This animosity was revealed in an aggravated and unreasoning form in the vigorous denunciation which greeted the Government’s joint intervention with Germany in the Venezuela affair of 1902. Joseph Chamberlain, who in 1899 had advocated an Anglo-German alliance, in 1903 was preaching “tariff reform,” directed, among other objectives, against the menace to the British Empire of the rising industrial prosperity of Germany. The proposal that British capital should participate in the Bagdad Railway project was introduced to the British public at a distinctly inopportune time from the point of view of those who desired some form of coöperation between England and Germany in the successful prosecution of the plan.
The British Government Yields to Pressure
The Bagdad Railway came up for discussion in Parliament on April 7, 1903. Mr. Balfour then informed the House of Commons that negotiations were being carried on between British and German capitalists, and between British capitalists and the Foreign Office, for the purpose of determining the conditions upon which British financiers might participate in the enterprise. If a satisfactory agreement could be reached by the bankers, His Majesty’s Government would be asked to give its consent to a reasonable increase in the customs duties of the Ottoman Empire, to consider the utilization of the new railway for the transportation of the Indian mails, and to adopt a friendly attitude toward the establishment of the eastern terminus of the Bagdad Railway at or near Koweit.
Coöperation with the German concessionaires on any such basis was attacked vigorously from the floor of the House. One member declared it a menace to the existing British-owned Smyrna-Aidin Railway lines in Turkey, a potential competitor of British maritime supremacy, and a threat at British imperial interests in Egypt and in the region of the Persian Gulf. Another member of the House believed that “it was impossible to divorce the commercial from the political aspect of the question. What made the House take a real, live interest in it was the feeling that bound up with the future of this railway there was probably the future political control of large regions in Asia Minor, Mesopotamia, and the Persian Gulf.” Another member was certain the House “knew Mesopotamia was a blessed word. They all felt it was impossible for this country to oppose the introduction of a railway through Mesopotamia. The only wonder was that the railway was not constructed forty or fifty years ago.” At the same time, he felt, it would be well for Britain to be assured that her participation in the enterprise would not lead to another “Venezuela agreement”; Germany must be given to understand that Britain, by control of the Persian Gulf, held the “trump card” of the deck.
The Prime Minister made it plain, nevertheless, that he favored coöperation with the German concessionaires provided British capital were permitted to participate on a basis of equality with any other power. He believed, also, that an obstructionist policy would be futile. “I have no doubt that whatever course English financiers may take and whatever course the British Government may pursue, sooner or later this great undertaking will be carried out,” said Mr. Balfour. “It is undoubtedly in the power of the British Government to hamper and impede and inconvenience any project of the kind; but that the project will ultimately be carried out, with or without our having a share in it, there is no question whatsoever.”
“There are three points,” continued Mr. Balfour, “which ought not to be lost sight of by the House when trying to make up their minds upon this problem in its incomplete state. They have to consider whether it is or is not desirable that what will undoubtedly be the shortest route to India should be entirely in the hands of French and German capitalists. Another question is whether they do or do not think it desirable that if there is a trade opening in the Persian Gulf, it should be within the territories of the Sheik whom we have under our special protection and with whom we have special treaties [i.e., the Sheik of Koweit], or whether it should be in some other port of the Persian Gulf where we have no such preferential advantage. The House must also have in view a third consideration with regard to a railway which goes through a very rich country and which ... is likely after a certain period of development to add greatly to the riches of Turkey, and indirectly, I suppose, greatly to the riches of any other country which is ready to take advantage of it. Whether the British producer will be able to take advantage of it is not for me to say; but the House will have to consider whether he is more likely to be able to take advantage of it if English capital is largely interested, than if it is confined to French and German capital. The House will have to calculate whether ... it will be prudent to leave the passenger traffic in the hands of those two nations, France and Germany, with whom we are on the most friendly terms, but whose interests may not be identical with our own.”[6]
Mr. Balfour’s presentation of the case was hailed in Berlin as eminently lucid and fair. The National Zeitung and the Vossische Zeitung of April 8 expressed the hope that British participation in the Bagdad Railway would be approved by Parliament and the press, in order that the German promoters might have the opportunity to demonstrate that no political ambitions were connected with the enterprise. The Russian attitude of refusing even to discuss internationalization, on the other hand, was roundly denounced.
The London press, however, saw no reason for enthusiasm over the Prime Minister’s proposal. The Times, the Daily Mail, the Daily Telegraph, the Pall Mall Gazette, and the National Review let loose a torrent of vituperation against German imperialist activities in general and the Bagdad Railway in particular. The Spectator, forswearing any thought of prejudice against Germany, constantly reminded its readers of German unfriendliness during the Boer War and suggested that the Bagdad negotiations offered the British Government an admirable opportunity to retaliate.
The Manchester Guardian, organ of the old Liberalism, likewise was opposed to British participation in the Bagdad Railway. Pleading for continued observance of Britain’s time-honored policy of isolation, its leading editorial of April 15 said: “Mr. Balfour expressed his belief that ‘this great international artery had better be in the hands of three great countries than in the hands of two or of one great country.’ In other words, England is to be mixed up in the domestic broils of Asia Minor; every Kurdish or Arab attack on the railway will raise awkward diplomatic questions, and any disaster to the Turkish military power will place the whole enterprise in jeopardy. What is far more important, English participation in railway construction in Asia Minor will certainly strengthen the suspicions which Russia entertains regarding our policy. It is the fashion with certain English politicians to abuse Russia for building railways in Manchuria and for projecting lines across Persia. Yet Mr. Balfour seems more than half inclined to pay her policy the compliment of imitation by helping to build a railway across Mesopotamia to the Persian Gulf—and, worse still, of imperfect imitation, since the Government is certainly not prepared to occupy the territory through which the railway will pass, as Russia does in Manchuria. What vital interests of our own shall we strengthen by this sudden ardour for railways in Turkey to counterbalance the certain weakening of our friendly relations with Russia?”