THE NEW PERSIA

Dominion, Volume 24, Issue 53, 26 November 1930, Page 9

THE NEW PERSIA

Westernisation Process FOREIGNERS HELP ■ , ’ \ Financial Difficulties “Persia’s trade cannot be mentioned without giving pride of place to a British company busily operating under a concession in the south-west,” said Mr. J. W. Burland, an ex-officer of the Imperial Bank of Persia,” in an address to members of the Wellington Rotary Club yesterday. “I refer, of course, to the Anglo-Persian Oil Co., Ltd., a large and most important company, whose royalties to the Persian Government average £1,000,000 annually during the last three years, and constitute Persia’s most valuable invisible export. “Of her exports, the next deserving of mention is her carpets, which industry is almost entirely in the hands of British companies. A good quality Persian carpet is a beautiful object, and is entirely manufactured by hand. Other exports, in order of importance, are opium, wool, cotton, hides, skins, dried fruit, gum tragacanth, and henna. “Persia’s imports comprise articles which she does not manufacture and commodities which she cannot produce. On her dutiable list appear motor vehicles and machinery, piece goods, woollen cloth, tea, sugar, spices, leather goods, glassware and hardware, fancy goods of all kinds, musical instruments, and indigo; but under the present regime she is making decided progress in the manufacture of woollen, cotton, and silk cloth and leather goods, thus creating fresh oportunities for employment. Ambitious Railway Project. “Apart from her oil wealth, there are indications that she possesses minerals in great quantities, but these are entirely unexploited. Possibly in consideration of this, but more probably as an expression of her new national aspirations, it was decided five years agoithat Persia should have a railway. This costly project, involving the construction of a line about 1000 miles long, running from north to south through difficult country, is too ambitious when Persia’s present state of development is taken into consideration, and although some work has already been done, I am afraid that the completion of this line will be likely to involve the country in an economic crisis. “Persia has not endeavoured to Westernise herself without obtaining foreign assistance. In 1922 she enlisted the services of an American financial mission, whose chief labour was to increase her resources. Among other measures suggested by these experts, a monoply tax was levied on tea and sugar to form a fund for the purchase of railway material abroad, and work was commenced in 1927. Up to date about 300 miles of line have been constructed at a cost, it is said, of some £3,000,000, and last March £K200,000 was lying to the credit of the railway fund. Persia’s Financial Position. “In addition to this fund the oil royalties have been allowed to aceumlate in London, where they amounted to £1,800,000 in March. There was, further, the equivalent of £2,000,000, composed of railway and road funds, lying to the credit of the Treasurer-General at Teheran, while on the other side the funded debt composed of British loans, is only £1,500,000, and the floating debt only £500,000, leaving an excess of £2,000,000 of assets over liabilities. Persia’s financial position was, therefore, an unusually liquid one at the beginning of this fiscal year, and it would have been easy to avoid, or at least ameliorate, the position in which she now finds herself. “Her revenue for this year was estimated at £7,000,000, of which £2,000,000 was to be derived from Customs receipts, and her expenditure at £6,500,000; but before I left Persia the Government had already been driven to borrow £500,000 to pay overdue salaries in various Government departments. ,l The reasons for this apparently anomalous position are the detention in London of sterling reserves representing accumulated oil royalties, the construction of a railway which the country does not need at present and cannot possibly afford, and the determination of the Persian Government to create a {fold standard. Fantastic Measure. “Persia’s standard, the kran, of which the par value is nominally 55 to the £1 sterling, is of silver. For several years since the war her trade balance has been favourable, and the rate was in her favour, but the heavy fall in the price of silver and the present world economic difficulties have reversed the position and caused a depreciation of the kran. The result of this is a shortage of foreign exchange in Persia, and the position there has been acute for more than a year. “Flatly refusing to make use Of Jits sterling deposits, the Persian Government promulgated early this year one of the most. fantastic measures that it Jwopld,' be possible to conceive.. It goes down to history as the Foreign Exchange Act, and as a hindrance to trade.and a menace to commerce it has "been an unqualified success. . .. - -< “Its object was to monopolise all available foreign exchange, and it fixes a' rate of 60 for that purpose, the' true value of the kran being about 90 as based on the price of silver. The naturaljresult was a huge falling-off in Customs revenue and a deficit in the Budget,, yet the Persian Government continuesi.,,, to pursue its policy of unbridled expenditure. It did not seem to be realised that the heavy eost of demonetising,the kran ’ and the construction of a railway would undoubtedly place Persia in,an undesirable position. , ■ .. “Instead of pursuing the right course, new taxes have been levied in ' every direction, and fresh burdens. placedj.on the backs of the people, whose purchasing power has already been seriously impaired. Obviously, retrenchment must be resorted to, railway construction must cease, the gold standard put aside . for the present, and the accumulated sterling reserves spent in Persia to relieve the situation.”