TURKISH RAILWAYS IN 1918

[Larger image]

TURKEY, THE GREAT POWERS,
AND THE BAGDAD RAILWAY

THE MACMILLAN COMPANY
NEW YORK · BOSTON · CHICAGO · DALLAS ·
ATLANTA · SAN FRANCISCO
MACMILLAN & CO., Limited
LONDON · BOMBAY · CALCUTTA ·
MELBOURNE
THE MACMILLAN CO. OF CANADA, Ltd.
TORONTO

Turkey, The Great Powers,
and
The Bagdad Railway

A Study in Imperialism
BY
EDWARD MEAD EARLE, Ph.D.
ASSISTANT PROFESSOR OF HISTORY IN
COLUMBIA UNIVERSITY
New York
THE MACMILLAN COMPANY
1924
All rights reserved

PRINTED IN THE UNITED STATES OF AMERICA
Copyright, 1923,
By THE MACMILLAN COMPANY.
Set up and electrotyped. Published July, 1923.
ReprintedJuly, 1924
Press of
J. J. Little & Ives Company
New York, U. S. A.

“When the history of the latter part of the nineteenth century will come to be written, one event will be singled out above all others for its intrinsic importance and for its far-reaching results; namely, the conventions of 1899 and of 1902 between His Imperial Majesty the Sultan of Turkey and the German Company of the Anatolian Railways.”—Charles Sarolea, The Bagdad Railway and German Expansion as a Factor in European Politics (Edinburgh, 1907), p. 3.

“The Turkish Government, I know, have been accused of being corrupt. I venture to submit that it has not been for want of encouragement from Europeans that the Turks have been corrupt. The sinister—I think it is not going too far to use that word—effect of European financiers on Turkey has had more to do with the misgovernment than any Turk, young or old.”—Sir Mark Sykes, in the House of Commons, March 18, 1914.

PREFACE

The Chester concessions and the Anglo-American controversy regarding the Mesopotamian oilfields are but two conspicuous instances of the rapid development of American activity in the Near East. Turkey, already an important market for American goods, gives promise of becoming a valuable source of raw materials for American factories and a fertile field for the investment of American capital. Thus American religious interests in the Holy Land, American educational interests in Anatolia and Syria, and American humanitarian interests in Armenia, are now supplemented by substantial American economic interests in the natural resources of Asia Minor. Political stability and economic progress in Turkey no longer are matters of indifference to business men and politicians in the United States; therefore the Eastern Question—so often a cause of war—assumes a new importance to Americans. This book will have served a useful purpose if—in discussing the conflicting political, cultural, and economic policies of the Great Powers in the Near East during the past three decades—it contributes to a sympathetic understanding of a very complicated problem and suggests to the reader some dangers which American statesmanship would do well to avoid. Students of history and international relations will find in the story of the Bagdad Railway a laboratory full of rich materials for an analysis of modern economic imperialism and its far-reaching consequences.

The assistance of many persons who have been intimately associated with the Bagdad Railway has enabled the author to examine records and documents not heretofore available to the historian. To these persons the author is glad to assign a large measure of any credit which may accrue to this book as an authoritative and definitive account of German railway enterprises in the Near East. He wishes especially to mention: Dr. Arthur von Gwinner, of the Deutsche Bank, president of the Anatolian and Bagdad Railway Companies; Dr. Karl Helfferich, formerly Imperial German Minister of Finance, erstwhile managing director of the Deutsche Bank, and at present a member of the Reichstag; Sir Henry Babington Smith, an associate of the late Sir Ernest Cassel, a director of the Bank of England, president of the National Bank of Turkey, and at one time representative of the British bondholders on the Ottoman Public Debt Administration; Djavid Bey, Ottoman Minister of Finance during the régime of the Young Turks, an economic expert at the first Lausanne Conference, and at present Turkish representative on the Ottoman Public Debt Administration; Mr. Ernest Rechnitzer, a banker of Paris and London, a competitor for the Bagdad Railway concession in 1898–1899; Rear Admiral Colby M. Chester, of the United States Navy (retired), beneficiary of the “Chester concessions.”

Valuable assistance in the collection and preparation of material has been rendered, also, by the following persons, to whom the author expresses his grateful appreciation: Sir Charles P. Lucas, director, and Mr. Evans Lewin, librarian, of the Royal Colonial Institute; Sir John Cadman, director of His Majesty’s Petroleum Department; Professor George Young, of the University of London, formerly attaché of the British embassy at Constantinople; Mr. Charles V. Sheehan, sub-manager in London of the National City Bank of New York; Mr. M. Zekeria, chief of the Turkish Information Service in the United States; Mr. René A. Wormser, an American attorney who assisted the author in research work in Germany during the summer of 1922. Dr. Gottlieb Betz, of Columbia University, and Dr. John Mez, American correspondent of the Frankfurter Zeitung, have aided in the translation of important documents.

Professors Carlton J. H. Hayes and William R. Shepherd, of Columbia University, have been patient advisers and judicious critics of the author during the preparation of his manuscript. To them he owes much, as teachers who stimulated his interest in international relations, and as colleagues who cheerfully coöperate in any useful enterprise. Professor Parker Thomas Moon, of Columbia University, also has read the manuscript and offered many valuable suggestions.

EDWARD MEAD EARLE

Columbia University
June, 1923

CONTENTS

MAPS

TURKEY, THE GREAT POWERS,
AND THE BAGDAD RAILWAY

TURKEY, THE GREAT POWERS AND THE BAGDAD RAILWAY
A Study in Imperialism

CHAPTER I
AN ANCIENT TRADE ROUTE IS REVIVED

Many a glowing tale has been told of the great Commercial Revolution of the sixteenth century and of the consequent partial abandonment of the trans-Asiatic trade routes to India in favor of the newer routes by water around the Cape of Good Hope. It is sometimes overlooked, however, that a commercial revolution of the nineteenth century, occasioned by the adaptation of the steam engine to land and marine transportation, was of perhaps equal significance. Cheap carriage by the ocean greyhound instead of the stately clipper, by locomotive-drawn trains instead of stage-coach and caravan, made possible the extension of trade to the innermost and outermost parts of the earth and increased the volume of the world’s commerce to undreamed of proportions. This latter commercial revolution led not only to the opening of new avenues of communication, but also to the regeneration of trade-routes which had been dormant or decayed for centuries. During the nineteenth century and the early part of the twentieth, the medieval trans-Asiatic highways to the East were rediscovered.

The first of these medieval trade-routes to be revived by modern commerce was the so-called southern route. In the fifteenth century curious Oriental craft had brought their wares from eastern Asia across the Indian Ocean and up the Red Sea to some convenient port on the Egyptian shore; here their cargoes were trans-shipped via caravan to Alexandria and Cairo, marts of trade with the European cities of the Mediterranean. The completion of the Suez Canal, in 1869, transformed this route of medieval merchants into an avenue of modern transportation, incidentally realizing the dream of Portuguese and Spanish explorers of centuries before—a short, all-water route to the Indies. Less than forty years later the northern route of medieval commerce—from the “back doors” of China and India to the plains of European Russia—was opened to the twentieth-century locomotive. With the completion of the Trans-Siberian Railway in 1905 the old caravan trails were paralleled with steel rails. The Trans-Siberian system linked Moscow and Petrograd with Vladivostok and Pekin; the Trans-Caspian and Trans-Persian railways stretched almost to the mountain barrier of northern India; the Trans-Caucasian lines provided the link between the Caspian and Black Seas.

The heart of the central route of Eastern trade in the fifteenth century was the Mesopotamian Valley. Oriental sailing vessels brought commodities up the Persian Gulf to Basra and thence up the Shatt-el-Arab and the Tigris to Bagdad. At this point the route divided, one branch following the valley of the Tigris to a point north of Mosul and thence across the desert to Aleppo; another utilizing the valley of the Euphrates for a distance before striking across the desert to the ports of Syria; another crossing the mountains into Persia. From northern Mesopotamia and northern Syria caravans crossed Armenia and Anatolia to Constantinople. This historic highway—the last of the three great medieval trade-routes to be opened to modern transportation—was traversed by the Bagdad Railway. The locomotive provided a new short cut to the East.

That a commercial revolution of the nineteenth century should revive the old avenues of trade with the East was a matter of the utmost importance to all mankind. To the Western World the expansion of European commerce and the extension of Occidental civilization were incalculable, but certain, benefits. Statesmen and soldiers, merchants and missionaries alike might hail the new railways and steamship lines as entitled to a place among the foremost achievements of the age of steel and steam. To the East, also, closer contacts with the West held out high hopes for an economic and cultural renaissance of the former great civilizations of the Orient. Alas, however, the reopening of the medieval trade-routes served to create new arenas of imperial friction, to heighten existing international rivalries, and to widen the gulf of suspicion and hate already hindering cordial relationships between the peoples of Europe and the peoples of Asia. Economic rivalries, military alliances, national pride, strategic maneuvers, religious fanaticism, racial prejudices, secret diplomacy, predatory imperialism—these and other formidable obstacles blocked the road to peaceful progress and promoted wars and rumors of wars. The purchase of the Suez Canal by Disraeli was but the first step in the acquisition of Egypt, an imperial experiment which cost Great Britain thousands of lives, which more than once brought the empire to the verge of war with France, and which colored the whole character of British diplomacy in the Middle East for forty years. No sooner was the Trans-Siberian Railway completed than it involved Russia in a war with Japan. So it was destined to be with the Bagdad Railway. Itself a project of great promise for the economic and political regeneration of the Near East, it became the source of bitter international rivalries which contributed to the outbreak of the Great War. It is one of the tragedies of the nineteenth and twentieth centuries that the Trans-Siberian Railway, the Suez Canal, and the Bagdad Railway—potent instruments of civilization for the promotion of peaceful progress and material prosperity—could not have been constructed without occasioning imperial friction, political intrigues, military alliances, and armed conflict.

The geographical position of the Ottoman Empire, the enormous potential wealth of its dominions, and the political instability of the Sultan’s Government contributed to make the Bagdad Railway one of the foremost imperial problems of the twentieth century. At the time of the Bagdad Railway concession of 1903 Turkey held dominion over the Asiatic threshold of Europe, Anatolia, and the European threshold of Asia, the Balkan Peninsula. Constantinople, the capital of the empire, was the economic and strategic center of gravity for the Black Sea and eastern Mediterranean basins. By possession of northern Syria and Mesopotamia, the Sultan controlled the “central route” of Eastern trade throughout its entire length from the borders of Austria-Hungary to the shores of the Persian Gulf. The contiguity of Ottoman territory to the Sinai Peninsula and to Persia held out the possibility of a Turkish attack on the Suez and trans-Persian routes to India and the Far East. In fact, the Sultan’s dominions from Macedonia to southern Mesopotamia constituted a broad avenue of communication, an historic world highway, between the Occident and the Orient. To a strong nation, this position would have been a source of strength. To a weak nation it was a source of weakness. As Gibraltar and Suez and Panama were staked out by the empire-builders, so were Constantinople and Smyrna and Koweit. Strategically, the region traversed by the Bagdad Railway is one of the most important in the world.

Turkey-in-Asia, furthermore, was wealthy. It possessed vast resources of some of the most essential materials of modern industry: minerals, fuel, lubricants, abrasives. Its deposits of oil alone were enough to arouse the cupidity of the Great Powers. Irrigation, it was believed, would accomplish wonders in the revival of the ancient fertility of Mesopotamia. By the development of the country’s latent agricultural wealth and the utilization of its industrial potentialities, it was anticipated that the Ottoman Empire would prove a valuable source of essential raw materials, a satisfactory market for finished products, and a rich field for the investment of capital. Economically, the territory served by the Bagdad Railway was one of the most important undeveloped regions of the world.

Neither the geographical position nor the economic wealth of the Ottoman Empire, however, need have been a cause for its exploitation by foreigners. Had the Sultan’s Government been strong—powerful enough to present determined resistance to domestic rebellion and foreign intrigue—Turkey would not have been an imperial problem. But Abdul Hamid and his successors, the Young Turks, showed themselves incapable of governing a vast empire and a heterogeneous population. They were unable to resist the encroachments of foreigners on the administrative independence of their country or to defend its borders against foreign invasion. That the Ottoman Empire, under these circumstances, should fall a prey to the imperialism of the Western nations was to be expected. Its strategic importance was a “problem” of military and naval experts. Its wealth was an irresistible lure to investors. Its political instability was the excuse offered by European nations for intervening in the affairs of the empire on behalf of the financial interests of the business men or the strategic interests of the empire-builders. Diplomatically, then, the region traversed by the Bagdad Railway was an international “danger zone.”

The problem of maintaining stable government in Turkey was complicated by the religious heritage of the Ottoman Empire. It was the homeland of the Jews, the birthplace of Christianity, the cradle of Mohammedanism. European crusaders had waged war to free the Holy Land from Moslem desecrators; the followers of the Prophet had shed their blood in defence of this sacred soil against infidel invaders; the sons of Israel looked forward to a revival of Jewish national life in this, their Zion. It is small wonder that Turkey-in-Asia was a great field for missions—Protestant missions to convert the Mohammedan to the teachings of Christ; Catholic missions to win over, as well, the schismatics; Orthodox missions to retain the loyalty of adherents to the Greek Church. Despite their cultural importance in the development of modern Turkey, the missions presented serious political problems to the Sultan. They hindered the development of Turkish nationalism by teaching foreign languages, by strengthening the separatist spirit of the religious minorities, and by introducing Occidental ideas and customs. They weakened the autocracy by idealizing the democratic institutions of the Western nations. They occasioned international complications, arising out of diplomatic protection of the missionaries themselves and the racial and religious minorities in whose interest the missions were maintained. In no country more than in Turkey have the emissaries of religion proved to be so valuable—however unwittingly—as advance pickets of imperialism.

Complicating and bewildering as the Near Eastern question always has been, the construction of the Anatolian and Bagdad Railways made it the more complicating and bewildering. The development of rail transportation in the Ottoman Empire was certain to raise a new crop of problems: the strategic problem of adjusting military preparations to meet new conditions; the economic problem of exploiting the great natural wealth of Turkey-in-Asia; the political problem of prescribing for a “Sick Man” who was determined to take iron as a tonic. These problems, of course, were international as well as Ottoman in their aspects. The economic and diplomatic advance of Germany in the Near East, the resurgent power of Turkey, the military coöperation between the Governments of the Kaiser and the Sultan were not matters which the other European powers were disposed to overlook. Russia, pursuing her time-honored policy, objected to any bolstering up of the Ottoman Empire. France looked with alarm upon the advent of another power in Turkish financial affairs and, in addition, was desirous of promoting the political ambitions of her ally, Russia. Great Britain became fearful of the safety of her communications with India and Egypt. Thus the Bagdad Railway overstepped the bounds of Turco-German relationships and became an international diplomatic problem. It was a concern of foreign offices as well as counting houses, of statesmen and soldiers as well as engineers and bankers.

The year 1888 ushered in an epoch of three decades during which two cross-currents were at work in Turkey. On the one hand, earnest efforts were made by Turks, old and young, to bring about the political and economic regeneration of their country. On the other, the steady growth of Balkan nationalism, the relentless pressure of European imperialism, and the devastation of the Great War gradually reduced to ruins the once great empire of Suleiman the Magnificent. The history of those three decades is concerned largely with the struggles of European capitalists to acquire profitable concessions in Asiatic Turkey and of European diplomatists to control the finances, the vital routes of communication, and even the administrative powers of the Ottoman Government. The coincidence between the economic motives of the investors and the political and strategical motives of the statesmen, made Turkey one of the world’s foremost areas of imperial friction. Its territories and its natural wealth were “stakes of diplomacy” for which cabinets maneuvered on the diplomatic checkerboard and for which the flower of the world’s manhood fought on the sands of Mesopotamia, the cliffs of Gallipoli, and the plains of Flanders. To tell the story of the Bagdad Railway is to emphasize perhaps the most important single factor in the history of Turkey during the last thirty eventful years.

CHAPTER II
BACKWARD TURKEY INVITES ECONOMIC EXPLOITATION

Turkish Sovereignty is a Polite Formality

The reign of Sultan Abdul Hamid II (1876–1909) began with a disastrous foreign war; it terminated in the turmoil of revolution. And during the intervening three decades of his régime the Ottoman Empire was forced to wage a fight for its very existence—a fight against disintegration from within and against dismemberment from without.

One of the principal problems of Abdul Hamid was the government of his vast empire in spite of domestic dissension and foreign interference. His subjects were a polyglot collection of peoples, bound together by few, if any, common ties, obedient to the Sultan’s will only when overawed by military force. In Turkey-in-Asia alone, Turks, Arabs, Armenians, Kurds, Jews, Greeks combined to form a conglomerate population, professing a variety of religious faiths, speaking a diversity of languages and dialects, and adhering to their own peculiar social customs. Of these, the Armenians were receiving the sympathy, support, and encouragement of Russia; the Kurds were living by banditry, terrorizing peasants and traders alike; the Arabs were in open revolt.[1]

Nature seemed to make more difficult the task of bringing these dissentient peoples under subjection. The mountainous relief of the Anatolian plateau lent itself to the success of guerrilla bands against the gendarmerie; a high mountain barrier separated Anatolia, the homeland of the Turks, from the hills and deserts of Syria and Mesopotamia, the strongholds of the Arabs. The vast extent of the empire—it is as far from Constantinople to Mocha as it is from New York to San Francisco—still further complicated an already tangled problem, for there were not even the poorest means of communication. Under these circumstances the authority of the Sultan was as often disregarded as obeyed. To police the country from the Adriatic to the Indian Ocean, from the borders of Persia to the eastern coast of the Mediterranean, was a physical impossibility. Universal military service was enforced only in the less rebellious provinces. It was almost out of the question to mobilize the military strength of the empire for defence against foreign invasion or for the suppression of domestic insurrection. Efforts to build up effective administration from Constantinople were paralyzed by incompetent, insubordinate, and corrupt officials.[2]

To these problems of maintaining peace and order at home there was added the equally difficult problem of preventing the extension of foreign interference and control in Ottoman affairs. The integrity of Turkey already was seriously compromised by the hold which the Great Powers possessed on Turkish governmental functions. Under the Capitulations foreigners occupied a special and privileged position within the Ottoman Empire. Nationals of the European nations and the United States were practically exempt from taxation; they could be tried for civil and criminal offences only under the laws of their own country and in courts under the jurisdiction of their own diplomatic and consular officials; in fact, they enjoyed favors comparable to diplomatic immunity. By virtue of treaties with the Sultan the Powers exercised numerous extra-territorial rights in Turkey, such, for example, as the maintenance of their own postal systems.[3]

The finances of Turkey, furthermore, were under the control of the Ottoman Public Debt Administration, composed almost entirely of representatives of foreign bondholders and responsible only to them. The Council of Administration of the Public Debt—composed of one representative each from the United Kingdom, France, Germany, Austria-Hungary, Italy, and Turkey—had complete control of assessment, collection, and expenditure of certain designated revenues. In fact, it controlled Ottoman financial policy and exercised its control in the interest of European bankers and investors. Customs duties of the Sultan’s dominions might be increased only with the consent of the Great Powers. Almost all administrative and financial questions in Turkey were directly or indirectly subject to the sanction of foreigners.[4]

European governments were not content to interfere in the affairs of the Ottoman Empire. They sought to destroy it. Their zeal in this latter respect was limited only by their jealousies as to who should become the heir of the Sick Man. Russia encouraged the Balkan and Transcaucasian peoples to resist Turkish domination; France acquired control of Tunis and built up a sphere of interest in Syria; Great Britain occupied Egypt; Italy cast longing glances at Tripoli and finally seized it; Greece fomented insurrection in Crete. Germany and Austria-Hungary sought to bring all of Turkey into the economic and political orbit of Central Europe. The Powers rendered lip-service to the sovereignty and the territorial integrity of the Ottoman Empire, but they never allowed their solemn professions to interfere with their imperial practices. At best Turkish sovereignty was a polite fiction—it was always a fiction, if not always polite.

The economic backwardness of Turkey emphasized the existing political confusion and instability. From one end of the empire to the other, it seemed, obstacle was piled on obstacle to prevent the modernizing of the nation. Brigandage made trade hazardous; there were almost no roads; the rivers of Anatolia and Cilicia were not navigable; the mineral resources of the country had been neglected; internal and foreign customs duties were the last straws to break the camel’s back—business was taxed to death. Agriculture, the occupation of the great majority of the people, was in a state of stagnation. The absence of systems of drainage and irrigation made the countryside the victim of alternate floods and droughts. Methods of cultivation were archaic: the wooden plow, used by the Hittites centuries before, was among the most advanced types of agricultural implements in use in Anatolia and Syria; harvesting and threshing were performed in the most antiquated manner; fertilization and cultivation were practically unknown. Markets were inaccessible; the peasant could not dispose of a surplus if he had it; therefore, production was limited to the needs of the family, and the Turkish peasant acquired a widespread reputation for inherent laziness.

Industrially, the Ottoman Empire had back of it a great past. The fine and dainty fabrics of Mosul; the famous mosque lamps, wonder-art of the glass-workers of Mesopotamia; the master workmanship of the coppersmiths of Diarbekr; the tiles of Erzerum; the steel work and the enamels of Damascus—all of these had been far-famed articles of world commerce for centuries. But Turkey in the nineteenth and twentieth centuries was, industrially as well as politically, a “backward nation.” Her manufactures were conducted under the time-honored handicraft system, which long since had been discarded by her European neighbors. In other words, Turkey had not experienced the Industrial Revolution which was the modern foundation of Western society and civilization. But Turkey was victimized by the Industrial Revolution. Her manufactures—with the exception of some luxuries of incomparable craftsmanship—produced by outworn methods, found it increasingly difficult to compete even in the markets of the Ottoman Empire with the cheaper machine-made goods of Europe. The pitiless competition of the industrialized West eliminated the cottage spinner and weaver, the town tailor and cobbler. And yet for Turkey to adopt European methods—to introduce the machine, the factory, and the factory town—was for a time impracticable. There was no mobile fund of capital for the purpose, and even Young Turks were not in a position to furnish the necessary technical skill. As for foreign capital and foreign directing genius, they could be obtained only under promises and guarantees which might still further jeopardize the independence of the Ottoman Empire.[5]

The Natural Wealth of Asiatic Turkey Offers Alluring Opportunities

It was not because of a lack of natural resources that Turkey was a “backward nation.” The Sultan’s Asiatic dominions were rich in raw materials, in fuel, and in agricultural possibilities. Anatolia, for example, is a great storehouse of important metals. A fine quality of chrome ore is to be found in the region directly south of the Sea of Marmora and in Cilicia, constituting sources of supply which were sufficient to assure Turkey first position among the chrome-producing nations until 1900, when exports from Russia and Rhodesia offered serious competition. There are valuable deposits of antimony in the vilayets of Brusa and Smyrna, as well as commercially profitable lead and zinc mines near Brusa, Ismid, and Konia. These metals, particularly chrome and antimony, are not only valuable for peace-time industry, but are almost indispensable in the manufacture of armor-plate, shells and shrapnel, guns, and armor-piercing projectiles.[6]

In the vicinity of Diarbekr there are mines, which, although not entirely surveyed, promise to yield large supplies of copper. Southern Anatolia is the world’s greatest source of emery and other similar abrasives. The famous meerschaum mines near Eski Shehr enjoy practically a universal monopoly. Boracite, mercury, nickel, iron, manganese, sulphur, and other minerals are to be found in Anatolia, although there is some question of the commercial possibilities of the deposits.[7]

Although Anatolia is not ranked among the principal fuel-producing countries of the world, its coal deposits are not inconsiderable. Operation of the chief of the coalfields, in the vicinity of Heraclea, was begun in 1896 by a French corporation, La Société française d’Héraclée, which invested in the enterprise during the succeeding seven years more than a million francs. The venture proved to be profitable, for by 1910 the mines were producing in excess of half a million tons of coal annually. In addition to coal, Anatolia possesses large deposits of lignite which, mixed with coal, is suitable fuel for ships, locomotives, gasworks, and factories.[8]

Oil exists in large quantities in Mesopotamia and in smaller quantities in Syria. The deposits are said to be part of a vast petroliferous area stretching from the shores of the Caspian Sea to the coast of Burma. As early as 1871 a commission of experts visited the valleys of the Tigris and the Euphrates for the purpose of studying the possibility of immediate exploitation of the petroleum wells in that region. They reported that although there was a plentiful supply of petroleum of good quality, difficulties of transportation made it extremely doubtful if the Mesopotamian fields could compete with the Russian and American at that time. The oil supply was then being exploited on a small scale by the Arabs and proved to be of sufficient local importance, as well as of sufficient profit, to warrant its being taken over by the Ottoman Civil List, in 1888, as a government monopoly.[9]

In 1901 a favorable report by a German technical commission on Mesopotamian petroleum resources stated that the region was a veritable “lake of petroleum” of almost inexhaustible supply. It would be advisable, it was pointed out, to develop these oilfields if for no other purpose than to break the grip of the “omnipotent Standard,” which, in combination with Russian interests, might speedily monopolize the world’s supply.[10] Shortly afterward, Dr. Paul Rohrbach, a celebrated German publicist, visited the Mesopotamian valley and wrote that the district seemed to be “virtually soaked with bitumen, naphtha, and gaseous hydrocarbons.” He was of the opinion that the oil resources of the region offered far greater opportunity for profitable development than had the Russian Transcaucasian fields.[11] In 1904 the Deutsche Bank, of Berlin, promoters of the Bagdad Railway, obtained the privilege of making a thorough survey of the oilfields of the Tigris and Euphrates valleys, with the option within one year of entering into a contract with the Ottoman Government for their exploitation.[12] Shortly thereafter Rear Admiral Colby M. Chester, of the United States Navy, became interested in the development of the oil industry in Asiatic Turkey.[13]

The Near East possesses not only mineral wealth but potential agricultural wealth as well. Mesopotamia, for example, gives promise of becoming one of the world’s chief cotton-growing regions. In antiquity the Land of the Two Rivers was an important center of cotton production, and recent experiments have held out great inducements for a revival of cotton culture there. The climate of Mesopotamia is ideal for such a purpose. The length of the summer season is from six to seven months, with a constantly rising temperature, as contrasted with a shorter season and variable temperatures in America and Egypt. Frost is almost unknown. Rainfall is plentiful during the early part of the year and scarce, as it should be, during the growing period. The soil contains a good percentage of the essential phosphorus, potash, and nitrogen. It is believed that Mesopotamia can grow cotton as good as the best Egyptian and better than the best American product and at a considerably higher yield per acre.[14]

Extravagant prophecies have been made regarding the rôle of irrigation in bringing about an agricultural renaissance in Turkey-in-Asia. A writer in the Vienna Zeit of August 31, 1901, predicted that as soon as the economic effects of irrigation and of the Bagdad Railway should be fully realized, “Anatolia, northern Syria, Mesopotamia, and Irak together will export at least as much grain as all of Russia exports to-day.” Dr. Rohrbach claimed that this probably would prove to be an exaggeration, but that certainly Mesopotamia would become one of the great granaries of the world.[15] Sir William Willcocks, the distinguished English engineer who had planned and supervised the construction of the famous irrigation works of the Nile, was no less enthusiastic about the prospects of Mesopotamia. “With the Euphrates and Tigris floods really controlled,” he wrote, “the delta of the two rivers would attain a fertility of which history has no record; and we should see men coming from the West, as well as from the East, making the Plain of Shinar a rival of the land of Egypt. The flaming swords of inundation and drought would have been taken out of the hands of the offended Seraphim, and the Garden of Eden would have again been planted.... Speaking in less poetical language we might say that the value of every acre in the joint delta of the two rivers would be immediately trebled before the irrigation works were carried out, and again increased many fold more the day the works were completed. Every town and hamlet in the valley from Bagdad to Basra would find itself freed from the danger, expense, and intolerable nuisance of flooding, and the resurrection of this ancient land would have been an accomplished fact.”[16]

Here in the Near East, then, was a great empire awaiting exploitation by Western capital and Western technical skill. No man could adequately predict its ultimate contributions in raw materials to Western industry, or accurately foretell its ultimate capacity in consumption of the products of Western factories, or confidently prophesy its final rôle in the promotion of Western commerce. But a trained and intelligent observer, surveying the situation at the opening of the twentieth century, could have said with a certain amount of assurance that there were two essential conditions to even a partial realization of the economic possibilities of the Ottoman Empire: the provision of adequate railway communications and the establishment of political security. The former of these conditions was met, in part, during the régime of Abdul Hamid and his successors, the Young Turks. The second, in spite of earnest efforts by loyal Ottomans, has not yet been satisfied.

Forces Are at Work for Regeneration

Probably there was no group of men more fully aware of the needs of Turkey than the members of the Ottoman Public Debt Administration. They were concerned, it is true, solely with obtaining prompt payment of interest and principal of Ottoman bonds and with improving Ottoman credit in European financial markets. But the accomplishment of this purpose, they realized, was altogether out of the question in the continued presence of political instability and economic stagnation. One must feed the goose which lays the golden eggs. They sought some means, therefore, of establishing domestic order in the Ottoman Empire, of lessening the constant danger of foreign invasion, and of providing a tonic for the economic life of the nation. All of these purposes, it was believed, would be served by the encouragement of railway construction in Turkey.

The interest and imagination of the Ottoman Public Debt Administration were stimulated by the plans of the eminent German railway engineer Wilhelm von Pressel, one of the Sultan’s technical advisers. Von Pressel had established an international reputation because of his services in the construction of important railways in Switzerland and the Tyrol. In 1872 he was retained by the Ottoman Government to develop plans for railways in Turkey, and a few years later he assumed a prominent part in the construction of the trans-Balkan lines of the Oriental Railways Company. No one knew more than von Pressel of the railway problems of Turkey; few were more enthusiastic about the rôle which rail communications might play in a renaissance of the Near East.

Von Pressel foresaw the possibility of establishing a great system of Ottoman railways extending from the borders of Austria-Hungary to the shores of the Persian Gulf. In this manner the far-flung territories of the empire would be brought into communication with one another and with the capital, and an era would be begun of unprecedented development in agriculture, mining, and commerce. A market would be provided for the crops of the peasantry; the hinterland of the ports of Constantinople, Smyrna, Mersina, Alexandretta, and Basra would be opened up; heretofore inaccessible mineral resources would be exploited. Foreign commerce might be restored to the prosperity it had once enjoyed before the Commercial Revolution of the sixteenth century replaced the caravan routes of the Near East by the new sea routes to the Indies. Mesopotamia might be transformed into a veritable economic paradise. The railways also would insure political stability, for rapid mobilization and transportation of the gendarmerie to danger points would enable the Sultan’s Government to suppress rebellions of the turbulent tribesmen of Kurdistan, Mesopotamia, and Arabia. Peace and prosperity were goals within easy reach, thought von Pressel, if Turkey could be provided with a comprehensive system of railways.[17]

To the Ottoman Public Debt Administration peace and prosperity were means to reaching another goal—a full treasury. Greater income for the Turkish farmer, miner, artisan, and trader would mean greater opportunities for the extension of tax levies. And the greater the tax receipts the greater would be the payments to the European bondholders and the greater the value of the bonds themselves. Obviously, railway construction would improve Turkish credit in the financial centers of the world. But, for the time, the Ottoman Government had at its disposal neither the capital nor the technical skill to carry into execution the plans for an ambitious program of railway building, and private enterprise showed no disposition to interest itself without substantial guarantees. It was under these circumstances, therefore, that the Ottoman Public Debt Administration recommended to the Sultan that certain revenues of his empire should be set aside for the payment of subsidies to railway companies.[18]

The Public Debt Administration were not unaware that the payment of railway subsidies would materially increase the amount of the imperial debt and mortgage certain of the imperial revenues. But they were confident that railways would be a powerful stimulant to economic prosperity in Turkey and would ultimately increase the revenues of the Government by an amount in excess of the amount of the subsidies. They believed that generous initial expenditures in a worth-while enterprise might yield generous final returns. As an instance of this they could point to the development of sericulture in Turkey. Under the auspices of the Ottoman Public Debt Administration tens of thousands of dollars were expended in the reclamation of more than 130,000 acres of land and the planting thereon of over sixty million mulberry trees. As a result, the silk crop increased more than tenfold during the years 1890–1910, with a result that there was a corresponding increase in the 10% levy (or tithe) on agricultural products in the regions affected. If the Public Debt Administration were actuated by self-interest, at least it was intelligent and far-sighted self-interest.[19]

But Sultan Abdul Hamid was no less interested than foreign bondholders in the extension of railway construction in his empire. Railways could be utilized, he believed, to serve his dynastic and imperial ambitions. Effective transportation was essential to the solution of at least three vexatious political problems: first, the problem of exercising real, as well as nominal, authority over rebellious and indifferent subjects in Syria, Mesopotamia, Kurdistan, Arabia, and other outlying provinces; second, the problem of compelling these provinces, by military force if necessary, to contribute their share of blood and treasure to the defence of the empire;[20] third, the problem of perfecting a plan of mobilization for war, on whatever front it might be necessary to conduct hostilities. The maintenance of order, the enforcement of universal military service, the collection of taxes in all provinces of the empire, and defence against foreign invasion—all of these policies would be seriously handicapped, if not paralyzed, by the absence of adequate railway communications.

For strategic reasons, if for no other, Abdul Hamid would have especially favored the Bagdad Railway. For strategic reasons, also, he supplemented the Bagdad system with the famous Hedjaz Railway—from Damascus to the holy cities of Medina and Mecca—one of the achievements of which the wily old Sultan was most proud.[21] The completion of these two railways would have extended Turkish military power from the Black Sea to the Persian Gulf, from the Bosporus to the Persian Gulf. General von der Goltz epitomized their military importance in the following terms: “The great distance dividing the southern provinces from the rest of the empire was not the only difficulty in holding them in control; it made Turkey unable to concentrate her strength in case of great danger in the north. It must not be forgotten that the Osmanlie Empire in all former wars on the Danube and in the Balkans has only been able to utilize half her forces. Not only did the far-off provinces not contribute men, but, on the contrary, they necessitated strong reënforcements to prevent the danger of their being tempted into rebellion. This will be quite changed when the railroads to the Persian Gulf and the Red Sea are completed. The empire will then be rejuvenated and have renewed strength.”[22] The General might have added that the new railways might conceivably be utilized for the transportation to the Sinai Peninsula of an army intended to threaten the Suez Canal and Egypt.[23]

The Ottoman Government made it plain from the very start that the Bagdad Railway, in particular, was intended to serve military, as well as purely economic, purposes. The concession of 1903 contained a number of explicit provisions regarding official commandeering of the lines for the objects of suppressing rebellion, conducting military maneuvers, or mobilizing in the event of war. Furthermore, the Ottoman military authorities insisted that strategic considerations be taken into account when the railway was constructed. For example, the sections of the Bagdad line from Adana to Aleppo were carried through the Amanus Mountains, in spite of formidable engineering difficulties and enormous expense, although the railway could have been carried along the Mediterranean coast with greater ease and economy. The latter course, however, would have exposed to the guns of a hostile fleet the jugular vein of Turkish rail communications. From an economic point of view the Amanus tunnels were the most expensive and most unremunerative part of the Bagdad Railway; strategically, they were indispensable. This point was emphasized in 1908, when the Ottoman General Staff refused to consider a proposal to divert the line from the mountain passes to the shore.[24]

One of the most frequent criticisms of Turkish railway enterprises in general, and of the Bagdad Railway in particular, is that they were military as well as economic in character. Such criticisms, however, must be discounted, for potentially every railway is of military value. And in the European countries few railways were constructed without frank consideration of their adaptability to military purposes in time of war. Railways, in fact, were one of the most important branches of Europe’s “preparedness” for war. Which European nation, therefore, was in a position to cast a stone at Turkey for adopting this lesson from the civilized Occident? If the Ottoman Empire had a right to prepare for defence against invasion, it had the right to make that defence effective—at least until such time as its neighbors, Russia and Austria, should abandon military measures of potential menace to Turkey.

Germans and Turkish Nationalists contended that there was a certain amount of cant in the righteous indignation of the Powers that Turkey should become militaristic. Was Russia, they said, as much interested in the welfare of Turkey as she was angered at the active measures of the Sultan to prevent a Russian drive at Constantinople via the southern shore of the Black Sea? Was France as much concerned with the safety of Turkey as she was solicitous of the imperial interests of her ally? Was Great Britain engaged in preserving the peace of the Near East, or was she fearful of a stiffened Turkish defence of Mesopotamia or of a Turkish thrust at Egypt?[25] For the Sultan to have admitted that foreign powers had the right to dictate what measures he might or might not take for the defence of his territories would have been equivalent to a surrender of the last vestige of his sovereignty. Obviously this was an admission he could not afford to make.

Whatever else Abdul Hamid may have been, he was no fool. To assume that this shrewd and unscrupulous autocrat walked into a German trap when he granted the Bagdad Railway concession is naïve and absurd. Abdul Hamid was not in the habit of giving things away, if he could avoid it, without adequate compensation for himself and his empire. As Lord Curzon said, there was no axiom dearer to the Sultan’s heart than that charity not only begins, but stays, at home.[26] Abdul Hamid knew that the granting of railway subsidies would mortgage his empire. He knew that mortgages have their disadvantages, not the least of which is foreclosure. But mortgages also have their advantages. Abdul Hamid granted extensive railway concessions, carrying with them heavy subsidies, because he hoped the new railways would strengthen his authority within the Ottoman Empire and improve the political position of Turkey in the Near East.

BIBLIOGRAPHICAL AND EXPLANATORY NOTES

[1] Count L. Ostrorog, The Turkish Problem (Paris, 1915, English translation, London, 1919), Chapter II; Leon Dominian, The Frontiers of Language and Nationality in Europe (London, 1917); V. Bérard, Le Sultan, l’Islam, et les puissances (Paris, 1907), pp. 15 et seq.; E. Fazy, Les Turcs d’aujourd’hui (Paris, 1898); A. Vamberry, Das Türkenvolk (Leipzig, 1885); A. Geiger, Judaism and Islam (London, 1899). Regarding Arab nationalism, in particular, cf. N. Azoury, Le réveil de la nation arabe (Paris, 1905); E. Jung, Les puissances devant la révolte arabe (Paris, 1906). A fascinating tale of the Arab separatist movement during the Great War is that of L. Thomas, “Lawrence: the Soul of the Arabian Revolution,” in Asia (New York), April, May, June, 1920. Cf., also, H. S. Philby, The Heart of Arabia (2 volumes, New York, 1923).

[2] There is a wealth of material upon the problems of the Ottoman Empire during the reign of Abdul Hamid. In particular, consult the following: A. Vamberry, La Turquie d’aujourd’hui et d’avant quarante ans (Paris, 1898); C. Hecquard, La Turquie sous Abdul Hamid (Paris, 1901); G. Dory, Abdul Hamid Intime (Paris, 1901); Sir Edwin Pears, The Life of Abdul Hamid (London, 1917); W. Miller, The Ottoman Empire, 1801–1913 (Cambridge, 1913), Chapters XVI-XVIII; N. Verney and G. Dambmann, Les puissances étrangères dans le Levant, en Syrie, et en Palestine (Paris, 1900); Baron von Oppenheim, Von Mittelmeer zum persischen Golfe (2 volumes, Berlin, 1899–1900); Lavisse and Rambaud, Histoire Générale (12 volumes, 1894–1901), Volume XI, Chapter XV; Volume XII, Chapter XIV; R. Davey, The Sultan and His Subjects (London, 1897); V. Cardashian, The Ottoman Empire of the Twentieth Century (Albany, N. Y., 1908).

[3] The texts of the various treaties of capitulation may be found in G. E. Noradounghian (ed.), Recueil d’actes internationaux de l’Empire ottoman, 1300–1902 (4 volumes, Paris, 1897–1903), Volume I, documents numbers 153, 170, 196, 201, etc., ad lib., Volume II, numbers 499, 593, etc., ad lib.; also Recueil des traités de la Porte ottomane avec les puissances étrangères, 1536–1901 (10 volumes, Paris, 1864–1901), passim; E. A. Van Dyck, Report on the Capitulations of the Ottoman Empire, Forty-seventh Congress, Special Session, Senate Executive Document No. 3, First Session, Senate Executive Document No. 87 (Washington, 1881–1882); G. Pelissie du Rausas, Le régime des capitulations dans l’Empire ottoman (2 volumes, Paris, 1902–1905); A. R. von Overbeck, Die Kapitulationen des osmanischen Reiches (Breslau, 1917); W. Lehman, Die Kapitulationen (Weimar, 1917); P. M. Brown, Foreigners in Turkey, Their Juridical Status (Princeton, 1914).

[4] For an account of the establishment, functions, and operation of the Ottoman Public Debt Administration, cf. George Young (ed.), Corps de droit ottoman—Recueil des codes, lois, réglements, ordonnances, et actes les plus importants du droit intérieur, et d’études sur le droit coutumier de l’Empire ottoman (7 volumes, Oxford, 1905–1906), Volume V, Chapter LXXXV; A. Heidborn, Manuel de droit public et administratif de l’Empire ottoman (2 volumes, Vienna, 1912), Volume II; C. Morawitz, Les finances de Turquie (Paris, 1902); A. du Velay, Essai sur l’histoire financière de la Turquie (Paris, 1903), Parts V and VI; L. Delaygue, Essai sur les finances ottomanes (Paris, 1911).

[5] There were a few factories erected in Turkey by foreign capitalists, notably those of the Oriental Carpet Manufacturers, Ltd., the American Tobacco Company, and the Deutsche-Levantischen Baumwollgesellschaft. In general, however, the factory and the factory town were not common phenomena in Asiatic Turkey. An interesting account of the effects of the Industrial Revolution upon economic conditions in Turkey is that of Talcott Williams, Turkey a World Problem of Today (Garden City, 1921), pp. 268 et seq.; W. S. Monroe, Turkey and the Turks: an Account of the Lands, Peoples and Institutions of the Ottoman Empire (London, 1909), Chapter X; M. J. Garnett, Turkish Life in Town and Country (London, 1904).

[6] J. E. Spurr (ed.), Political and Commercial Geology (New York, 1921), pp. 109, 115–116, 172–173, 184–185; Anatolia, No. 17 in a series of handbooks published by the Historical Section of the Foreign Office (London, 1920), pp. 88–90.

[7] Spurr, op. cit., pp. 358–359; Armenia and Kurdistan, No. 62 of the Foreign Office Handbooks, p. 60; L. Dominian, “The Mineral Wealth of Asia Minor,” in The Near East, May 26, 1916, p. 91; E. Banse, Auf den Spuren der Bagdadbahn (Weimar, 1913), pp. 140–145; L. de Launay, La Géologie et les richesses minerales de l’Asie (Paris, 1911); R. Fitzner, Anatolien, Wirtschaftsgeographie (Berlin, 1902); P. Rohrbach, Die wirtschaftliche Bedeutung Westasiens (Halle, 1902); G. Carles, La Turquie économique (Paris, 1906); E. Mygind, “Anatolien und seine wirtschaftliche Bedeutung,” in Die Balkan Revue, Volume 4 (1917), pp. 1–6.

[8] L. Dominian, “Fuel in Turkey: an Analysis of Coal Deposits,” in The Near East, June 23, 1916, pp. 186–187; J. Kirsopp, “The Coal Resources of the Near East,” ibid., October 10, 1919, pp. 393–394.

[9] F. Maunsell, “The Mesopotamian Petroleum Field,” in the Geographical Journal, Volume IX (1897), pp. 523–532; L. Dominian, “Fuel in Turkey: Petroleum,” in The Near East, July 14, 1917; Mesopotamia, No. 63 of the Foreign Office Handbooks, pp. 34, 85–86; Syria and Palestine, No. 60 of the Foreign Office Handbooks, p. 111.

[10] Parliamentary Papers, 1921, Cmd. 675; The Near East, October 26, 1917, p. 516.

[11] Die Bagdadbahn (1903), pp. 26–28.

[12] Parliamentary Papers, 1921, Cmd. 675. For some reason or other this option was allowed to lapse.

[13] H. Woodhouse, “American Oil Claims in Turkey,” in Current History (New York), Volume XV (1922), pp. 953–959.

[14] Report of the Department of Agriculture in Mesopotamia, 1920 (Bagdad, 1921); The Cultivation of Cotton in Mesopotamia (Bagdad, 1922); “Cotton Growing in Mesopotamia,” in the Bulletin of the Imperial Institute, Volume 18 (1920), pp. 73–82.

[15] Rohrbach, op. cit., pp. 30–46.

[16] Quoted in The Near East, October 6, 1916, pp. 545–546. For an elaboration of the views of Sir William Willcocks see the following of his books and articles: The Recreation of Chaldea (Cairo, 1903); The Irrigation of Mesopotamia (London, 1905, and Constantinople, 1911); “Mesopotamia, Past, Present and Future,” in the Geographical Journal, January, 1910, pp. 1–18. For further works on the economic resources of Turkey-in-Asia consult, also, the following: K. H. Müller, Die wirtschaftliche Bedeutung der Bagdadbahn (Hamburg, 1917); L. Blanckenhorn, Syrien und die deutsche Arbeit (Weimar, 1916); L. Schulmann, Zur türkischen Agrarfrage (Weimar, 1916); A. Ruppin, Syrien als Wirtschaftsgebiet (Berlin, 1917).

[17] W. von Pressel, Les chemins de fer en Turquie d’Asie (Zurich, 1902), pp. 4–5, 52–59, etc. ad lib. For statements of the importance of von Pressel in the development of railways in Turkey cf. André Chéradame, La question d’Orient: la Macédoine, le chemin de fer de Bagdad (Paris, 1903), pp. 25 et seq.; C. A. Schaefer, Die Entwicklung der Bagdadbahnpolitik (Weimar, 1916), p. 13.

[18] Corps de droit ottoman, Volume IV, pp. 62–64.

[19] Sir H. P. Caillard, Article “Turkey” in the Encyclopedia Britannica, eleventh edition, Volume 27, p. 439; Reports of the Ottoman Public Debt (London, 1884 et seq.), passim.

[20] In Turkey all Mussulmans over 20 years of age were liable to military service for a period of 20 years, 4 of which were with the colors in the regular army. Residents in the outlying territories, notably the Arabs and the Kurds, constantly avoided military service and went unpunished because of the inability of the Government to send punitive expeditions into these regions. Railways would have produced satisfactory bases of operations for such expeditions and would have shortened their lines of communication. The Statesman’s Year Book, 1903, pp. 1168–1170.

[21] The Hedjaz Railway was a great national enterprise which indicated the strength of Moslem feeling in Turkey and which proved the desire of the Ottoman Government to construct national railways as far as capital and technical skill could be obtained. So far as Abdul Hamid was concerned, the railway was an attempt to gain prestige for his claim to the Caliphate, as well as a move to strengthen his political position in Syria and the Hedjaz. In April, 1900, the Sultan announced to the Faithful his determination to construct a railway from Damascus to the holy cities of Medina and Mecca. An appeal was issued to Mohammedans the world over for funds to carry out the work. The Sultan headed the list with a subscription of about a quarter of a million dollars, and by 1904 over three and a half million dollars had been collected. The only compulsory contributions were the levies of 10% on the salary of every official in the civil and military service of the empire. It is estimated that the contributions eventually amounted to almost fifteen million dollars. The engineers in charge of the construction were Italians, although the great bulk of the work was done by the army and the peasantry. Nearly seven hundred thousand persons were employed on the construction work at one time or another, the non-Moslems being replaced as quickly as Mussulmans could be trained to take their places. On August 31, 1908, the thirty-second anniversary of the accession of Abdul Hamid, the railway was completed to Medina, where construction was halted temporarily because of the Young Turk Revolution and the international complications which followed it. Corps de droit ottoman, Volume IV, pp. 242–244; A. Hamilton, Problems of the Middle East (London, 1909), pp. 273–292; Annual Register, 1908, pp. 328–329.

[22] Quoted by Hamilton, op. cit., pp. 274–275.

[23] Via the Bagdad Railway and the Syrian system Turkish troops could have been transported to a point less than 200 miles from Suez. A successful attack on the Canal, of course, would have severed British communications with the East. In addition, it would have given the Sultan an opportunity to attack, and assert his suzerainty over, Egypt. Dr. Rohrbach made a great point of this alleged menace to the British position in Egypt. Cf. Die Bagdadbahn, pp. 18–19; German World Policies, pp. 165–167. This program, however, would have been an altogether too ambitious one for the military strength of the Ottoman Empire, which had such far-flung frontiers to defend. In any event, British statesmen seemed to realize that the Sinai Peninsula was a formidable natural defence against an attack on the Suez Canal and that such an expedition would be merely a pin-prick in the imperial flesh. Parliamentary Debates, House of Lords, fifth series, Volume 7 (1911), pp. 601 et seq. The termination in a fiasco of the Turkish drive of 1914–1915 against the Canal confirmed this prophecy.

[24] Infra, p. 83; Kurt Wiedenfeld, Die deutsch-türkische Wirtschaftsbeziehungen (Leipzig, 1915), p. 23; Report of the Bagdad Railway Company, 1908, pp. 4–5.

[25] Cf., e.g., K. Helfferich, Die deutsche Türkenpolitik, p. 22.

[26] Persia and the Persian Question, Volume I, p. 634.

CHAPTER III
GERMANS BECOME INTERESTED IN THE NEAR EAST

The First Rails Are Laid

During the summer of 1888 the Oriental Railways—from the Austrian frontier, across the Balkan Peninsula via Belgrade, Nish, Sofia, and Adrianople, to Constantinople—were opened to traffic. Connections with the railways of Austria-Hungary and other European countries placed the Ottoman capital in direct communication with Vienna, Paris, Berlin, and London (via Calais). The arrival at the Golden Horn, August 12, 1888, of the first through express from Paris and Vienna was made the occasion of great rejoicing in Constantinople and was generally hailed by the European press as marking the beginning of a new era in the history of the Ottoman Empire. To thoughtful Turks, however, it was apparent that the opening of satisfactory rail communications in European Turkey but emphasized the inadequacy of such communications in the Asiatic provinces. Anatolia, the homeland of the Turks, possessed only a few hundred kilometres of railways; the vast areas of Syria, Mesopotamia, and the Hedjaz possessed none at all. Almost immediately after the completion of the Oriental Railways, therefore, the Sultan, with the advice and assistance of the Ottoman Public Debt Administration, launched a program for the construction of an elaborate system of railway lines in Asiatic Turkey.[1]

The existing railways in Asia Minor were owned, in 1888, entirely by French and British financiers, with British capital decidedly in the predominance. The oldest and most important railway in Anatolia, the Smyrna-Aidin line—authorized in 1856, opened to traffic in 1866, and extended at various times until in 1888 it was 270 kilometres in length—was owned by an English company. British capitalists also owned the short, but valuable, Mersina-Adana Railway, in Cilicia, and held the lease of the Haidar Pasha-Ismid Railway. French interests were in control of the Smyrna-Cassaba Railway, which operated 168 kilometres of rails extending north and east from the port of Smyrna. It was not until the autumn of 1888 that Germans had any interest whatever in the railways of Asiatic Turkey.[2]

The first move of the Sultan in his plan to develop railway communication in his Asiatic provinces was to authorize important extensions to the existing railways of Anatolia. The French owners of the Smyrna-Cassaba line were granted a concession for a branch from Manissa to Soma, a distance of almost 100 kilometres, under substantial subsidies from the Ottoman Treasury. The British-controlled Smyrna-Aidin Railway was authorized to build extensions and branches totalling 240 kilometres, almost doubling the length of its line. A Franco-Belgian syndicate in October, 1888, received permission to construct a steam tramway from Jaffa, a port on the Mediterranean, to Jerusalem—an unpretentious line which proved to be the first of an important group of Syrian railways constructed by French and Belgian promoters. Shortly afterward the concession for a railway from Beirut to Damascus was awarded to French interests.[3]

But the great dream of Abdul Hamid was the great dream of Wilhelm von Pressel: the vision of a trunk line from the Bosporus to the Persian Gulf, which, in connection with the existing railways of Anatolia and the new railways of Syria, would link Constantinople with Smyrna, Aleppo, Damascus, Beirut, Mosul, and Bagdad. As early as 1886 the Ottoman Ministry of Public Works had suggested to the lessees of the Haidar Pasha-Ismid Railway that they undertake the extension of that line to Angora, with a view to an eventual extension to Bagdad. The proposal was renewed in 1888, with the understanding that the Sultan was prepared to pay a substantial subsidy to assure adequate returns on the capital to be invested. The lessees of the Haidar Pasha-Ismid line, however, were unable to interest investors in the enterprise and were compelled to withdraw altogether from railway projects in Turkey-in-Asia. Thereupon Sir Vincent Caillard, Chairman of the Ottoman Public Debt Administration, endeavored to form an Anglo-American syndicate to undertake the construction of a Constantinople-Bagdad railway, but he met with no success.[4]

The opportunity which British capitalists neglected German financiers seized. Dr. Alfred von Kaulla, of the Württembergische Vereinsbank of Stuttgart, who was in Constantinople selling Mauser rifles to the Ottoman Minister of War, became interested in the possibilities of railway development in Turkey. With the coöperation of Dr. George von Siemens, Managing Director of the Deutsche Bank, a German syndicate was formed to take over the existing railway from Haidar Pasha to Ismid and to construct an extension thereof to Angora. On October 6, 1888, this syndicate was awarded a concession for the railway to Angora and was given to understand that it was the intention of the Ottoman Government to extend that railway to Bagdad via Samsun, Sivas, and Diarbekr. The Sultan guaranteed the Angora line a minimum annual revenue of 15,000 francs per kilometre, for the payment of which he assigned to the Ottoman Public Debt Administration the taxes of certain districts through which the railway was to pass. Thus came into existence the Anatolian Railway Company (La Société du Chemin de Fer Ottomane d’Anatolie), the first of the German railway enterprises in Turkey.[5]

The German concessionaires were not slow to realize the possibilities of their concession. They elected Sir Vincent Caillard to the board of directors of their Company, in order that they might receive the enthusiastic coöperation of the Ottoman Public Debt Administration and in order that they might interest British capitalists in their project. With the assistance of Swiss bankers they incorporated at Zurich the Bank für orientalischen Eisenbahnen, which floated in the European securities markets the first Anatolian Railways loan of eighty million francs—more than one fourth of the loan being underwritten in England. Shortly thereafter this same financial group, under the leadership of the Deutsche Bank, acquired a controlling interest in more than 1500 kilometres of railways in the Balkan Peninsula, by purchasing the holdings of Baron Hirsch in the Oriental Railways Company. The Bank für orientalischen Eisenbahnen became a holding company for all of the Deutsche Bank’s railway enterprises in the Near East.[6]

Under the direction of German engineers, in the meantime, construction of the Anatolian Railway proceeded at so rapid a rate that the 485 kilometres of rails were laid and trains were in operation to Angora by January, 1893. About the same time a German engineering commission, assisted by two technical experts representing the Ottoman Ministry of Public Works and by two Turkish army officers, submitted a report on their preliminary survey of the proposed railway to Bagdad. This was enthusiastically received by the Sultan, who reiterated his intention of constructing a line into Mesopotamia at the earliest practicable date.[7]

In 1887 there was no German capital represented in the railways of Asiatic Turkey. Five years later the Deutsche Bank and its collaborators controlled the railways of Turkey from the Austro-Hungarian border to Constantinople; they had constructed a line from the Asiatic shore of the Straits to Angora; they were projecting a railway from Angora across the hills of Anatolia into the Mesopotamian valley. In coöperation with the Austrian and German state railways they could establish through service from the Baltic to the Bosporus and, by ferry and railway, into hitherto inaccessible parts of Asia Minor. Almost overnight, as history goes, Turkey had become an important sphere of German economic interest. Thus was born the idea of a series of German-controlled railways from Berlin to Bagdad, from Hamburg to the Persian Gulf!

The Ottoman Government apparently was well pleased with the energetic action of the German concessionaires in the promotion of their railway enterprises in Turkey. In any event, a tangible evidence of appreciation was extended the Anatolian Railway Company by an imperial iradé of February 15, 1893, which authorized the construction of a branch line of 444 kilometres from Eski Shehr (a town about midway between Ismid and Angora) to Konia. The new line, like its predecessor, was guaranteed a minimum annual return of 15,000 francs per kilometre, payments to be made under the supervision of the Ottoman Public Debt Administration. The obvious advantages of developing the potentially rich regions of southern Anatolia, and of providing improved communication between Constantinople and the interior of Asia Minor, led the Anatolian Company to hasten construction, with the result that service to Konia was inaugurated in 1896.[8]

Simultaneously with the granting of the second Anatolian concession the Sultan authorized an important extension to the French-owned Smyrna-Cassaba Railway. The existing line was to be prolonged a distance of 252 kilometres from Alashehr to Afiun Karahissar, at which latter town a junction was to be effected with the Anatolian Railway. Another French company was awarded a concession for the construction of the Damascus-Homs-Aleppo railway, in Syria, under substantial financial guarantees from the Ottoman Treasury. It was said that these concessions to French financiers were “compensatory” in character and were granted upon the urgent representations of the French ambassador in Constantinople.[9]

Between 1896 and 1899 no further definite steps were taken to extend the Anatolian Railway beyond Angora, as had been provided by the original concession. In the latter year, however, largely because of Russian objections to the further development of railways in northern Asia Minor, the Sultan took under consideration the advisability of projecting and building, instead, a line from Konia to Bagdad via Aleppo and Mosul. Early in 1899 a German commission left Constantinople to make a thorough survey of the economic and strategic possibilities of such a line. Included in the commission were Dr. Mackensen, Director of the Prussian State Railways; Dr. von Kapp, Surveyor for the State Railways of Württemberg; Herr Stemrich, the German Consul-General at Constantinople; Major Morgen, German military attaché; representatives of the Ottoman Ministry of Public Works. It was this commission that finally decided upon the route of the Bagdad Railway.[10]

At the close of the nineteenth century, therefore, the sceptre of railway power in the Near East was passing from the hands of Frenchmen and Englishmen into the hands of Germans. In a period of about ten years the German-owned Anatolian Railway Company had constructed almost one thousand kilometres of railway lines in Asia Minor. A German mission was blazing a trail through Syria and Mesopotamia for the extension of the Anatolian Railway to the valley of the Tigris River and the head of the Persian Gulf. German prestige seemed to be in the ascendancy: the Directors of the Anatolian Company reported to the stockholders in 1897 that, “as in former years, our Company has concerned itself continuously with the development of trade, industry, and agriculture in the region served by the Railway. As a result our enterprise has enjoyed in every sense the whole-hearted support and the powerful protection of His Majesty the Sultan. Our relationships with the Imperial Ottoman Government, the local authorities, and all classes of the people themselves are more cordial than ever.”[11]

The system of railways thus founded had been conceived by a German railway genius; it had been constructed by German engineers with materials made by German workers in German factories; it had been financed by German bankers; it was being operated under the supervision of German directors. In the minds of nineteenth-century neo-mercantilists this was a matter for national pride. A Pan-German organ hailed the Anatolian Railways and the proposed Bagdad enterprise in glowing terms: “The idea of this railway was conceived by German intelligence; Germans made the preliminary studies; Germans overcame all the serious obstacles which stood in the way of its execution. We should be all the more pleased with this success because the Russians and the English busied themselves at the Golden Horn endeavoring to block the German project.”[12]

The Traders Follow the Investors

The construction of the Anatolian Railways by German capitalists was accompanied by a considerable expansion of German economic interests in the Near East. In 1889, for example, a group of Hamburg entrepreneurs established the Deutsche Levante Linie, which inaugurated a direct steamship service between Hamburg, Bremen, Antwerp, and Constantinople. It was the expectation of the owners of this line that the construction of the Anatolian railways would materially increase the volume of German trade with Turkey—an expectation which was justified by subsequent developments. In 1888, the year of the original railway concession to the Deutsche Bank, exports from Germany to Turkey were valued at 11,700,000 marks; by 1893, when the line was completed to Angora, they mounted to a valuation of 40,900,000 marks, an increase of about 350%. Imports into Germany from Turkey during the same period rose from 2,300,000 marks to 16,500,000 marks, showing an increase of over 700%. No small proportion of the phenomenal increase in the volume of German exports to Turkey can be attributed to the use of German materials on the Ismid-Angora railway. In any event, there was no further substantial development of this export trade between 1895 and 1900, although imports into Germany from Turkey reached the high figure of 28,900,000 marks at the close of the century.[13]

That German traders should follow German financiers into the Ottoman Empire was to be expected. The Deutsche Bank—sponsor of the Anatolian Railways—had been notably active in the promotion of German foreign commerce. From its very inception it had devoted itself energetically to the promotion of industrial and commercial activity abroad, thus carrying out the object announced in its charter “of fostering and facilitating commercial relations between Germany, other European countries, and oversea markets.” By the establishment of foreign branches, by the liberal financing of import and export shipments, by the introduction of German bills of exchange in the four corners of the earth, and by other similar methods, this great bank was largely responsible for the emancipation of German traders from their former dependence upon British banking facilities. The Anatolian Railways concessions marked the initial efforts of the Deutsche Bank at Constantinople. What it had done elsewhere it could be expected to do in the interests of German business men operating in Turkey.[14]

The London Times of October 28, 1898, contained a significant review of the status of German enterprise in the Ottoman Empire during the decade immediately preceding. Whereas ten years before, the finance and trade of Turkey were practically monopolized by France and Great Britain, the Germans were now by far the most active group in Constantinople and in Asia Minor. Hundreds of German salesmen were traveling in Turkey, vigorously pushing their wares and studiously canvassing the markets to learn the wants of the people. The Krupp-owned Germania Shipbuilding Company was furnishing torpedoes to the Turkish navy; Ludwig Loewe and Company, of Berlin, was equipping the Sultan’s military machine with small arms; Krupp, of Essen, was sharing with Armstrong the orders for artillery. German bicycles were replacing American-made machines. There was a noticeable increase of German trade with Palestine and Syria. In 1899 a group of German financiers founded the Deutsche Palästina Bank, which proceeded to establish branches at Beirut, Damascus, Gaza, Haifa, Jaffa, Jerusalem, Nablus, Nazareth, and Tripoli-in-Syria.

Promoters, bankers, traders, engineers, munitions manufacturers, ship-owners, and railway builders all were playing their parts in laying a substantial foundation for a further expansion of German economic interests in the Ottoman Empire.[15]

The German Government Becomes Interested

In a sense, German diplomacy had paved the way for the Anatolian Railway concessions. For numerous reasons, which need not be discussed here, French and British influence at the Sublime Porte gradually declined during the decades of 1870–1890. British prestige, in particular, waned after the occupation of Egypt in 1882. The German ambassador at Constantinople during most of this period was Count Hatzfeld, an unusually shrewd diplomatist, who perceived the extraordinary opportunity which then existed to increase German prestige in the Near East. His place in the counsels of the Sultan became increasingly important, as he missed no chance to seize privileges surrendered by France or Great Britain.[16]

An instance of Count Hatzfeld’s activity was the appointment of a German military mission to Turkey. Until 1870 there had been a French mission in Constantinople, with almost complete control over the training and equipment of the Ottoman army. At the outbreak of the Franco-German War, however, the mission was recalled because of the crying need for French officers at the front. After the termination of hostilities, and again after the collapse of the Turkish defence against Russia in 1877, the Sultan requested the reappointment of the mission, but the French Government politely declined the invitation. The German ambassador seized upon this neglected opportunity and, in 1883, persuaded Abdul Hamid to invite the Kaiser to designate a group of German officers to serve with the Ottoman General Staff.[17]

In command of the German military mission despatched to Turkey in response to this invitation was General von der Goltz. This brilliant officer—who, appropriately enough, was to die in the Caucasus campaign of 1916—remained in Turkey twelve years, reorganizing the Turkish army, forming a competent general staff, establishing a military academy for young officers, and formulating plans for an adequate system of reserves. So great was his success that he won the lasting respect of Turkish military and civil officials; time and time again he was invited to return to Turkey as military adviser extraordinary; in 1909 he answered the call of the Young Turks and lent his ripened judgment to the solution of their distracting problems; he was granted the coveted title of Pasha. The personal prestige of von der Goltz was of no small importance in brightening Germany’s rising star in the Near East.[18]

Another event of first rate importance in the history of German ventures in the Ottoman Empire was the accession, in 1888, of Emperor William II. During the three decades of his reign the economic foundations of German imperialism were strengthened and broadened; the superstructure of German imperialism was both reared and destroyed. During his régime the German industrial revolution reached its height, and the empire, it seemed, became one enormous factory consuming great quantities of raw materials and producing a prodigious volume of manufactured commodities for the home and foreign markets. Simultaneously there was developed a German merchant marine which carried the imperial flag to the seven seas. A normal concomitant of this industrial and commercial progress was the expansion of political and economic interests abroad—renewed activity in the acquisition of a colonial empire; marked success in the further conquest of foreign markets; the creation of a great navy; the phenomenal increase of German investments in Turkey. It is no insignificant coincidence that German financiers received their first Ottoman railway concession in the year of the accession of William II and that the capture of Aleppo—ending once and for all the plan for a German-controlled railway from Berlin to Bagdad—occurred just a few days before his abdication.

From the first the Kaiser evinced a keen interest in the Ottoman Empire as a sphere in which his personal influence might be exerted on behalf of German economic expansion and German political prestige. He was quick to recognize the opportunities for German enterprise in a country where much went by favor, and where political influence could be effectually exerted for the furtherance of commercial interests. In one of a round of royal visits following his accession, the young Emperor, in November, 1889, paid his respects to the Sultan Abdul Hamid. Upon the arrival in the Bosporus of the imperial yacht Hohenzollern, the Kaiser and Kaiserin received an ostentatious welcome from the Sultan and cordial greetings from the diplomatic corps. It was suggested at the time that there was more than formal significance in this visit of the German sovereigns, coming, as it did, when prominent German financiers were engaged in constructing the first kilometres of an important Anatolian railway. This impression was confirmed when, shortly after the Emperor’s return to the Fatherland, a favorable commercial treaty was negotiated by the German ambassador at Constantinople and ratified by the German and Ottoman Governments in 1890.[19]

The expansion of German economic interests and political prestige in the Ottoman Empire was not looked upon with favor by Bismarck. The Great Chancellor was primarily interested in isolating France on the continent and in avoiding commercial and colonial conflicts overseas. In particular he had no desire to become involved in the complicated Near Eastern question—toward which at various times he had expressed total indifference and contempt—for fear of a clash with Russian ambitions at Constantinople. He realized that German investments in Turkey might lead to pressure on the German Government to adopt an imperial policy in Asia Minor, as, indeed, German investments in Africa had forced him to enter colonial competition in the Dark Continent.[20] When the Deutsche Bank first called the Chancellor’s attention to its Anatolian enterprises, therefore, Bismarck frankly stated his misgivings about the situation. In a letter to Dr. von Siemens, Managing Director of the Deutsche Bank, dated at the Foreign Office, September 2, 1888, he wrote:[21]

“With reference to the inquiry of the Deutsche Bank of the 15 ultimo, I beg to reply that no diplomatic objections exist to an application for a concession for railway construction in Asia Minor.

The Imperial Embassy at Constantinople has been authorized to lend support to German applicants for such concessions—particularly to the designated representative of the Deutsche Bank in Constantinople—in their respective endeavors in this matter.

The Board of Directors in its inquiry has correctly given expression to the assumption that any official endorsement of its plans, in the present state of affairs, would neither extend beyond the life of the concession nor apply to the execution and operation of the enterprise. As a matter of fact, German entrepreneurs assume a risk in capital investments in railway construction in Anatolia—a risk which lies, first, in the difficulties encountered in the enforcement of the law in the East, and, second, in the increase of such difficulties through war or other complications.

The danger involved therein for German entrepreneurs must be assumed exclusively by the entrepreneurs, and the latter must not count upon the protection of the German Empire against eventualities connected with precarious enterprises in foreign countries.”[22]

Bismarck disapproved of the visit of William II to Turkey in 1889. Failing to persuade the young Emperor to abandon the trip to Constantinople, the Chancellor did what he could to allay Russian suspicions of the purposes of the journey. Describing an interview which he had with the Tsar, in October, 1889, Bismarck wrote, in a memorandum recently taken from the files of the Foreign Office: “As to the approaching journey of the Kaiser to the Orient, I said that the reason for the visit to Constantinople lay only in the wish of our Majesties not to come home from Athens without having seen Constantinople; Germany had no political interests in the Black Sea and the Mediterranean; and it was accordingly impossible that the visit of our Majesties should take on a political complexion. The admission of Turkey into the Triple Alliance was not possible for us; we could not lay on the German people the obligation to fight Russia for the future of Bagdad.”[23] In 1890, however, Prince Bismarck was dismissed, and the chief obstacle to the Emperor’s Turkish policy was removed.

During the succeeding decade the German diplomatic and consular representatives in the Ottoman Empire rendered yeoman service in furthering investment, trade, and commerce by Germans in the Near East. It became proverbial among foreign business men in Turkey that no service was too menial, no request too exacting, to receive the courteous and efficient attention of the German governmental services. German consular officers were held up as models for others to pattern themselves after. The British Consul General at Constantinople, for example, informed British business men that his staff was at their disposal for any service designed to expedite British trade and investments in Turkey. “If,” he wrote, “any merchant should come to this consulate and say, ‘The German consulate gives such and such assistance to German traders, do the same for me,’ his suggestion would be welcomed and, if possible, acted on at once.”[24]

A judicious appointment served to reinforce the already strong position of the Germans in Turkey. In 1897 Baron von Wangenheim was replaced as ambassador to Constantinople by Baron Marschall von Bieberstein (1842–1912), a former Secretary of State for Foreign Affairs. Baron Marschall was one of the most capable of German bureaucrats. The Kaiser was glad to have him at Constantinople because his training and experience made him an admirable person for developing imperial interests there; his political opponents considered his appointment to the Sublime Porte a convenient method of removing him from domestic politics. The new ambassador’s political views were well known: he was a frank believer in a world-policy for Germany; he was an ardent supporter of colonialism, if not of Pan-Germanism; he was a bitter opponent of Great Britain; he espoused the cause of a strong political and economic alliance between the German and Ottoman Empires. What Baron Marschall did he did well. Occupying what appeared, at first, to be an obscure post, he became the foremost of the Kaiser’s diplomatists and for fifteen years lent his powerful personality and his practical experience to the furthering of German enterprise in Turkey.[25]

In 1898 William II made his second pilgrimage to the Land of Promise. Every detail of this trip was arranged with an eye to the theatrical: the enthusiastic reception at Constantinople; the “personally conducted” Cook’s tour to the Holy Land; the triumphal entry into the Holy City through a breach in the walls made by the infidel Turk; the dedication of a Lutheran Church at Jerusalem; the hoisting of the imperial standard on Mount Zion; the gift of hallowed land to the Roman Catholic Church; the visit to the grave of Saladin at Damascus and the speech by which the Mohammedans of the world were assured of the eternal friendship of the German Emperor.[26] The dramatic aspects of the royal visit were not sufficient, however, to obscure its practical purpose. It was generally supposed in western Europe that the Kaiser’s trip to Turkey was closely connected with the application of the Anatolian Railways for the proposed Bagdad Railway concessions.[27] But little objection was raised by the British and French press. Paris laughed at the obvious absurdity of a Cook’s tour for a crowned head and his entourage; London took comfort in the discomfiture which the incident would cause Russia. But there was no talk then of a great Teutonic conspiracy to spread a “net” from Hamburg to the Persian Gulf.[28]

The true significance of this royal pilgrimage of 1898 cannot be appreciated without some reference to its background of contemporary events. For the preceding four years the Ottoman Government had permitted, if not actually incited, a series of ruthless massacres of Christians in Macedonia and Armenia. European public opinion was unanimous in condemnation of the intolerance, brutality, and corruption of Abdul Hamid’s régime; the very name of the “Red Sultan” was anathema. Under these circumstances any demonstration of friendship and respect for the Turkish sovereign would be considered flagrant flaunting of public morality.[29] By Abdul Hamid, on the other hand, it would be welcomed as needed support in time of trouble. With the Kaiser the exigencies of practical politics triumphed!

It was appropriate, furthermore, that the year 1898 should be marked by some definite step forward in German imperialist progress in Turkey, for during that year notable advances had been made by German imperialism in other fields. On March 5 there was forcibly wrung from China a century-long lease of Kiao-chau and of certain privileges in the Shantung Peninsula, thus assuring to German enterprise a prominent position in the Far East. Two weeks later was passed the great German naval law of 1898, laying the foundation of a fleet that later was to challenge British supremacy of the seas. German diplomacy had developed interests in eastern Asia; it was developing interests on the seas and in western Asia; it had abandoned a purely Continental policy. No further signs were needed that a new era was dawning in German foreign affairs—unless, perhaps, it be mentioned that the great Prince Bismarck quietly passed away at Friedrichsruh on July 30 of that momentous year!

German Economic Interests Make for Near Eastern Imperialism

Bismarck’s policy of aloofness in the Near East, however desirable it may have been from the political point of view, could not have appealed to those statesmen and soldiers and business men who believed that diplomatic policies should be determined in large part by the economic situation of the German Empire. The interest of William II in Turkey was enthusiastically supported by all those who sought to have German foreign affairs conducted with full recognition of the needs of industrialized Germany in raw materials and foodstuffs, of the importance of richer and more numerous foreign markets for the products of German factories, and of the exigencies of economic, as well as military, preparation for war. The great natural wealth of the Ottoman Empire in valuable raw materials, the possibilities of developing the Near East as a market for manufactured articles, and the geographical situation of Turkey all help to explain why the economic exploitation of the Sultan’s dominions was a matter of more vital concern to Germany than to any other European power. To make this clear it will be necessary to digress, for a time, to consider the nature of the imperial problems of an industrial state and, in particular, the problems of industrial Germany.

Under modern conditions the needs of an industrial state are imperious. Such a state is dependent for its very existence upon an uninterrupted supply of foodstuffs for the workers of its cities and of raw materials for the machines of its factories. As its population increases—unless it be one of those few fortunate nations which, like the United States, are practically self-sufficient—its importations of foodstuffs mount higher and higher. As its industries expand, the demand for raw materials becomes greater and more diversified—cotton, rubber, copper, nitrates, petroleum come to be considered the very life-blood of the nation’s industry. It is considered one of the functions of the government of an industrial state—whether that government be autocratic and dynastic or representative and democratic—to interest itself in securing and conserving sources of these essential commodities, as well as to defend and maintain the routes of communication by which they are transported to the domestic market. The securing of sources of raw materials may involve the acquisition of a colonial empire; it may require the establishment of a protectorate over, or a “sphere of interest” in, an economically backward or a politically weak nation; or it may necessitate nothing more than the maintenance of friendly relations with other states. Protection of vital routes of communication may demand the construction of a fleet of battleships; it may be the raison d’être for a large standing army; it may necessitate only diplomatic support of capitalists in their foreign investments. Methods will be dictated by circumstances, but the impulse usually is the same.[30]

The German Empire was an industrial state, and its needs were imperious. In the face of a rapidly increasing population the nation became more and more dependent upon importations of foreign foodstuffs. Herculean efforts were made to keep agricultural production abreast of the domestic demand for grain: transient laborers were imported from Russia and Italy to replace those German peasants who had migrated to the industrial cities; machinery was introduced and scientific methods were applied; high protective tariffs were imposed upon imported foodstuffs to stimulate production within the empire. These measures, however, were insufficient to meet the situation; the greatest intensive development of the agricultural resources of the nation could not forestall the necessity of feeding some ten millions of Germans on foreign grain.[31]

German manufacturers, as well, were unable to obtain from domestic sources the necessary raw materials for their industrial plants. Many essential commodities were not produced at all in Germany and in only insignificant quantities in the colonies. Some German industries were almost wholly dependent upon foreign sources of supply for their raw materials. The most striking example of this was the textile manufactures, which had to obtain from abroad more than nine tenths of their raw cotton, jute, silk, and similar essential supplies.[32] Interruption of the flow of these or other indispensable goods would have brought upon German industrial centers the same paralysis which afflicted the British cotton manufactures during the American Civil War.

The German Empire had to pay for its imported foodstuffs and raw materials with the products of its mines and factories, with the services of its citizens and its ships, with the use of its surplus funds, or capital.[33] The development of a German export trade was the natural outcome of the development of German industry. And as German industries expanded, the demand for imported raw materials increased, thus rendering more necessary the extension of the export trade. The German industrial revolution of the late nineteenth century was at once the cause and the effect of the growing dependence of German economic prosperity upon foreign markets.[34]

But foreign commerce is not concerned with the sale of manufactured articles only. In its export trade, German industry was closely allied with German shipping and German finance. The services rendered German trade by the German merchant marine need not be reiterated; they are sufficiently well known. The relationship between the policies of German industry and the policies of German finance was no less important. The export of goods by German factories was supplemented by the so-called “export of capital” by German banks. Sometimes the German trader followed the German investor; sometimes the investor followed the trader. But whichever the order, the services rendered by the investor were to develop the purchasing power and the prosperity of the market, as well as to oil the mechanism of international exchange.[35] The industrial export policy and the financial export policy went hand in hand. Certainly this was the case in the Near East.

The German Empire depended for its welfare, if not for its existence, upon an uninterrupted supply of food for its workers and of raw materials for its machines. But this supply, in turn, was conditional upon the maintenance and development of a thriving export trade. The allies of this export trade were a great merchant marine and a vigorous policy of international finance and investment. Thus the nation which in 1871 was economically almost self-sufficient, by 1900 had extended its interests to the four corners of the earth. This could not have been without its effects upon German international policy. “The strength of the nation,” said Prince von Bülow, “rejuvenated by the political reorganization, as it grew, burst the bounds of its old home, and its policy was dictated by new interests and needs. In proportion as our national life has become international, the policy of the German Empire has become international.... Industry, commerce, and the shipping trade have transformed the old industrial life of Germany into one of international industry, and this has also carried the Empire in political matters beyond the limits which Prince Bismarck set to German statecraft.”[36]

From the German point of view, the call to German imperialism was clearly urgent, but the resources of German imperialism were seriously limited. The colonial ventures of the Empire had culminated in no outstanding successes and in some outstanding failures. Entering the lists late, the Germans had found the spoils of colonial rivalry almost completely appropriated by those other knights errant of white civilization, French, British, and Russian empire-builders. The few African and Asiatic territories which the Germans did succeed in acquiring were extensive in size, but unpromising in many other respects. With the exception of German East Africa the colonies were comparatively poor in the valuable raw materials so much desired by the factories of the mother country; they were unimportant as producers of foodstuffs. Attempts to induce Germans to settle in these overseas possessions were singularly unsuccessful. On the other hand, colonial enterprises had involved the empire in enormous expenditures aggregating over a billion marks; had precipitated a series of wars and military expeditions costing the nation thousands of lives and creating a host of international misunderstandings; had won for Germans widespread notoriety as poor colonizers, as tactless and autocratic officials, as ruthless overlords of the natives. It was no wonder that the German people seemed to be thoroughly discouraged and discontented with their colonial ventures.

However, even had the German colonies been richer than they were, they, alone, could not have solved the imperial problem of an industrialized Germany. German colonial trade was possessed of the same inherent weakness as German overseas commerce—it would be dependent, in the event of a general European war, upon British sea power. German industry could be effectually crippled by interruption of the flow of essential raw materials, such as cotton and copper, or by the cutting of communications with her foreign markets. It was questionable whether the German navy could be relied upon to keep the seas open.

Blockades, furthermore, exist not only in time of war, but in time of peace as well. European nations were surrounded by tariff barriers which seriously restricted the development of international trade and served to promote a system of national economic exclusiveness—a condition of affairs which harmonized only too well with the existing colossal military establishments. In this respect, of course, Germany was more sinner than sinned against. But in such an age it behooved every nation to build its industries, as well as its armies, with some view to the contingencies of war.

German statesmen and economists were by no means backward in understanding the situation. Although they had no disposition to overlook the development of the merchant marine and the navy, they believed this was not enough. They sought to build up in Central Europe a system of economic alliances, as they previously had effected a formidable military alliance. Thus might Germany and her allies become an economically self-sufficient unit, freed from dependence upon British sea power.[37] And into this alliance could be incorporated the Near East!

Beyond the Bosporus lay a country rich in oils and metals; a country capable of supplying German textile mills with cotton of superior quality; a country which in ancient times was fabulously wealthy in agricultural products; a country which gave promise of developing into a rich market for western commodities. Communication with this wonderland was to be established by a German-controlled railway upon which service could be maintained in time of war, as in time of peace, without the aid of naval power. What greater inducements could have been offered to German imperialists, living in an imperialist world? Turkey was destined to fall within the economic orbit of an industrialized Germany!

A distinguished German publicist said in 1903, “From the German point of view, it would be unparalleled stupidity if we did not most energetically do our part to acquire a share in the revival of the ancient civilization of Mesopotamia, Syria, and Babylonia. What we do not do others will surely do—be they British, French, or Russian; and the increased economic advantage which, through the Bagdad Railway, will accrue to us in the Nearer East would otherwise not only fail to be ours, but would serve to strengthen our rivals in diplomacy and business.”[38] Some years later, in the midst of the Great War, an American writer expressed much the same point of view: “Hemmed in on the west by Great Britain and France and on the east by Russia, born too late to extend their political sovereignty over vast colonial domains, and unable (if only for lack of coaling stations) to develop sea power greater than that of their rivals, nothing was more natural than the German and Austro-Hungarian conception of a Drang nach Osten through the Balkan Peninsula, over the bridge of Constantinople, into the markets of Asia. The geographical position of the Central European states made as inevitable a penetration policy into the Balkans and Turkey as the geographical position of England made inevitable the development of an overseas empire.”[39] Karl Helfferich has said that “it was neither accident nor deliberate purpose, as much as it was the course of German economic development, which led Germany to take an active interest in Turkey.”[40]

BIBLIOGRAPHICAL AND EXPLANATORY NOTES

[1] The Annual Register, 1888, pp. 44, 310.

[2] Good general statements of the transportation problem of Turkey during the two decades 1880–1900 are Verney and Dambmann, op. cit., Part III; J. Courau, La locomotive en Turquie d’Asie (Brussels, 1895), pp. 18–47; Corps de droit ottoman, Volume IV, pp. 117 et seq.

[3] Corps de droit ottoman, Volume IV, pp. 202–223, 237–242, etc.

[4] Bulletin de la Chambre de Commerce française de Constantinople, August 31, 1888, p. 10; September 30, 1888, p. 31. Cf., also a prospectus issued by a banker, Mr. W. J. Alt, “Heads of a Convention for the extension of the Haidar Pasha-Ismid Railway” (London, 1886), a copy of which was loaned to the author by Mr. Ernest Rechnitzer.

[5] The story of these negotiations is well told in a new book by Dr. Karl Helfferich, Georg von Siemens—ein Lebensbild (Leipzig, 1923), the proofs of which I have had the privilege of reading. For an official copy of the convention and by-laws of the Anatolian Railway Company (Firman Impérial de concession et statuts de la Société du Chemin de Fer Ottomane d’Anatolie, Constantinople, 1889), I am indebted to Dr. Arthur von Gwinner, of the Deutsche Bank. Cf., also, Administration de la dette publique ottomane—Rapport sur les opérations de l’année 1888 (Constantinople, 1889); Report of the Anatolian Railway Company, 1889, pp. 1–2; Corps de droit ottoman, Volume IV, pp. 120–142.

[6] Helfferich, op. cit., Part V; A. P. Brüning, Die Entwicklung des ausländischen, speciell des überseeischen deutschen Bankwesens (Berlin, 1907), pp. 14 et seq.; Report of the Anatolian Railway Company, 1889, p. 3; Report of the Deutsche Bank, 1892, p. 4, 1890, p. 4.

[7] Report of the Anatolian Railway Company, 1891, p. 20, 1892, pp. 16, 23.

[8] Actes de la concession du chemin de fer Eski Shehr-Konia (Constantinople, 1893); Report of the Anatolian Railway Company, 1896, pp. 4, 9.

[9] Corps de droit ottoman, Volume IV, pp. 191–197. The junction of the two systems at Afiun Karahissar did not immediately materialize. The distance from that town to Constantinople is longer by sixty-six kilometres than the distance to Smyrna; the latter port, therefore, is the better natural outlet for the products of Anatolia. This diversion of traffic to Smyrna the Anatolia Railway sought to avoid, it is said, by granting discriminatory rates in favor of through freight to Constantinople over its own lines. A rate war ensued between the Anatolian and Smyrna-Cassaba systems, and neither was willing to permit an actual joining of the tracks at Afiun Karahissar, with the result that for years the rails of the two roads lay a comparatively few yards apart. This absurd situation, so obviously detrimental to the interests of the two roads, was remedied by an agreement of 1899. Infra, pp. 59–60. Cf., also R. LeCoq, Un chemin de fer en Asie Mineure (Paris, 1907), pp. 23–24; Report of the Anatolian Railway Company, 1899, p. 3.

[10] A summary of the report of the Commission is to be found in Diplomatic and Consular Reports, No. 3140 (London, 1903), pp. 26 et seq. A statement of its membership and purposes is given in the Report of the Anatolian Railway Company, 1899, p. 9.

[11] Report of the Anatolian Railway Company, 1897, p. 3.

[12] Alldeutsche Blätter, December 17, 1899. It should be borne in mind, however, that until the Bagdad Railway concession was granted French financiers held the lead in the number of kilometres of railway in operation or contracted for. The situation in 1898 was as follows:

All of the British and German lines were in operation in 1898, whereas the French Syrian Railways were only partially completed.

[13] Statistisches Handbuch für das deutsche Reich, Volume 2, pp. 506, 510; Diplomatic and Consular Reports, No. 2950 (1902), pp. 5, 23; Turkey in Europe, No. 16 of the Foreign Office Handbooks, pp. 86–87.

[14] J. Riesser, Die deutschen Grossbanken und ihre Konzentration im Zusammenhang mit der Entwicklung der Gesamtwirtschaft in Deutschland (third edition, Jena, 1909); translated into English and published as Senate Document No. 593, Sixty-first Congress, Second Session, 1911. References here given are to the translation. In this connection cf. “The Oversea and Foreign Business of the German Credit Banks,” pp. 420 et seq.

[15] Syria and Palestine, p. 126; The Times, October 28, 1898, August 2 and 16, 1899.

[16] Karl Helfferich, Die deutsche Türkenpolitik (Berlin, 1921), pp. 10 et seq.; J. A. R. Marriot, The Eastern Question (Oxford, 1917), pp. 347 et seq.

[17] L. Ostrorog, The Turkish Problem (London, 1919), pp. 52–53; E. Dutemple, En Turquie d’Asie (Paris, 1883), pp. 131 et seq.

[18] For a biographical account of General von der Goltz (1843–1916) cf. F. W. Wile, Men Around the Kaiser (Philadelphia, 1913), Chapter XXVI. Bismarck consented to the appointment of von der Goltz’s military mission—which was not in accord with his general Eastern policy—as a sort of insurance against the possibility that chauvinism, Pan-Slavism, and anti-German elements in Russia should gain the ascendancy at the court of the Tsar. In such an event it might be possible to utilize Turkish bayonets and Turkish artillery, especially if they had been trained by Prussian officers. Memoirs of Prince Hohenlohe-Schillingsfürst (English translation, New York, 1906), Volume II, p. 268.

[19] Recueil d’actes internationaux de l’Empire Ottoman, Volume IV (1903), Document No. 960.

[20] Mary E. Townsend, Origins of Modern German Colonialism (New York, 1921), Chapters V-VII; Prince Bismarck, Reflections and Reminiscences (New York, 1899), Volume II, pp. 233 et seq.

[21] For this letter, hitherto unpublished, I am indebted to Dr. Karl Helfferich, son-in-law of the late George von Siemens.

[22] The italics are mine.

[23] Die grosse Politik der europäischen Kabinette, 1871–1914 (Berlin, 1922 et seq.), Volume VI, pp. 360–361. (A compilation of documents from the files of the Foreign Office, edited by a non-partisan commission appointed by the Government of the German Republic.) Of Bismarck’s policy in the Near East the Ex-Kaiser writes, “Bismarck spoke quite disdainfully of Turkey, of the men in high position there, and of conditions in that land.– I thought I might inspire him in part with essentially more favorable opinions, but my efforts were of little avail.... Prince Bismarck was never favorably inclined toward Turkey and never agreed with me in my Turkish policy.” W. von Hohenzollern, My Memoirs, 1878–1918 (New York, 1922), p. 27.

[24] Diplomatic and Consular Reports, No. 2950 (1902), p. 20.

[25] For information regarding the appointment of Baron Marschall to Constantinople the author is indebted to Dr. Arthur von Gwinner, who believes that the Baron was being sentenced to political exile when he was detailed to the Sublime Porte, but that his opponents overlooked the possibilities of the embassy at the Ottoman capital. Wile, op. cit., Chapter XVIII, gives a short biographical account of Baron Marschall.

[26] Cf. E. Lamy, “La France du Levant: Voyage de l’Empereur Guillaume II,” in Revue des deux mondes, Volume 150 (1898), pp. 880–911, Volume 151 (1899), pp. 315–348; E. Lewin, The German Road to the East (New York, 1917), pp. 105 et seq.; C. S. Hurgronje, The Holy War, Made in Germany (New York, 1915), pp. 70–71; The All Highest Goes to Jerusalem, being an English translation of a series of articles published in Le Rire (Paris) during 1898 (New York, 1917). In Germany the royal pilgrimage was intended to be taken seriously. Herr Heine, of the Munich Simplicissimus, was convicted of lèse majesté and imprisoned for six months for having published humorous cartoons of the Kaiser and his party on their travels. The Annual Register, 1898, pp. 255–258.

[27] The author found some difference of opinion in Germany regarding the connection between the Kaiser’s visit and the pending Anatolian and Bagdad concessions. Dr. von Gwinner denies that there was any such purpose behind the Emperor’s trip to the East—or, at least, if there was, that it was unsolicited by the promoters and not looked upon with favor by them. Dr. Helfferich, on the other hand, is convinced that His Majesty was directly concerned with the desirability of obtaining additional railway concessions for German financiers. The Kaiser himself agrees with Dr. Helfferich. Cf., My Memoirs, 1878–1918, p. 86.

[28] Cf. foreign correspondence in The Times (London), October 25, 1898, and days immediately thereafter.

[29] For an analysis of this situation see The Manchester Guardian, July 31, 1899, which took the stand that “for no sort of mercantile gain would a nation be justified in making friendly advances to the blood-stained tyrant of Armenia.”

[30] In this connection see Leonard Woolf, Economic Imperialism (London and New York, 1920), Chapter I; Ramsay Muir, The Expansion of Europe (New York, 1917), Chapter I; J. E. Spurr (editor), Political and Commercial Geology (New York, 1920), Chapter XXXII, entitled “Who Owns the Earth?”; Aspi-Fleurimont, “La Question du coton,” in Questions diplomatiques et coloniales, Volume 15 (1903), pp. 429–432; J. A. B. Scherer, Cotton as a World Power (New York, 1922). In addition, for the wider aspects of imperialism, consult H. N. Brailsford, The War of Steel and Gold (New edition, London, 1915), Chapter II; F. C. Howe, Why War? (New York, 1916), passim; Walter Lippman, The Stakes of Diplomacy (New York, 1915); J. A. Hobson, Imperialism: A Study (London, 1902).

[31] W. H. Dawson, The Evolution of Modern Germany (New York, 1908), Chapter XII. P. Rohrbach, Deutschland unter den Weltvölkern, p. 17.

[32] Riesser, op. cit., pp. 110, 121.

[33] It should be remarked here that the author is not unaware of the fallacy of speaking of “German trade” and “German industry.” He is cognizant of the fact that trade takes place not between countries, but between individuals. If he anthropomorphizes the German Empire for the purposes of this description, it is not because of either ignorance or malice, but for convenience.

[34] For further consideration of German economic progress during the late nineteenth century see: Dawson, op. cit., Chapters III, IV, XII, XVI; E. D. Howard, The Cause and Extent of the Recent Industrial Progress of Germany (New York, 1907); T. B. Veblen, Imperial Germany and the Industrial Revolution (New York, 1915); W. H. Dawson, Industrial Germany (London, 1913); Karl Helfferich, Germany’s Economic Progress and National Wealth (New York, 1913); G. Blondel, L’Essor industriel et commercial du peuple allemand (Paris, 1900).

[35] Paul Dehn, Weltwirtschaftliche Neubildungen (Berlin, 1904), passim.

[36] Bernhard von Bülow, Imperial Germany (English translation, New York, 1914), pp. 17, 18–20.

[37] The extent of German economic control of central and eastern Europe before the War is indicated by Mr. J. M. Keynes, in his book The Economic Consequences of the Peace (New York, 1920), pp. 17–18: “Germany not only furnished these countries with trade, but in the case of some of them supplied a great part of the capital needed for their own development. Of Germany’s pre-war foreign investments, amounting in all to about six and a half billion dollars, not far short of two and a half billions was invested in Russia, Austria-Hungary, Bulgaria, Rumania, and Turkey. And by the system of ‘peaceful penetration’ she gave these countries not only capital, but what they needed hardly less, organization. The whole of Europe east of the Rhine thus fell into the German industrial orbit, and its economic life was adjusted accordingly.” A frank German admission of a policy of a self-sufficient Central Europe is the work of Friedrich Naumann, Mittel-Europa, translated into English by C. M. Meredith and published under the title Central Europe (New York, 1917). See, especially, Chapters IV-VII. Cf., also, Ernst zu Reventlow, Deutschlands auswärtige Politik (3rd revised edition, Berlin, 1916), pp. 336 et seq.; K. H. Müller, Die Bedeutung der Bagdadbahn (Hamburg, 1916), p. 29.

[38] Paul Rohrbach, Die Bagdadbahn (Berlin, 1903), p. 16.

[39] H. A. Gibbons, The Reconstruction of Poland and the Near East (New York, 1917), pp. 57–58. The author is not in agreement with either Dr. Rohrbach or Dr. Gibbons. He certainly would hesitate to call any imperialist policy “inevitable.”

[40] Die deutsche Türkenpolitik, p. 8.

CHAPTER IV
THE SULTAN MORTGAGES HIS EMPIRE

The Germans Overcome Competition

During 1898 and 1899 the Ottoman Ministry of Public Works received many applications for permission to construct a railway to Bagdad. Whatever may have been thought later of the financial prospects of the Bagdad Railway there was no scarcity then of promoters who were willing and anxious to undertake its construction. It was not because of lack of competition that the Deutsche Bank finally was awarded the all-important concession.

In 1898, for example, an Austro-Russian syndicate proposed the building of a railway from Tripoli-in-Syria to an unspecified port on the Persian Gulf, with branches to Bagdad and Khanikin. The sponsor of the project was Count Vladimir I. Kapnist, a brother of the Russian ambassador at Vienna and an influential person at the Tsar’s court. Count Kapnist had the support of Pobêdonostsev, the famous Procurator of the Holy Synod, who was an avowed Pan-Slavist and an enthusiastic promoter of Russian colonization in Asia Minor.[1] The Sultan instructed his Minister of Public Works to study the Kapnist plan and submit a report. The Austro-Russian syndicate, however, made no further progress at Constantinople. The Sublime Porte obviously was opposed to any expansion of Russian influence in Turkey—a point of view which received the encouragement of the British and German ambassadors. Furthermore, in Russia itself there was opposition to Count Kapnist’s project. Count Witte, Imperial Minister of Finance, and foremost political opponent of Pobêdonostsev, emphasized the strategic menace to Russia of improved railway transportation in Turkey and sturdily maintained that Russian capital and technical skill should be kept at home for the development of Russian railways and industry. By the spring of 1899 the Kapnist plan had been shelved.[2]

In the meantime French bankers had become interested in the possibilities of constructing a railway from the Mediterranean to the Persian Gulf, utilizing the existing railways in Syria as the nucleus of an elaborate system. Their spokesman was M. Cotard, an engineer on the staff of the Smyrna-Cassaba Railway. This project was possessed of such strong financial and political support at Constantinople that the Deutsche Bank considered it best to negotiate for a merger with the French interests involved.[3] Accordingly conversations were held at Berlin early in 1899 between the Deutsche Bank and the Anatolian Railway Company, on the one hand, and the Imperial Ottoman Bank and the Smyrna-Cassaba Railway, representing French interests, on the other. The result was an important agreement of May 6, 1899, the chief provisions of which were as follows:[4]

1. The Deutsche Bank admitted the Imperial Ottoman Bank to participation in the proposed Bagdad Railway Company. German and French bankers were to be equally represented in ownership and control, each to be assigned 40% of the capital stock, the remaining 20% to be offered to Turkish investors. If British, or other capital were subsequently interested in the Company, the share of the new participants was to be taken from the German and French holdings in equal proportions.

2. A modus vivendi was arrived at between the Anatolian and Smyrna-Cassaba Railways. The prevailing rate-war was to be stopped; a joint commission was to be appointed to agree upon a uniform tariff for the two companies; a junction of the two lines was to be effected and maintained at Afiun Karahissar for reciprocal through traffic.

3. In order to assure the faithful execution of the agreement between the Anatolian and Cassaba railways, each of the companies was to designate two of its directors to sit on the board of the other.[5]

4. French proposals for the construction of a Euphrates Valley railway were to be withdrawn.

5. The French and German bankers were to use their best offices with their respective governments to secure united diplomatic support for the claims of the Deutsche Bank to prior consideration in the award of the Bagdad Railway concession.

This agreement temporarily removed all French opposition to the Bagdad Railway. M. Constans, the French ambassador at Constantinople, joined Baron Marschall von Bieberstein in cordial support of the new “Franco-German syndicate.”[6]

Competition had arisen, however, from a third source. During the summer of 1899 British bankers, represented in Constantinople by Mr. E. Rechnitzer, petitioned for the right to construct a railway from Alexandretta to Bagdad and the Persian Gulf. The terms offered by the British financiers were considered more liberal than any heretofore proposed,[7] and they were endorsed by the Ministry of Public Works. Mr. Rechnitzer enlisted the aid of Mahmoud Pasha, a brother-in-law of the Sultan. He secured the assistance of Sir Nicholas O’Connor, the British ambassador. He attended to the niceties of Oriental business by sending the Sultan and his aids costly presents.[8] He engineered an effective press campaign in Great Britain to arouse interest in his project. Just how much success Mr. Rechnitzer’s plan might have achieved on its own merits is an open question. It definitely collapsed, however, in October, 1899, when the outbreak of the Boer War diverted British attention and energies from the Near East to South Africa.[9] It was under these circumstances that the Sultan, on November 27, 1899, announced his decision to award to the Deutsche Bank the concession for a railway from Konia to Bagdad and the Persian Gulf.[10]

The success of the Germans was not unexpected. They had a strong claim to the concession, for, in 1888 and again in 1893, the Sultan had assured the Anatolian Railway Company that it should have priority in the construction of any railway to Bagdad. On the strength of that assurance, the Anatolian Company had conducted expensive surveys of the proposed line.[11] After a short period of sharp competition for the concession in 1899, the Deutsche Bank group was left in sole possession of the field—the Russian promoters had withdrawn because of lack of support at home; the French financiers had accepted a share in the German company in preference to sole responsibility for the enterprise; the British proposals had lost support when the Boer difficulty temporarily obscured all other issues. The diplomatic situation, furthermore, was distinctly favorable to the German claims. The Fashoda Affair and the serious Anglo-Russian rivalry in the Middle East had served to put Russia, France, and Great Britain at sixes and sevens, leaving Germans practically a free hand in the development of their interests in Asia Minor.

Aside from these purely temporary advantages, however, there were excellent reasons, from the Ottoman point of view, for awarding the Bagdad Railway concessions to the German Anatolian Railway Company. The usual explanations—that the soft, sweet-sounding flattery of William II overcame the shrewdness of Abdul Hamid; that Baron Marschall von Bieberstein dominated the entire diplomatic situation at the Porte; that the German military mission exerted a powerful influence in the final result—are more obvious than convincing. These were all contributing factors in the success of the Germans, but they were not determining factors. The reasons for the award of the concession to the Deutsche Bank were partly economic, partly strategic, partly political.

The Germans alone submitted proposals which met the demands of the Public Debt Administration and the Ottoman Government. They proposed to extend the existing Anatolian Railway from Konia, across the mountains into Cilicia and Syria, down the valley of the Tigris to Bagdad and Basra and the Persian Gulf. The railway which they had in mind would reach from one end of Asiatic Turkey to the other; in connection with the railways of southern Anatolia and of Syria, it would provide continuous railway communication between Constantinople and Smyrna in the north and west, with Aleppo, Damascus, Beirut, Mecca, and Mosul in the south and east. There were serious technical and financial difficulties in the construction of such a railway, it is true, but there were political and economic considerations which warranted the expenditure of whatever effort and funds might be necessary to carry the line to completion.

On the other hand, the groups other than the Germans proposed the construction of a trans-Mesopotamian railway which did not come up to specifications. They submitted plans calling for the building of a line from some Mediterranean port—such as Alexandretta or Tripoli-in-Syria—down the Euphrates valley to the Persian Gulf.[12] Such a line would have had obvious advantages, from the point of view of the concessionaires, over the projected German railway. The cost of construction would have been materially less, for it would have been unnecessary to build the costly sections across the Taurus and Amanus mountains. The prospects of immediate earning power were better, for the railway would have been able to take over some of the caravan trade from Arabia to the Syrian coast and from Mesopotamia to Aleppo. From the Ottoman point of view, however, the proposal was altogether unsatisfactory. The railway would have developed the southern provinces of the empire without connecting them with Anatolia, the homeland of the Turks themselves and the heart of the Sultan’s dominions. It might have promoted a separatist movement among the Arabs. Its termini on the Mediterranean and the Persian Gulf could have been controlled by the guns of a foreign fleet. From every standpoint—economic, political, strategic—the acceptance of such a proposal was out of the question.

Even had all other things been equal, it is probable that the German bankers would have been given preference in the award of the concession. The Turkish Government was determined that the Anatolian lines should be made the nucleus of the proposed railway system for the empire. That being the case, no purpose, other than the promotion of confusion, would have been served by awarding the Bagdad plum to interests other than those which controlled the Anatolian Railway Company. This reasoning was fortified by the fact that the Company had made an enviable record in its dealings with the Ottoman Ministry of Public Works. The existing lines were well constructed and were being operated in a manner entirely satisfactory to the Ottoman Government and to the peasantry and business men of Anatolia. And M. Huguenin, Assistant General Manager of the Anatolian system, announced that his Company would observe a similar policy in the construction and operation of the proposed Bagdad Railway. “We are determined,” he said, “to build a model line such as exists nowhere in Turkey, able in all respects to undertake efficiently an international service involving high speeds over the whole line.”[13]

From the political point of view, too, there were reasons for giving preference to German capitalists. Abdul Hamid was seeking moral and material assistance for the promotion of his favorite doctrine of Pan-Islamism. He sought to foster this movement, which looked toward the unification of Islamic communities for resistance to Christian European domination over the Moslem world. As Caliph of the Mohammedan world, Abdul Hamid placed himself at the head of those defenders of the faith who had been propagating the idea that Mussulmans everywhere must resist further Christian encroachment and aggression, be it political, economic, religious, cultural. That the Sultan’s primary motives were religious is doubtful. Apparently he believed that the Pan-Islamic movement could be utilized to the greater glory of his dynasty and his empire. As the tsars of Russia had utilized their position as head of the Orthodox Church for the purpose of strengthening the power of the autocracy, so Abdul Hamid proposed to exploit his position as Caliph for purposes of personal and dynastic aggrandizement.[14]

In awarding the Bagdad Railway concession, which was of such considerable economic and political importance, it was essential to choose the nationals of a power which would be sympathetic toward Pan-Islamism. Would it be Russia, whose tsars had set fires in Afghanistan, sought to destroy the independence of Persia, and threatened all of the Middle East? Would it be Great Britain, whose professional imperialists were holding in subjection more than sixty million Mohammedans in India alone? Would it be France, whose soldiers controlled the destinies of millions of Mussulmans in Algeria and Tunis? These nations could have no feeling for Pan-Islamism other than fear and hatred,[15] for it threatened their dominion over their Moslem colonies. Germany, however, had everything to gain and nothing to lose in lending support to Abdul Hamid’s Pan-Islamic program. She had practically no Mohammedan subjects and therefore had no reason to fear Moslem discontent. She had imperial interests which might be served by the revolt of Islam against Christian domination.[16]

Turkish patriots, as well as Moslem fanatics, would have preferred to see Germans favored in the award of economic concessions in the Ottoman Empire. The Germans came to Turkey with clean hands. Their Government had never despoiled the Ottoman Empire of territory and appeared to have no interests which could not be as well served by the strengthening of Turkey as by its destruction. On the other hand, Russia, traditional enemy of the Turks, sought, as the keystone of her foreign policy, to acquire Constantinople and the Straits. France, by virtue of her protectorate over Catholics in the lands of the Sultan, sought to maintain special privileges for herself in Syria and the Holy Land. Great Britain held Egypt, a nominal Turkish dependency, and was fomenting trouble for the Sultan in the region of the Persian Gulf.[17] Germany, it appeared, was the only sincere and disinterested friend of the Ottoman Empire!

The rising prestige of Germany in the Near East and the rapid expansion of German economic interests in Turkey, however, did not, during these crucial years of 1898–1900, arouse the fear or the cupidity of other European powers. Russia, it is true, objected for strategic reasons to the construction of the proposed Bagdad Railway via the so-called “northern” or trans-Armenian route from Angora. But when the Tsar was assured by the Black Sea Basin Agreement that a southern route from Konia would be substituted, M. Zinoviev, the Russian minister at Constantinople, withdrew his formal diplomatic protest.[18] The French Government adopted a policy of benevolent neutrality toward the claims of the Deutsche Bank for the concession, on the ground that the Imperial Ottoman Bank, representing powerful financial interests in Paris, was to be given a substantial participation in the proposed Bagdad Railway Company. The pact of May 6, 1899, between the German and French promoters satisfied even M. Delcassé![19]

In Great Britain, likewise, there was the friendliest feeling toward the German proposals. When the Kaiser made his second visit to the Near East in 1898 the London Times said: “In this country we can have nothing but good wishes for the success of the Emperor’s journey and for any plans of German commercial expansion which may be connected with it. Some of us may perhaps be tempted to regret lost opportunities for our own influence and our own trade in the Ottoman dominions. But we can honestly say that if we were not to have these good things for ourselves, there are no hands we would rather see them in than in German hands.”[20] The Morning Post of August 24, 1899, expressed the hope that no rivalry over the Bagdad Railway would prejudice the good relations between Great Britain and Germany. “So long as there is an efficient railway from Haidar Pasha to Bagdad, and so long as the door there is open, it should not really matter who makes the tunnels or pays the porters. If it should be necessary to insist on an open door, the Foreign Office will probably see to it; while if it should happen to be, as usual, asleep, there are always means of poking it up. As a matter of general politics it may not be at all a bad thing to give Germany a strong reason for defending the integrity of Turkey and for resisting aggression on Asia Minor from the North.”

Sympathetic consideration of German expansion in the Near East was not confined to the press. Cecil Rhodes, great apostle of British imperialism, visited Germany in the spring of 1899 and came away from Berlin favorably disposed toward the Bagdad Railway and none the less pleased with the Kaiser’s apparent enthusiasm for the Cape-to-Cairo plan. In November of the same year William II paid a royal visit to England. It was then that Joseph Chamberlain, Secretary for the Colonies, learned the details of German plans in the Ottoman Empire, but, so far from being alarmed, he publicly announced his belief in the desirability of an Anglo-German entente. The almost simultaneous announcement of the award of the preliminary Bagdad Railway concession met with a favorable reception from the British press.[21]

At the same time, however, less cordial sentiments were expressed toward Russia and France. There was general agreement among the London newspapers regarding at least one desirable feature of the Bagdad Railway enterprise: the discomfiture it would be certain to cause the Tsar in his imperial ambitions in the Near East. The Globe characterized as “impudence” the desire of Russia to regard Asiatic Turkey as “a second Manchuria.”[22] No love was being lost, either, on France. The Daily Mail of November 9, 1899, said: “The French have succeeded in wholly convincing John Bull that they are his inveterate enemies. England has long hesitated between France and Germany. But she has always respected German character, while she has gradually come to feel scorn for France. Nothing in the nature of an entente cordiale can exist between England and her nearest neighbor. France has neither courage nor political sense.”

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]

The Locomotive Is to Supplant the Camel

The Bagdad Railway was to revive the “central route” of medieval trade—to traverse one of the world’s historic highways. It was to bring back to Anatolia, Syria, and Mesopotamia some of the prosperity and prestige which they had enjoyed before the explorations of the Portuguese and Spaniards had opened the new sea routes to the Indies.[33]

The starting point of the new railway was to be Konia. This town of 44,000 inhabitants, situated high in the Anatolian plateau, was a landmark in the Near East. It was once the capital of the Seljuk Turks and during its heyday had been a crossroads of the caravan routes of Asia Minor. Along one of these old routes to the northwest ran the Anatolian Railway, with which the Bagdad line was to be linked. From Konia the new railway was to cross the Anatolian table-lands, at an average altitude of 3500 feet, passing through the towns of Karaman and Eregli. Just beyond the latter town are the foothills of the Taurus, the first of the mountain barriers between Asia Minor and the Mesopotamian valley. In crossing the Taurus range the railway was to pass through the famous Cilician Gates, down the eastern slope into the fertile Cilician plain. At Adana, center of the trade of this region, a junction was to be effected with the existing railway to Mersina, a small port on the Mediterranean.[34]

Formidable engineering difficulties faced the succeeding stretch of the railway. Beyond Adana stood the second mountain barrier of the Amanus range, through which there was no natural pass, and it was apparent that costly blasting and tunneling would be required before the hills could be pierced.[35] Once beyond the mountains the railway could be carried quickly to Aleppo, a city of 128,000, “the emporium of northern Syria,” and a meeting place for the Mesopotamian, Syrian, and Anatolian trade-routes. At this point connections were to be established with the important railways of Syria, providing direct communication with Hama, Homs, Tripoli-in-Syria, Beirut, Damascus, Jaffa, and Jerusalem. In fact, enthusiastic Syrians have prophesied that when all projected transcontinental railways are completed in Europe, Asia, and Africa, Aleppo will become “the crossroads of the world”—a junction point for rail communication between Berlin and Bagdad, Calais and Calcutta, Bordeaux and Bombay, Moscow and Mecca, Constantinople and Cairo and Cape Town.[36] Seventy miles away from Aleppo, along one of the few good wagon roads in Turkey, lay the important Mediterranean port of Alexandretta. Leaving Aleppo, the Bagdad Railway was to turn east, crossing a desert country, to Nisibin and to Mosul, on the Tigris. From this sector of the railway it was proposed to construct several short spurs into the Armenian foothills, as well as a longer branch from Nisibin to Diarbekr and Kharput.

The city of Mosul is the northern gateway to the Mesopotamian valley, the “Land of the Two Rivers.” In medieval times it was a center of caravan routes between Persia, Mesopotamia, Syria, and Anatolia, and once was famed for its textile manufactures, which produced a cloth named after the city, “muslin.” It is located on the site of a suburb of the ancient city of Nineveh and guards a high pass leading through the mountains into Armenia. In 1903 it had a population of 61,000 and bade fair, after the completion of the Bagdad Railway, to regain some of its lost lustre. South and southeast of Mosul flows the Tigris River all the way to the Persian Gulf. Along the valley of this river was to run the new railway, through the towns of Tekrit, Samarra, and Sadijeh, to Bagdad.[37]

In 1903 the splendor of the ancient city of Bagdad was very much dimmed. Although it still was the center of an important caravan trade with Persia, Arabia, and Syria, its prosperity was but a name compared with the riches which the city had enjoyed before the commercial revolution of the sixteenth century. The population of 145,000—in part nomad—was to a large extent dependent upon the important export trade in dates and cereals, amounting, in 1902, to almost £1,000,000. All told, the trade of Bagdad was valued at about £2,500,000 annually. Whether the shadow of the former great Bagdad could be transformed into a living thing was an open question.[38]

Five hundred miles south of Bagdad is the Persian Gulf,[39] the proposed terminus of the Bagdad Railway. About sixty miles north of the Gulf, located on the Shatt-el-Arab—the confluence of the Tigris and Euphrates Rivers—is the port of Basra, the outlet for the trade of Bagdad. Communication between these two Mesopotamian cities was carried on, in 1903, by means of a weekly steamer service operated by the English firm of Lynch Brothers, under the name “The Euphrates and Tigris Steam Navigation Company, Ltd.” The Lynch Brothers—typical British imperial pathfinders—had established themselves at Basra during the decade 1840–1850 and had succeeded during the following half-century in securing a practical monopoly of the river trade from Bagdad to the Persian Gulf. The absence of effective competition and the hesitancy of the Turkish Government to grant permission for the operation of additional steamers were responsible for a totally inadequate service. It was not uncommon for freight to stand on the wharves at Bagdad and Basra for three months or more awaiting transportation. Under these circumstances it was to be expected that freight charges would be exorbitant; it cost more to transfer cargoes from Bagdad to Basra than from Basra to London. The advent of the Bagdad Railway promised great things for the trade of lower Mesopotamia and Persia.[40]

It was the aim of the Turkish Government and the concessionaires not only to compete with the river trade of the Tigris, but to develop the Euphrates valley as well, there being no steamer service on the latter river. With this in mind, it was decided to divert the railway beyond Bagdad from the Tigris to the Euphrates and down the valley to Basra. For a time Basra was to mark the terminus of the railway; the concession made provision, however, for the eventual construction of a branch “from Zubeir to a point on the Persian Gulf to be agreed upon between the Imperial Ottoman Government and the concessionaires.”[41]

Of considerable importance was a proposed branch line from Sadijeh, on the Tigris, to Khanikin, on the Persian frontier. This railway, it was believed, would take the place of the existing caravan route from Bagdad to Khanikin and thence to Teheran. The annual value of British trade alone transported via this route was estimated at about three quarters of a million pounds sterling.[42]

The Bagdad Railway, as thus projected, was one of the really great enterprises of an era of dazzling railway construction. Here was a transcontinental line stretching some twenty-five hundred miles from Constantinople, on the Bosporus, to Basra, on the Shatt-el-Arab—a project greater in magnitude than the Santa Fé line from Chicago to Los Angeles or the Union Pacific Railway from Omaha to San Francisco.[43] It was a promise of the rejuvenation of three of the most important parts of the Ottoman Empire—eastern Anatolia, northern Syria, and Mesopotamia. It was to open to twentieth-century steel trains a fifteenth-century caravan route. It was to replace the camel with the locomotive.

The Sultan Loosens the Purse-Strings

There are special and peculiar problems connected with the construction of railways in the economically backward areas of the world. In well populated regions, such as western Europe, railways have been built to accommodate existing traffic; in sparsely populated regions, such as eastern Russia and western United States, they have been constructed chiefly to create new traffic. In the economically advanced countries of the world the railway has been the result of civilization; in the backward countries it has been the outpost of civilization. A new railway in an undeveloped region is obliged at the outset to concern itself mainly with the upbuilding of the territory through which it runs, in order to assure abundant traffic for the future; during this period its receipts are rarely, if ever, adequate to meet the costs of operation. Private capital cannot be expected to assume alone the risk and burden thus involved, but the public service which the railway renders during this critical time justifies the government in subsidizing the enterprise until it can become self-supporting. The granting of state subventions has been a common practice of the nineteenth and twentieth centuries. China time and time again has pledged national revenues in support of railway construction; the Latin-American countries have been conspicuous exemplars of the same practice; more than half of the railways of Russia were constructed with government funds.[44]

There was every reason to believe that the Bagdad Railway would be built with some system of state guarantees. Almost every railway in Asiatic Turkey at one time or another had been the recipient of a government subvention, and the proposed trans-Mesopotamian railway faced many more obstacles than had faced any then in operation. The provinces through which the Bagdad Railway was to pass were sparsely settled and were too backward, economically, to warrant the construction of a railway for the accommodation of existing traffic;[45] the German technical commission of 1899 had pointed out that the estimated gross operating revenue for some years would be entirely inadequate to pay the expenses of running trains even if there should be an unlooked for volume of passenger and mail service to India. In time, it was believed, improved transportation and greater political security would induce immigration and produce widespread economic prosperity in the provinces of Anatolia, Syria, and Mesopotamia, thus assuring financial independence to the railway.[46] During the interim, however, a state guarantee appeared to be necessary.

Under the terms of the convention of 1903, the Turkish Government undertook partially to finance the construction of the Bagdad Railway. For each kilometre of the line built the Government agreed to issue to the Company the sum of 275,000 francs, nominal value, in Imperial Ottoman bonds, to be secured by a first mortgage on the railway and its properties.[47] The payment of interest and sinking fund on these bonds was to be guaranteed by the assignment to the Public Debt Administration for this purpose of the revenues of certain of the districts through which the railway was to pass. For the purpose of financing the first section of two hundred kilometres beyond Konia, there was delivered to the Company on March 5, 1903, an issue of fifty-four million francs of “Imperial Ottoman Bagdad Railway Four Per Cent Bonds, First Series.”[48] Similar payment for the construction of subsequent sections was to be made the subject of further agreement between the Government and the concessionaires.

In addition to supplying in this manner the actual funds for the building of the railway, the Ottoman Government guaranteed gross operating receipts of forty-five hundred francs annually for each kilometre of the line open to traffic. If the receipts failed to reach that sum, the Government was to reimburse the Company for the deficiency. If the receipts amounted to more than forty-five hundred francs per kilometre in any given year, the excess over that amount to ten thousand francs was to belong to the Government; any excess over and above ten thousand francs was to be divided sixty per cent to the Government, forty per cent to the Railway. The Government also agreed to reimburse the Company, in thirty annual payments of three hundred fifty thousand francs, for such improvements as might be necessary to prepare the Anatolian Railways for the initiation of a through express service to the Persian Gulf and, furthermore, to subsidize that express service at the rate of three hundred fifty thousand francs annually from the date of the completion of the main line to Aleppo.[49]

Closely connected with these financial guarantees were grants of public lands. Lands owned by the Government and needed for right-of-way were transferred to the concessionaires free of any charge. Additional land required for construction purposes might be occupied without rental as well as worked by the Company for sand and gravel. Wood and timber necessary for the construction and operation of the railway might be cut from State-owned forests without compensation. The concessionaires were permitted to operate mines within a zone twenty kilometres each side of the line, subject to such regulations as might be laid down by the Ministry of Public Works. As a public utility, the railway was granted the right of expropriation of such privately owned land as might be essential for the right-of-way, as well as quarries, gravel-pits, or other properties necessary for purposes of construction. The Company was authorized, also, to conduct researches for objects of art and antiquity along the route of the railway![50]

In the foregoing respects the Bagdad Railway Convention was by no means revolutionary in character. In issuing its bonds for the purpose of financing railway construction, in pledging public revenues as a guarantee of traffic receipts, in granting public lands for right-of-way, the Imperial Ottoman Government was following wellestablished precedents of the nineteenth century. The United States, for example, had adopted similar measures to encourage the building of transcontinental railways. To cite a single instance, Congress granted the promoters of the Union Pacific system a right-of-way through the public domain, twenty sections of land on each side of each mile of the railway, and a loan of bonds of the United States to an amount of fifty million dollars. Between 1850 and 1873 alone the Government transferred to the railways some thirty-five million acres of public lands, an area in excess of that of the State of New York.[51]

In certain other respects, however, the Bagdad Railway Convention was radical and far-reaching in its innovations. Worthy of first mention among its unusual provisions is the sweeping tax exemption granted the concessionaires by Article 8: “Manufactured material for the permanent way and materials, iron, wood, coal, engines, cars and coaches, and other stores necessary for the initial establishment as well as the enlargement and development of the railway and everything pertaining thereto which the concessionaires shall purchase in the empire or import from abroad shall be exempt from all domestic taxes and customs duties. The exemption from customs duties shall also be granted the coal necessary for the operation of the road, imported abroad by the concessionaires, until the gross receipts of the line and its branches reach 15,500 francs per kilometre. Likewise, during the entire period of the concession the land, capital, and revenue of the railway and everything appertaining thereto shall not be taxed; neither shall any stamp duty be charged on the present Convention or on the Specifications annexed thereto, the additional conventions, or any subsequent instruments; nor on the issue of Government bonds; nor on the amounts collected by the concessionaires on account of the guarantee for working expenses; nor shall any duty be levied on their stock, preferred stock and bonds, or on the bonds which the Imperial Ottoman Government shall issue to the concessionaires.” Thus the Bagdad Railway not only was assured of a subsidy constituting a preferred claim on certain taxes collected from the Turkish peasantry, but, in addition, was exempted from the payment of important contributions to the national revenue. The extent to which such an arrangement would confound confusion will be clear if one will recall that many other restrictions on the collection and disbursement of public funds were vested in the Ottoman Public Debt Administration.[52]

Incidental to the railway, the Bagdad Company was granted other valuable concessions. The corporation was given permission to establish and operate tile and brick works along the line of the railway. For the direct and indirect use of the railway and its subsidiary enterprises the Company was authorized to establish hydro-electric stations for the generation of light and power. The erection of necessary warehouses and depots was permitted as essential to the proper operation of the railway. The Anatolian Railway was empowered to provide for satisfactory ferry service between Constantinople and Haidar Pasha, in order to insure direct sleeping-car service from Europe to Asia and to provide other facilities for through traffic. All of these subsidiary projects were to enjoy the same exemption from taxation as the railway itself.[53]

The concessionaires were granted the right of constructing at Bagdad, Basra, and at the terminus on the Persian Gulf modern port facilities, including “all necessary arrangements for bringing ships alongside the quay and for the loading, unloading, and warehousing of goods.” During the period of the construction of the railway the Company was granted rights of navigation on the Tigris, the Euphrates, and the Shatt-el-Arab for the transportation of materials and supplies necessary to the building and operation of the main line and its branches.[54] These river and harbor concessions aroused the fear and the rage of the Lynch Brothers, who, as we shall see, were to be among the leaders of British opposition to the Bagdad Railway.[55]

These, then, were the outstanding economic provisions of the Bagdad Railway Convention of 1903. The Imperial Ottoman Government assumed the cost of the construction of the railway and, in addition, guaranteed a certain minimum annual return on each kilometre in operation. It pledged for these purposes the taxes of the districts through which the railway was to pass, and it deputed the Ottoman Public Debt Administration to collect these revenues and supervise payments to the concessionaires. As additional compensation to the Company it made large grants of public lands and conceded valuable privileges indirectly connected with the construction of the railway. In this manner the Sultan mortgaged his empire. But mortgages have their purposes, and Abdul Hamid hoped for big things from the Bagdad Railway.

Some Turkish Rights Are Safeguarded

As mortgagor the Sultan was certain to insist upon the recognition and protection of certain rights. To assure observance by the concessionaires of their obligations under the convention, supervision over construction, operation, and maintenance of the railway was vested in the Ministry of Public Works, represented by two Imperial Railway Commissioners. As a guarantee of good faith the Company was obliged to deposit with a Constantinople bank a bond of £30,000, subject to release only upon the completion of the entire line. The Ottoman Government was determined, also, that the concession, far-reaching as were its implications, should not lead to additional extra-territorial rights, or “capitulations,” in favor of foreign powers. The concessionaires were forbidden to contract for the transportation of foreign mails, or to perform other services for the foreign post offices in Turkey, without the formal approval of the Ottoman Government. It was specified, also, that, inasmuch as the Anatolian and the Bagdad Railway Companies were Ottoman joint-stock corporations, all disputes and differences between the Government and the Companies, or between the Companies and private persons, “arising as a result of the execution or interpretation of the present Convention and the Specifications attached thereto, shall be carried before the competent Ottoman courts.” It was further provided that the concessionaires “must correspond with the State Departments in Turkish, which is the official language of the Imperial Ottoman Government!”[56]

The Government was sincere in its determination that the railway should become a powerful instrument in the economic development of the backward provinces of the empire. A significant clause specified that the section between Bagdad and Basra should not be placed in operation before the section between Konia and Bagdad should have been opened to traffic, although immediate operation of trains on the former section would have enabled the Company to compete with the valuable trade of the Lynch Brothers on the Tigris. The traffic between Bagdad and Basra would have been profitable and would thus have decreased by a considerable figure the total subsidies the Treasury might be obliged to pay for railway operation. It was of more immediate concern to the Turkish Government, however, that southern Mesopotamia should be connected by an economic and political link with the rest of the Sultan’s dominions. Elaborate regulations were laid down regarding a minimum train service which the Company was required to supply, and it was specified in this connection that Turkish mails, together with postal employees and officials, should be transported without charge and under such other conditions as the Government might stipulate. To forestall discriminatory treatment of passengers and shippers maximum rates were prescribed for all classes of traffic, including express, insurance, and similar supplementary services; it was decreed that “all rates, whether they be general, special, proportional, or differential, are applicable to all travelers and consignors without distinction”; the concessionaires were “formally prohibited from entering into any special contract with the object of granting reductions of the charges specified in its tariffs.”[57] This last provision was of the utmost importance, as it enabled Germans and Turks alike to point to the railway as an outstanding example of the economic “open door.”

One of the chief interests of the Turkish Government in the construction of the Bagdad Railway was the possibility of its utilization for military purposes. In time of peace for purposes of maneuvers or the suppression of rebellion, in time of war for purposes of mobilization, the Company was required, upon requisition of the military authorities, to place at the disposal of the Government its “entire rolling stock, or such as might be necessary, for the transportation of officers and men of the army, navy, police or gendarmerie, together with any or all equipment.” The Government undertook to maintain order along the line and to construct such fortifications as it might consider necessary to defend the railway against invading armies, and the Company was obliged to expend, under the direction of the Minister of War, a total of four million francs for the construction of military stations. To give effect to all of these provisions, a special military convention was to be drawn up and approved by the Company and the Minister of War.[58]

Upon the expiration of the concession all rights of the concessionaires in the railway, port works, and other subsidiary enterprises were to revert, free of all debt and liability, to the Imperial Government. In the meantime, a semblance of Turkish nationality was to be assured the enterprise by the stipulation that the railway employees and officials should wear the fez and such uniform as might be approved by the Government. It was contemplated, also, that within five years after the opening of each section to traffic the whole of the operating staff, except the higher officials, should be composed exclusively of Ottoman subjects.[59]

Appended to the Bagdad Railway Convention was a secret agreement binding the Company not to encourage or install foreign settlements or colonies in the vicinity of the Anatolian or Bagdad Railways.[60] Although the Sultan had mortgaged his empire, at least he was determined to retain possession![61]

BIBLIOGRAPHICAL AND EXPLANATORY NOTES

[1] On this point cf. M. Solovieff, La Terre Sainte et la société impériale de Palestine (Petrograd, 1892). The society there referred to was said to be liberally patronized by the Tsar and other members of the imperial family.

[2] For details of the Kapnist plan see The Times (London), December 17, 1898; The Euphrates Valley Railway—a prospectus (London, 1899).

[3] In a memorandum of June 10, 1899, to the Sultan, Dr. Kurt Zander, General Manager of the Anatolian Railway Company, said that, in accordance with the wishes of the Sultan—and “to avoid all obstacles and avert every possibility of opposition”—his Company sought to arrive at a satisfactory understanding with the Smyrna-Aidin and Smyrna-Cassaba railways. All proposals to the Smyrna-Aidin Company, however, “met with evasive answers, which finally resulted in a termination of negotiations.” Cf., also, E. Aublé, Bagdad—son chemin de fer, son importance, son avenir (Paris, 1917), pp. 9 et seq.

[4] For a copy of the text of this agreement the author is indebted to Mr. E. Rechnitzer. Summaries were published in The Times, August 10, 1899; Le Temps (Paris), August 15, 1899; Corps de droit ottoman, Volume IV, pp. 155–156.

[5] In June, 1899, the Anatolian Railway Company elected to its Board of Directors M. L. Rambert, of the Imperial Ottoman Bank, and in June, 1900, M. Gaston Auboyneau, of the same institution. The new directors replaced Mr. George Henry Maxwell Batten, of London, and Sir Edward F. G. Law, of the Ottoman Public Debt Administration. The refusal of the Smyrna-Aidin line to come to a working agreement with the Anatolian Company thus removed the last British directors from the board of the latter. Cf. Reports of the Anatolian Railway Company, 1898–1900, passim.

[6] A letter from Mr. E. Rechnitzer to the Sultan, dated August 16, 1899, accuses M. Constans of having publicly referred to the “accord” between French and German interests in Turkish railways. Dr. Karl Helfferich states that the agreement between the two railway companies was supplemented by a gentlemen’s agreement between the two ambassadors. Die Vorgeschichte des Weltkrieges (Berlin, 1919), p. 127. This would seem to be confirmed by André Chéradame, op. cit., pp. 48 et seq.

[7] The proposals previously made called for an absolute guarantee of several thousands of francs income per kilometre per annum. Mr. Rechnitzer’s plan called for “an annual guarantee of 15,000 francs in gross receipts per kilometre, the said guarantee to be paid exclusively out of the excess of the tithes of the vilayets through which the railway is to pass; it being understood that in the event that the excess of such tithes be not sufficient to defray the kilometric guarantee, the concessionaire shall have no redress against the Imperial Government on account of the insufficiency.” Memorandum of May 14, 1899, from Mr. Rechnitzer’s files. Although this plan had the great advantage of requiring no immediate payments from the Ottoman Treasury, it probably would have cost Turkey more in the long run, for the guarantee specified was excessively high. Compare with provisions of the Bagdad Railway concession of March, 1903, infra. Mr. Rechnitzer also asked for extensive port privileges in Alexandretta and in the port to be determined on the Persian Gulf. The chief features of the plan were outlined in a pamphlet published in London, July 29, 1899, entitled The Euphrates Valley Railway.

[8] Mr. Rechnitzer now has in his possession a beautiful watch—inlaid with a map of the Ottoman Empire, in precious stones, showing the route of the proposed Euphrates Valley Railway—which he presented to Abdul Hamid in 1899. He repurchased it at a public auction held in Paris after the Young Turk revolution of 1909.

[9] In a letter dated September 30, 1922, to the author Mr. Rechnitzer outlines the situation as follows: “My offer being much more favorable than that of the Germans, it seemed likely in August, 1899, that it would be accepted. Unfortunately the Transvaal War broke out in the autumn of that year, and the German Emperor, a few days after the declaration of war, specially came to London to ask our Government to give him a free hand in Turkey. It appears that there was an interview between the Emperor and Mr. Joseph Chamberlain, who was more interested in Cecil Rhodes’ scheme in Africa than in my scheme in Turkey. As a consequence Sir Nicholas O’Connor was instructed to inform the Turkish Government that the British Government’s support was withdrawn from my offers.” It is only fair to add, however, that there may have been other factors in the situation. The Financial News (London), of August 17, 1899, intimated that Mr. Rechnitzer’s proposal did not have sufficiently strong financial backing; that it was more Austrian than British; that the support of the British Government was more formal than whole-hearted.

[10] Report of the Anatolian Railway Company, 1899, pp. 9–10; The Annual Register, 1899, p. 292. Simultaneously the Sultan granted the Deutsche Bank group a concession for the construction of port and terminal facilities at Haidar Pasha, across the Straits from Constantinople. Sweeping privileges were granted for the building of docks, stations, sidings, and quays to a subsidiary of the Anatolian Railway, the Haidar Pasha Port Company. The latter company completed a handsome station and terminal at Haidar Pasha in 1902, the year before the definitive Bagdad Railway concession. Furthermore, it entered into close coöperation with the Mahsoussie Steamship Company, a Government-owned company operating a ferry service between Constantinople and the Asiatic side of the Straits; in this manner adequate service was assured passengers and freight from European to Asiatic points. The text of the concession is to be found in Corps de droit ottoman, Volume III, pp. 342–351. Cf., also, Report of the Anatolian Railway Company, 1902, p. 8.

[11] Supra, pp. 31–34.

[12] The single exception was Mr. Rechnitzer’s plan, which provided that within five years of the award of the concession, the Sultan might require the construction of a spur from Alexandretta to Konia, on terms to be agreed upon between the Government and the concessionaire. The chief feature of Mr. Rechnitzer’s plan, however, unquestionably was the railway from Alexandretta to the Persian Gulf—i.e., the Syrian and Mesopotamian, not the Anatolian and Cilician, sections. Furthermore, there were political objectives connected with the Rechnitzer proposal which, however attractive to British imperialists, could not have been regarded with equanimity by the Sultan. The following are typical quotations from Mr. Rechnitzer’s prospectus: “It has long been the object of English statesmen to consolidate the position of England in the Persian Gulf, where British interests (both political and commercial) are now paramount. With a railway in this region controlled by British interests ... a very strong foothold would accrue to British influence” (p. 12). Among the advantages of the proposed railway are listed the following (pp. 17–18): “It will place under British control two important ports, one on the Mediterranean and the other on the Persian Gulf; it will strengthen British influence in Turkey and in the Persian Gulf, and indirectly, in Persia and Afghanistan; it will afford England powerful means of exercising her influence over the territory of Central Persia, and of establishing new commercial enterprises over an enormous area of unexploited country of exceptional wealth.”

[13] Quoted by A. D. C. Russell, “The Bagdad Railway,” in The Fortnightly Review, Volume 235 (1921), p. 312. Cf., also, Corps de droit ottoman, Volume IV, pp. 153 et seq.

[14] Pan-Islamism started as a religious and cultural revival but rapidly took on political and economic significance. Later, in connection with Turkish nationalism (see infra, Chapter IX), it became a serious international problem. A short, popular discussion of the rise of Pan-Islamism is Lothrop Stoddard’s The New World of Islam (New York, 1921), Chapters I, II, V. Cf., also, Mohammedan History, No. 57 of the Foreign Office Handbooks (London, 1920), Part I; G. Charmes, L’avenir de la Turquie: le pan-islamisme (Paris, 1883); A. J. Toynbee, Nationality and the War (London, 1915), pp. 399–411, and Turkey: a Past and a Future (New York, 1917); Tekin Alp, Türkismus und Pantürkismus (Weimar, 1915); C. Snouck Hurgronje, The Holy War, “Made in Germany” (New York, 1917). Regarding Abdul Hamid’s place in the Pan-Islamic movement cf. Mohammedan History, pp. 42–46.

[15] Great Britain, characteristically enough, took steps to protect her interests by reviving the Arabian caliphate—i.e., by supporting the claims of the Sherif of Mecca to the caliphate.

[16] Infra, pp. 127–128.

[17] Regarding British activities in Koweit, cf. infra, pp. 197–198.