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

by Edward Mead Earle

[7] Lord Mount Stephen had been president of the Canadian Pacific Railway and of the Bank of Montreal. Lord Revelstoke was senior partner in the firm of Baring Brothers & Company and a director of the Bank of England.

[8] The participation of the three Great Powers was to be on the basis of 25–25–25%, 15% was to be reserved for minor groups, and 10% for the Anatolian Railway Company. The provisions of Article 12 of the concession of 1903 were to be amended to establish a board of directors of 30, upon which each of the principal participants should be represented by 8 members. The remaining 6 members of the board were to be designated by the Ottoman Government and the Anatolian Railway Company. The directors were to be appointed by the original subscribers so that sale or transfer of shares could not alter the proportionate representation thus agreed upon.

[9] For the facts in this and the succeeding paragraph the author is indebted to Dr. Arthur von Gwinner, managing director of the Deutsche Bank; and to Sir Henry Babington Smith, erstwhile chairman of the Ottoman Public Debt Administration, a partner of Sir Ernest Cassel, president of the National Bank of Turkey, and a director of the Bank of England. Dr. von Gwinner placed at the disposal of the author many of the records of the Deutsche Bank and of the Bagdad Railway Company, and Sir Henry Babington Smith graciously volunteered to answer many puzzling questions.

[10] Parliamentary Debates, House of Commons, Volume 121 (1903), pp. 271–272.

[11] The British banking houses interested in the Bagdad enterprise were Baring Brothers, Sir Ernest Cassel, and Morgan-Grenfell Company. Cf. The Westminster Gazette, April 24, 1903; Stenographische Berichte, XII Legislaturperiode, 2 Session, Volume 260 (1910), p. 2181d. The bankers, of course, were not bound by the decision of the Cabinet to withdraw from the negotiations; they still would have been at liberty to invest in Bagdad Railway securities, as did the French bankers. However, it has been the practice of British financiers to accept the “advice” of the Foreign Office in the case of loans which may lead to international complications. An analogous case in American experience was the decision of prominent New York financial institutions to withdraw from the Chinese consortium in 1913 because of the avowed opposition of President Wilson to the terms of the loan contract.

[12] The Nineteenth Century, Volume 65 (1909), pp. 1090–1091.

[13] Supra, pp. 30, 59–60.

[14] Parliamentary Debates, House of Commons, Volume 120, pp. 1360–1361; Volume 126, p. 108. The opinions of Mr. Gibson Bowles were not cordially received by The Scotsman, which said, April 9, 1903, “Mr. Gibson Bowles carried the House in imagination to the banks of the Euphrates and Tigris. Germany is there seeking by means of a railway to supersede our trade, and to serve herself heir to the wealth and empire of ancient Babylon and Assyria. The member for King’s Lynn was, as usual, not very well posted up on his facts. On this occasion he was so entirely wrong-headed that no one on the opposition bench would agree with him.... The outstanding moral of the debate was, indeed, that the honorable member for King’s Lynn was much in want of a holiday.”

[15] Fraser, op. cit., pp. 42–43. The senior member of the firm of Lynch Brothers was H. F. B. Lynch (1862–1913), who was widely known as an authority on the Near East and who, as a Liberal member of Parliament, 1906–1910, was able to call official attention to the necessity for safeguarding British interests in Persia and Mesopotamia. That he succeeded in convincing the Government of the importance of his navigation concession is evidenced by the vigorous protests filed by the British Government with the Young Turks in 1909, when the latter attempted to operate competing vessels on the Tigris and the Shatt-el-Arab. On this point see Stenographische Berichte, XII Legislaturperiode, 2 Session, Volume 260 (1910), pp. 2174d et seq. Again in 1913–1914, the British Government refused to consider any settlement of the Bagdad Railway question which did not adequately protect the interests of the Lynch Brothers. Infra, pp. 258–265. Mr. Lynch, however, was not an irreconcilable opponent of the Deutsche Bank. He took the point of view that the Germans had rendered Turkey a great service by the construction of the Anatolian Railways because of the total lack of natural means of communication in the Anatolian plateau. He urged that they were making a great mistake, however, to extend the Anatolian system into Mesopotamia, where the Tigris and Euphrates provided natural and logical avenues of trade for the Valley of the Two Rivers. In Mesopotamia, he maintained, what was needed was a development of the river traffic, not the construction of railways. Cf. H. F. B. Lynch, “The Bagdad Railway,” Fortnightly Review, March 1, 1911, pp. 384–386.