FOOTNOTES:

> Two tomans.One toman.1879.One toman.Subsequent to 1879.Half toman.Two kran piece.Grains troy100.6450.3244.4022.208.88Weight in pure gold90.57645.28839.9619.987.992

The new silver coinage consists of 2-kran pieces (five of which make a toman), one-kran, half-kran, and quarter-kran, all keeping to the legal fineness of 900 as in the older coins struck from 1857 to 1878:—

Two krans.One kran.Half kran.Quarter kran.Legal weight (grains troy)142.0871.0430.5215.26Weight in grains silver127.87263.93627.46813.734

The 1857 to 1878 coins were merely one-kran, half-kran, quarter-kran:—

One kran.Half kran.Quarter kran.Legal weight76.9638.4819.24Weight in pure silver69.26434.63217.316

The older coinage before 1857, a most irregular coin—of one kran—varied considerably and had an approximate average fineness of 855, an average weight (grains troy) of 75.88, and a weight in pure silver of grains troy 64.877, which is below the correct standard by no less than 6.76 per cent.

In the newest coinage of two-kran pieces, the coin most used in cities,—large payments being always made in two-kran pieces—we have an average fineness of 892.166; average weight, grains troy,119.771; weight in pure silver, grains troy, 124.69, or 2.55 per cent. below the standard.

In nickel coinage, composed of 25 per cent. of nickel and 75 per cent. of copper, we have:—

Two shai pieces (grains troy)69.45One shai pieces (grains troy)46.30

The copper coins are in great variety. There is theabassi(one-fifth of a kran) worth four shais, and very scarce now.

Thesadnar(one-tenth of a kran) equivalent to two shais.

The (one)shai(one-twentieth of a kran).

Thepul(one-fortieth of a kran), half a shai.

And thejendek(one-eightieth of a kran) a quarter shai; this coin only found in circulation in Khorassan.

When it is remembered that at the present rate of exchange the kran can be reckoned at fivepence in English money, and the toman as roughly equivalent to one American dollar, it will be seen that the subdivisions of the kran are rather minute for the average European mind.

The Imperial Bank of Persia Decorated on the Shah's Birthday.

Yet there are things that one can buy even for ajendek; think of it,—the fourth part of a farthing! But that is only in Khorassan.

FOOTNOTES:[1]I understand this figure has since considerably increased.

[1]I understand this figure has since considerably increased.

The Banks of Persia—The Imperial Bank of Persia—The most revered foreigner in Persia—Loans—The road concession—The action of the Stock Exchange injurious to British interests—Securities—Brains and not capital—Risks of importing capital—An ideal banking situation—Hoarding—Defective communication—The key to profitable banking in Persia—How the exchange is affected—Coins—Free trade—The Russian Bank and Mr. De Witte—Mr. Grube an able Manager—Healthy competition—Support of the Russian Government.

TheBanks of Persia can be divided into three classes. One, containing the smaller native bankers, who often combine the jeweller's business with that of the money changer; the larger and purely native banking businesses, and then the foreign banks, such as the Imperial Bank of Persia (English Bank), the Banque d'Escompte et de Prêts (Russian Bank) and the Agency of the Banque Internationale de Commerce de Moscow (Banque Poliakoff). There are other foreign firms too, such as Ziegler and Co., Hotz, the Persian Gulf Trading Co., etc., which transact banking to a limited extent besides their usual and principal trading business; but these are not banks proper.

The Imperial Bank of Persia, being a purelyBritish enterprise, is the most interesting to us. Its main offices are in a most impressive building in the principal square of Teheran, and it has branch offices at Tabriz, Isfahan, Meshed, Yezd, Shiraz, in the Teheran Bazaar, at Bushire and Kermanshah. It would be useless to go into the various vicissitudes through which the Bank has passed since it was first started, and the difficulties which it encountered in meeting the unusual ways of doing business of Persians and satisfying the desires of directors and shareholders in simple London town. One thing is, nevertheless, certain, and that is that if the Imperial Bank of Persia maintains the prestige now belonging to it, it owes this to Mr. Rabino, of Egyptian fame, the Manager of the Bank,—without exception the most revered foreigner in Persia.

I will not touch on the sore question of the Persian loans, eventually secured by Russia, but, curiously enough, the capital of the first loan, at least, was in great measure practically transferred from Russia to Persia by the Imperial Bank, which had the greatest stock of money in Teheran; nor shall I go into the successful and unsuccessful ventures of the Bank, such as the Road Concession, and the Mining Corporation. As to the road concession, it is beyond doubt that had the Bank not become alarmed, and had they held on a little longer, the venture might have eventually paid, and paid well. But naturally, in a slow country like Persia, nothing can be a financial success unless it is given time to develop properly.

With regard to its relation with the Banque d'Escompte et de Prêts, the Russian Bank—believed by some to be a dangerous rival—matters may to my mind be seen in two aspects. I believe that the Russian Bank, far from damaging the Imperial Bank, has really been a godsend to it, as it has relieved it by sharing advances to the Government which in time might have proved somewhat of a burden on one establishment. It is a mistake, too, to believe that in a country like Persia there is not room for two large concerns like the two above-mentioned Banks, and that one or the other is bound to go.

The rumoured enormous successes of the Russian Bank and its really fast-increasing prestige are indisputable, but the secret of these things is well known to the local management of the Imperial Bank, which could easily follow suit and quickly surpass the Russians if more official and political support were forthcoming.

The action of the London Stock Exchange in depreciating everything Persian, for the sake of reprisal, is also injurious to the Bank, and more so to the prestige of this country, though we do not seem to see that our attitude has done much more harm to ourselves than to the Persians. It is true that Persia is a maladministered country, that there is corruption, that there is intrigue, and so forth, but is there any other country, may I ask, where to a greater or smaller extent the same accusation could not be made? Nor can we get away from the fact that althoughPersia has been discredited on the London market it is one of the few countries in which the national debt is extremely small and can easily be met.

The obligations of the Imperial Government and of Muzaffer-ed-din Shah's signature, have never failed to be met, nor has the payment of full interest on mortgages contracted ever been withheld. Delays may have occurred, but everything has come right in the end. Our absurd attitude towards the Persians, when we are at the same time ready to back up enterprises that certainly do not afford one-tenth of the security to be found in Persia, is therefore rather difficult to understand.

There are few countries in which so much can be done with a comparatively small outlay as in Persia. It is not enterprises on a gigantic scale, nor millions of pounds sterling that are needed; moderate sums handled with judgment, knowledge and patient perseverance, would produce unlooked-for results. Large imported sums of capital in hard cash are not wanted and would involve considerable risk. First of all, stands the danger of the depreciation of capital by the fall in silver and the gradual rise in exchange due to the excess of imports over exports. Then comes the narrowness of the Persian markets which renders the return of large sums in cash an extremely long and difficult operation; and last but not least, the serious fact that capital is generally imported at a loss, inasmuch as the intrinsic value of the kran is much below its exchange value.

The ideal situation of an English Bank trading with the East,[2]is when its capital remains in gold, whilst its operations are conducted in silver by means of its deposits. This, because of the instability in the price of silver as compared with that of gold, and the risks which follow upon holding a metal fluctuating in value almost daily. The situation in Persia, partly owing to the constant appreciation of the Persian currency, due to the great dearth of silver produced by hoarding as well as by the export of coin to Central Asia, is quite suitable to the system of banking indicated above.

The difference between the intrinsic and the exchange value of the kran, notwithstanding the constant demand for exchange, is quite worthy of note. Political preoccupation is the principal cause of the hoarding system in Government circles, and in the masses the absence of banking organisations in which the natives have sufficient confidence to deposit their savings. Slowly but surely the Persian is beginning to feel the good effects of depositing his money in a European-managed Bank offering sound guarantees, and it is certain that in time all the money required for trade purposes will be found in Persia itself.

When better communication between the various commercial centres has been established, the distribution of the funds as required, now a matter of great difficulty and risk, will be greatly facilitated. When the despatching of sums from one city to another instead of taking minutes bytelegraph or hours by post occupy, under normal circumstances, days, weeks, a month or even more, because the payments are made in solid silver which has to travel by caravan, it is easy to understand how the dangerous system of hoarding comes to be practised with impunity and facility all over Persia.

A Typical Persian Window. (Mr. Rabino's House, Teheran.)

A Typical Persian Window.(Mr. Rabino's House, Teheran.)

Of course every precaution is taken to foresee abnormal scarcity of funds, by sending specie to the places threatened, in order to help trade. During the summer months, for instance, most of the floating capital is absorbed in the provinces by the opium crop in the Yezd and Isfahan markets, when the silver krans find their wayen masseto the villages, much to the inconvenience of the two cities. In the autumn a similar occurrence hampers trade during the export season of dried fruit and silk from Azerbaijan and Ghilan, the exchange falling very low owing to scarcity of money.

A very important item in the Bank's transactions in Persia is the constant demand for remittances of revenue to Teheran for Government purposes, such as payments for the army, officials, etc., and these remittances amount to very large sums.

The key to profitable banking in Persia is the arbitration of foreign exchanges, which being so intimately connected with internal exchange allows the latter to be worked at a profit, advantage being taken of breaks in the level of prices; but of course, with the introduction of telegraphs and in future of railways, theseprofits will become more and more difficult to make. In Persia the lack of quick communication still affords a fair chance of good remuneration without speculation for the important services rendered by a bank to trade.

The exchange of Persia upon London is specially affected by two influences. In the north by the value of the ruble, the more important and constant factor, Tabriz, the Persian centre of the Russian exchange, being the nearest approach in Persia to a regular market; and in the south by the rupee exchange, which differs from the ruble in its being dependent upon the price of silver.

In a country like Persia, where the exchange is not always obtainable and money at times is not to be procured, it is easy to conceive the difficulty of a bank. Forecasts of movements, based on general causes, are of little or no value in Persia. To this must be added the difficulties of examining and counting coins—weighing is not practicable owing to the irregularity of each coin—of the transmission of funds to distant places, and the general ignorance except in mercantile circles—of banking methods as we understand them.

The Imperial Bank is established in Persia, not as is believed by some persons to do business for England and English people, but to do business with everybody. "The spirit of free trade alone," said Mr. Rabino to me, "must animate the management of such a bank. Its services must be at the disposal of all; its impartiality toEnglish, Russian, Austrian, Persian, or whatever nationality a customer may belong to, unquestioned. All must have a fair and generous treatment." The interests of the Imperial Bank are firstly those of its shareholders, secondly those of Persia which gives the Bank hospitality.

The Bank has already rendered inestimable services to Persia by diffusing sound business principles, which the Persians seem slowly but gladly to learn and accept. That the future of a bank on such true principles is bound to be crowned with success seems a certainty, but as has often been pointed out, it would be idle to fancy that a couple of years or three will remove the prejudices and peculiar ways of thinking and of transacting business of an Oriental race, whose civilisation is so different from ours, or that the natives will accept our financial system with its exactitude and punctuality, the result of ages of experience, unhesitatingly and immediately.

The Persian requires very careful handling. He is obstinate, and by mere long, tedious, passive resistance will often get the better in a bargain. By the employment of similar methods however, it is not difficult to obtain one's way in the end. A good deal of patience is required and timead libitum, that is all.

There is no need for a large stock of gold and rubles, but what is mostly wanted is a greater number of men who might be sent all over the country, men with good business heads and a polite manner, and, above all, men wellsuited to the present requirements of the country.

The Russian, we find,—contrary to our popular ideas, which ever depict him knut in hand,—almost fraternises with the Asiatics, and in any case treats them with due consideration as if they had a right to live, at least in their own country. Hence his undoubted popularity. But we, the quintessence of Christianity and charity towards our neighbours, habitually treat natives with much needless harshness and reserve, which far from impressing the natives with our dignity—as we think—renders us ridiculous in their eyes. A number of younger Englishmen are beginning to be alive to this fact, and instruction on this point should form part of the commercial training of our youths whose lives are to be spent in the East.

The other important bank in Persia upon which great hopes are built, although worked on different lines, is the so-called Russian Bank, theSociété de Prêts de Perse, as it was at first called when founded by Poliakoff in 1891. It was an experiment intended to discover exactly what was wanted in the country and what was the best way to attract business. The monopoly of Public Auctions was obtained in conjunction with the Mont-de-Piété—a scheme which did not work very well at first, the natives not being accustomed to sudden innovations. The concern subsequently developed into theBank Estekrasi(Bank of Loans), orBanque de Prêts de Perse, as it styled itself, but financially it did not pay,and at one moment was expected to liquidate. It is said that it then threatened to amalgamate with the Imperial Bank. Mr. De Witte, of St. Petersburg fame, was consulted in the matter, and took exactly twenty-four hours to make up his mind on what was the best course to pursue. He bought the bank up, the State Bank of St. Petersburg making an advance on the shares. The Minister of Finance has a right to name all the officials in the bank, who, for appearance sake, are not necessarily all of Russian nationality, and the business is transacted on the same lines as at the State Bank of St. Petersburg.

A most efficient man was sent out as manager; Mr. Grube, a gentleman of much tact and most attractive manner, and like Mr. Rabino—a genius in his way at finance; a man with a thorough knowledge of the natives and their ways. In the short time he has been in Teheran the bank has made enormous strides, by mere sound, business capability and manly, straightforward enterprise.

Mr. Grube has, I think, the advantage of the manager of the Imperial Bank in the fact that, when the Russians know they have a good man at the helm, they let him steer his ship without interference. He is given absolute power to do what he thinks right, and is in no way hampered by shareholders at home. This freedom naturally gives him a very notable advantage over the Imperial Bank, which always has to wait for instructions from London.

Mr. Grube, with whom I had a long andmost interesting conversation, told me how he spends his days in the bazaar branch of his bank, where he studies the ways and future possibilities of the country and its natives, and the best ways of transacting business compatible with European principles, and in particular carefully analysing the best ways of pushing Russian trade and industries in Persia. In all this he has the absolute confidence and help of his Government, and it is really marvellous how much he has been able to do to further Russian influence in Persia. There is no trickery, no intrigue, no humbug about it; but it is mere frank, open competition in which the stronger nation will come out first.

It was most gratifying to hear in what glowing terms of respect the managers of the two rival banks spoke of each other. They were fighting a financial duel, bravely, fairly, and in a most gentlemanly manner on both sides. There was not the slightest shade of false play on either side, and this I specially mention because of the absurd articles which one often sees in English papers, written by hasty or ill-informed correspondents.

Russia's trade, owing to its convenient geographical position, is bound to beat the English in Northern Persia, but it should be a good lesson to us to see, nevertheless, how the Russian Government comes forward for the protection of the trade of the country, and does everything in its power to further it. Russia will even go so far as to sell rubles at a loss to merchants in order to encourage trade in Persia, no doubt withthe certainty in sight that as trade develops the apparent temporary loss will amply be compensated in due time by big profits.

It is, to an Englishman, quite an eye-opener to watch how far the Russians will go for the absolute benefit of their own trade, and this conduct pursued openly and blamelessly can only be admired by any fair-minded person. It is only a pity that we are not yet wide awake enough to do the same.

The Russian Bank has branches in the principal cities of Northern Persia, her business being so far merely confined to the North.

FOOTNOTES:[2]See Institute of Bankers.

[2]See Institute of Bankers.

Illegitimate Bank-notes—Hampering the Bank's work—The grand fiasco of the Tobacco Corporation—Magnificent behaviour of the natives—The Mullahs and tobacco—The nation gives up smoking—Suppression of the monopoly—Compensation—Want of tact—Important European commercial houses and their work—Russian and British trade—Trade routes—The new Persian Customs—What they are represented to be and what they are—Duties—The employment of foreigners in Persia—The Maclean incident.

Thework of the Imperial Bank has at various times been hampered by speculators who tried to make money by misleading the public. Their speculations were always based on the prestige of the bank. For instance, take the Bushire Company and the Fars Trading Company, Limited, companies started by native merchants. They illegally issued bank-notes which, strangely enough, owing to the security found in the Imperial bank-notes, found no difficulty in circulating at a small discount, especially in Shiraz.

Naturally, the Imperial Bank, having in its conventions with the Persian Government the exclusive right to issue bank-notes payable at sight, protested against this infringement ofrights, but for a long time got little redress, and some of the fraudulent bank-notes are to this day circulating in Southern Persia.

Sooner or later this was bound to interfere with the bank, as the natives, unaccustomed to bank-notes, confused the ones with the others. Moreover, the enemies of the bank took advantage of this confusion to instigate the people against the Imperial Bank, making them believe that the word "Imperial" on the bank-notes meant that the issuing of bank-notes was only a new scheme of the Government to supply people with worthless paper instead of a currency of sound silver cash. In the southern provinces this stupid belief spread very rapidly, and was necessarily accentuated by the issue of the illegal bank-notes of local private concerns, which, although bearing foreign names, were merely Persian undertakings.

Necessarily, the many foreign speculations to which we have already referred, cannot be said to have strengthened confidence in anything of European importation; but the grand successive abortions of the Belgian and Russian factories—which were to make gas, sugar, glass, matches, etc.—are hardly to be compared in their disastrous results to the magnificent English fiasco of the Tobacco Corporation, which not only came to grief itself, but nearly caused a revolution in the country. It is well-known how a concession was obtained by British capitalists in 1890 to establish a tobacco monopoly in Persia, which involved the usual payment of alarge sum to the Shah, and presents to high officials.

The company made a start on a very grand scale in February, 1891, having the whole monopoly of purchase and sale of tobacco all over Persia. No sooner had it begun its work than a commission of injured native merchants presented a petition to the Shah to protest against it. A decree was, however, published establishing the monopoly of the corporation all over Persia, and upon this the discontent and signs of rebellion began.

Yet this affair of the tobacco monopoly showed what fine, dignified people the Persians can be if they choose. The want of tact, the absolute mismanagement and the lack of knowledge in dealing with the natives, the ridiculous notion that coercion would at once force the Persians to accept the tobacco supplied by the Corporation, fast collected a dense cloud of danger overhead. Teheran and the other larger cities were placarded with proclamations instigating the crowds to murder Europeans and do away with their work.

But the Persians, notwithstanding their threats, showed themselves patient, and confident that the Shah would restore the nation to its former happiness. In the meantime the company's agents played the devil all over the empire. It seems incredible, even in the annals of Persian history, that so little lack of judgment could have been shown towards the natives.

The Mullahs saw an excellent opportunity toundo in a few days the work of Europeans of several scores of years. "Allah," they preached to the people, "forbids you to smoke or touch the impure tobacco sold you by Europeans." On a given day the Mugte halh, or high priest of sacred Kerbalah, declared that the faithful throughout the country must touch tobacco no more; tobacco, the most cherished of Persian indulgences.

Mirza Hassan Ashtiani,mujtehedof Teheran, on whom the Shah relied to pacify the crowds now in flagrant rebellion, openly preached against his Sovereign and stood by the veto of his superior priest at Kerbalah. He went further andexhortedthe people to cease smoking, not because tobacco was impure, but because the Koran says that it is unlawful to make use of any article which is not fairly dealt in by all alike.

At a given date all through the Shah's dominions—and this shows a good deal of determination—the foreigner and his tobacco were to be treated with contempt. Tobacco was given up by all. In the bazaars, in the caravanserais, in the streets, in the houses, where under ordinary circumstances every man puffed away at akalian, achibuk(small pocket-pipe) or cigarette, not a single soul could be seen smoking for days and days. Only the Shah made a point of smoking in public to encourage the people, but even his wife and concubines—at the risk of incurring disfavour—refused to smoke, and smashed thekaliansbefore his eyes. In house-holds where the men—ever weaker than women—could, after weeks of abstinence, not resist the temptation in secrecy, their wives destroyed the pipes.

For several weeks not a single individual touched tobacco—a most dignified protest which quite terrified the Shah and everybody, for, indeed, it was apparent that people so strong-willed were not to be trifled with.

In many places the natives broke out into rebellion, and many lives were lost. Nasr-ed-din Shah, frightened and perplexed, called the high Mullah of Teheran to the palace (January 5th-6th, 1892). By his advice the tobacco monopoly was there and then abolished by an Imperial Decree, and the privileges granted for the sale and export of tobacco revoked. Furthermore, the Mullah only undertook to pacify the people on condition that all foreign enterprises and innovations in Persia should be suppressed; that all people imprisoned during the riots should be freed, and the families of those killed fully indemnified.

The sudden end of the Tobacco Corporation necessarily led to much correspondence with the British Minister, Sir Frank Lascelles, on the question of compensation and damages to the company which, depending on its monopoly, had entered into agreements, and had already paid out large sums of money. It was finally agreed that the Shah should pay £500,000 sterling compensation, and take over the assets of the company, supposed to be some £140,000, subject to realisation.

With the assistance of the Bank of Persia, a six per cent. loan was issued, which was taken up principally by the shareholders of the Tobacco Corporation. The interest and the sinking fund of this loan were punctually met until the year 1900 when it was repaid in full on the conclusion of the Russian loan.

In England this failure seems to have been ascribed to Russian intrigue, but it must in all fairness be said that had the Russians tried a similar scheme in a similar manner, they would have fared even worse than we did. Even Persian concerns established on European principles have serious troubles to contend with; but it was madness to believe that an entire Eastern nation could, at a moment's notice, be forced to accept—in a way most offensive to them—such an article of primary use as tobacco, which, furthermore, was offered at a higher price than their own tobaccos which they liked better.

There are in Persia a few important European commercial houses, such as Ziegler and Co., and Hotz and Son, which have extensive dealings with Persians. Ziegler and Co. deal in English imports and in the exportation of carpets, etc., whereas Hotz and Son import Russian articles, which they find cheaper and of easier sale. Both are eminently respectable firms, and enjoy the esteem of everybody.

Notwithstanding the Swiss name, Ziegler and Co. is an English firm, although, as far as I know, it has not a single English employee in its various branches in Persia. The reason, as wehave seen, is that foreigners are considered more capable. It has in the various cities some very able Swiss agents, who work most sensibly and excellently, and who certainly manage to make the best of whatever business there is to be done in the country. For over thirty years the house has been established in Persia, having begun its life at Tabriz and then extended to Teheran, Resht, Meshed, Isfahan, Yezd—the latter so far a non-important branch—and Shiraz, Bushire, Bandar Abbas and Bagdad, where it has correspondents working for the firm.

The house imports large quantities of Manchester goods and exports chiefly carpets, cloths, opium and dried fruit. The carpets, which are specially made for the European market, are manufactured chiefly at Sultanabad where thousands of hands are employed at the looms, scattered about in private houses of the people and not in a large factory. The firm takes special care to furnish good wool and cottons coloured with vegetable dyes, and not with aniline. Ancient patterns are selected and copied in preference to new designs. Of course, besides these, other carpets are purchased in other parts of the country. Carpets may be divided into three classes. The scarce and most expensive pure silk rugs; thelamsaviehor good quality carpets, and themojodehor cheaper kind. There is a good demand for the two latterqualitiesall over Europe and in America.

Articles specially dealt in are the cotton andwool fabrics calledghilim, the designs of which are most artistic; and to a certain extent other fabrics, such as the vividly coloured Kashan velvets, the watered silks of Resht, the Kerman cloths resembling those of Cashmir, the silver and gold embroidered brocades of Yezd, and the silk handkerchiefs manufactured in the various silk districts, principally Tabriz, Resht, Kashan and Yezd.

The stamped and hand-drawnkalamkarsin stringent colours upon white cotton also find their way in large quantities to Europe, but are more quaint than beautiful. Large and ill-proportioned figures are frequently attempted in these designs. When of truly Persian manufacture the colours are said to be quite permanent under the action of both light and water.

The firm of Hotz and Son deals in well-nigh everything, and has made good headway of late years. It has large establishments at Isfahan, Shiraz and Bushire, and two agencies, one at Ahwaz on the Karun River, and one in Teheran (Groeneweg, Dunlop, and Co.); while it has correspondents in Bagdad, Busrah, Hongkong and Rotterdam, the head offices being in London. Its carpet manufacturing business in Sultanabad is now carried on by the Persian Manufacturing Co. The exports are similar to those of Ziegler and Co.

There are also smaller firms, particularly in Teheran, such as the Toko, Virion, and others who do a retail business in piece goods and articles of any kind, and are entirely in the handsof foreigners, Belgians, Austrians, and French. Without reference to statistics, which are absolutely worthless in a country like Persia, the yearly foreign trade of Persia, divided between the Gulf ports and the north and north-western and south-western frontiers, may be put down roughly at some nine or ten millions sterling.

The Russian trade in the north may be considered as about equal to the British in the south. Then there are the goods brought by the Trebizonde-Tabriz trade route from Turkey and the Mediterranean, and by the Bagdad-Kermanshah, another very important route.

The extravagant system of farming prevailing until quite lately in Persia, as well as the uncertainties of Customs and revenue returns, makes it difficult to give trustworthy figures; but in future, probably this year, we may expect some more reliable data from the new Belgian customs office, a really sensible and well-managed administration organised by Monsieur Naus, who is, indeed, to be congratulated on the success with which his efforts at bringing about so radical a reform in the system of collecting duties have in so short a time been crowned. We often hear in England that the Customs of Persia are absolutely in the hands of Russia, and are worked by Russian officials. Even serious papers likeThe Timespublish misleading statements of this kind, but nothing could be more erroneous. M. Naus, at the head of the Customs, is a Belgian, and so are nearly all the foreign employees (there are one or two French, I believe) in Persian employ, butnot a single Russian is to be found among their number. That the Russians hold a comparatively trifling mortgage on the Customs as a security for their loan is true, but, as long as Persia is able to pay interest on it, Russia has no more power over the Persian Customs than we have. Under regular and honest management, like the present, the Customs have already given considerable results, and were it not for the weakness of the Government in the provinces, the Customs receipts might easily be doubled, even without a change in the tariff.

The duties levied in Persia are determined by the treaty of Turkmantchai with Russia in 1828, by which a uniform and reciprocal five per cent. for import and export was agreed to, a special convention, nevertheless, applying to Turkey, which fixed a reciprocal 12 per cent. export and 6 per cent. import duty, and 75 per cent. on tobacco and salt. An attempt was made to negotiate a new commercial treaty with Russia last year, but unfortunately, matters did not go as was expected by M. Naus, who was very keen on the subject. A high Russian official was despatched to Teheran who caused a good deal of trouble, and eventually the whole matter fell through.

Regarding the employment of foreigners by the Persian Government, it is not out of place to recall the Maclean incident.

An agreement had been entered into with Mr. Maclean, a British subject, and a former employee of the Imperial Bank, to take chargeof the Mint, in order to bring it up to date and work it on more business-like principles than at present. This led to a demand from the Russians that a similarly high office in the Shah's Government should be given to a Russian, so that this appointment might not be taken as a slight against Russia; or, if this were not possible, that two or three Russians might be employed instead in minor capacities in the new Customs. The Persian Government would not agree to this, but owing to the pressure that had been brought to bear by the Russians they felt obliged to dismiss Mr. Maclean. The British minister necessarily then stood up for British rights, and a great scandal was made of the whole affair, and as an agreement for three years had been signed, the Persian Government had to pay the salary in full for that period, although they had only availed themselves of Mr. Maclean's services for a few months.

It is to be regretted that the Sadrazam acted in so reckless a manner, for the whole matter might have been settled quietly without the slightest disturbance and unpleasantness. Anyhow, this led to a decree being passed (in 1901) that in futureno British subject, no Russian, and no Turkwill be accepted in Persian employ. This includes the army, with the exception of the special Cossack regiment which had previously been formed under Russian instructors. It can safely be said that there is not a single Russian in any civil appointment in Persia, no more than there is any Britisher; but, in the Customsservice particularly, M. Naus being a Belgian, nearly all the employees are Belgian, as I have said, with only one or two French lower subordinates.

The First Position in Persian Wrestling.

Palawans, or Strong Men giving a Display of Feats of Strength.

The Customs service is carried on with great fairness to all alike, and the mischievous stories of Russian preference and of the violation of rules in favour of Russian goods are too ridiculous to be taken into consideration. One fact is certain, that any one who takes the trouble to ascertain facts finds them very different from what they are represented to be by hasty and over-excited writers.

Russia on the brain—The apprehended invasion of India—Absolute nonsense—Russia's tariff—In the House of Commons—A friendly understanding advisable—German competition—The peace of the world—Russia's firm policy of bold advance—An outlet in the Persian Gulf—The policy of drift—Sound knowledge of foreign countries needed—Mutual advantages of a Russian and British agreement—Civilisation—Persia's integrity.

Thereis, unfortunately, a class of Englishmen—especially in India—who have Russia on the brain, and those people see the Russian everywhere and in everything. Every humble globe-trotter in India must be a Russian spy—even though he be an Englishman—and much is talked about a Russian invasion of India, through Tibet, through Afghanistan, Persia or Beluchistan.

To any one happening to know these countries it is almost heartrending to hear such nonsense, and worse still to see it repeated in serious papers, which reproduce and comment upon it gravely for the benefit of the public.

In explanation, and without going into many details, I will only mention the fact that it is more difficult than it sounds for armies—evenfor the sturdy Russian soldier—to march hundreds of miles across deserts without water for men and animals, or over a high plateau like Tibet, where (although suggested by the wise newspaper Englishman at home as a sanatorium for British troops in India) the terrific climate, great altitudes, lack of fuel, and a few other such trifles would reduce even the largest European army into a very humble one at the end of a journey across it.

Then people seem to be ignorant of the fact that, with a mountainous natural frontier like the Himahlyas, a Maxim gun or two above each of the few passable passes would bring to reason any army—allowing that it could get thus far—that intended to cross over into India!

But, besides, have we not got soldiers to defend India? Why should we fear the Russians? Are we not as good as they are? Why should we ever encourage the so far unconcerned Russian to come to India by showing our fear? It is neither manly nor has it any sense in it. The Russian has no designs whatever upon India at present—he does not even dream of advancing on India—but should India eventually fall into Russia's hands—which is not probable—believe me, it will never be by a Russian army marching into India from the north, or north-west, or west. The danger, if there is any, may be found probably very much nearer home, in our own ignorance and blindness.

We also hear much about the infamy of Russia in placing a tariff on all goods in transitfor Persia, and we are told that this is another blow directed at English trade. Such is not the case. Russia, I am told by people who ought to know, would be only too glad to come to an understanding with England on some sensible basis, but she certainly is not quite so unwise as we are in letting Germany, her real enemy, swamp her market with cheap goods. The tariff is chiefly a protection against Germany. Of course, if we choose to help Germany to ruin Russia's markets as well as our own, then we must suffer in consequence, but looking ahead towards the future of Asia, it might possibly not be unwise to come to some sensible arrangement with Russia, by which her commercial interests and ours would mutually benefit instead of suffering as they do at present.

In Persia we are playing a rapidly losing game. Commercially, as I have already said, we have lost Northern Persia, and Russian influence is fast advancing in Southern Persia. This is surely the time to pull up and change our tactics, or we shall go to the wall altogether.

As Mr. Joseph Walton, M.P., very ably put it before the House of Commons on January 22nd, 1902, in the case of Russia we have at present to contend with abnormal conditions of competition. It would therefore be wise for the British Government to reconsider its policy in order to maintain, at least, our commercial interests in Southern Persia. The Government of India, too, should take its share in upholding British interests—being directly concerned inaffairs that regard the welfare of Persia. Russia has gone to great expense to construct two excellent roads from the north into Persia to facilitate Russian commerce, and it would be advisable if we were to do the same from the south. (One of the roads, the Piri Bazaar—Kasvin Road, is said to have cost, including purchase of the Kasvin Teheran section, something like half a million sterling). It is indeed idle, as Mr. Walton said, to adhere to methods of the past when foreign Governments are adopting modern methods in order to achieve the commercial conquest of new regions.

The matter of establishing Consulates, too, is of the greatest importance. We find even large trading cities like Kermanshah, Yezd, Shiraz and Birjand devoid of British Consuls. Undoubtedly we should wish a priority of right to construct roads and railways in Southern Persia—in the event of the Persians failing to construct these themselves—to be recognised, and it seems quite sensible and fair to let Persia give a similar advantage to Russia in Northern Persia. Nothing but a friendly understanding between England and Russia, which should clearly define the respective spheres of influence, will save the integrity of Persia. That country should remain an independent buffer state between Russia and India. But to bring about this result it is more than necessary that we should support Persia on our side, as much as Russia does on hers, or the balance is bound to go in the latter's favour.

The understanding with Russia should also—and I firmly believe Russia would be only too anxious to acquiesce in this—provide a protection against German commercial invasion and enterprise in the region of the Persian Gulf. Germany—not Russia—is England's bitterest enemy—all the more to be dreaded because she is a "friendly enemy." It is no use to try and keep out Russia merely to let Germany reap any commercial advantages that may be got—and that is the policy England is following at the present moment. The question whether or no we have a secret agreement with Germany, in connection with the Euphrates Valley Railway, is a serious one, because, although one cannot but admire German enterprise in that quarter, it would be well to support it only in places where it is not likely to be disastrous to our own trade and interests generally.

Little or no importance should be attached to the opinion of the Russian Press in their attacks upon England. The influential men of Russia, as well as the Emperor himself, are certainly anxious to come to a satisfactory understanding with England regarding affairs not only in Persia but in Asia generally. An understanding between the two greatest nations in the world would, as long as it lasted, certainly maintain the peace of the world, and would have enormous control over the smaller nations; whereas petty combinations can be of little practical solid assistance or use to us.

As I have pointed out before on severaloccasions,[3]Russia is not to-day what she was half a century ago. She has developed enough to know her strength and power, and her soldiers are probably the finest in Europe—because the most practical and physically enduring. Her steady, firm policy of bold advance, in spite of our namby-pamby, ridiculous remonstrances, can but command the admiration of any fair-minded person, although we may feel sad, very sad, that we have no men capable of standing up against it, not with mere empty, pompous words, but with actual deeds which might delay or stop her progress. As matters are proceeding now, we are only forwarding Russia's dream of possessing a port in the Persian Gulf. She wants it and she will no doubt get it. In Chapters XXXIII and XXXIV the question of the point upon which her aims are directed is gone into more fully. The undoubted fact remains that, notwithstanding our constant howling and barking, she invariably gets what she wants, and even more, which would lead one to believe that, at any rate, her fear of us is not very great.

We are told that our aggressive—by which is meant retrogressive—policy towards Russia is due to our inability to effect an entire reversal of our policy towards that country, but this is not the case at all. At any rate, as times and circumstances have changed, our policy need not be altogether reversed, but it must necessarily be subjected to modifications in order to meet changed conditions. If we stand still whileRussia is going fast ahead, we are perforce left behind. The policy of drift, which we seem to favour, is bound to lead us to disaster, and when we couple with it inefficacious resistance and bigoted obstruction we cannot be surprised if, in the end, it only yields us bitter disappointment, extensive losses, enmity and derision.

The policy of drift is merely caused by our absolute ignorance of foreign countries. We drift simply because we do not know what else to do. We hear noble lords in the Government say that the reason we did not lend Persia the paltry two and a half millions sterling was because "men of business do not lend money except on proper security, and that before embarking on any such policy the Government must be anxious to see whether the security is both sufficient and suitable." Yes, certainly, but why did the Government not see? Had the Government seen they certainly would have effected the loan. Surely, well-known facts, already mentioned in previous pages, have proved very luminously our folly in taking the advice of incompetent men who judge of matters with which, to say the least, they are not familiar. But the real question appears to be, not how to make a safe and profitable financial investment, which is no part of the functions of the British or any other Government, but rather whether it is not better to lay out a certain sum for a valuable political object than to allow a formidable competitor to do so to our prejudice.

Hence the disadvantageous position in whichwe find ourselves at present, all over Asia, but particularly in Persia. It would no doubt be the perfection of an agreement if an amicable understanding could be arrived at with Russia, not only regarding Persia but including China, Manchuria, and Corea as well. A frank and fair adjustment of Russian and British interests in these countries could be effected without serious difficulty, mutual concessions could advantageously be granted, and mutual advice and friendly support would lead to remarkably prosperous results for both countries.

Russia, notwithstanding all we hear of her, would only be too glad to make sacrifices and concessions in order to have the friendship and support of England, and Russia's friendship to England would, I think, be of very great assistance to British manufacturers. It must be remembered that Russia is an enormous country, and that her markets both for exports and imports are not to be despised. In machinery alone huge profits could be made, as well as in cloths, piece goods, fire-arms, Manchester goods, worked iron, steel, etc.

Articles of British manufacture are in much demand in Russia and Siberia, and, should the British manufacturer see his way to make articles as required by the buyer, very large profits could be made in the Russian market. Also huge profits will eventually be made by the export of Siberian products into England and the Continent, a branch of industry which the Russians themselves are attempting to push intothe British market with the assistance of their Government.

To return to Persia it must not be forgotten that British imports into that country (in 1900) amounted to £1,400,000, whilst Russia imported £21,974,952 of British goods. Which, after all, is the customer best worth cultivating: Persia which takes £1,400,000 of our goods, or Russia which buys from us for £21,974,952?

It is a mistake to believe that we are the only civilising agents of the world, and that the work of other powers in that direction only tends to the stagnation of Eastern peoples. One might affirm with more truth that our intercourse with the civilisation of the East tends to our own stagnation. We do impart to the natives, it is true, some smattering of the semi-barbaric, obsolete ways we possess ourselves, but standing aside and trying to look upon matters with the eye of a rational man, it is really difficult to say whether what we teach and how we teach it does really improve the Eastern people or not. Personally, with a long experience of natives all over Asia, it appears to me that it does not.

The Russian, though from a British point of view altogether a barbarian, does not appear to spoil the natives quite so much in his work among them. The natives under hisrégimeseem happy, and his work of civilisation is more of the patriarchal style, tending more to enrich the people, to promote commerce and trade on appropriate lines, than to educate themasses according to Western methods and laws. The results are most decidedly good, and anyhow lead to much greater contentment among the masses than we can secure, for instance, in India. Above all things it makes for peace; the natives are treated with extreme consideration and kindness, but at the same time they know that no nonsense is tolerated, and that is undoubtedly the way most appreciated by Asiatics.

In Persia, it is to be hoped for the peace of all that neither Russia nor England will acquire any territorial rights, but that the integrity of the Shah's Empire may long be preserved. Only it would not be unwise to prepare for emergencies in case the country—already half spoiled by European ways—should one day collapse and make interference necessary. The integrity of states in Asia intended to serve as buffers is all very well when such states can look after themselves, but with misgovernment and want of proper reform, as in Persia, great trouble may be expected sooner than we imagine, unless we on our side are prepared to help Persia as much as Russia does on her side.

If this can be done, with little trouble to ourselves, and in a way agreeable to the Persians, there is no reason why, as an independent state, Persia should not fully develop her resources, reorganise her government and army, become a powerful nation, and establish a flourishing trade, Russia and England profiting equally by the assistance given her.

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