of the Navy List shows that rather more than half of the torpedo craft of the British Fleet-the new vessels are kept in full seagoing commission and the remainder with large nucleus crews.

It should be added that nucleus-crew ships are not comparable with the ships in reserve in foreign fleets, in that the British vessels are dispatched to sea frequently for cruises and engage in gunnery and other competitions similar to those in the fully commissioned divisions of the fleet. Nor can one other salient fact be ignored. Ship for ship the British Navy possesses units which are without compeers under any other flag. This month there will be in the Home Fleet a group of nine ships embodying the all-big-gun principle, four vessels of the Dreadnought type, three of the Indomitable class, and the Lord Nelson and Agamemnon. There will in addition be eight battleships of the King Edward VII. class. In no other European fleet in the world is there a single unit equal to either of these seventeen armoured ships. Judged by the new standard of naval strength which rests upon peace training for war, the British Fleet has never been worked more persistently and consistently or to better purpose than to-day. So great has been the improvement of naval gunnery owing to the spirit of emulation which has been excited afloat, the institution of the war nucleus crews, and the introduction of improved weapons and resources, that as a fighting machine the fleet is to-day of three times the fighting value that it was ten years ago.

Looking back over the period which has elapsed since Germany abandoned the old easy-going methods of peace and inaugurated the new routine of careful preparation for war, the British people have cause for congratulation. The Navy to-day exhibits the result of careful thought and intelligent organisation. Thankful for what has already been accomplished in remodelling the British forces to modern conditions, it is at the same time apparent that there are still deficiencies to be made good. The strength of a chain is that of its weakest links. The British Navy still has weak links. It requires a well-considered scheme of mobile coast defence upon our eastern shores. It requires increased docking facilities between Rosyth in the north and Portsmouth in the south-a stretch of coast which is at present without a single dock which can take a Dreadnought. It stands in need of a persistent and courageous policy which shall provide it with an adequate number of new ships of war-not less than eight Dreadnoughts this year-so that it may successfully meet the unprecedented rivalry in the new types which threatens it in the immediate future. And, lastly, it will require increasingly large expenditure on war training if it is to maintain its traditional standing. There must be economy financially-otherwise our resources will prove inadequate-but let us be spendthrift in the attention devoted to preparation for war as a definite end. Thus and thus only can we secure peace.

ARCHIBALD S. HURD.

1909

THE BAGHDAD RAILWAY AND THE QUESTION OF BRITISH CO-OPERATION

A FEW days before coming here, a friend brought me a book, bound in red cloth, with the map of the old world on its cover and a white line from the Bosporus to the Persian Gulf, showing The Short Cut to India, the Baghdad Railway. During my journey I found time to peruse the book. Its title seemed to indicate that the author considers the Baghdad Railway to be important and its execution desirable; but as I went on reading I found that the writer is as one of those who, some forty years ago, tried to prove that the Suez Canal, if ever completed, would soon be filled up again by the sands of the desert. I refer those of my readers who may be too young to recall that campaign to the four volumes of Ferdinand de Lesseps's Diary, where they will find how much talent was misused in the vain endeavour to wreck and ruin what has proved to be one of the greatest achievements of the human race, as foretold forty years earlier by Goethe's immortal mind.

When I had finished that book, and had found my name in it and heard that widely circulating periodicals repeated and spread what I can show to be untrue, I came to the conclusion my friend was right in saying that the story ought not to remain uncontradicted and that British public opinion ought to have a chance of being better informed.

More than twenty years ago my predecessor, the late Georg von Siemens, conceived the idea of restoring to civilisation the great wastes of Asia Minor and Mesopotamia, once and for long the centre of the history of humanity. The only means of achieving that end was by building railways; this was undertaken, slowly but persistently, and with marvellous results. Constantinople and the Turkish Army at that time were eating bread made from Russian flour; they are now eating grain of their own country's growth. Security in Asia Minor at that time was hardly greater than it is to-day in Kurdistan. When the Deutsche Bank's engineers reached a station a little beyond Ismid (Nikomedia),"on the Sea of Marmara, the neighbourhood was infested with Tscherkess robbers; the chief of those robbers is now a stationmaster in the service of the Anatolian Railway Company, drawing about 100l. per annum, a party as respectable as

the late Mr. Micawber after his conversion to thrift. The railways brought ease to the peasantry, who are obtaining for their harvest twice to four times the prices formerly paid, and the railways brought revenue to the Treasury. Over 8,000,000l. in cash have been invested in building the lines of the Anatolian Railway Company. To finance, that is to raise from the public, this large amount of capital, the Council of Administration of the Ottoman Public Debt lent its help and credit to the Government and the railway company, by undertaking to collect certain dimes or tithes which the Government pledged in order to assure to this railway, as well as to others, a certain minimum gross revenue, varying from 250l. sterling to about 750l. sterling annually per kilometre, equal to about five-eighths of a statute mile. Should a railway company omit to develop the traffic of its lines thus subventioned, this system, for evident reasons, is liable to abuse; but in the case of the Anatolian Company at least, as well as that of the Deutsche Bank's other Turkish railways, it is publicly on record that everything possible has been done, and successfully, to relieve the Treasury of its burden.

Whatever the shortcomings of Abdul Hamid's reign may have been, and they were many, the building of the several railways of the Ottoman Empire will remain a lasting title to the credit of that régime. The Anatolian Railway's lines are in as good a condition as any line in the United Kingdom, and their transportation charge is less than half the rates of any railway in England. On the oldest section of the Anatolian Railway the Ottoman Treasury has ceased to contribute, and, instead of paying an annual subvention, is receiving every year its share in surplus earnings; the line from Ismid to Angora (Ankyra, the capital of the Galatians) no longer requires a subsidy in years of plentiful crops-rare, alas! in a country deprived of its forests, like most of the sites of ancient civilisation; the line to Konia is costing the company every year a heavy amount, because the subvention, which does not exceed some 2701. sterling per annum, has proved insufficient. The Macedonian Railway Company in 1908 reached its full guaranteed gross earnings without requiring any contribution from the Government.

Altogether Turkey has done well with her system of railway subventions, which seems the one best suited to the backward state and poor elasticity of that country. To give an example in figures I will quote from an essay by Edwin Pears, published in the Contemporary Review of last November; it says:

During the first three years of its (the Anatolian Railway's) working—namely, during 1888, 1889, and 1890-the districts or sandjaks through which it runs produced in tithes for the Government 606,571 Turkish pounds. (The pound sterling is worth 10 per cent. more than the Turkish pound.) Fourteen years afterwards the same districts produced in tithes 1,120,711 Turkish pounds, or 'I am preferably quoting from British sources and trust to prove my case without making use of any other, except public or official documents.

an increase of 514,140 Turkish pounds. Out of these tithes the Government paid to the railway during the three later years 190,591 Turkish pounds. From whence it results that the net advantage to the Government after paying its subvention was 323,549 Turkish pounds, or more than 50 per cent. over what it had formerly received.

Whilst I will not endorse all the author says on Turkish railways in general and the Baghdad Railway in particular, I readily admit that essay to be a fair statement of the case from the British point of view.

But whatever the advantages or defects of the Turkish system of railway guarantees may be, I know of no railway in Turkey built without such a guarantee that failed to come to grief or bring heavy loss on those who risked their money in it. The English Smyrna Aidin Company was in receivers' hands several times. I remember its debentures having dropped to one third of their par value. The French railway from Beirut to Damascus had to arrange with its creditors; so had the Mersina to Adana Railway Company, which is not likely ever to give a dividend to its shareholders. The rails of the Haifa Railway were rusting in the sands when the Turkish Government built a connexion from the Hedjaz line to that port. The traffic on the old line from Haidar Pacha to Ismid had to be stopped, because it was unsafe to run a train on its lines. Nor have the Anatolian and the Macedonian Railway Companies been particularly profitable ventures, the dividends paid to their shareholders not having ever exceeded 5 to 6 per cent. per annum. But none of the investors ever lost a penny, and the country gained enormously.

When the Anatolian Company's lines stopped at Angora and at Konia, an expedition of experts was organised to study the best means of continuing the railway further east. It was an affair both costly and difficult, necessitating quite a caravan and almost a little army. After having spent many months in those inhospitable regions, and after having examined all the various possibilities, the expedition reported and recommended to build the line from Konia, over the Taurus and Amanus mountain ranges to Aleppo, across the Euphrates to a point on the Tigris, following the right bank of that river to Baghdad, traversing the now swampy lower Mesopotamia, the land 'between the rivers,' re-crossing the Euphrates and continuing on its right side to Basrah on the Shat-el-Arab, and eventually to some point on the Persian Gulf, preferably to Koweit.

The cost of that line was confirmed to be enormous; but larger would be its value for Turkey, as the best and practically the only means of bringing the disjointed members of that large empire within reach of control. Enormous would be the cost, but larger would be the reward, by bringing security and cultivation to a country that had once been the most fertile on earth. If the restoration to order and civilisation of Mesopotamia promised ultimately great profits, it was clear on the other hand that no art of the financier could bridge

over the gap between the present and the future. That could only be done by a Government subvention. In 1856 Sir John MacNeill and General Chesney had figured the cost of a railway from the Mediterranean to the Persian Gulf at 7500l. per kilometer, but their scheme did not include the most difficult part of what we had to achieve, the crossing of the Taurus, comparable only to one of the great Alpine passes, such as the St. Gotthard; nor did that scheme consider anything like a railway capable of running trains at 75 kilometers an hour. Our experts gave us the average cost of the Baghdad Railway from Konia to the Persian Gulf at about 8500l. per kilometer; but they warned us to save 1000l. to 20007. on each kilometer outside the Taurus and Amanus ranges for the purpose of coping with the extraordinary cost of the mountain sections.

My excellent friend Siemens having died, too soon, in 1901, from his assistant I became his successor and pursued these negotiations. On the 5th of March 1903 I signed with Zihni Pacha, then Ottoman Minister of Public Works, the Baghdad Railway Concession as it stands to-day. I am pleased to recollect that this worthy functionary never claimed nor received from us any backshish, neither on this nor on any other occasion. I am an old man,' he said, 'why should I appear before Allah, my conscience laden with sin?' The text of the Baghdad convention has been public for a number of years; whilst its opponents, for reasons of their own, have decried it as too unfavourable for Turkey, some of our own technical associates have found fault with us for accepting so difficult a task on terms below the cost of other Turkish lines far easier. In order to reduce the burden to Turkey, the Company is not to sell its own debentures, which would have required an issue of 5 per cent. bonds, but it receives a capitalised amount of 11,000 francs gross earnings per annum and per kilometer in the shape of 4 per cent. Turkish Government bonds representing, at the price of about 82 per cent., very exactly the 8,500l. sterling required for building and equipping the railway. No sensible man will find fault with the calculated price of 821 per cent., as the cost of an issue will absorb for brokerage, foreign governments' stamps, commissions and underwriting at least a 5 per cent. margin. The Ottoman Government further guarantees to the Company a minimum amount of 4500 francs (1807.) per annum and per kilometer for the cost of working and maintaining the railway. On the other hand, all earnings of the railway company up to 10,000 francs per annum and per kilometer belong to the Government, as well as 60 per cent. of all earnings beyond that figure. Thus if the earnings be 10,000 francs, the Company must pay all working expenditure and repairs for 45 per cent. of the earnings, and at 40 per cent. of any higher amount of earnings. Few, if any, are the railways in Turkey, or indeed throughout the world, that work so cheaply. It is true that the Government must pay the interest on the Turkish loans, granted as subventions for ninety-nine years, to the end of the concession; but