Talbot Concession: Dishonoring a Nation

  October 10, 2021   Read time 3 min
Talbot Concession: Dishonoring a Nation
In 1890 Näsir al-Dïn Shah granted another sweeping concession to a British subject, Major G. Talbot, for a period of fifty years. The prospective company was granted the exclusive right to sell in Iran and to export tobacco, cigars, cigarettes, and snuff.

Iranian producers and owners of such products would be compelled by the government to sell their products to the company immediately upon its formation. The company was exempted from all customs duties and taxes on all the materials necessary for its work. In return for all these privileges, the Shah would receive a fixed amount, £15,000 annually, and would also receive one-quarter of the company's annual profit after the deduction of all business expenses and after the payment of dividends of 5 per cent on its capital.

The overly generous terms of this concession aroused the opposition of Russia, but more important was the resistance of the Iranians themselves. Both Western and Iranian writers regard the opposition to this concession as the first major milestone in the history of the national awakening in Iran. The people would not submit to being obliged to buy from a foreign corporation the tobacco which they themselves grew and gathered in. The Shah had, “for a comparatively insignificant personal profit, needlessly and recklessly saddled his long-suffering subjects with an intolerable burden.” The popular dissatisfaction first appeared among the people of Tabriz; it soon spread to Isfahan and Tehran. When the news of popular discontent reached Häj Mlrzâ Muhammad Hasan-i Shirâzî, a Mujtahid, he wrote to the Shah that the concession was contrary to the Koran. The Shah then considered modifying the terms of the concession by confining to the company only the sale of tobacco abroad.

This device failed to placate the demand of Häj Mirzâ Javàd of Tabriz, Äqä Najafy of Isfahan, and Häj Mirzâ Muhammad Hasan-i Shirâzî for the abrogation of the concession. Faced with the Shah’s stubborn resistance, Mirzâ Muhammad Hasan issued a fo tw ä enjoining the people to abandon smoking completely until the concession was cancelled. The response was overwhelming, and as a result the Shah had no alternative but to comply with the popular demand. As it turned out, however, the annulment of the concession led to even greater immediate economic and political difficulties for the country. The company demanded £650,000 as indemnity for its concession ; it finally obtained £500,000. The depleted Iranian treasury could not pay such a sum. The Shah had to borrow the compensation money from the British bank at 6 per cent interest.

While engaged in feeding and exploiting popular discontent over the tobacco concession, Russia acquired the railway concession mentioned earlier and also the consent of the Shah to establish the Banque d’Escompte de Perse (1891), a branch of the Russian Ministry of Finance and a part of the Central Bank of Russia.The bank was consciously used as a powerful instrument of Russian policy in Iran. In advancing loans the British bank had to consult the interests of its shareholders as it could not afford losses, but the Russian bank consulted “only the requirement of the policy it [had] been created to carry out, and was quite prepared to incur losses in promoting it ” In the years immediately after its establishment the bank began to wield increasing control over a number of princes, a few influential clergymen, and some merchants by providing them with loans on easy terms. Through such methods Russia by 1900 had nearly bought off the ruling elite in Iran.

In the same year Kitäbchi Khan, an Iranian customs official of Armenian origin, asked the former British Minister in Tehran, Sir Henry Drummond Wolff, who was then in Paris, to find someone in London who would be willing to invest in Iranian oil. Kitäbchi Khan's attention had just been called to the findings of a French archaeologist which had been published in Les annales des mines (1892) claiming that oil existed in the Qasir-i Shirin region near the Irano-Turkish border in Mesopotamia. Some time later Wolff, who had known Kitäbchi Khän in Iran during his mission at Tehran, summoned him to London. There Kitäbchi Khän explained his plan to William Knox D’Arcy, an adventurous British millionaire who had made his fortune as a shareholder in the mine of Mount Morgan in Australia.

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