Foreign Concessions: Reuter

  October 10, 2021   Read time 3 min
Foreign Concessions: Reuter
The grant of economic concessions was one of the three major components of Iran's foreign economic policy in the nineteenth century. Näsir al-Din Shah (1848-96) and subsequently his son, Muzaffar al-Din Shah (1896-1907), granted a wide variety of economic concessions to European powers.

The most important of these were obtained by British or Russian interests. The first major concession was granted to Great Britain in 1863. This was a concession for the establishment of an overland telegraph line through Iran. Great Britain wanted it as an alternative line to India. Earlier in the year Great Britain had concluded a convention with Turkey enabling it to lay down wire from Constantinople, through Asia Minor and Mesopotamia, to Baghdad.

For fear that the direct line of communication between Baghdad and the head of the Persian Gulf might suddenly break down, perhaps because of hostility on the part of the Arab tribes living in the area, Great Britain sought and obtained the convention with Iran in the same year. By the end of 1864 this alternative line was completed from Khanaqin via Kermanshah and Hamadan to Tehran, and from there via Isfahan and Shiraz to Bushire, where it joined the marine cable to the telegraph terminus at Karachi. According to the terms of the convention, the line was to be constructed by England at Iran's expense. Iran was to be paid a maximum of 30,000 tomans a year for English messages.' In contrast with other concessions the telegraph concessions of 1863 and 1865T-th e latter providing for a free wire for Iranian useproved not only economically advantageous but also culturally significant in bringing Iran into close contact with Europe.

Immediately after the construction of the telegraph line, Iran studied various plans for inviting in European capital and skill as set forth by a number of private investors. Having concluded that the greater part of these plans were put forward by “adventurers and speculators," the Shah decided to put into the hands of a single man the entire responsibility for Iran’s economic and industrial development. To this end the Shah in 1872 granted to Baron Julius Reuter, a naturalized British subject, an all-encompassing economic concession for a period of seventy years. This concession was, in Lord Curzon’s words, "the most extraordinary surrender of the entire industrial resources” of the country. The concessionaire was given the exclusive right (1) to construct, among other things, all railways, dams, and canals throughout Iran ; (2) to regulate rivers ; (3) and to exploit all mines, except those of gold and silver. He was also promised priority over any person or corporation that might in the future seek concessions for the establishment of banks and industrial plants or for any other purpose.

The grant of such a gigantic monopoly to a British national aroused severe Russian opposition. Russia claimed that the grant had completely repudiated Iran’s claim to adhere to the principle of equilibrium between the great powers. Russian opposition was voiced on two major grounds. It was claimed that under the Reuter concession Great Britain would have the right to evaluate Russian goods for the payment of duty. Since there was no ground for such a supposition, it seems evident that this argument was used to camouflage the interest of Russian merchants in preventing any proper exaction of customs duties, which they had previously avoided paying and which they would probably have to pay in the event of improvement in the administration of customs. The second ground for opposition related to the exploitation of mines, including those of the Elburz range, which were coveted by Russia.

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