Berlin Baghdad Railway
A Century of War, Anglo-American Oil Politics and the New World Order.
CHAPTER TWO:
The Lines are Drawn: Germany and the Geopolitics of the "Great War"
Germany's "Wirtschaftswunder"
AFTER 1873, GROWING divergence between the depressed economy of the British Empire and the emerging industrial economies of Continental Europe, above all the German Reich, created the background for the outbreak of the Great World War in 1914. The role of petroleum already had become central in this conflict, to a degree that few outside a tiny elite of London and New York bankers and financiers realized until years later.
Toward the final decade of the 19th century, British banking and political elites had begun to express the first signs of alarm over two specific aspects of the impressive industrial development in Germany. The first was emergence of an independent, modern German merchant and military naval fleet. Since 1815 and the Congress of Vienna, the English Navy had been the unchallenged lord of the seas. The second strategic alarm was sounded over an ambitious German project to construct a railway linking Berlin with, ultimately, Baghdad, then part of the Ottoman Empire.
In both areas, the naval challenge and construction of a rail infrastructure linking Berlin to the Persian Gulf, oil figured as a decisive, if still hidden, motive force for both the British and the German side. We will see why these two developments were regarded as virtual casus belli by the Anglo-Saxon establishment at the turn of the century.
By the 1890's, British industry had been surpassed in both rates and quality of technological development by an astonishing emergence of industrial and agricultural development within Germany. With the United States concentrated largely on its internal expansion after its Civil War, the industrial emergence of Germany was increasingly seen as the largest "threat" to Britain's global hegemony during the last decade of the century.
By the 1870's, decades of piecemeal German adoption of the economic reforms of Friedrich List, creation of a national modern rail transport infrastructure and tariff protection for emerging domestic industries, began to yield notable results, more so in the context of the political unity of the German Reich after 1871.
Until approximately the 1850's, imitation of the apparently successful British economic model was the dominant policy followed in Germany, and the free trade economics of such British economists as Adam Smith or David Ricardo were regarded as holy gospel in German universities. But increasingly, after England went into prolonged depression in the 1870's which hit Germany and Austria as well, Germany began to realize the serious flaws in continuing faithfully to follow the "British model." As Germany increasingly turned to a form of national economic strategy, and away from British "free trade" adherence, in building a national industry and agriculture production, the results were remarkable.
As one indication of this shift away from the English model, from 1850 to the eve of the First World War in 1913, German total domestic output increased five-fold. Per capita output increased in the same period by 250%. The population began to experience a steady increase in its living standard, as real industrial wages doubled between 1871 and 1913.
But the heart of the German industrial revolution was the explosion of technological progress. Germany established a national system of technological schools (Technische Hochschulen) and colleges, modelled on the French Ecole Polytechnique, for the education of scientific and engineering cadre for industry, and a system of "Handelshochschulen," organized with support from the various chambers of commerce and industry, for education of business cadre. Moreover, German universities placed emphasis on natural sciences in their curricula. German engineering and science began to blossom. This was paralleled by a nationwide system of "Fachschulen" for training of skilled tradesmen. The net result of it all was a dramatic increase in the technological competence of the German working population after the 1870's.
As late as 1870, British large industrial companies dwarfed their young German rivals. But that was to change drastically over the next three to four decades. In the decades before 1914, in terms of fueling world industry and transportation, coal was king. In 1890, Germany produced 88 million tons of coal, while Britain produced more than double as much, 182 million tons. But by 1910, German output of coal climbed impressively to 219 million tons, while Britain had only a slight lead at 264 million tons.
Steel was at the center of Germany's growth, with the rapidly emerging electrical power and chemicals industries close behind. Using the innovation of the Gilchrist Thomas steel-making process, which capitalized on the high-phosphorus ores of Lorraine, German steel output increased 1,000% in the twenty years from 1880 to 1900, leaving British steel output far behind. As late as 1890, Britain still led Germany in production of pig iron, with 7.9 million tons versus 4.6 million tons for Germany. But by 1910, German pig iron output was 50% greater than Britain's at 14.6 million tons to 10 million tons. At the same time, the cost of making Germany's steel dropped to one-tenth the cost of the 1860's. By 1913, Germany was smelting almost two times the amount of pig iron as British foundries.1
The rail infrastructure to transport this rapidly expanding flow of industrial goods was the initial "locomotive" for Germany's first "Wirtschaftswunder." While the initial expansion of the German railway system began in the 1840's and 1850's, under the initial influence of Lisf s Zollverein and his national railway plan state-backed rail infrastructure fully doubled the kilometers of track from 1870 to 1913.
Following the development of centralized electric power generation and long-distance transmission under the impulse of Oskar von Miller and others, the German electrical industry grew from an infant industry employing 26,000 in 1895 to dominate fully half of all international trade in electrical goods by 1913. German chemical industry, under the impulse of great researchers such as Justus von Liebig and others, grew from one vastly inferior to both French and British industry, to become the world's leader in ana-line dye production, pharmaceuticals and chemical fertilizers.
Introduction of scientific agriculture chemistry by von Liebig and others led also to astonishing rates of productivity increase during this period for German agriculture. Going from a situation in the early decades of the 1800's which was literally desperate, with outbreaks of famine and harvest failure, when it seemed more economical to import grain from Russia or even Argentina, Germany re-imposed a protective tariff blocking imports of cheap grain in the 1890's.
The mechanization of farming began to show progress, going from 20,000 harvesting machines in 1882 to some 300,000 by 1907. Despite often inferior and sandy soils, German chemical fertilizer development led to improving harvest yields. Grain harvest yields had improved as a result, by 80% at the time of the World War, compared with the period before 1887 when fertilizers were first introduced on a significant scale. By contrast, Russia, at the outbreak of the war, with three million acres more under grain cultivation, produced 19 million tons less grain than Germany. By 1913 Germany was 95% self-sufficient in meat production, despite per capita meat consumption having doubled since 1870, while Britain in 1913 imported 45% of its meat requirements.
Paralleling the expansion of its industry and agriculture, Germany went from a net emigration country in the early 1800's, to a country with strong population growth by the end of the century. Between 1870 and 1914 Germany's population increased almost 75% from 40,000,000 to more than 67,000,000 people.
Large industry grew in a symbiosis after the 1880's together with large banks such as Deutsche Bank, under what became known as the "Grossbanken" model, or simply "German model" of interlocking ownership between major banks and key industrial companies.2
Germany's "Wirtschaftwunder" arose in this period after 1870. The much-proclaimed industrial recovery from the devastation of war and world depression in the late 1950's represented, to a very significant degree, the recovery of the foundations laid during the 1880's up to l914.
A Berlin Bank Panic
The development of an independent national economic policy in Germany took its second impetus from the consequences ironically, of a banking panic. In 1890, as a result of the near-failure of the prestigous London merchant bank, Baring Brothers, arising from their huge losses in Argentine bond speculation and investment, and the ties of German banking to this Argentine speculation, a Berlin bank panic ensued, as the dominoes of an international financial pyramid began to topple.
Berlin, and German investors generally, were caught up in international railroad speculation mania in the 1880's. With the crash of the elite Baring Bros., with some $75,000,000 invested into various Argentine bonds, down came the illusions of many Germans about the marvels of financial speculation.
In the wake of the financial collapse of Argentina, a large wheat exporter to Europe, Berlin grain traders Ritter & Blumenthal had foolishly attempted a "corner" on the entire German wheat market, planning to capitalize on the consequences of the financial troubles in Argentina. This only aggravated the financial panic in Germany when their scheme collapsed, bankrupting the esteemed private banking house of Hirsclifeld & Wolf in its wake, and causing huge losses at the Rheinisch-Westphalische Bank, further triggering a general run on German banks and a collapse of the Berlin Stock Market, lasting into the autumn of 1891.
Responding to the crisis, the Chancellor named a Commission of Inquiry of 28 eminent persons, under the chairmanship of Reichsbank President Dr. Richard Koch, to look into the causes and to propose legislative measures to prevent further such panics from occuring. The Koch Commission was composed of a broad and representative cross-section of German economic society including representatives from industry, agriculture, universities, political parties, as well as banking and finance.
The result of the commission's work, most of it voted into law by the Reichstag in the Exchange Act in June 1896, and the Depot-gesetz of that July, was the most severe legislation restricting financial speculation of any industrial country of the time. Futures positions in grain were prohibited. Stock market speculation possibilities were severely constrained, one result of which has been the relative absence of stock market speculation as a major factor affecting German economic life since then.
The German Exchange Act of 1896 definitively established a different form of organization of finance and banking in Germany, from that of England or America—Anglo-Saxon banking. Not only this, but many London financial houses reduced their activity in the restrictive German financial market after the 1890's as a result of these restrictions, lessening the influence of City of London finance over German economic policy. Significantly, to the present day, these fundamental differences between Anglo-Saxon banking and finance and a "German model" as largely practiced in Germany, Holland, Switzerland and Japan, are still somewhat visible.3
The Necessity of Ship and Rail Infrastructure
Thus, while England's national industrial and finance policy, especially after 1873, fostered industrial retardation of technological progress, that of Germany fostered quite the opposite. By 1900, the trends of divergence between the two countries were evident to all. But a growing friction between Germany and England in the years before 1914 was centered on two special aspects of Germany's impressive overall economic development. First and foremost was the dramatic emergence of Germany as a pre-eminent modern shipping nation, ultimately threatening the decades-long English domination of the seas.
As long as Germany did not control her own modern merchant ship fleet, and did not have a navy to defend it, Germany could never determine her own economic affairs. England was still the sovereign on the world's oceans, and intended to remain so. This was the heart of British geopolitical strategy- Under such conditions, an increasing majority in Germany argued that the nation's economic life would be ever subject to the manipulations of a foreign shipping power for the essential terms of its vital international trade.
In 1870, the tota! merchant fleet of the German Reich barely totalled 640,000 tons. The German merchant fleet at the time was the fifth largest in the world, behind the British, American, French, and Norwegian. By 1914, the German fleet had risen to Number Two, just behind England, and gaining rapidly.
German export goods in 1870 were subject to both the rates and ships of other nations, above all England. By 1914, this had changed dramatically. Already by 1901, 9,000,000 tons on 52,000 different ships left German ports sailing under German flag. By 1909, these figures had increased to 65,000 vessels totalling 13,000,000 tons under German flag. In this time, fully 70% of all German trade was dependent on the sea. Control of the terms of this trade was clearly vital for the economic security of Germany. But few in London finance and shipping circles welcomed that prospect.
The parallel developments in German steel and engineering were directly applied to construction of a modern merchant shipping fleet. Replacement of wind power with steam propulsion and of wooden hulls, first with iron reinforcing and later with steel hulls, allowed Germany's merchant fleet to become larger and more efficient. In 1891, the German fleet could count three steamers over 7,000 BWT. By 1914, the German flag carried five steamers above 20,000 BWT, nine between 15-20,000 BWT, and 66 between 7,000 and 10,000 BWT.
During this time, German sea transport developed with extraordinary rapidity and efficiency. By 1914 two large companies, the Hamburg-American and the North German Lloyd, held some 40% of all Germany's commercial marine. Organization, economies of scale, and emphasis on construction of the most efficient and modern ships, was the secret of the spectacular growth in this period. A French observer of the day, commenting on the extraordinary success of German marine transport in this period noted, "It is this concentration which makes possible the rapid amortization of capital and, in consequence, the 'scrapping' of ships which have become old, the perpetual rejuvenation of the floating machinery. You do not find in the German mercantile marine old vessels of thirty or forty years. What the German industries, properly speaking—metallurgy, electro-technique, etc.—secure by standardized production, the German merchant service obtains by the frequency and regularity of sailings." He adds, "In the case of the Germans, the creation of shipping lines does not follow trade, it precedes it, and in preceding it, it brings it into existence."*
Following the final incorporation of Hamburg into the German Reich in 1888, Hamburg, and later Bremen-Bremerhaven, became the centers for construction of the most modern and efficient port facilities in all Europe, drawing the rail freight of much of central Europe north, to be shipped out to world markets. Through establishment of a national infrastructure policy which encouraged cheapest possible transport communications, Germany in the decade and a half before 1914 expanded its shipping presence throughout the world, as well into traditional market monopolies of English shipping in British colonies or traditional British "spheres of influence" such as Egypt, or even the Americas.
In 1897, little more than one year after the Reichstag passed the restrictive financial speculation controls, Grand-Admiral von Tir-pitz announced the first German naval construction program, which the Reichstag approved in 1898, followed in 1900 by a second law doubling the number of naval ships to be built.
By 1906, England had launched a superior new, all-big gun battleship class with the Dreadnaught, which was swifter and carried more firepower than any existing battleship. In response in 1906, Germany passed a little-publicized law mandating replacement of the German naval fleet every 20 years. By 1909, to the astonishment of the British, Germany launched its Nassau series with four ships superior to the Dreadnaught ships were soon superceded by both British and German shipbuilders with an even more advanced Super-Dreadnaught series. Britain never imagined that Germany could develop such a modern fleet in its own naval yards, and in such a short time. Reviewing the background of the 1914 Great War in an Oxford University lecture in 1951, Sir Llewellyn Woodward tersely stated, "Germany, like every other power, was free to build for herself as large a fleet as she might wish. The question was one of expediency and of realist calculation. A German battle fleet could not be other than a challenge to Great Britain, the dominant sea power."5.
It was becoming clear to some in England by about 1910 that dramatic remedies would be required to deal with the awesome German economic emergence- For the first time, as we shall now see, petroleum also emerged as a significant factor in the geopolitical calculus of war.
1. Bom, Karl Erich. "Wirtschafts-und So/ialgeschichte des DeulschenKaiserreichs (1867/71-1914)." SteinerVer[ag,Stutlgart, 1985.
2. Borchardt, Knut. "Deutsche Wirtschaft seit 1870." German Economy, 1870 to the present. Weidenfeid & Nicholson. London. 1167.
3. Loeb, Ernst. "The German Exchange Act of 18%." in The Quarterly Journal of Economics, vol. xi. 1897. Boston.
4. Hauser, Henri. "Germany's Commercial Grip on the World." Translated from the French. Chas. Scribner's & Sons. New York. 1918. pp.106*
5. Woodward, Sir Llewellyn, in "Prelude to Modern Europe." Norfolk, Methuen &Co. 1971. p. 135.
CHAPTER THREE:
A Global Fight for Control of Petroleum Begins
A British Admiral sees beyond lamp oil
IN 1882, THE BLACK heavy sludge we know today as petroleum had little commercial interest other than for fuel to light new mineral oil lamps, a technique developed in Berlin in 1853 by a German lamp manufacturer named Stohwasser. The fuel was then known as "rock oil" because it seeped through rocks in certain oil areas such as Titusville, Pennsylvania, Baku in Russia, or in Galicia, now part of Poland. In 1870,]ohn D. Rockefeller created the Standard Oil Co. to exploit this market for lamp oil and various oil medicine "cures" in the United States. The development of the internal combustion engine had not yet revolutionized world industry.
But at least one man understood the military-strategic implications of petroleum for future control of the world seas. Beginning with a public address in September 1882, Britain's Admiral Lord Fisher, then Captain Fisher, argued to anyone in the British establishment who would listen that Britain must convert its naval fleet from bulky coal-fired propulsion to the new oil fuel. Since 1870 Russian steamers on the Caspian Sea had burned a heavy fuel oil the Russians called "mazut." Fisher and a few other far-sighted individuals began to argue for adoption of the new fuel. He insisted that oil-power would allow Britain to maintain decisive strategic advantage in future control of the seas.
Fisher had done his homework on the qualitative superiority of petroleum over coal as a fuel, and knew his reasoning was sound. A battleship powered by a diesel motor burning petroleum issued no tell-tale smoke, while a coal ship's emission was visible up to 10 kilometers away. Where some 4 to 9 hours were required for a coal-fired ship to reach full power, art oil motor required only 30 minutes and could reach peak power within 5 minutes. To provide oil fuel for a battle ship required the work of 12 men for 12 hours. The same equivalent of energy for a coal ship required the work of 500 men and 5 days. For equal horsepower propulsion, the oil-fired ship required 1 /3 the engine weight, and almost one-quarter of the daily tonnage of fuel, a critical factor for a fleet, whether commercial or military. The radius of action of an oil-powered fleet was up to four times as great as that of the comparable coal ship.1 But at the time, Fisher was regarded by his English peers as an eccentric dreamer.
Meanwhile, by 1885 a German engineer, Gottlieb Daimler, developed the world's first workable petroleum motor to power a road vehicle. Although automobiles were regarded as playthings of the ultra-rich until the turn of the century, the economic potentials of the petroleum era were beginning to be more broadly realized by many beyond Admiral Fisher and his circle.
D'Arcy captures the secret of the burning rocks
By 1905, British Secret Services and the British government had finally realized the strategic importance of the new fuel. Britain's problem was that it had no known oil of its own. It had to rely on America, Russia or Mexico to supply it, an unacceptable condition in time of peace, impossible in the event of a major war.
A year before, in 1904, Captain Fisher had been promoted to the rank of Britain's First Sea Lord, the supreme commander of British naval affairs. Fisher promptly established a committee to "consider and make recommendations as to how the British navy shall secure its oil supplies."
Britain's presence in Persia and the Arabian Gulf—the latter still part of the Ottoman Empire—was quite limited in this time. Persia was not part of the formal British Empire. For some years, Britain had maintained consulates at Bushire and Bandar Abbas, and kept British naval ships in the Gulf to deter other powers from entertaining designs on strategic waters so close to Britain's most vital colonial source of looting, India. In 1892, Lord Curzon, later Viceroy of India, writing on Persia, stated, "I should regard the concession of a port upon the Persian Gulf to Russia, by any power, as a deliberate insult to Great Britain and as a wanton rupture of the status quo, and as an international provocation to war..."2
But in 1905, Her Majesty's Government, through the agency of the notorious British "ace of spies," Sidney Reilly, secured an extraordinarily significant exclusive right over what were then believed to be vast untapped petroleum deposits in the Middle East. In early 1905, Her Majesty's Secret Service sent Reilly (born Sigmund Georgjevich Rosenblum in Odessa, Russia) with the mission to extract rights to exploit the mineral resources of Persia from an eccentric Australian amateur geologist and engineer named William Knox d'Arcy.
D'Arcy, a devout Christian who had studied history deeply, became convinced that accounts of "pillars of fire" at the holy sites of the ancient Persian God of Fire, Ormuzd, derived from the practice of the priests of Zoroaster lighting naptha—oil—seeping from the rocks in those select sites. He spent years wandering the areas where these ancient Persian temples existed, searching for oil. He made numerous visits to London to secure financial support for his quest, with diminishing support from British bankers.
Sometime in the 1890's, the new Persian monarch, Reza Khan Pahlevi, a man committed to modernizing what today is Iran, called on D'Arcy as an engineer who knew Iran thoroughly, asking him to aid Persia in development of railways and the beginnings of industry.
In 1901, in gratitude for his services to Persia, the Shah awarded to D'Arcy a "firman," or royal concession, giving D'Arcy "full powers and unlimited liberty, for a period of sixty years, to probe, pierce and drill at their will the depths of Persian soil; in consequence of which all the sub-soil products sought by him without exception will remain his inalienable property."
D'Arcy paid the equivalent of 20,000 dollars cash and agreed to pay the Shah a 16% "royalty" from sales of whatever petroleum was discovered. Thus the eccentric Australian secured one of the most valuable legal documents of the day, granting him and "all his heirs and assigns and friends" exclusive rights to tap the oil potential of Persia until 1961. D'Arc/s first successful oil discovery came in the region of Shushtar north of the Persian Gulf.3 Sidney Reilly managed to track D'Arcy down in 1905, just as the latter was on the verge of signing a joint oil exploration partnership with the French through the Paris Rothschild banking group, before retiring back to his native Australia.
Reilly, disguised as a priest and skillfully playing on d'Arcy's strong religious inclinations, persuaded d'Arcy instead to sign over his exclusive rights to Persian oil resources in an agreement with a British company which he claimed to be a good "Christian" enterprise, the Anglo-Persian Oil Company. The Scottish financier Lord Strathcona was brought in by the British government as a key shareholder of Anglo-Persian, while the government's actual role in Anglo-Persian was kept secret. Reiily had thus secured Britain's first major petroleum source.
By rail from Berlin to Baghdad
In 1889, a group of German industrialists and bankers, led by Deutsche Bank, secured a concession from the Ottoman government to build a railway through Anatolia from the capital, Constantinople. This accord was expanded ten years later, in 1899, when the Ottoman government gave the German group approval for the next stage of what became known as the Berlin-Baghdad Railway project. The second agreement was one consequence of the 1898 visit to Constantinople by German Kaiser Wilhelm II. German-Turkish relations had gained high importance over those ten years.
Germany had decided to build a strong economic alliance with Turkey beginning in the 1890's, as a way to develop potentially vast new markets to the East for export of German industrial goods. The Berlin-Baghdad Railway project was to be the centerpiece of a brilliant and quite workable economic strategy. Potential supplies of oil lurked in the background and Britain stood opposed. The seeds of animosities tragically acted out in the Middle East in the 1990's trace directly back to this period.
For more than two decades, the question of construction of a modern railway linking Continental Europe with Baghdad was at the center of German-English relations as a point of friction. In the estimation of Deutsche Bank director Karl Helfferich, the person responsible at the time for the Baghdad rail project negotiations, no other issue led to greater tensions between London and Berlin in the decade and half before 1914, with the possible exception of the issue of Germany's growing naval fleet.4
In 1888, under the leadership of Deutsche Bank, a consortium secured a concession for construction and maintenance of a railway connecting Haidar-Pascha outside Constantinople, with Angora. The company was named the Anatolian Railway Company, and included Austrian and Italian shareholders as well as a small English shareholding. Work on the railway proceeded so well, that the section was completed ahead of schedule and construction was further extended south to Konia.
By 1896 a rail line was open which could go from Berlin to Konia deep in the Turkish interior of the Anatolian highlands, a stretch of some 1,000 kilometers of new rail constructed in less than 8 years in an economically desolate area. It was a true engineering and construction accomplishment. The ancient rich valley of the Tigris and Euphrates rivers was coming into sight of modern transportation infrastructure. Hitherto, the only rail infrastructure built in the Middle east had been British or French, all of it extremely short stretches in Syria or elsewhere to link key port cities, but never to open up large expanses of interior to modem industrialization.
For the first time, the railway gave Constantinople and the Ottoman Empire vital modern economic linkage with its entire asiatic interior. The rail link, once extended to Baghdad and a short distance further to Kuwait, would provide the cheapest and fastest link between Europe and the entire Indian subcontinent, a world rail link of the first order.
From the English side, this was exactly the point. "If 'Berlin-Baghdad' were achieved, a huge block of territory producing every kind of economic wealth, and unassailable by sea-power would be united under German authority," warned R.G.D. Laffan, at that time a senior British military adviser attached to the Serbian Army.
"Russia would be cut off by this barrier from her western friends, Great Britain and France," Laffan added. "German and Turkish armies would be within easy striking distance of our Egyptian interests, and from the Persian Gulf, our Indian Empire would be threatened. The port of Alexandretta and the control of the Dardanelles would soon give Germany enormous naval power in the Mediterranean."5
Laffan hinted at the British strategy to sabotage the Berlin- Baghdad link. "A glance at the map of the world will show how the chain of States stretched from Berlin to Baghdad. The German Empire, the Austro-Hungarian Empire, Bulgaria, Turkey. One little strip of territory alone blocked the way and prevented the two ends of the chain from being linked together. That little strip was Serbia. Serbia stood small but defiant between Germany and the great ports of Constantinople and Salonika, holding the Gate of the East... Serbia was really the first line of defense of our eastern possessions. If she were crushed or enticed into the 'Berlin-Baghdad' system, then our vast but slightly defended empire would soon have felt the shock of Germany's eastward thrust."
Thus it is not surprising to find that behind the enormous unrest and wars throughout the Balkans in the decade before 1914, including the Turkish War, the Bulgarian War, and continuous unrest in the region, the guiding hand of England was actively fostering conflict and wars, directed at rupturing the Berlin-Constantinople alliance, and especially the completion of the Berlin-Baghdad rail link, just as Laffan hints. But it would be a mistake to view the construction of the Berlin-Baghdad railway project as a "German" coup against England. Germany repeatedly sought English cooperation in the project. Since the 1890's, when agreement was reached with the Turkish government to complete a final 2,500 kilometer stretch of rail, which would complete the line down to what is today Kuwait, Deutsche Bank and the Berlin government made countless attempts to secure English participation and co-financing of the enormous project.
In November 1899, following his visit to Constantinople, German Kaiser Wilhelm II went to meet with Queen Victoria in Windsor Castle to personally intercede in favor of soliciting a significant British participation in the Baghdad project. Germany well knew that Britain asserted interests in the Persian Gulf and Suez in defense of her India Passage, as it was known. Without positive English backing, it was clear that the project would face great difficulties, not least political and financial. The size of the final leg of the railway was beyond the resources of German banks, even one as large as Deutsche Bank, to finance alone.
From its side, however, for the next fifteen years, England sought with every possible means to delay and obstruct progress of the railway, while always holding out the hope of ultimate agreement to keep the German side off balance. This game lasted literally until the outbreak of war in August, 1914.
But the trump card which Her Royal Britannic Majesty played in the final phase of the negotiations around the Baghdad railway, was her tie with the corrupt Sheikh of Kuwait. In 1901, English warships off the Kuwait coast dictated to the Turkish Government that henceforth they must consider the Gulf port located just below the Shaat al Arab, controlled by the Anaza tribe of Sheikh Mubarak al-Sabah, to be a "British Protectorate."
At that point, Turkey was too economically and militarily weak to do anything but feebly protest the British de facto occupation of this distant part of the Ottoman Empire. Kuwait in British hands blocked successful completion of the Berlin-Baghdad rail from important eventual access to the Persian Gulf waters and beyond.
In 1907, Sheihk Mubarak Al-Sabah, a ruthless sort who reportedly seized power in the region in 1896 by murdering his two half-brothers as they slept in his palace, was convinced to sign over, in the form of a "lease in perpetuity," the land of Bander Shwaikh to "the precious Imperial English Government." The document was co-signed by Major C.G. Knox, Political Agent of the Imperial English Government in Kuwait. Reportedly, there were generous portions of English gold and rifles to make the signing more palatable to the Sheikh.
By October 1913, Lt.-Colonel Sir Percy Cox secured a letter from the ever-obliging Sheikh, wherein the Sheikh agreed not to grant any concession for development of oil in the land "to anyone other than a person nominated and recommended by the British government."6.
By 1902, it was known that the region of the Ottoman Empire known as Mesopotamia—today Iraq and Kuwait—contained resources of petroleum. How much and how accessible was still a matter for speculation. This discovery shaped the gigantic battle for global economic and military control which continues to the end of the 20th century.
In 1912, Deutsche Bank, in the course of its financing of the Baghdad rail connection, negotiated a concession from the Ottoman Emperor giving the Baghdad Rail Co. full "right-of-way" rights to all oil and minerals on a parallel 20 kilometers either side of the rail line. The line had reached as far as Mosul in what today is Iraq.
By 1912, German industry and government realized that oil was the fuel of its economic future, not only for land transport but for naval vessels. At that time, Germany was itself locked in the grip of the large American Rockefeller Standard Oil Company trust. Standard Oil's Deutsche Petroleum Verkaufgesellschaft controlled 91% of all German oil sales. Deutsche Bank held a minority 9% share of Deutsche Petroleums Verkaufgesellschaft, hardly a decisive interest.
In 1912, Germany had no independent, secure supply of oil. But geologists had discovered oil in that part of Mesopotamia today called Iraq, between Mosul and Baghdad. The projected line of the last part of the Berlin-Baghdad rail link would go right through the area believed to hold large oil reserves.
Efforts to pass legislation in the Berlin Reichstag in 1912-13 to establish a German state-owned company to develop and run the new found oil resources, independent of the American Rockefeller combine, were stalled and delayed, until the outbreak of World War in August 1914 pushed it off the agenda. The Deutsche Bank plan was to have the Baghdad rail link transport Mesopotamian oil over land, free from possible naval blockade by the British and thereby make Germany independent in its petroleum requirements.
The new Dreadnaughts
But it was not until 1909, that Admiral Fisher's plans for Britain's oil-fired navy began to be implemented. Germany had just launched the first of its advanced improvement of the English Dreadnought series. The German Von der Tann carried 80,000 horsepower engines, which, while still coal-fired, were capable of a then astounding 28 knots speed. Only two British ships could match that speed. Britain's coal-fired fleet was at its technological limit and British naval supremacy was decisively threatened by the rapidly expanding German economic marvel. By 1911, a young Winston Churchill succeeded Lord Fisher as First Lord of the Admiralty. Churchil immediately began a campaign to implement Fisher's demand for an oil-powered navy. Using Fisher's arguments, Churchill pointed out that, with ships of equal size, oil gives far greater speed, and, per unit of weight, gives a decisive advantage in domain of action without refueling.
In 1912, the United States produced more than 63% of the world's petroleum, Russia's Baku 19%, and Mexico about 5%. Britain's Anglo-Persian Exploration Co. was not yet producing major supplies of petroleum, but even then, British government strategy had determined that British presence in the Persian Gulf was essential national interest. As we have seen, Germany's relentless extension of the Berlin-Baghdad railway line played a significant role in this determination.
By July 1912, Prime Minister Asquith's government, on Churchill's urging, appointed a Royal Commission on Oil & The Oil Engine. The retired Lord Fisher was named to chair it.
By early 1913, acting secretly, and again at Churchill's urging, the British Government bought up a majority share ownership of Anglo-Persian Oil (today British Petroleum). From this point, oil was at the core of British strategic interest7
If England could not only secure her own direct petroleum needs for the transport and energy technology of the future, but, perhaps more decisive, deny economic rivals access to secure petroleum reserves in the world, the dominant role of Britain might be maintained into the nexf decades. In short, if England's stagnating industry could not compete with Germany's emerging Daimler motors, it would control the raw material on which the Daimler motors must run. Just what this policy of British petroleum control implied for the course of world history will become more clear.
Sir Edward Grey's fateful Paris trip
Why would England risk a world war in order to stop the development of Germany's industrial economy in 1914?
The ultimate reason why England declared war in August, 1914, lay fundamentally "in the old tradition of British policy, through which England grew to great power status, and through which she sought to remain a great power," stated German banker, Karl Helfferich, in 1918. "England's policy was always constructed against the politically and economically strongest Continental power," he stressed.
"Ever since Germany became the politically and economically strongest Continental power, did England feel threatened from Germany more than from any other land in its global economic position and its naval supremacy. Since that point, the English-German differences were unbridgeable, and susceptible to no agreement in any one single question." Helfferich sadly notes the accuracy of the declaration by Bismarck in 1897, "The only condition which could lead to improvement: of German-English relations would be if we bridled our economic development, and this is not possible."8
In April, 1914, George, King of England, and his Foreign Minister Edward Grey, made an extraordinary visit to meet French President Poincare in Paris. It was one of the few times Sir Edward Grey left the British Isles. Russia's Ambassador to France, Iswolski, joined, and the three powers firmed up a secret military alliance against the German-Austro-Hungarian powers. Grey deliberately did not warn Germany beforehand of its secret alliance policy, whereby England would enter a war which engaged any one of the carefully-constructed web of alliance partners England had built up against Germany.9
The British establishment had determined well before 1914 that war was the only course suitable to bring the European situation "under control." British interests dictated, according to their balance-of-power logic, a shift from her traditional "pro-Ottoman and anti-Russian" alliance strategy of the 19th century, to a "pro-Russian and anti-German" alliance strategy as early as the late 1890's, when the emerging alliance between France's Gabriel Hanotaux and Russia's Serge Witte, together with an emerging industrial Germany, seemed imminent.
Fashoda, Witte, Great Projects and Great Mistakes
Indeed, fear of the emerging German economic challenge towards the end of the 1890's was so extreme among the leading circles of the British establishment, that Britain made a drastic change in its decades-long Continental alliance strategy, in a bold effort to tilt European events back to England's advantage.
A seminal event, which crystalized this alliance shift, was, oddly enough, an eyeball-to-eyeball military confrontation over Egypt, where historically both England and France had major interests through the Suez Canal Company. In 1898, French troops marching across the Sahara to the east under Colonel Jean Marchand, encountered British forces under command of General Kitchener at Fashoda on the Nile. A tense military showdown ensued, with each ordering the other side to withdraw, until finally, after consultation with Paris, Marchand withdrew. The Fashoda Crisis, as it became known, ended in a de facto Anglo-French balance-of-power alliance against Germany, in which France foolishly ceded major possibilities to industrialize Africa.
The decision to send the French Expeditionary Force under Marchand to Fachoda for a head-on military confrontation with England in Africa, came from Colonial Minister Theophile Delcassé. Britain had steadily moved to what became a de facto military occupation of Egypt and the Suez Canal, despite French claims to the area going back to Napoleon. Since 1882, British troops had "temporarily" occupied Egypt, and British civil servants ran the government in order to "protect" French and British interests in the Suez Canal Company. England was stealing Egypt out from under France.
Delcasse acted against the better interests of France and against the explicit policy design of French Foreign Minister Gabriel Hanotaux. Hanotaux, who was absent from government for a critical six months when the Fashoda folly was decided, had a conception of development and industrialization of France's African colonies. A moderate Republican who was known as an Anglophobe, Hanotaux had a conception of an economically unified French Africa centered around development of Lake Chad, with a railroad linking the interior from Dakar in French Senegal to French Djibouti on the Red Sea. The idea was referred to in France as the Trans-Sahara Railway project. It would have transformed the entirety of Saharan Africa from West to East. It would also have blocked major British strategic objectives to control the entire region from Africa, across Egypt and into India. Hanotaux carefully pursued a policy of normalizing relations between France and Germany, a development most threatening to British balance-of-power machinations. In early 1896, the German Foreign Secretary asked the French Ambassador in Berlin whether France would consider joint action in Africa for "limiting the insatiable appetite of England... [It] is necessary to show England that she can no longer take advantage of the Franco-German antagonism to seize whatever she wants."
Then, the infamous Dreyfus Affair erupted in the press in France. Its direct aim was to rupture the delicate efforts of Hanotaux to stabilize relations with Germany. A French army Captain named Dreyfus was prosecuted on charges of spying for the Germans. Hanotaux intervened into the initial process in 1894, correctly warning that the Dreyfus affair would lead to "a diplomatic rupture with Germany, even war." Dreyfus was exonerated years later, and it was revealed that Count Ferdinand Walsin-Esterhazy, in the pay of the Rothschild banking family, had manufactured the evidence against Dreyfus. By 1898, Hanotaux was out of office, and succeeded by the malleable Anglophile, Theophile Delcasse.
After Fachoda in 1898, Britain skillfully enticed France, under Foreign Minister Delcasse, to give up fundamental colonial and economic interests in Egypt and concentrate on a French policy against Germany, with Britain secretly agreeing to back French claims on Alsace-Lorraine, as well as supporting French ambitions in other areas not vital to British designs. Describing these British diplomatic machinations around Fachoda some years later (in 1909), Hanotaux remarked, "It is an historical, proven fact that any colonial expansion of France has been seen with fear and concern in England. For a long time, England has thought that, in the domination of the Seas, she has no other rival to consider than that power endowed by nature with a triple coastline of the Channel, the Atlantic and the Mediterranean Sea. And when, after 1880, France, induced by the circumstances and stimulated by the genius of Jules Ferry, began to reconstitute her dismembered colonial domain, she came up against the same resistance. In Egypt, in Tunisia, Madagascar, Indo-China, even the Congo and Oceania, it is always England she confronts."
After Fachoda, the Entente Cordiale was fashioned and ultimately formalized in a secret agreement between France and Britain, signed by Delcasse, Hanotaux' successor, in 1904. Germany's economic threat was the glue binding the two unlikely allies.
Commenting on this sad turn of events afterwards, Hanotaux noted the success with which Britain had imposed a new foreign policy on France, "a marvelous invention of English diplomatic genius to divide its adversaries."
Over the next eight years, Britain reversed its geopolitical alliance policy in another profound manner as well, and shifted developments in Russia to British advantage. Beginning 1891, Russia had embarked on an ambitious industrialization program with the passage of a stringent protective tariff and railroad infrastructure program. In 1892, the man responsible for the railroad plan, Count Sergei Witte, became Minister of Finance. Witte had enjoyed close relations with France's Hanotaux and a positive basis for Franco-Russian relations developed around the construction of the railway system of Russia.
The most ambitious project initiated in Russia at that time had been construction of a railroad linking Russia in the West to Vladivostock in the far East—the Trans-Siberian Railway project, a 5,400 mile-long undertaking, which would transform the entire economy of Russia. This was the most ambitious rail project in the world. Witte himself was a profound student of the German economic model of Friederich List, having translated List's "National System of Political Economy"into Russian, which Witte termed, "the solution for Russia."
Witte spoke of the rail project's effect on uplifting the culturally backward regions of the interior. "The railroad is like a leaven which creates a cultural fermentation among the population. Even if it is passed through an absolutely wild people along the way, it would raise them in a short time to the level requisite for its operation," he said in 1890. A central part of Witte's plan was to develop peaceful and productive relations with China, independent of British control of China's ports and sea lanes, through the overland openings which the Siberian rail line would facilitate.
As Finance Minister from 1892 until he was deposed during the suspiciously-timed Russian 1905 "revolution," Witte transformed Russia's prospects dramatically from its former role as "bread basket" for British grain trading houses, into a potentially modem industrial nation. Railroads became the largest industry in the country and were inducing transformation of the entire range of related steel and other sectors- Furthermore, Witte's friend and close collaborator, the scientist Dimitri Mendeleyev, who had founded Russian agro-chemistry based on the ideas of the German Justus Liebig, was appointed by Witte to head a new Office of Standard Weights and Measures, in which he introduced the metric system to further facilitate trade with the Continent of Europe.
Britain energetically opposed the economic policies of Witte and the Trans-Siberian Railway project with every means at its disposal, including attempts to influence reactionary Russian landed nobility linked to English grain trade. Shortly after the inception of the Trans-Siberian Rail project, a British commentator, A. Colqhum, expressed the dominant view of the British Foreign Office and the City of London. Referring to the new Russian rail project, undertaken with French financing and which would ultimately link Paris to Moscow to Vladivostock by rail, Colqhum declared, "This line will not only be one of the greatest trade routes that the world has ever known, but it will also become a political weapon in the hands of the Russians whose power and significance it is difficult to estimate. It will make a single nation out of Russja, for whom it will no longer be necessary to pass through the Dardanelles or through the Suez Canal. It will give her an economic independence, through which she will become stronger than she has ever been or ever dreamed of becoming."
For decades, British balance-of-power alliance strategy in Europe had been built around support of Ottoman Turkey's Empire, as part of what British strategists called the Great Game—blocking the emergence of a strong and industralized Russia. Support of Turkey, which controlled the vital Dardanelles access to warm waters for Russia, had been a vital part of British geopolitics until that time. But as German economic links with the Ottoman Empire grew stronger at the end of the century and into the early 1900s, so did British overtures to Russia, and against Turkey and Germany. It took a series of wars and crises, but following unsuccessful British attempts to block Russia's Trans-Siberian Railway to Wladiwostok, which the Russians largely completed in 1903, Russia was badly humiliated in the Russo-Japanese War in 1905, in which Britain had allied with Japan against Russia. After 1905, Witte was forced to resign his position as Chairman of the Council of Ministers under Czar Nicholas II. His successor argued that Russia must come to terms with British power, and proceeded to sign over rights to Afghanistan and large parts of Persia to the British, and agreed to significantly curtail Russian ambitions in Asia.
Thus, an Anglo-French-Russian Triple Entente in effect had been fully established by 1907. Britain had created a web of secret alliances web encircling Germany, and had laid the foundations for its coming military showdown with the Kaiser's Reich. The next seven years were ones of preparation for the final elimination of the German threat.10.
Following British consolidation of its new Triple Entente strategy of encirclement of Germany and allies, a series of continuous crises and regional wars were unleashed in the "soft underbelly" of Central Europe, the Balkans. In the so-called First Balkan War in 1912, Serbia, Bulgaria, and Greece, backed secretly by England, declared war against the weak Ottoman Turkey, resulting in stripping Turkey of most of her European possessions, followed by a second 1913 Balkan War over the spoils of the first, in which Romania joined to help crush Bulgaria. The stage was being set for Britain's Great European War.
On July 28,1914, three months after Edward Grey's Paris talks, Archduke Francis Ferdinand, heir to the Austrian throne, was assassinated in Sarajevo by a Serb, setting off a predictably tragic chain of events which detonated the Great War.
Footnotes:1. Mohr, Anton. "The Oil War." . Harcoort Brace & Co, New York, 1926
2. Ibid. p. 124.
3. Hanigen, Frank C. "The Secret War." The John Day & Co., New York, 1934.
4. Helfferich, Karl. "Der Weltkrieg: Vorgesehichte des Weltkrieges." Uilstein & Co. Berlin. 1919. pp.120-165.
5. Laffan, R.G.D., 'TheSerbs: TheGuardiansof theGate," 1917. Reprinted by Dorset Press, New York, 1989. pp. 163-4. Emphasis added-w.e.
6. Abu-Hakima, Ahmad Mustafa. "The Modern History of Kuwait." Luzak & Co. Ltd. London. 1983. pp. 188-197.
7. Hanigen. op eit. pp. 22-3.
8. Helfferich. op cit. pp. 165-6-
9. WeUs, H.G. "Experiment in Autobiography." The Macmillan Co- New York, 1934. pp.658-9.
10. Material tor this section is drawn extensively from the unpublished manuscript, "The Dreyfus Affair", by Dana Sloan, January 1977, New York; and Hanutaux, Gabriel, "Fashoda: The African Negotiation." La Revue Des Deux Mondes, Fev-rier 1909, Paris. Material on Witte, drawn from Barbara Frazier, 'The Railroad Plan of Scientist Mendeleyev and Statesman Witte to Civilize Russia," The New Federalist, June 10,1991, Leesburg, Virginia; Von Laue, T. H. "Sergei Witte and the Industrialization of Russia," Atheneum, New York, 1974.
CHAPTER FOUR:
Oil Becomes the Weapon, the Near East the Battleground
A Bankrupt Britain Goes to War
ONE OF THE BETTER KEPT secrets of the 1914-18 World War is that on the eve of August 1914, when Britain declared war against the German Reich, the British Treasury and the finances of the British Empire were bankrupt. An examination of the actual financial relations of the principal parties to the war reveals an extraordinary background of secret credits, coupled with detailed plans to reallocate raw material and physical wealth of the entire world after the war, especially areas believed to hold significant petroleum reserves in the Ottoman Empire.
By most accounts, the trigger which unleashed the Great War was pulled by a Serbian assassin on June 28,1914, at the Bosnian capital Sarajevo, when he murdered Archduke Francis Ferdinand, heir to the Austro-Hungarian throne. Following a month of frenzied negotiations, Austria declared war on July 28 against the tiny state of Serbia, holding her responsible for the assassination. Austria had been assured of German support should Russia back Serbia. The following day, July 29, Russia ordered mobilization of her army in the event war became necessary.
That same day, the German Kaiser telegrammed Czar Nicholas, begging the Czar not to mobilize, and causing the Czar momentarily to rescind his order. On July 30, the Russian High Command persuaded the hesitant Czar to resume the mobilization. On July 31, the German Ambassador to St. Petersburg handed the Czar a German declaration of war against Russia, then reportedly burst into tears and ran from the room.
The German General Staff, having been prepared for possible war on both the Eastern and Western fronts, implemented the Schlieffen Plan. As France and Russia had mutual defense commitments, Germany decided that France must be defeated swiftly, correctly calculating that Russia would be slower to mobilize. On August 3, 1914, Germany declared war on France, and German troops entered Belgium en route to attack France.
Then, on August 4, only eight days following Austria's declaration of war against tiny Serbia, Britain announced it had declared war against Germany. The nominal reason given was Britain's prior committment to protect Belgian neutrality. The actual reason was far from any spirit of neighborly charity.
Britain's decision to go to war against Germany in August 1914 on the Continent was remarkable, to say the least, given that the British Treasury and the Pound Sterling system, the dominant currency system of world trade and finance, were de facto bankrupt. Recently declassified internal memoranda from the British Treasury staff of the Chancellor of the Exchequer, Lloyd George, raise additional questions. In January 1914, a full six months before the nominal casus belli at Sarajevo, Sir George Paish, senior British Treasury official, was asked by the Chancellor to make a definitive study of the state of the all-important British gold reserves.
In 1914, the Sterling Gold Standard was the prop of the world monetary system. In fact. Sterling had become so accepted in international commerce and finance for more than 75 years, that Sterling itself was considered "as good as gold." In 1914, Sterling played a role comparable to that of the U.S. dollar before August 15,1971.
Sir George's confidential memorandum reveals thinking in the highest levels of the City of London at the time: "Another influence fanning the agitation for banking reform has been the growing commercial and banking power of Germany, and the growth of uneasiness lest the gold reserves of London should be raided just before or at the beginning of a great conflict between the two countries." This confidential report was written more than six months before the heir to the Austrian throne was assassinated in Sarajevo.
Paish then discussed his concern over the growing sophistication of the large German trade banks following the 1911-12 Balkan crisis, which had led the German banks to stock up their gold reserves. Sir George warned his Chancellor Lloyd George that any future run on the banks of London, under prevailing conditions, "might seriously hamper a nation in raising money to conduct a great war."1
On May 22,1914, a senior British Treasury official, Basil Blackett, drafted another confidential memorandum for Chancellor Lloyd George. This memo dealt with the "Effect of War on Our Gold reserves." Blackett writes, revealingly, "It is of course impossible clearly to forecast what would be the effect of a general European war in which most of the Continental countries as well as Great Britain were engaged, leaving only New York (assuming the neutrality of the United States) among the big money markets of the world available from which gold could be attracted to the seats of war."2
Equally astonishing, in light of Britain's decision to go to war that fateful August 4, was a letter from Sir George Paish to Lloyd George dated 2 a.m. Saturday morning, August 1,1914: "Dear Mr. Chancellor, The credit system upon which the business of this country is formed, has completely broken down, and it is of supreme importance that steps should be taken to repair the mischief without delay; otherwise, we cannot hope to finance a great war if, at its very commencement, our greatest houses are forced into bankruptcy." 2-
Specie payments (gold and silver bullion) were promptly suspended by the Bank of England, along with the Bank Act of 1844. This decision placed large sums of gold into the hands of the Bank of England, in order that Britain's government could finance food and war materiel purchases for the newly declared war against Germany. Instead of gold, British citizens were given Bank of England notes as legal tender for the duration of the emergency. By August 4, the British financial establishment was ready for war.
But the secret weapon was to emerge later, as the special relationship of His Majesty's Treasury with the New York banking syndicate of Morgan, as we shall soon see.
Oil in the Great War
Between 1914 when fighting began and 1918 when it ended, petroleum had definitively emerged as the recognized key to success of a revolution in military strategy. The age of air warfare, mobile tank warfare and swifter naval warfare all depended on abundant and secure supplies of the new fuel.
England, under the foreign policy guidance of Sir Edward Grey, precipitated what became the bloodiest, most destructive war in modern history, in the months leading up to August 1914. According to official statistics, deaths directly due to the war or indirectly inflicted by it numbered between 16,000,000 and 20,000,000, with the great majority, 10,000,000 or more, being civilian deaths. The British Empire itself incurred more than 500,000 dead and total casualties of almost 2,500,000 in the four-year long world "war to end all wars."
Rarely discussed, however, is the fact that the strategic geo-political objectives of England, well before 1914, included not merely the crushing of its greatest industrial rival, Germany, but, through the conquest of war, the securing of unchallenged British control over the precious resource which by 1919 had proven itself as the strategic raw material of future economic development—petroleum. This was part of what some English establishment strategists then termed the Great Game, creation of a new global British Empire, whose hegemony would be unchallenged for the rest of the century, a British-led New World Order.
A study of the major theaters of the 1914-1918 Great War reveals the extent to which securing petroleum supplies was already at the center of military planning. Oil had opened the door to a terrifying new mobility in modern warfare. The German campaign into Rumania under Field Marshall von Mackensen, had the priority of reorganizing Steaua Romana, the previously English, Dutch, French and Rumanian oil refining, production and pipeline capacities, into a single combine. During the course of the war Rumania was the only secure German petroleum supply for her entire air force, tank forces, and U-boats. The British campaign in the Dardanelles, the disastrous defeat of Gallipoli, was undertaken to secure the oil supplies of the Russian Baku to the Anglo-French war effort. The Ottoman Sultan had embargoed shipments of Russian oil out through the Dardenelles.
By 1918, the rich Russian oil fields of Baku on the Caspian Sea were the object of intense military and political effort from the side of Germany, and also Britain, which pre-emptively occupied them for a critical matter of weeks, denying the German General Staff vital oil supplies in the August 1918 period. Denial of Baku was a decisive last blow against Germany, which sued for peace some weeks later, only months after it seemed Germany had defeated the Allied forces. It was proven that oil was at the center of geopolitics.
By the end of the First World War, no major power was unaware of the vital strategic importance of the new fuel, petroleum, for future military and economic security. At the end of the Great War, fully 40% of the British naval fleet was oil fired. In 1914, at the onset of the war, the French army had a mere 110 trucks, 60 tractors and 132 airplanes. By 1918, four years later, France had increased to 70,000 trucks and 12,000 airplanes, while the British and, in the final months the Americans, put 105,000 trucks and over 4,000 airplanes into combat service. The final Anglo-French-American offensives of the war consumed a staggering 12,000 barrels of oil daily, on the Western Front.
By December 1917, French supplies of oil had become so low that General Foch enveighed on President Clemenceau to send an urgent appeal to President Woodrow Wilson. "A failure in the supply of petrol would cause the immediate paralysis of our armies, and might compel us to a peace unfavorable to the Allies," Clemenceau wrote to Wilson. "The safety of the allies is in the balance. If the Allies do not wish to lose the war, then, at the moment of the great German offensive, they must not let France lack the petrol which is as necessary as blood in the battles of tomorrow."
Rockefeller's Standard Oil group answered Clemenceau's appeal, giving Marshall Foch's forces vital petrol. Lacking sufficient Rumanian oil supply as well as access to the Baku, despite a Russian-German Brest-Litovsk agreement to cease hostilities, German forces were unable to successfully mount a final offensive in 1918, as trucks necessary to bring sufficient reserves were unable to secure petrol.
Britain's Foreign Minister, Lord Curzon commented, quite accurately, "The Allies were carried to victory on a flood of oil...With the commencement of the war, oil and its products began to rank as among the principal agents by which they would conduct, and by which they could win it. Without oil, how could they have pro-. cured the mobility of the fleet, the transport of their troops, or the manufacture of several explosives?" The occasion was a November 21,1918 victory dinner, ten days after the armistice ending the war. France's Senator Henry Berenger, director of France's wartime Comite General du Petrole, added that oil was the "blood of victory. Germany had boasted too much of its superiority in iron and coal, but it had not taken sufficient account of our superiority of oil."?
With this emerging role of petroleum in the war, we should now follow the thread of the postwar Versailles reorganization, with a special eye to British objectives.
Britain's creation of the League of Nations through the Versailles Peace Conference in 1919, became a vehicle to give a facade of international legitimacy to a naked imperial territory seizure. For the financial establishment of the City of London, the expenditure of hundreds of thousands of British lives in order to dominate future world economic development through raw materials control, especially of the new resource oil, was a seemingly small price to pay.
England's Secret Eastern War
If anything demonstrated the hidden agenda of the British allied powers in the 1914-18 war against the central powers grouped around Germany, Austria-Hungary and Ottoman Turkey, it was a secret diplomatic accord signed in 1916, during the heat of battle. The signatories were Britain, France, and later Italy and Czarist Russia. Named after the two officials, English and French, who drafted the paper, the Sykes-Picot Agreement spelled out betrayal, and England's intent to grab commanding control of the undeveloped petroleum potentials of the Arabian Gulf after the war.
While France was occupied with Germany in a bloody and fruitless slaughter along the French Maginot Line, Britain moved an astonishingly large number of its own soldiers, more than 1,400,000 troops, into the Eastern Theatre.
England's public explanation for this extraordinary commitment of preciously scarce men and materiel to the eastern reaches of the Mediterranean and Persian Gulf, was that this would ensure the more effective fighting capacity of Russia against the Central Powers, as well as to allow Russian grain out through the Darde-nelles into Western Europe where it was badly needed.
This was not quite the reality however. Following 1918, England continued to maintain almost one million soldiers stationed throughout the Middle East. The Persian Gulf had become an "English Lake" by 1919. The angry French feebly protested that, while millions of their forces bled on the Western Front, Britain took advantage of the stalemate to win victories against the weaker Turkish Empire. France had lost almost 1,500,000 soldiers and another 2,600,000 badly wounded.
In November 1917, following the Bolshevik seizure of power in Russia, Lenin's Communists discovered among the documents of the Czarist Foreign Ministry a secret document which they quickly made public. It was a Great Powers' plan to carve up the entire Ottoman Empire after the war, and parcel out relevant parts to the victorious powers. The details had been worked out in February 1916, and were secretly ratified by the relevant governments in May 1916. The world at large knew nothing of this secret wartime diplomacy.
From the British side, Sir Mark Sykes, an adviser on Eastern Affairs to Lord Kitchener of Khartoum, Secretary of State for War, drafted the document. The document was designed to secure French acquiescence to a huge diversion of British manpower from the European Theatre into the Middle East. To get that French concession, Sykes was authorized to offer French negotiator Georges Picot, former Consul-General in Beirut, valuable postwar concessions in the Arab portion of the Ottoman Empire.
France was to get effective control over what was called "Area A," encompassing Greater Syria (Syria and Lebanon), including the major inland towns of Aleppo, Hama, Horns and Damascus, as well as the oil-rich Mosul to the northeast, including the oil concessions then held by Deutsche Bank in the Turkish Petroleum Gesellschaft. This French control paid nominal Up service to recognition of Arab "independence" from Turkey, under a French "protectorate."
Under the Sykes-Picot accord, Britain would control "Area B" in the region to the south-east of the French region, from what today is Jordan, east to most of Iraq and Kuwait, including Basra and Baghdad. Further, Britain was to get the ports of Haifa and Acre, and rights to build a railway from Haifa through the French zone to Baghdad, with rights to use it for troop transport.
Italy was promised a huge section of the mountainous coastline of Turkish Anatolia and the Dodecanese Islands, while Czarist Russia was to receive the areas of Ottoman Armenia and Kurdistan, southwest of Jerevan 4
Out of these secret Sykes-Picot paragraphs, the British created the arbitrary divisions which largely exist down to the present day, including the creation of Syria and Lebanon as French "protectorates," and Trans-Jordan, Palestine (Israel), Iraq, and Kuwait as English entities. Persia, as we have seen, had been under effective British control since 1905, and Saudi Arabia was considered unimportant to British strategic interests at that point, one of the few major blunders they were to realize later to their great dismay.
Britain had been forced by its relative weakness following the disastrous failure of its Gallipoli Expedition in 1915 to grant France the oil concessions of the Mosul, in addition to recognition of previous French claims over the Levant. But Britain's loss of the Mosul oil riches was only a temporary tactical expedient, in her long-term designs to dominate world petroleum supplies, as we shall see.
"Selling the same horse twice"
When details of the secret Sykes-I'icot agreement became public, the major embarrassment for Britain was the simultaneous and blatantly contradictory assurances England had given Arab leaders in order to secure Arab revolt against Turkish rule during the war.
Britain had gained the invaluable military assistance of Arab forces under Sherif Husain ibn Ali, the Hashemite Emir of Mecca, and guardian of the Muslim Holy Places of Mecca and Medina. Britain had assured the Arab forces who served under the command of T.E Lawrence ("Lawrence of Arabia"), that the reward for their help in defeating the Turks would be English assurance of full postwar sovereignty and Arab independence. The assurances were contained in a series of letters between Sir Henry McMahon, England's High Commissioner in Egypt, to Sherif Husain of Mecca, then self-proclaimed leader of the Arabs.
Lawrence was fully witting in the British fraud to the Arabs at the time. "I risked the fraud," he admitted some years later in his memoirs, "on my conviction that Arab help was necessary to our cheap and speedy victory in the East, and that better we win and break our word, than lose...The Arab inspiration was our main tool for winning the Eastern war. So 1 assured them that England kept her word in letter and spirit. In this comfort they performed their fine things; but of course, instead of being proud of what we did together, 1 was continually and bitterly ashamed."5
The loss of 100,000 Arab lives was part of this "cheap and speedy victory." But Britain quickly betrayed those promises in a move to secure to its own interests the vast oil and political riches of the Arab Middle East.
Adding insult to injury, once publication of the Sykes-Picot agreement revealed a contrary commitment to France in the Middle East, Great Britain and France issued a new Anglo-French Declaration on November 7,1918, four days before the European Armistice ending the war with Germany. The new declaration insisted that Britain and France were fighting for "the complete and definite emancipation of the peoples so long oppressed by the Turks, and the establishment of national governments and administrations deriving their authority from the initiative and free choice of the indigenous populations."6
That noble result never came about. Once the solemn pledges of Versailles had been signed, Britain, with its approximately one million strong military force in the region, established its military supremacy over the French area of the Middle East as well.
By September 30, 1918, France had agreed to British terms for creating what were called "zones of temporary military occupation." Under this agreement, the British would occupy Turkish Palestine under what was called Occupied Enemy Territory Administration, along with the other parts of the British sphere.
Knowing French inability to significantly deploy troops into the designated French areas, after the exhaustion of war in Europe, Britain generously offered to act as the overall supreme military and administrative guardian, with General Sir Edmund Allenby, Commander-in-Chief Egyptian Expeditionary Force, as the de facto military dictator over the entire Arab Middle East after 1918, including the French sphere. In a private discussion in London in December 1918, British Prime Minister Lloyd George told France's Clemenceau that Britain wanted France to attach the "Mosul to Iraq, and Palestine from Dan to Beersheba under British control." In return, France was said to have been assured of the remaining claims to Greater Syria, as well as a half share in the exploitation of Mosul oil, and a guarantee of British support in the postwar period in Europe, should France ever have to "respond" to German action on the Rhine.7
This private understanding set the stage for later events in a profoundly tragic manner.
Arthur Bal four's strange letter to Lord Rothschild
Postwar British designs for redrawing the military and economic map of the Ottoman Empire included an extraordinary new element for its completion—more extraordinary, in that the advocates of the creation of a Jewish homeland in Palestine were English "Gentile Zionists" for the most part, including Lloyd George."
On November 2,1917, in the darkest days of the Great War, with Russia's war effort on behalf of the Anglo-French alliance collapsing under economic chaos and the Bolshevik seizure of power, and with the might of America not yet fully engaged in Europe as a combatant on the side of Britain, Britain's Foreign Secretary, Arthur Balfour, sent the following letter to Walter Lord Rothschild, representative of the English Federation of Zionists:
"Dear Lord Rothschild, I have much pleasure in conveying to you, on behalf of His Majesty's Government, the following declaration of sympathy with Jewish Zionist aspirations which has been submitted to, and approved by, the Cabinet: 'His Majesty's Government view with favor the establishment in Palestine of a national home for the Jewish people, and will use their best endeavours for the achievement of this object, it being clearly understood that nothing shall be done which may prejudice the civil and religious rights of existing non-]ewish communities in Palestine, or the rights and political status enjoyed by Jews in any other country.' 1 should be grateful if you would bring this declaration to the knowledge of the Zionist Federation. Yours sincerely, Arthur )ames Balfour" q
The letter was the basis on which a post-1919 British League of Nations Mandate over Palestine was established, and under whose guiding hand, territorial changes of global consequences were to be wrought. The almost casual reference to "existing non-Jewish communities in Palestine" by Balfour and the Cabinet was a reference to the more than 85% of the existing population, who were Palestinian Arabs. In 1917, less than 1% of the inhabitants of Palestine were Jewish.
It is notable that the letter was an exchange between two close friends. Both Balfour and Walter Lord Rothschild were members of an emerging imperialist faction in Britain, which sought to create an enduring global Empire, one based on more sophisticated methods of social control.
Also notable, is the fact that Lord Rothschild spoke, not as head of any international organization of Jewry, but rather as a member of the English Federation of Zionists, whose president at the time was Chaim Weizmann. Rothschild money had essentially created that organization, and had subsidized since 1900 the emigration of hundreds of Jews fleeing Poland and Russia to Palestine, through the Jewish Colonisation Association, of which England's Lord Rothschild was president for life. England was generous in offering lands far away from her shores, while in the same period she was far from having open arms to welcome persecuted Jewish refugees to her own shores.
But more relevant than the evident hypocrisy in the Balfour-Rothschild exchange, was the British geopolitics which lay behind the Balfour note. It is not insignificant that the geographical location for the new British-sponsored Jewish homeland lay in one of the most strategic areas along the main utter/ of the enlarged post-1914 British Empire, in a sensitive position along the route to India as well as in relation to the newly-won Arab petroleum lands of Ottoman Turkey. A minority settlement under British protectorate in Palestine, argued Balfour and others in London, would give London strategic possibilities of enormous importance. It was, to say the least, a cynical ploy from the side of Balfour and his circle.
Balfour backs the new concept of Empire
Beginning approximately in the early 1890's, a group of English policy elites, primarily from the privileged colleges of Oxford and Cambridge, formed what was to become the most influential policy network in Britain over the next half century and more. The group denied its existence as a formal group, but its footprints can
be found around the establishment of a new journal of Empire, The Round Table, founded in 1910.
The group argued that a more subtle and more efficient system of global empire was required to extend the effective hegemony of Anglo-Saxon culture into the next century.
At the time of its inception, this "Round Table" group as it was sometimes called, was explicitly anti-German and pro-Empire. Writing in the Round Table in August 1911, three years before England declared war against Germany, the influential Philip Kerr {Lord Lothian) declared, "There are at present two codes of international morality—the British or Anglo-Saxon and the continental or German. Both cannot prevail. If the British Empire is not strong enough to be a real influence for fair dealing between nations, the reactionary standards of the German bureaucracy will triumph, and it will then only be a question of rime before the British Empire itself is victimized by an international 'hold-up' on the lines of the Agadir incident. Unless the British people are strong enough to make it impossible for backward rivals to attack them with any prospect of success, they will have to accept the political standards of the aggressive military powers."10
In place of costly military occupation of British colonies, they argued for a more repressive tolerance shaped around creation of a British "Commonwealth of Nations," which were to be given the illusion of independence, enabling England also to reduce the costs of expensive far-flung armies of occupation from India to Egypt, and now across Africa and the Middle East. The term "informal empire" was sometimes used to describe the shift.
This emerging faction was grouped around the influential London Times, and included such voices as Albert Lord Grey, historian and member of British secret intelligence Arnold Toynbee, as well as H.G. Wells, Alfred Lord Milner of the South Africa project, and the proponent of a new field termed geopolitics, Halford J. Mack-inder, of the London School of Economics. Its principal think-tank became the Royal Institute for International Affairs (Chatham House), formed in the corridors of Versailles in 1919.
The idea of a Jewish-dominated Palestine, beholden to England for its tenuous survival and surrounded by a balkanized group of squabbling Arab states, formed part of this group's concept of a new British Empire. Mackinder, commenting at the time of the Versailles peace conference, described his influential group's vision of the role a British protectorate over Palestine would play in the of British advance toward a post-1918 global empire, to be shaped around the new British-defined and dominated League of Nations.
Mackinder described how the more far-thinking of the British establishment viewed their Palestine project in 1919: "If the World-Island be inevitably the principle seat of humanity on this globe, and if Arabia, as the passage-land from Europe to the Indies and from the Northern to the Southern Heartland, be central to the World-Island, then the lull citadel of Jerusalem has a strategical position with reference to world-realities not differing essentially from its ideal position in the perspective of the Middle Ages, or its strategical position between ancient Babylon and Egypt."
He noted that "the Suez Canal carries the rich traffic between the Indies and Europe to within striking distance of an army based on Palestine, and already the trunk railway is being built through the coastal plain by Jaffa, which will connect the Southern with the Northern Heartland."
Commenting on the special significance of the thinking behind his friend Balfour's 1917 proposal to Lord Rothschild, Mackinder noted, "The Jewish national seat in Palestine will be one of the most important outcomes of the war. That is a subject on which we can now afford to speak the truth...a national home at the physical and historical center of the world, should make the Jew 'range' (sic) himself ...There are those who try to distinguish between the Jewish religion and the Hebrew race, but surely the popular view of their broad identity is not far wrong."11
Their grand design was to link England's vast colonial possessions, from the gold and diamond mines of Cecil Rhodes' and Rothschild's Consolidated Gold Fields in South Africa, north to Egypt and the vital shipping route through the Suez Canal, and on through Mesopotamia, Kuwait and Persia into India in the East.
British conquest of the German colony of Tanganyika (German East Africa) in central Africa in 1916 was not a decisive battle in a war to bring Germany to the Peace table; it constituted completion of a vital link in this chain of British imperial control, from the Cape of Good Hope to Cairo.
The Great Power able to control this vast reach would control the world's most valuable strategic raw materials from gold, the basis of the international Gold Standard for world trade, to petroleum, emerging as the energy source of the modern industrial era in 1919.
This has remained as much geopolitical reality in the 1990's as it was in 1919. With such control, every nation on earth would fall under the sceptre of the Britannic Empire. Until his death in 1902, Cecil Rhodes was the prime financial backer of this elite new "informal empire" group.
The Boer War (1899-1902) was a project of the group, financed and personally instigated by Rhodes in order to secure firm English control of the vast mineral wealth of the Transvaal, at that time in control of a Dutch-origin Boer minority. The war itself, in which Winston Churchill rose to public notice, was precipitated by Rhodes and Alfred Milner, and others of their circle, in order to bring what was believed to be the world's richest gold-producing region firmly under British control.
The Transvaal held the world's largest gold discovery since the 1848 California Gold Rush, and its capture was essential to the continued role of London as the capital of the world's financial system and of its gold standard. Lord Milner, Jan Smuts and Rhodes all were part of the new Empire faction which defeated the independent Boers, and created a Union of South Africa as part of Iheir Great Game.12
Thus, by 1920 Britain had succeeded in establishing her firm control over all of southern Africa, including former German South West Africa, as well as the newly-discovered vast petroleum wealth of the former Ottoman Empire, by means of its military presence, conflicting promises, and the establishment of a British Protectorate over Palestine as a new Jewish homeland. But all accounts were not quite in order in 1920. The British Empire had come out of the war as bankrupt as she had entered it, if not more so.
Footnotes:1. Paish, Sir George. "Memorandum on British Gold Reserves sent toChancellor." (an. 1914. Treasury Files of British Public Record Office. T171 53.
2. Paish. "Letter to the Chancellor Lloyd George, dated 2 a.m. Saturday, Aug. 1, 1914." Public Record Office. T170 14.
3. Hanigen, Frank C. "The Secret War." New York. 1934: The John Day Co., pp.82-3.
4. "Documents on British Foreign Policy, 1919-1939." First Series. Vol. IV, pp. 245-
5. Lawrence, T.E. "Seven Pillars of Wisdom." London, Cape. 1935, p. 24. i.
6. Nevakivi, J. "Britain, France and the Arab Middle East, 1914-1956. London, 1969, p. 264.
7. Zeine.Z.N. "The Struggle for Arab Independence: Western Diplomacy and the Rise and Fall of Faisal's Kingdom in Syria." Beirut. I960, p. 59. i.
8. Rose, N.A. "The Gentile Zionists: A Study in Anglo-Zionist Diplomacy, 1929- 39." London: Frank Cass. 1973.
9. Wilson, Derek. "Rothschild: A story of wealth and power." London. Mandarin. 1990, p. 341.
10. Kerr, Philip (Lord Lothian). "The Round Table." August, 1911, pp. 422.3.
11. Mackinder, Hal ford J. "Democratic Ideals and Reality." New York. 1969: W.W. Norton & Co., p. 89. Emphasis added.
12.Quigley, Carroll. "The Anglo-American Establishment from Rhodes to Clivden." New York. 1981: Books in Focus Inc. p. 5.
Baghdad Railway
In the late 19th and early 20th centuries, the Ottoman Empire planned to construct a Baghdad Railway under German control. The Baghdad Railway consisted of the already constructed Orient Express line and the newer Constantinople-Baghdad line through Turkey, Syria and Iraq. By this railway, Germans attempted to establish a port at the Persian Gulf. The Ottoman Empire desired to maintain its control of Arabia and to expand its influence across the Red Sea into Egypt, which was controlled by Great Britain. The railway became a source of international disputes during the years immediately preceding World War I. Although it has been argued that they were resolved in 1914 before the war began, it has also been argued that the railroad was a leading cause of the First World War. Technical and diplomatic delays meant that by 1915 the railway was still 300 miles short of completion, severely limiting its use in the war itself.
If it had been completed the Berlin-Baghdad (and, ultimately, Basra) railway linkages would have enabled transport and trade from Germany through a port on the Persian Gulf, from which trade goods and supplies could be exchanged directly with the farthest of the German colonies, and the world. The journey home to Germany would give German industry direct supply of oil. This access to resources, with trade less affected by British control of shipping would have been beneficial to German economic interests.
The railway also threatened Russia, since it was accepted as axiomatic that political influence followed economic, and the railway was expected to extend Germany's economic influence towards the Caucasian frontier and into north Persia where Russia had a dominant share of the market.
By the late 19th Century the Ottoman Empire was weak, and cheap imports from industrialised Europe and the effects of a disastrous war had resulted in the country's finances being controlled by the Ottoman Public Debt Administration, composed of and answerable to the Great Powers. The Europeans saw great potential to exploit the resources of the weakening empire, irrigation could transform agriculture, there were chrome, antimony lead and zinc mines and some coal. Not least there was potentially vast amounts of oil. As early as 1871 a commission of experts studied the geology of the Tigris and Euphrates rivers and reported plentiful oil of good quality, but commented that poor transportation made it doubtful these fields could compete with Russian and American ones. During 1901 a German report announced the region had a veritable "lake of petroleum" of almost inexhaustible supply.
In 1872 German railway engineer Wilhelm von Pressel was retained by the Ottoman government to develop plans for railways in Turkey. However private enterprise would not build the railway without subsidies, so the Ottoman Government had to reserve part of its revenues to subsidise its construction, thus increasing its debt to the European powers.
The process of construction of a rail line from İstanbul to Baghdad begun during 1888 when a German arms dealer, Alfred von Kaulla (of Wurttemburger Vereinsbank) and Georg von Siemens, Managing director of Deutsche Bank, created a syndicate and obtained a concession from Turkish leaders to extend the Haydarpaşa - İzmit Railway to Ankara. Thus came into existence the Anatolian Railway Company (SCFOA, or ARC).
After the line to Ankara was completed during December 1892, railway workshops were built in Eskişehir and permission was obtained to construct a railway line from Eskişehir to Konya, and that line was completed in July 1896. The two lines were the first two sections of the Baghdad Railway. Another railroad built at the same time by German engineers was the Hejaz railway, commissioned by Sultan Hamid II.
The Ottoman Empire chose to place the line outside the range of the British Navy guns. Therefore, the coastal way from Iskenderun to Alep was avoided. The line had to cross the Amanus mountains inland at the cost of expensive engineering including an 8 km tunnel between Ayran and Fevzipaşa.
During 1898 and 1899 the Ottoman Ministry of Public Works received many applications for permission to construct a railway to Baghdad, it was not because of lack of competition that the Deutsche Bank was finally awarded the concession. A Russian plan was rejected for fear of it extending Russian influence in Constantinople. A well-financed British plan collapsed due to the outbreak of the Boer War. A well-financed French proposal entitled the Imperial Ottoman Railway enabled them to become financiers of the winning Deutsche Bank plan.
Other nations of Europe paid little attention to the building of the railway lines until 1903 when the Ottoman Government gave permission to an Ottoman corporation to build the railway line from Konia to Baghdad. This Baghdad Railway Company was controlled by a few German banks. McMurray rejects the theory that the railroad tied Turkey to Germany.
There was concern in Russia, France, and Britain after 1903 as the implications of the German scheme to construct a great Berlin-Baghdad railway became apparent. A railway that would link Berlin to the Persian Gulf would provide Germany with a connection to her colonies in Africa, i.e., with German East Africa and German South-West Africa (present-day Tanzania and Namibia). The railroad might eventually strengthen the Ottoman Empire and its ties to Germany and might shift the balance of power in the region.
Despite obstructions at the diplomatic level, work began slowly on the railway. Both geographical and political obstacles prevented the completion of the Baghdad Railway before World War I commenced in 1914.
Route
Route of the railway
Route of the railway
The railway passed through the following towns and places, in the order given, north to south:
* Konya
* Anatolian table lands
* Karaman
* Ereğli
* The foothills of Taurus
* Gülek Pass
* Çukurova plain
* Adana
* Yenice
* Amanus range
* Aleppo
* Nusaybin
* Mosul
* Baghdad
* Basra
The line Mersin–Yenice–Adana existed prior to the construction of the Bagdad railway and was used for the later in its section Yenice–Adana.
British view of the railway
Initial support
The initial reaction of Great 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.
Steamer price war and settlement
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.
Britain blocks further development
Railway Station Mouslimie, Syria
Railway Station Mouslimie, Syria
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 Messopotamian 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 Great 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 ...".
Settlement
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.
Role in origins of World War I
Bagdad-Railway Station, Aleppo, Syria
Bagdad-Railway Station, Aleppo, Syria
Discussion of the railway's role as a contributing factor to the outbreak of war is complicated by two issues. Firstly historians and political analysts who wrote about this issue directly after the war were not in possession of closed diplomatic records. Full diplomatic documents of the German government were released between 1922 and 1927, British documents between 1926 and 1938. Only some Russian documents were released, and Italian documents only came out after the Second World War.
Secondly, war historians tend to give an interpretation of the facts that is clouded by their own partisanship, political orientation, language, and current perspectives. Socialist historians emphasised imperial rivalries and economic monopolies as the driving force for the war, as was popularly reported with respect to the railway at the time and especially as revealed in the Russian diplomatic documents.
Other historians have argued that intractable nationality issues in the denial of self-determination to minority groups were the dominant cause. They argue that although the railway issue was heated before 1914 (Corrigan shows that the Railway issue was driving Germany and Turkey further apart) conservative historians agree that it was not a cause of World War I, because the main controversies (over financing) had been resolved before the war started.
"Some of the optimism should be attributed to the willingness of the German government to compose long-standing differences... and in June 1914 a settlement was achieved over the Baghdad railway." (Evans)
"Many economic and colonial issues which had been causing friction between French, German and British governments before 1914, such as the financing of the Berlin-Baghdad railway and the future disposition of the Portuguese colonies, had been resolved by the summer of 1914." (Henig)
However, war began on August 1, 1914—and one day later the secret treaty establishing the Ottoman-German Alliance was signed, perhaps giving credence to the notion that the issue had not been fully resolved. In fact, restriction of German access to Mesopotamia and its oil, and strategic exclusion from rail access to the Persian Gulf was enforced by British military presence during WW1, and afterwards by removal of the would-be Baghdad Railway from German ownership. Thus the potential consequences to Anglo-German economic rivalry in oil and trade by the existence of the railway, rather than the financing of it is seen by some as the deeper issue.
During the War
Main article: Mesopotamian Campaign
By 1915 the railway ended some 50 miles east of Diarbakr (now called Diyarbakır). Another spur, heading east from Aleppo, ended at Nasibin (now called Nusaybin). Additionally some rail was laid starting in Baghdad reaching north to Tikrit and south to Kut. This left a gap of some 300 miles between the railroad lines. Additionally, there were three mountains which the railroad was going to go through, but the tunnels through these three mountains were not complete. So the railroad was, in actual fact, broken into four different sections at the start of the war. The total time to get from Istanbul to Baghdad during the war was 22 days. The total distance was 1,255 miles (2019 km). The breaks in the railroad meant that the Ottoman government had significant difficulties in sending supplies and reinforcements to the Mesopotamian Front. The fighting in Mesopotamia remained somewhat isolated from the rest of the war. During the conflict, Turkish and German workers labored to complete the railway for military purposes but with limited manpower and so many more important things to spend money on, only two of the gaps were closed.
After the War
The Baghdad Railway passes varied landscapes: Bridge between the Turkish/Syrian border station Meydan Ekbez and the junction Mouslemiye
The Baghdad Railway passes varied landscapes: Bridge between the Turkish/Syrian border station Meydan Ekbez and the junction Mouslemiye
The Baghdad Railway passes varied landscapes: The plains north of Aleppo, Syria
The Baghdad Railway passes varied landscapes: The plains north of Aleppo, Syria
In 1919, the Treaty of Versailles cancelled all German rights to the Baghdad Railway. However, the Deutsche Bank transferred its holdings to a Swiss bank.
People in Turkey, Italy, France, and Britain created various arrangements that gave a certain degree of control over the Baghdad Railway to various indistinct interests in those nations. Investors, speculators, and financiers were involved by 1923 in secretive and clandestine ways.
The British Army had completed the southeastern section from Baghdad to Basra, so that part was under British control. The French held negotiations to obtain some degree of control over the central portion of the railway, and Turkish interests controlled the oldest sections that had been constructed inside of Turkey, but talks continued to be held after 1923. The American involvement in the Near East began in 1923 when Turkey approved the Chester concession, which aroused disapprovals from France and the United Kingdom.
On 1936-03-31, Iraq bought the lines on its area for £494,000 from the United Kingdom and started closing the last gap. On 1940-07-15, the railway was completed. Two days later, the Toros Ekspresi for the first time made the journey Istanbul–Baghdad without interruption. Previously the missing part between Nusaybin and Kirkuk had been covered with buses.
Later the railway was extended to Basra, thus connecting the Bosporus with the Persian Gulf. Due to the strained relations between Turkey, Syria and Iraq however continuous traffic remained rare, and other means of transport soon reduced its strategic and economic relevance.
Current situation
Most of the line is in a usable condition. Due to the situation in Iraq, little can be said about the part in this country. Robinson's World Rail Atlas shows it as intact.
Most of the stations are still original.
The part between Toprakkale and Narlı has been electrified for heavy ore transport.
Earth's magnetic field:
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