British View of The Railway
The initial reaction of Britain was one of strong support. A long article outlining the positive benefits of the enterprise appeared in the Times newspaper. It was argued that Germany was a major trading partner of Britain, and that though the competition for trade would affect Britain the fact that it was a good trading partner that was winning the trade instead would make up for the loss.
The railway would obviously compete with British trade in Mesopotamia, but this would not happen for many years. However in 1906 the Hamburg-American Steamship Line announced its intention to run regular steamships between Europe and the Persian Gulf. After a futile price war the British lines, which had lost their monopoly, came to agreement in 1913 with their competitors, ending a rivalry which had caused considerable political concern.
In 1911 the railway company looked to build a branch line to Alexandretta from Aleppo to pick up on the valuable trade of Northern Syria and the Northern Mesopotamian valley. However the Young Turk government could not offer further railway concessions without raising customs duties from 11 to 14 percent. Such a raise required the agreement of all the powers, but was vetoed by Britain after Sir Edward Grey spoke in the House of Commons—"... if the money is to be used to promote railways which may be a source of doubtful advantage to British trade ... I say it will be impossible for us to agree to that increase ...".
The British realised that the railways would be slightly too close to their oilfields in Persia. The British were worried that the Young Turks could block off oil supplies vital for the navy.
The main British commercial interest that the British government insisted was protected, was that of the Right Honorable James Lyle Mackay, Baron Inchcape of Strathnaver. As well as being the foremost shipping magnate of the British Empire, Lord Inchcape was a director of the Anglo-Persian Oil Company and of the D'Arcy Exploration Company. On February 23 a contract was signed in London between Lord Inchcape and the Baghdad Railway Company. In March 1914 the German government was obliged to recognize southern Mesopotamia, as well as central and southern Persia, as the exclusive field of operations of the Anglo-Persian Company.
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