The Bagdad Railway, 1899-1914.

1. THE BUILDING AND FINANCING OF THE LINE.

The Bagdad line, as foreshadowed in the concession of 1893 to the German
Anatolian Railway Company, was to be a continuation of the Angora branch, of the
Anatolian railway, through Armenia, entering the Euphrates valley from the north
and avoiding much expensive mountain tunneling and grading. Russia, for economic
and strategic reasons, blocked this plan and eventually the concession was for a
railroad running from the end of the Konia railway to Bagdad, then to Bassora, at
the head of deep water navigation on the Shatt-el-Arab, to the mouth of the Tigris,
and finally to a port, not specified. on the Persian Gulf. The concession was
authorized in 1899, after the visit of the Kaiser to the Sultan in 1898. Great
influence was exerted on the Sultan to secure this concession, which was looked
upon by the Germans as assuring a great market for their goods and capital in the
development of the district traversed, and even in sonic quarters as a means of
colonization and of the acquisition of political power in Asia-Minor. The firman for
the concession was finally issued in 1903. It w as for ninety-nine years, assured high
kilometric guarantees, gave mining rights in a twenty kilometer zone on each side
of the line, important electric power and other privileges, and the right to build ports
at Bagdad, Bassora, and at the Persian Gulf terminus. It required the formation of a
Turkish corporation to operate the concession.
Strong hostility to the project developed in Russia and France, and the British
government, at first indifferent, took an unfriendly attitude. Russia feared the
economic competition with her projected railways through Persia and opposed the
road vigorously. The German syndicate intended to finance the project largely in
France and England and also wanted the Indian mail contracts. It, therefore,
proposed that French and English interests should be associated in the company.
The Germans, however, refused to let control out of their hands, so these plans for
obtaining foreign financial aid with government approval came to nothing. In spite,
however, of official opposition, a large amount of French money was obtained for
the enterprise through a strong French group of bankers, and with this and money
provided through the Deutsche Bank the road was finished.
The building of the road was financed by the sale of Turkish bonds. The Government
issued its bonds to the company, secured by the kilometric guarantees, which in
turn was secured on the revenues of the provinces traversed for the first series, for
the second and third on the surplus revenue turned over to the Government by the
commission of the debt, and on revenues of provinces traversed for the balance.
The bonds were sold by the Deutsch Bank, for the concessionaire company, with a
small brokerage fee; the share capital was small.
2. THE KOWEIT INCIDENT, 1899-1903.
British main opposition to the execution of the Bagdad Railway project was based
upon its political aspects, more particularly the menace to Britain's position in Egypt
and India. British diplomacy succeeded in preventing the consummation of one
cherished German design, namely the extension of the railway from Bassorah to the
Persian Gulf.
In January, 1899, the Sheikh of Koweit, denying that he was a vassal of the Sultan,
secretly accepted the protection of the British Government, in return for a promise
not to cede any territory without the consent of Great Britain. Consequently he
refused to lease or sell terminal facilities to the Germans in 1900, and was protected
against German and Turkish intrigue by British cruisers. In 1901 Turkey was virtually
forced to recognize his independence, and in May, 1903, Lord Lansdowne, then
British foreign secretary, announced that Great Britain would regard the
establishment of a naval base or a fortified port in the Persian Gulf as a very grave
menace to British interests, and would certainly resist it by all means at her
disposal.
3. THE POTSDAM AGREEMENT, 1910.
Russia had also been opposed to some features of the Bagdad Railway enterprise;
but, at the famous Potsdam interview between the German Emperor and the Czar in
November, 1910, Russia accepted the project on condition that no branch lines were
built into Armenia and Kurditan. Germany withdrew her opposition to Russian
railway schemes in northern Persia.
4. SITUATION AT THE OUTBREAK OF THE WAR.
The settled opposition of Great Britain to the extension to the Gulf and to Bassorah,
under German control, led to new arrangements. The Bagdad Company, in 1911,
got a concession for the port of Alexandretta on the Mediterranean and for a
railroad to connect the port with the Bagdad main line; the line to Bassorah was to
be built by an Anglo-German group with at least two English directors; and the
branch to the Persian Gulf was given up. By treaty of August 19, 1911, Russia
withdrew opposition to the Bagdad Railway and France in 1914 came to an
agreement with Germany in respect to French interests in the road.
5. CONCLUSION.
When the war broke out, Germany had in the main succeeded in her Bagdad design.
The work was well advanced and when completed the road would run from Bagdad
to Constantinople, with a branch line to the excellent port of Alexandretta on the
Mediterranean. In addition to its great commercial value, so long as the alliance
with Turkey lasted, the Bagdad Railway, connecting with Syrian roads and the
Hedjaz running to Arabia, opened the way for an attack on Egypt and the Suez and
on India by routes which British warships could not dominate. Said Rohrbach, the
chief German authority on the subject: The railroad is political life insurance for
Germany.
Source: Anderson, Frank Maloy and Amos Shartle Hershey, Handbook for the
Diplomatic History of Europe, Asia, and Africa 1870-1914. Prepared for the
National Board for Historical Service. Government Printing Office, Washington, 1918.

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