Persian Petroleum: The Imperial Origins of the Iranian Oil Industry 183860684X, 9781838606848

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PERSIAN PETROLEUM

PERSIAN PETROLEUM

Oil, Empire and Revolution in Late Qajar Iran

Leonardo Davoudi

I.B. TAURIS Bloomsbury Publishing Plc 50 Bedford Square, London, WC1B 3DP, UK 1385 Broadway, New York, NY 10018, USA BLOOMSBURY, I.B. TAURIS and the I.B. Tauris logo are trademarks of Bloomsbury Publishing Plc First published in Great Britain 2021 Copyright © Leonardo Davoudi, 2021 Leonardo Davoudi has asserted his right under the Copyright, Designs and Patents Act, 1988, to be identified as Author of this work. For legal purposes the Acknowledgements on p. xii constitute an extension of this copyright page. Cover design: Adriana Brioso Cover image © Hulton Archive/Getty Images All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage or retrieval system, without prior permission in writing from the publishers. Bloomsbury Publishing Plc does not have any control over, or responsibility for, any third-party websites referred to or in this book. All internet addresses given in this book were correct at the time of going to press. The author and publisher regret any inconvenience caused if addresses have changed or sites have ceased to exist, but can accept no responsibility for any such changes. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress. ISBN: HB: 978-1-8386-0684-8 ePDF: 978-1-8386-0687-9 eBook: 978-1-8386-0686-2 Typeset by Newgen KnowledgeWorks Pvt. Ltd., Chennai, India Printed and bound in Great Britain To find out more about our authors and books visit www.bloomsbury.com and sign up for our newsletters.

To my parents

veritas numquam perit

CONTENTS List of illustrations xi Acknowledgements xii Notes on transliteration, names and currencies xiii Abbreviations of archives, collections and text xiv Chapter 1 IMPERIAL SYSTEM  AN INTRODUCTION

1

Chapter 2 GENESIS THE ORIGINS OF THE D’ARCY CONCESSION

11

Chapter 3 SET-UP GROUNDWORK AND SABOTAGE

27

Chapter 4 GRAVITY TRAGEDY AND RAPPROCHEMENT

39

Chapter 5 RESISTANCE BAKHTIYARI NEGOTIATIONS AND GOVERNMENT OPPOSITION

55

Chapter 6 UPHEAVAL THE CONSEQUENCES OF THE PERSIAN CONSTITUTIONAL REVOLUTION

65

Chapter 7 DISINTEGRATION ASSASSINATION AND PARTITION

81

Chapter 8 PRESSURE STRIKING OIL AND RAISING MONEY

95

x

Contents

Chapter 9 ABUSE POWER, PRIVILEGE AND AUTHORITY

111

Chapter 10 ABERRATION THE GOVERNMENT’S SHARE PURCHASE

125

Chapter 11 AFTERMATH CONCLUSIONS AND FALLOUT

141

Appendix I The D’Arcy Concession 153 Appendix II Biographical details 159 Notes 163 Bibliography 193 Index 213

ILLUSTRATIONS

2.1 2.2 2.3 3.1 3.2 4.1 4.2 8.1 8.2

General Antoine Kitabgi Khan in 1894 William Knox D’Arcy at his desk A signed picture of Amin al-Sultan, the grand vizier Reynolds, Williams and Crush having a picnic The Persian imperial visit to the United Kingdom in 1902 Letter of allotment to the Persian government Sir Boverton Redwood Well no. 1 in Masjid-i Sulayman Map of Persia showing oil sites, Persian borders and the area covered by the concession 9.1 Enjoying the works

23 24 25 37 38 52 53 110 110 123

ACKNOWLEDGEMENTS It has been the privilege of a lifetime to be mentored by Professor John Darwin during the research that led to this book. I am grateful to Professors Peter Cain, John Gurney and Stephanie Cronin, who have improved the text in innumerable ways. This book has been enriched by the faculty and staff at St Antony’s College, Oxford. A  special debt of gratitude is owed to the Kitabgi family, especially Patrick, for allowing me to delve into the treasure trove of documents that they so wisely and meticulously preserved. All the archivists and librarians who have helped me deserve mention for their friendly demeanour during my extensive time with them. I am also grateful to Professors Christopher McKenna, Eugene Rogan, James Belich, Peter Frankopan, Homa Katouzian, Sho Konishi and Roham Alvandi. I thank my publishers for their faith and support and the Middle East Centre at the LSE for hosting me during the final stages of this endeavour. It is impossible to accurately convey the gratitude and love owed to my mother, Vivien, my late father, Behrouz, and late uncle, Hossein. I can only hope that they are proud of the efforts that led to this book. I owe them everything. I am grateful for the love and encouragement of my grandparents Maria Patrizia and William, my late grandparents Kouchik and Mohammad, my uncle Charles, my late greataunt and uncle Martha and Francesco, my cousin Salamander, as well as Aliénor Ava Aurora and Alfred Richard Anakin. Smaranda Predescu has been my rock throughout this entire odyssey, and I owe her so much. I have also been fortunate to exchange ideas with Naysan Rafati, Giovanni Cadioli, Graeme Thompson, Ezgi Ulusoy, Stefan Saftescu, Christo Tekkel, Andrea Bach, Andrea Bernini, Ana Alfonso, Fred Nwaneampeh, Immanuel von Bennigsen and Talal al-Duaij. Any, hopefully sparse, errors and omissions are mine alone. Excelsior!

TRANSLITERATION, NAMES AND CURRENCIES Transliteration The Iranian Studies transliteration scheme has been used, where possible, and no diacritical marks have been retained. Direct quotations have been left intact, and some place names have been used in their common form.

Names Kitabgi, from the original Armenian, has been kept in the form most commonly used by the family, then and now. Mirza Ali Asghar Khan is referred to, interchangeably, as Atabak, Amin al-Sultan and grand vizier. To maintain consistency with the primary sources, ‘Persia’ is used instead of ‘Iran’. The country was officially renamed ‘Iran’ in 1935.

Currencies The Persian kran was one-tenth of a tuman. As per Charles Issawi’s book The Economic History of Iran, 1800–1914, the average exchange rate fluctuated around 50 krans, or 5 tumans, per British pound for the period covered by this book. According to the Office for National Statistics, £1 in 1900 had the same purchasing power as approximately £120 pounds in 2020, accounting for inflation.

ABBREVIATIONS OF ARCHIVES, COLLECTIONS AND TEXT ADM BP CAB CHAR CSCT

FISR FO IOR KFP LoC MEC Parl. Debs. PRO

Records of the Admiralty, Naval Forces, Royal Marines, Coastguard and related bodies, The National Archives, London The BP Archive, Modern Records Centre, University of Warwick ©BP plc. Records of the Cabinet Office, The National Archives, London The Papers of Sir Winston Churchill, Chartwell Papers, The Churchill Archives Centre, Churchill College, Cambridge The Papers of Clementine Ogilvy Spencer-Churchill, Baroness SpencerChurchill of Chartwell, The Churchill Archives Centre, Churchill College, Cambridge The Papers of 1st Lord Fisher of Kilverstone, The Churchill Archives Centre, Churchill College, Cambridge Foreign Office, The National Archives, London India Office Records, British Library, London Kitabgi Family Papers, Paris Library of Congress, Washington DC Middle East Centre Archive, St Antony’s College, Oxford British Parliamentary Debates Public Record Office, now The National Archives, London

Chapter 1 I M P E R IA L SYST E M A N I N T R O D U C T IO N

Petroleum is a dark, malodorous and viscous liquid formed by millennia of decomposing organic material. For over a century, it has served as the bloodstream of industry by powering the most sophisticated military and civilian machinery ever built. Its numerous industrial applications have led to the creation of commercial behemoths, and securing its supply has sparked acrid rivalries amongst the world’s great powers. Its discovery in the Middle East, at the advent of the twentieth century, has proven one of the most important events in modern history. Peter Frankopan goes so far as to equate its global significance to Christopher Columbus’s journey across the Atlantic.1

The British Empire By the turn of the twentieth century, the British Empire ruled over nearly onequarter of the globe. It dominated the world’s waterways as well as its capital flows. Within its imperial system, economic and political power were inextricably linked. As John Darwin argues, the ‘union of commercial and imperial muscle was the foundation of the British world-system’.2 Commercial ventures provided the empire with economic might while the government, with its expanding coffers, secured the vast physical, military and systemic infrastructure required for the seamless continuation of business. Commerce, through trade, exploitation, investment or other, was thus one of the principal forces that drove imperial expansion while government was the ultimate arbiter of who benefitted from the immense, and often vital, resources of the machinery of state. The dynamics governing this important synergy have been at the centre of vivid academic and political debate for centuries. The pernicious pre-eminence of capitalist impulses on imperial developments was discussed, amongst others, by John Hobson. In his work Imperialism, Hobson discusses the ‘slavers, piratical traders, treasure hunters, concession mongers . . . animated by mere greed of gold or power’, who wreaked ‘havoc with the political economic, and moral institutions of the people’.3 The agents of economic

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power, he argued, were the ‘parasites of imperialism’, or ‘harpies’, that hijacked public funds and foreign policy for private gain. Financial interests, in particular, manipulated ‘the patriotic forces which politicians, soldiers, philanthropists, and traders generate[d]’, and investments were the most powerful economic drivers of imperialism.4 Finance was ‘the governor of the imperial engine’, he added in The Evolution of Modern Capitalism, and the financial class held ‘the seat of authority’ in the British Empire.5 The ‘struggle for profitable markets of investment’ thus dominated British politics and its opaque manoeuvrings were the most serious danger to the integrity of the state.6 Hobson’s writings eventually became a source of inspiration for Vladimir Lenin, who acknowledged his work in the Russian preface to Imperialism: The Highest Stage of Capitalism.7 According to other scholars, the relationship between economic and political power in the British Empire was more complex. Cain and Hopkins’s theory of ‘gentlemanly capitalism’, for example, provides a more nuanced analysis of the workings of the British elite.8 They argue that ‘capitalism and tradition came to terms with each other to create a unique domestic “substance” ’, which resulted in a distinctive type of imperial governance and expansion. The tradition, rooted in the landed aristocracy, co-opted elements of the capitalist system, which it found most palatable, and out of this union emerged gentlemanly capitalism. In this paradigm, a gentleman needed considerable wealth without the inconvenience and stigma of having to work for it. Apart from this lifestyle being more agreeable to the landed aristocracy, it gave gentlemen time to develop the personal networks, which would allow them to succeed in their commercial endeavours. This restricted acceptable occupations to the higher echelons of the services sector, especially finance. After 1850, therefore, they argue that there was a difference between wealth acquired through gentlemanly means and that acquired through industry. The ‘former set the cultural tone, was closer to the centre of power and was the dominant influence upon the expression of that power overseas’. Some non-capitalist occupations were also suitable for gentlemen and included the highest levels of politics, the civil service, the military and the diplomatic corps. Gentlemen of a capitalist and non-capitalist variety shared values that were inculcated through elite educational institutions and religious tradition. The British gentlemanly elite in the private and public spheres thus ‘had a common view of the world and how it should be ordered’.9 These social underpinnings explain why certain economic interests possessed an innate systemic advantage. The theory of gentlemanly capitalism has been the subject of vivid academic debate.10 Of relevance to this book, it has been suggested that it is perhaps ‘too Anglocentric, too essentially metropolitan’, to be able to fully explain the workings of the British imperial world-system.11 This criticism aligns with the ‘collaboration’ or ‘excentric’ theory of imperialism put forward by Ronald Robinson. In this theory, the British Empire is portrayed as a highly adaptive, amorphous entity that manifested differently according to the scenarios it encountered. The type of imperial control that developed in a certain area, therefore, depended on the type of collaboration or non-collaboration that existed with local elites.12 In order to obtain a better understanding of imperial mechanics, the analytical focus

Imperial System

3

should thus be recentred, or at least rebalanced, away from the imperial metropole towards the periphery. This book will participate in this important debate, as it scrupulously examines the nature of the formal and informal elite relationships in both Britain and Persia. This will provide a balanced view of the dynamics occurring in the metropole and those in the periphery, while demonstrating their complementarity. Importantly, it will determine whether William Knox D’Arcy, the first investor in the Persian oil venture, received the benefits of a systemic bias in favour of Britain’s investor class and how this bias expressed itself. It will also ascertain who held the ultimate leverage in his relationship with the British government, what the guiding principles of this relationship were and, ultimately, whether his investment affected British policy towards Persia.

Imperial games In contrast to Britain, Persia was in a desperate situation at the beginning of the twentieth century. Internally, it was fractured by tribes, clergymen and local elites, who challenged the sovereignty of the central government. Externally, it had lost most of the Caucasus and Central Asia to Russia while it suffered further humiliating military defeats to the British in the east. As a consequence, it found itself trapped between two imperial behemoths with increasingly insignificant economic and military clout. This led to the gradual deterioration of its sovereignty, which resulted in most of its political decisions having to be approved by either or both of its neighbouring empires.13 Persia was never formally integrated into a foreign empire but, informally, it had been partitioned between Russia and Britain. The concept of ‘informal empire’ put forward by Robinson and Gallagher is invaluable in understanding the dynamics facing Persia in this period.14 Their theory argues that Britain’s imperial influence over a territory could range ‘from a vague, informal paramountcy to outright political possession’. Britain’s formal empire was thus merely the tip of the imperial iceberg, as British imperialism took different forms depending on the region. The formality of imperial control varied according to a number of factors, which included the commercial value of a territory, the solidity of its existing political structures, the degree to which its elites were willing to collaborate with British designs, the ability of its indigenous population to undergo economic transformation without direct control, the flexibility available to British policymakers at any one time and the extent to which other European powers allowed Britain free action.15 Within this paradigm, it becomes clear that Persia was independent in name only, as the scope of its sovereign action was impeded by the two strangulating informal imperial influences of Britain and Russia. Lord Curzon, who was viceroy of India at the time, accurately summarized this situation when he stated that ‘within the limits of a nominally still existing integrity and independence so many encroachments upon both these attributes are possible, that by almost imperceptible degrees they pass into the realm of constitutional fiction, where they

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may continue to provide an exercise for the speculations of the jurist, long after they have been contemptuously ignored by statesmen’.16 One of the reasons Persia maintained its nominal independence was that it was an integral part of the territorial cordon sanitaire between Britain’s Indian possessions and the Russian Empire. The British government, despite divergences between Whitehall and the Indian government, wanted to maintain an independent Persia, along with Afghanistan and Tibet, because it prevented a contiguous border between Britain and Russia and thus reduced the chances of a direct conflict.17 The general situation made Curzon conclude, prior to his becoming viceroy, that Persia had merely become one of ‘the pieces on a chessboard upon which [was] being played the game for the domination of the world’.18 Punch magazine, for its part, illustrated this dynamic more bluntly, at the time, with cartoons depicting a helpless Persian cat being toyed with by a Russian bear and a British lion.19 This book will provide insights into the strategies used by the British and the Russians to secure imperial dominance in Persia. In particular, it will look at the type of actions the British government took to protect British oil interests in this period and the limitations it faced. It will determine the nature of those limitations and how their change affected the policy and actions of the British government. By understanding the Great Game and Britain’s political objectives in Persia, furthermore, this book will determine if the Persian oil venture complemented Britain’s imperial objectives, how that complementarity developed and how British policy towards Persia affected the venture. It will also provide insights on Persia’s constraints within this paradigm and the way it navigated them to pursue its own objectives.

The Persian Empire Persia and Britain had radically different political, legal and economic systems. Persia had a largely arbitrary system of government, as the Qajar shahs were absolute monarchs, perhaps, ‘the most absolute in the world’.20 Curzon pithily observed that the shah ‘fused the threefold functions of government, legislative, executive and juridical . . . He [was] the pivot upon which turn[ed] the entire machinery of public life’.21 Unlike Britain, therefore, laws could be made and altered according to the shah’s whim. This led to a short-term outlook for official decision-making and a general disregard for contractual obligations. It was normal practice for the shah’s most senior minister, the grand vizier, to accommodate any of the shah’s requests. This modus operandi only occasionally failed as when Muzaffar al-Din Shah asked for a pension of £3,000 a year, in addition to a lump sum, for his astrologer, ‘because His Majesty had dreamt that he had saved him from drowning’. In this rare instance, the grand vizier refused, as he was managing the country’s growing debts and increasingly precarious situation. He thus retorted that ‘he had raised large sums to pay for the Shah’s tours and toys, but [had to] protest against paying for his dreams’.22

Imperial System

5

The concentration of power in the person of the shah led to a distinctive set of dynamics regarding the acquisition of political favour. There was no unspoken, yet powerful and unifying, world-vision, which brought cohesion to a subsection of the political and economic elite like in Britain, but a system that revolved around one person. In this system, the shah’s personal favour had to be acquired by navigating a complex system of Persian protocol, managing ‘the universal intrigue prevailing among the ruling classes’ and obtaining the support of the shah’s vast entourage through personal affinity and money. Money lubricated the Persian political system at all levels and its gifting had become institutionalized. Pishkesh, as it was called by the donor, or madakhil, by its receiver, ‘became one of the more important practices of Qajar society’, and it was even taxed as irregular revenue, or sursat.23 Curzon commented that ‘[g]overnment, nay, life itself, in that country may be said to consist for the most part of an interchange of presents . . . Under its political aspects, the practice of gift-making, though consecrated in the adamantine traditions of the East, [was] synonymous with the system elsewhere described by less agreeable names’ and ‘in no country that [he had] ever seen or heard of in the world, [was] the system so open, so shameless, or so universal as in Persia’. This made him conclude, ironically, that Persia was ‘the most democratic country in the world’, as anyone with any level of ability and social standing could escalate to any position, provided they had the necessary financial means.24 As a result of these conditions, Persia was not a fertile environment for the development of industry, a domestic investor base or a thriving economy. The wealthier elements of the political establishment depended on political favours and had no incentive to reform the rent-seeking system of patronage they enjoyed. The arbitrary nature of political power, which translated into an omnipresent risk of random taxation and expropriation, prevented the development of an investment ecosystem and made it difficult for the merchant classes to accumulate a capital base. Growing international competition had also pushed domestic businesspeople to opt for cash crops instead of any form of industrial assets. These factors were exacerbated by physical insecurity, widespread poverty, high interest rates, inflation, the scarcity of a functional credit system and infrastructural desolation. In turn, this situation made it impossible for the Persian state to borrow from the international financial markets, as financiers had no faith in Persia’s ability to honour its debts. The scope for public investments was thus severely limited. The Persian government thus resorted to one of the only available routes to economic development left  – a system of economic concessions. Concessions imparted monopolistic rights to foreign investors and entrepreneurs over entire industries or specific projects in exchange for monetary compensation. They were widely used throughout the Middle East. In effect, the concessionary system outsourced industrialisation to foreign actors, who generated considerable profit for themselves. This process, in turn, rendered Persia more dependent on its imperial neighbours, as both empires pressured the Persian government to grant concessions to their respective subjects. The earliest concessions were aimed at developing Persia’s inexistent transport and communication infrastructure. The

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British Indo-European Telegraph Department was thus created in 1863 to build a telegraph line from Khaniqin to Bushihr, via Tehran, followed by the IndoEuropean Telegraph Company, obtained by Siemens, and the Indo-European Telegraph Department in 1868. There were also concessions granted to exploit the Caspian fisheries, navigate the Karun River, exploit forests and establish a lottery.25 The most encompassing of these early concessions was the Reuter Concession of 1872. This concession was exploited by Baron Julius de Reuter, who had originally made his fortune in the news business.26 His Persian concession included the right to build a railway from the Caspian to the Persian Gulf, operate all tramways, exploit most mineral resources, establish a national bank and carry out public works, including lighting, roads, bridges, canals, telegraph lines and embankments. Most astonishingly of all, the concession included the exclusive right to set up mills and factories throughout the country.27 In Curzon’s words, it was ‘the most complete and extraordinary surrender of the entire industrial resources of a kingdom into foreign hands that [had] ever been dreamed of ’.28 At face value, the Reuter Concession seemed like a triumph for British interests in Persia, but, as discussed later, it eventually failed as the British government abandoned it to its own devices. From its cancellation, however, there emerged the Imperial Bank of Persia in 1889, which retained the exclusive right to issue banknotes and became of great strategic importance to British interests in Persia. It was frequently used to influence the Persian government, as it was one of its only sources of public debt. In 1891, the Russians established a rival bank under the name of Banque des Prêts, later renamed the Banque d’Escompte et des Prêts de Perse, to challenge this newly acquired British influence. Concessions thus gradually became the focal points of intrigues and sabotage as they were employed as imperial instruments in the Anglo-Russian rivalry over Persia. The 1890 Tobacco Concession proved to be the most consequential of these early concessions due to its political and economic repercussions. Instead of establishing new industries or infrastructure, the concession led to foreign control over an existing economic sector. Prior to the concession, the tobacco industry employed hundreds of thousands of Persians through its cultivation, distribution and sale, created important revenue streams for landowners and had its final products enjoyed by a large proportion of the population. Overnight, that substantial part of the economy and its labour force had become subjugated to a foreign interest. The new system put in place by the Imperial Tobacco Corporation of Persia, born out of the concession, disrupted entrenched inefficiencies and engendered a series of unintended consequences. The concession was thus perceived by the local population as a foreign aggression to be actively resisted. Widespread revolts eventually put an end to the short-lived concession, and the Persian government was forced to cancel it. The aftermath of the cancellation of the Tobacco Concession proved devastating to the Persian government. In order to pay out compensations to the concessionaires, it hypothecated some of its last revenue-generating assets. This led it into a vicious cycle of politically instrumentalized debt for decades to come,

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which made it increasingly vulnerable to the desires of its imperial neighbours. Persia had thus conceded not only economic privileges in this instance, but also any meaningful form of sovereignty. The success of the protests, furthermore, had proven the fallibility of the shah and foreign powers, which sparked a public appetite for constitutional reform. It also invigorated clerics, who had placed themselves at the forefront of Persian politics by branding themselves the leaders of the popular front against absolutist rule. These novel dynamics persisted and would lead to dramatic changes in the Persian political system through the events of the Constitutional Revolution discussed in detail below. This book examines how the Persian context, its evolution and its differences with the British context had implications on British oil interests. It will determine how unexpected and profound changes in Persia’s domestic political paradigm affected the oil concession’s operations, its relationship with the Persian government and its reliance on local intermediation and the British government. Conversely, it will also determine how systemic differences and political changes, complemented by predatory commercial behaviour, affected the Persian government’s standing in the oil concession. Specifically, it will delve into the political, legal and accounting manoeuvres that relegated the Persian government’s stake in its indigenous oil industry to virtual insignificance. Whereas this book relies primarily on British sources, the newly unveiled documents it uses reveal the Persian government’s decision-making process, negotiating stance and perspective at crucial time junctures in the concession’s early history.

The business empire The literature, which discusses the early years of the Persian oil venture, leaves many questions unanswered and suffers from considerable shortcomings. Early publications regarding the business’s history were commissioned by the corporate heirs of the D’Arcy Concession and documents have been found that reveal the editing stages of two of these historical texts in particular. These documents trace clear guidelines from senior executives regarding the positive image that a written history should attribute to the venture’s operations and its protagonists. While these texts hardly qualify as independent academic endeavours, they formulated a creation myth that persists in much of the literature. The first of these texts was made in 1938 by the Anglo-Iranian Oil Company exclusively for internal use.29 It was named The Record of the Anglo-Iranian Oil Co. Ltd. but was more commonly referred to by the cult-like name The Green Book. Its author, Laurence Lockhart, was a member of the Faculty of Oriental Studies at Cambridge University and worked in the Foreign Office before joining the company.30 He was given clear guidelines regarding the direction the book should take, and his text was subjected to several rounds of edits by senior executives of the company. The Green Book glorified the company’s founders while removing aspects of its early history that did not fit the desired narrative. One effort was directed at reducing the importance of British political assistance in the early

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stages of the company.31 Other efforts were aimed at concealing the company’s activities on the Persian side and, although the text was to stay out of the reach of Persian government officials, Lockhart took care in making ‘reference to the Government and Officials as innocuous as possible’.32 Yet another effort was directed at maintaining D’Arcy’s personal image intact, and Lockhart thus ‘omitted practically all references to quarrels’. Furthermore, episodes that put the company in a negative light had ‘been very much cut down’.33 In the end, the company was satisfied with the outcome, and the chairman of the company at the time, John Cadman, was very grateful that they had ‘given [him] just the truth [he] desire[d]’.34 About twenty years later, shortly after the overthrow of Mossadegh, Adventure in Oil was published to commemorate fifty years of the Anglo-Persian Oil Company. This was also subjected to substantial edits by the company’s senior management.35 They chose a text by Longhurst, who had been the golf correspondent of the Sunday Times. Lockhart, who had authored The Green Book, was involved in a thorough editing of this book with guidelines coming directly from the chairman of British Petroleum. During the process, Lockhart wrote that, following the chairman’s comments, it ‘should hurt no one’s feelings’, the Persian employees’ ‘loyalty and friendship should be stressed’, ‘the reference to the Admiralty Agreement should be omitted’ and that ‘some more generous, kinder and more appreciative’ words should be made regarding the Burmah Oil Company.36 Longhurst eventually became displeased by the amount of editing his text was undergoing and told Lockhart that ‘it was agreed that nothing should be cut . . . except on policy grounds’. Furthermore, if heavy editing persisted, he would ‘not be prepared . . . to let it go to the printers without . . . seeing it. [He felt] rather strongly on this, as any professional author would do’.37 Referring to Longhurst’s discontent, Lockhart wrote ‘that the trouble was mainly about the cuts and other liberties that [they had] been taking with that book’ and he wondered what else he would ‘have to do on that infernal book’.38 British Petroleum even wrote an entire chapter of the book in-house, which Lockhart then suggested to send to Longhurst ‘to put the thing into his own words’.39 In its final stages, Lockhart wondered ‘how and when “The Powers that Be” in Britannic House [were] to have their final say’, and a political agent of the company in charge of this project wrote that he had ‘deleted the copyright mark and Longhurst’s name on the reverse-title page because the copyright [was theirs] (which [they did] not want to show) not his’.40 Finally, in a letter to Lockhart, regarding Longhurst’s text and the chairman’s edits, Dr Young, the company’s former chief medical officer and political advisor, wrote that ‘there [came] a point where you [took] all the meaning out of a book if well-known historical facts [were] slid over politely; this book would then . . . become no more than a glorified company brochure’.41 In 1982, Ferrier wrote the major work relating to the venture’s history. It was commissioned and financed by British Petroleum and published by Cambridge University Press. It has become the foundation stone of all subsequent literature regarding the early years of Persian oil.42 Ferrier’s scholarship and his extensive access to the BP Archives allowed him to correct previous accounts of many of

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their inaccuracies and write one of the most important histories of the company. However, as the present enquiry reveals, his account ambiguously circumnavigates sensitive matters, frames delicate issues in favour of the company and omits crucial details regarding the company’s political and diplomatic activities. There are many other published works that mention the discovery of oil in Persia. Most of them use Ferrier’s book as their principal source and many contain mistakes and omissions. One of the most entertaining of these is the phantasmagorical tale of the conspiracy theorist Zischka. Despite constantly reassuring the reader that everything he writes is true, he produces no evidence to corroborate his assertions that William Knox D’Arcy had sold his rights in the oil concession to a British spy disguised as a priest on a cruise to the United States. This, allegedly, having been after years of D’Arcy exploring the Persian desert, in the hopes of evangelizing the local population, armed with a range of religious paraphernalia, including wooden saints, crucifixes, a small solid-gold figure of Christ and several versions of the Bible.43 In reality, D’Arcy never even set foot in Persia.

Chapter 2 G E N E SI S T H E O R IG I N S O F T H E D’A R C Y C O N C E S SIO N

The D’Arcy Concession was the legal foundation of the Persian oil industry and ‘one of the more significant documents of the twentieth century’.1 It was the product of challenging negotiations orchestrated by a vigilant intermediary amid delicate domestic and international circumstances. The newly unveiled diaries and letters of this intermediary, in French, Persian, Armenian, Ottoman Turkish and English, allow this chapter to provide the most complete account of the concession’s inception to date. They also provide the unique extra-European vantage point of an individual who had to bridge different commercial, political and cultural practices.

Inception In seeking the origins of human civilization, Jacques de Morgan moved his excavations to Persia after serving as director of the Egyptian antiquities service for the French government. He focused his efforts on a site in Susa where he built the Château de Suse as the base of his operations. In his time there, as the chief archaeologist of the French mission, he unearthed extraordinary treasures that the Elamites had brought back from Mesopotamia in the second millennium BC. Notable amongst them were the Victory Stele of Naram-Sin and Hammurabi’s Code. During his stay, de Morgan would find another unexpected treasure buried underneath Persian soil. In an unrelated expedition, he stumbled upon petroleum springs and set off a chain of events that would lead to the birth of the Middle Eastern oil industry.2 After further research, de Morgan prepared a report on the potential petroleum reserves he had encountered and discussed it with Georges Lampre, his colleague in the French mission. Lampre remembered that his wife’s uncle Edouard Cotte had been Baron Julius de Reuter’s private secretary and that he had previously obtained concessions for Reuter in Persia. He thus sent de Morgan’s findings to Cotte to see if he had any ideas on what to do with them. Based on de Morgan’s studies and his own research, Cotte compiled another report whereby he concluded that

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the Persian oilfields were vastly larger than those in Baku. This was particularly significant as Baku possessed the most prolific oilfields in the world at the time. Cotte further concluded that the quality of Persian oil was nearly twice as good as that in Baku and that its refining and transporting costs would end up being much lower. He estimated a saving of up to 90 per cent in refining costs and 60 per cent in transport costs if a pipeline was built to Muhammarah.3 This report, borne out of a chance find, became one of the central elements to a historic investment proposal. Armed with de Morgan’s findings and his own conclusions, Cotte approached the person whom he considered to be the best versed in Persian affairs. This character, who became a central figure in the history of the D’Arcy Concession, was General Antoine Kitabgi Khan, an elegant, slender and proud man with an imposing moustache and a steely gaze (see Figure  2.1). He was an Armenian Ottoman who led a cosmopolitan nineteenth-century life and possessed tremendous intelligence and energy, which he applied to all his undertakings. He had met Cotte in Paris after having been forced to move from Constantinople following a series of commercial disappointments.4 Through his Armenian network, he had made the acquaintance of a group of Persian dignitaries in Paris, including the Persian minister Nazar Aqa and the Persian consul Nariman Khan. In 1878, he negotiated his first Persian concession with the financial backing of a French banker. The concession was to build a railroad from Rasht to Tehran, and Kitabgi went to Persia for the first time, a year later, in order to oversee its operations.5 The concession failed, but, during his time in Persia, he developed very close ties with the court minister Aqa Muhammad Ibrahim and his son, the future grand vizier, Mirza Ali Asghar Khan. Kitabgi’s influential friendships led him to be appointed director general of the Persian customs. With characteristic zeal, he reformed the customs despite the entrenched interests that had long abused it. As a result of his efforts, the customs’ revenues increased by 50 per cent over three years and became one of the government’s most reliable assets.6 They would eventually be used as collateral to secure a series of notorious foreign loans. Kitabgi’s public duties spanned many other areas as well. He advised the government on monetary policy, fiscal policy and matters of international arbitration and had been given a series of international appointments, such as the post of commissioner general of the Persian pavilion at the 1900 Exposition Universelle in Paris.7 He was awarded the title of ‘Khan’ by Nasir al-Din Shah in 1887 and the rank of ‘general’ in the Persian army. He had, in the meantime, also pursued a number of private commercial ventures. For example, he had been the intermediary of the second Reuter Concession of 1889, as well as the Tobacco Concession of 1890. In 1898, he had also worked on an oil deal in Baku.8 Kitabgi thus possessed an unrivalled combination of contacts and professional experience in the public and private sectors in Persia. As Sir Henry Drummond Wolff, the former British minister to Persia, wrote in his memoirs, Kitabgi ‘was . . . the European element of the Persian Government . . . for he was well versed in Western matters – being able to draw up a concession and initiate commercial movements’.9

Genesis

Kitabgi was the perfect person to help Cotte realize the commercial potential of Persian petroleum when he approached him in 1900. He could not finance the venture himself, but he could find someone who would. He initially approached investors within his own network, such as Calouste Gulbenkian, who rejected the proposal because of its disproportionate risks.10 Kitabgi also asked his old friend Sir Henry Drummond Wolff if he knew of any British investors who would be interested. After some thought, Sir Henry mentioned ‘un capitaliste de premier ordre’, who he had met through the auspices of his nephew, Lord Orford.11 He thought this investor could be a perfect match and thus introduced Kitabgi to William Knox D’Arcy in February 1901.12 William Knox D’Arcy was a portly middle-aged man imbued with a great sense of optimism and an outstanding flair for investments (see Figure 2.2). Although he was of aristocratic descent and had been educated at Westminster, his family had lost everything when he was 17  years old and moved to Australia.13 He eventually went on to practice law and amassed an immense fortune by investing in prospectors also coincidentally named Morgan. They had stumbled upon one of the most consequential gold finds in history. As a result, D’Arcy moved back to Britain and spent his time managing his wealth. This lifestyle, coupled with the lavish social efforts of his second wife, Nina Boucicault, and his upbringing, quickly secured him a place among the British elite. D’Arcy possessed enough leisure time, wealth and entertaining power to cultivate the social connections that could prove crucial to his investments. He invited generously to his box in Epsom, which was the only box apart from the Queen’s, and his collection of silverware was so extraordinary that the Foreign Office had occasionally borrowed it for its own receptions.14 D’Arcy, was, arguably, a gentlemanly capitalist according to Cain and Hopkins’s definition. At the very least, he was a gentleman ‘in the making’ or even “re-making”.15 Kitabgi was duly impressed by Sir Henry’s introduction and quickly convinced D’Arcy of the merits of the venture. They reached an informal understanding according to which D’Arcy would provide the capital and Kitabgi the Persian expertise to bring this project to fruition. It was also formally agreed that Kitabgi would receive a 7 per cent stake in the forthcoming concession, with an option to purchase an additional 10 per cent of its shares when they were offered to the public. Kitabgi and D’Arcy had also begun discussing the possibility of an Ottoman oil concession, which, if granted, would entitle Kitabgi to the same remuneration.16 Cotte, for his part, would be given a 3 per cent stake, and Sir Henry was promised 10 per cent of the profits derived from the concession.17 It is unknown whether de Morgan ever financially benefitted from his findings, as he may have been given a portion of Cotte’s shares.18 D’Arcy also agreed to give Kitabgi a substantial budget to obtain the required concession: £50,000 in cash and a further £50,000 in shares of a future company were deemed sufficient.19 This amount was to include all official and unofficial payments, which Kitabgi assured he would treat with utmost discretion, while achieving with ‘5 what someone else could not with 20’.20 Having settled these preliminary arrangements, Kitabgi left for Persia on 14 March 1901, with ‘all kinds of opulent gifts for all the people that could directly or indirectly be favourable’.21

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External support Kitabgi knew only too well how demanding his task was going to be, and he was exposed to the complexities of his undertaking while still in transit. During a stopover in Baku, he was told by the son of an Armenian merchant, Toumaniantz, that a Russian company was about to request an oil concession from the Persian government, as the governor of Rasht had found oil on several of his properties near the Caspian coast. Engineers were already there making plans for a pipeline to the Persian Gulf, and they were only waiting for the results of the first perforations to proceed.22 As Kitabgi’s journey continued and he was arriving in Anzali, his boat was unexpectedly accosted by a bateau-mouche, and Elianozoff, the farmer of the fisheries of the north, emerged.23 On spotting Kitabgi, Elianozoff quickly approached him and asked whether he was the representative of the Russian finance minister, Count Witte.24 This impromptu enquiry made Kitabgi realize that a high-ranking Russian delegation was on its way to Tehran. Both of these revelations had direct implications on Kitabgi’s mission. He had to accelerate his efforts and practice extreme discretion due to a competing interest and an impending Russian visit. The Russian mission was particularly worrisome, as a confrontation with Russia could prove fatal to the negotiations. Persia’s precarious sovereignty meant that its ruling class had to be shielded from Russian pressure, which could emerge if it was discovered that Persia was going to bestow a commercial favour to a British subject. Kitabgi thus began his manoeuvrings as soon as he arrived in Tehran, on 9 April. He went directly to the grand vizier’s estate to rekindle his long-standing friendship.25 The next morning, he wrote to another ‘good friend and brother’, Muhandis al-Mamalik, the Persian minister of mines, to see him as promptly as possible in order to discuss a petroleum concession.26 The minister quickly responded that he had already been approached by the Persian minister in St. Petersburg regarding a similar request, but that he would put those proceedings on hold. He urged great haste, however, because of growing Russian pressure.27 It is unknown whether this Russian request was related to the aforementioned explorations on the Caspian coast, the Russian government’s long-standing aspiration of a pipeline from Baku to the Persian Gulf or another undertaking altogether. In any case, there was a parallel Russian project in the same industry as an aspiring British concession. This could prove highly problematic, and therefore British pressure had to be applied to counteract any Russian efforts. When Kitabgi had negotiated the Tobacco Concession of 1890, Sir Henry Drummond Wolff, then British minister in Persia, had played a pivotal role in the negotiations. In addition to using his official capacity to pressure the Persian government, he had drafted part of the concession himself and executed informal payments to Persian ministers.28 Having experienced this level of cooperation in the past and acknowledging its crucial role in the current situation, Kitabgi sought and expected the same level of support from official British sources. He thus went to the British legation, on the day after his arrival, to meet the new British minister in Persia, Sir Arthur Hardinge, but was dismayed to find Sir

Genesis

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Arthur entirely ignorant of his mission.29 He complained about this to Sir Henry but was told to wait for the arrival of D’Arcy’s envoy before doing anything else.30 Kitabgi was thus forced to wait ‘despite all [his] impatience, despite all [his] desire to accelerate [his] undertakings before the arrival of Witte’s special mission’.31 D’Arcy’s envoy, Alfred Marriott, was the cousin of D’Arcy’s private secretary. He was sent to Persia to negotiate on D’Arcy’s behalf, while also ‘keep[ing] an eye on Kitabji’, in exchange for 1 per cent of the concession.32 He arrived in Tehran with Cotte, on 14 April, on the same day as the Russian delegation, and brought with him a letter of introduction from Lord Lansdowne, the secretary of state for foreign affairs, which D’Arcy had obtained through the intervention of Lord Orford.33 Upon arriving in Tehran, Marriott and Cotte were briefed by Kitabgi on the situation and made privy to a plan he had excogitated to avoid any confrontation with the Russians. This plan involved him asking for the concession in his name, instead of D’Arcy’s, as it would shelter the Persian government from an uncomfortable situation and thus make them more likely to grant it. Apart from mitigating the adverse effects of the Anglo-Russian rivalry, this scheme also clearly benefitted Kitabgi, personally, as it cemented his role in the company’s future. After several long debates on the matter, over several days, they decided to seek Sir Arthur’s advice while also trying to determine what level of support they could expect from him.34 Marriott thus lunched with Sir Arthur on 20 April and sent Kitabgi a note, later that day, telling him to proceed with the request in D’Arcy’s name. Kitabgi was relieved, as he interpreted this as a signal that Sir Arthur and the British legation would actively support their endeavour.

Internal support Having received confirmation that the British legation would support the concessionary project, Kitabgi could concentrate his efforts on the domestic political scene. His first objective was to secure the support of the grand vizier, who was the éminence grise of the Persian government and its foremost political power after the shah (see Figure 2.3). The grand vizier, referred to, interchangeably, as Atabak, Amin al-Sultan and Mirza Ali Asghar Khan, managed an extremely precarious situation. His government was strangled by external influences, plagued with internal intrigues, limited by the lack of any meaningful armed forces and destabilized by a temperamental regent. The only way he could preserve Persia’s very tenuous sovereignty, and his own political career, was by engaging in a policy of equilibrium between British and Russian interests. For Kitabgi’s objectives, this meant he had to leverage on British pressure to obtain the grand vizier’s support, while engineering the negotiations in a way that would shelter him from any adverse pressure from Russia. Before approaching him, Kitabgi decided to find out what he had discussed with the Russian delegation. Despite their long-standing friendship, he had to lead a small investigation amongst the grand vizier’s entourage. In doing so, he discovered that the discussions had centred on railway concessions and a new

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loan.35 As no oil matters had been mentioned, he believed he could proceed as planned. He thus visited the grand vizier, on 21 April, and initially framed the issue as a private message from ‘a good friend’, Sir Henry Drummond Wolff. [The] communication . . . [could] not be done in writing nor by an official entity . . . and here [was] the question: Britain [had] always been a good friend of Persia and of [His] Highness . . . She [had] always been happy to scrupulously respect the policy of equilibrium created by [His] Highness but it [was] a pity to notice that since a while this equilibrium [had] been broken in favour of the Russians.36

At this point, the grand vizier abruptly interrupted Kitabgi to exclaim that he had never intended to break the equilibrium. After a brief pause, Kitabgi continued. He mentioned the recent benefits granted to the Russians, whereupon the grand vizier interjected again and reminded him of all the favours he had granted the British during Sir Henry’s tenure in Persia, including the Imperial Bank of Persia, the navigation rights on the Karun and the disastrous Tobacco Concession. Kitabgi finished Sir Henry’s message and asked the grand vizier how he wanted him to respond. He quickly, and nonchalantly, added that he had heard of an oil project that could strengthen Persia’s friendship with Britain.37 Whereas the Anglo-Russian rivalry made Russian pressures dangerous to Kitabgi’s efforts, British pressures had the reverse effect. In this case, it was not official British pressure but, rather, theoretical British pressure expressed by a former diplomat that Kitabgi was trying to leverage. He had also mentioned the concessionary solution in a seemingly disinterested fashion in order to further strengthen his position. The grand vizier, however, reacted forcefully and exclaimed that he had absolutely no wish to return to the concessionary system after its recent failings. He had already expressed these hesitations in the prelude to the Tobacco Concession and had been proven right.38 The fiasco of the Tobacco Régie had nearly overthrown his government, led to Nasir al-Din Shah’s assassination and driven Persia into a vicious spiral of debt. Kitabgi was not going to give up this easily, however, and argued that granting ‘such a minor concession’ was a small price to pay to retain Britain’s friendship. He also mentioned that the investor interested in obtaining the concession was ready to reimburse him, personally, for the money he had lost in Reuter’s mining concession and that he was one of the ‘most loyal, noblest and richest’ gentlemen in Britain. Kitabgi ended the conversation by telling him that he would be available if he needed his assistance in this affair, but that, otherwise, his duty as a messenger was over. The Atabak could continue conversations with the group’s representative in Tehran if he wished.39 As the Atabak seemed unfazed by Kitabgi’s initial approach, Sir Arthur complemented his efforts and met with the grand vizier to introduce him to Marriott. Kitabgi’s theoretical pressure had thus taken official form, even though Sir Arthur’s enthusiasm was considerably milder than Sir Henry’s had been at the time of the Tobacco Concession. In Sir Arthur’s own words, he did not ‘afford active support’ to the negotiators.40 Regardless of the veracity and

Genesis

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intensity of the pressure, however, from the Atabak’s perspective, the diplomatic Sword of Damocles that defined his political life had, once again, manifested itself. He had to manage Russian sensitivities while satisfying a British request. His concerns of being on the receiving end of British pressure were further amplified, in this period, by the situation in the Transvaal, which he often discussed with Kitabgi.41 Finding himself between Scylla and Charybdis, he ceded to this latest British request and promised to do what he could after Muharram.42

Drafts Having obtained the grand vizier’s tenuous blessing, after a modicum of British pressure, Kitabgi could finalize the concessionary text and secure the remaining support he required. As the shah’s entourage could easily sway his judgement and Sir Arthur worried that the entire Persian government was under Russian influence, Kitabgi had to ensure that anyone with influence over the shah was appropriately rewarded. He also had to ensure that they were sheltered from the inevitable jealousies and intrigues of the Qajar court.43 Sir Arthur advised ‘great secrecy’ in these proceedings, as ‘it was felt that if the Russian Legation got news of the project, it would attempt to crush it, and would almost certainly succeed in doing so’.44 Kitabgi thus began his efforts swiftly and, on 4 May, he met with Mushir al-Dawlah, the Persian minister for foreign affairs. He repeated the same arguments that he had used with the grand vizier and added that he would be rewarded with cash, shares and a monthly stipend if the concession was granted.45 He then spent the next day with the minister and his son translating the draft concession into Persian in order to present it to the grand vizier. A few days later, on one of his daily visits to the Atabak’s estate, Kitabgi welcomed Muhandis al-Mamalik, the minister of mines, back to Tehran and, after a warm embrace, quickly briefed him on the project as well. The next morning, he read him the current draft of the concession and promised him a reward of 25,000 tumans, one-fifth of which would be in shares, as well as other prospective payouts.46 That evening, as all seemed to be going according to plan, Kitabgi received a note from the minister of mines warning him that the grand vizier had suddenly become very apprehensive of continuing any proceedings without consulting the Russians.47 Kitabgi immediately instructed Marriott to have Sir Arthur meet with the Atabak as soon as possible. A further official nudge from the British would remind him of the stakes. As Sir Arthur later wrote, he was given to understand . . . that a good word from [him] might considerably assist their success, and [he] therefore took an opportunity as an important British enterprise was at stake, of intimating to the Atabeg i Azam [his] conviction that the investment of a large amount of British capital in Persia would be greatly to the advantage of that country.48

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Three days later, the concessionary project was back on track, and Kitabgi was summoned to the Atabak’s estate with the minister of mines to prepare a finalized draft of the concession to be read to the shah. In this session, they drafted two important clauses, in addition to editing the remainder of the concessionary text. The first of these, brought up by Muhandis al-Mamalik, regarded an issue that would often return as a point of contention between the government and the concessionaires. It concerned the status of three existing oil-producing assets in Shushtar, Dalaki and Qasr-i Shirin, which paid the government annual dues of 2,000 tumans as a result of their ongoing exploitation. The initial suggestion by the minister was to exclude these from the concession, but Kitabgi proposed that the concessionaire take them over as well as the responsibility of paying the government the annual dues.49 The second important clause drafted in this session regarded the position of imperial commissioner, which Kitabgi had created for himself. The imperial commissioner would be the official representative of the Persian government in all concessionary matters. He would mediate relations between the concessionaire and the government, suggest appropriate courses of action to both parties and protect the government’s interests. In addition to reassuring the Persian government, Kitabgi had created this position to cement his own place in the future of the concession and give himself leverage over both parties. It also provided him with a grand-sounding title, diplomatic status and a yearly stipend of £1,000 from which he would pay the various dignitaries that were promised regular compensation. An evident conflict of interest arose from Kitabgi holding this position while being a shareholder of the company, but this matter was never brought up. Marriott, however, objected to the position because of its excessive salary and the prescription that the imperial commissioner would ‘inform [the concessionaires] of the best course of action to follow in the interest of the enterprise’.50 Kitabgi considered Marriott’s objections laughable, as the negotiations had already proven that it was better to ‘have the possibility to consult a man certainly, more competent than an Englishman, for what concern[ed] Persia’.51 He thus ignored Marriott, submitted the concession to the grand vizier with the clause as he envisioned it and awaited the outcome of its reading to the shah. However, even two days after the concession was supposed to have been read to the shah, Kitabgi had still not received any news. As the mounting anxiety was causing him stomach cramps, he decided to go to the Atabak’s estate and enquire directly. Upon his arrival, he saw the minister of mines, who, exchanging glances with him, made a gesture indicating that he had still not received any news either. The grand vizier finally appeared with requests coming directly from the shah. Article 10 of the concessionary text projected the formation of an exploitation company in which the Persian government would be allocated £20,000 worth of shares. It is important to note that the Persian government would receive these shares only in the first company to be created after the granting of the concession. It would also receive a single payment of £20,000 upon the creation of this first company. In addition, the Persian government would receive a percentage of the annual net profits of any and all companies formed by the concessionaire. The shah

Genesis

asked if D’Arcy could double his offer to £40,000 in cash and £40,000 in shares, as well as increase the government’s share of profits from 10 per cent to 16 per cent. Kitabgi was horrified by these new demands and gestured for help to the minister of foreign affairs, who had just joined them. The minister, however, sided with the shah and argued that the Russians had received the same deal on their recent mining concession. Kitabgi, exasperated, exclaimed that it was impossible for him to justify a de facto payout of 21 per cent, which included 16 per cent of profits in addition to 5 per cent in export duties. Despite the remonstrances of the minister of foreign affairs that there was a domestic market for oil, unlike what the Russians mined, the grand vizier concluded the discussion by asking to see the Russian concession and stated that he would give the British exactly the same conditions. He further requested a clause that would make the Persian government exempt from any future legal claims, in light of the debacles of the tobacco and Reuter concessions. He also asked for a clause forbidding operations near holy sites.52 There remained the issue of the increased cash and share payments to the Persian government. Upon leaving the Atabak’s estate and en route to Mushir al-Dawlah’s residence, Kitabgi went home to instruct his son to ask Marriott whether he could obtain an additional £5,000 to be distributed on the day of the concession’s signing. Kitabgi had already asked for this advance, after having been requested it by both the minister of mines and the minister of foreign affairs, but Marriott had originally advised against it, arguing that it would diminish Kitabgi’s prestige in D’Arcy’s eyes. This time, however, Kitabgi quickly received a response that read ‘Birratt accepted’.53 D’Arcy had, unambiguously, instructed Marriott not to ‘scruple if [he could] propose anything for facilitating affairs on [his] part’.54 Thus, after reprimanding the minister of mines for being unhelpful during the negotiations, Kitabgi informed him he would make an additional 5,000 tumans on the day of the signing, if they could keep the financial commitment down to the original £20,000 in cash and £20,000 in shares. He then took the minister of foreign affairs aside and requested the same favour in exchange of 10,000 tumans.55 These incentives proved remarkably effective, as the cash and share payments reverted to their original number. It was also agreed to exempt the concessionaires from export duties but the percentage of profits due to the government was maintained at 16 per cent.

Disequilibrium Throughout the negotiation process, Kitabgi handed out substantial amounts of money to a wide range of people. As Sir Arthur noted, Kitabgi had ‘secured in a very thorough manner the support of all the Shah’s principal Ministers and courtiers, not even forgetting the personal servant who brings His Majesty his pipe and morning coffee’.56 Amongst them, he also rewarded Haji Aqa Muhammad Hassan, who was the British agent in Kirmanshah. Before establishing a diplomatic presence outside Tehran, the British legation relied on these agents, who acted as informants and protected British interests in their respective regions. As most

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influential positions in Persia at the time, this came with considerable benefits. According to Curzon, this particular agent was ‘one of the most remarkable men in Persia’, who largely owing to the protection from official rapacity . . . amassed great wealth, which he dispenses with a liberality and public spirit rare, if not unique, in Persia . . . Upon the occasion of the Queen’s Jubilee he illuminated the town and fêted the inhabitants at his own expense – a singular and affecting testimony of loyalty in a distant and alien land.57

Kitabgi clearly thought it wise to cast the net of payments as wide as possible in order to avoid any complications. In addition to money, Kitabgi distributed share promises. These had been originally signed by D’Arcy, but Marriott had suddenly panicked that they could be used to alert the Russians or hostile members of the British Parliament of the existence of the project. Kitabgi, therefore, handed out share promises signed by himself as he realized this solution benefitted everyone. It benefitted D’Arcy, as it removed the risk of him being exposed. It benefitted the Persians, as they received a promise signed by someone they trusted. Finally, it benefitted him, as the relevant Persians would be obliged to help him in connection with the venture when he was appointed imperial commissioner.58 Despite having paid numerous individuals, averted the shah’s requests and kept the Russians ignorant of the negotiations, the next few days proved to be complicated and eventful. The jealousies and intrigues that defined the Qajar court began to emerge. The minister of foreign affairs, for example, immediately after having been promised an additional monetary reward, asked Kitabgi what the grand vizier stood to gain from the concession’s enactment. Despite Kitabgi denying any reward, due to their long-standing friendship, and responding to the minister’s persistence with a polite smile, it was clear that the more rapacious elements of the Persian government wanted to ensure they were benefitting from the deal commensurately. In the same conversation, the minister informed Kitabgi that the Persian minister in London had recently telegraphed him about a ‘formidably rich company’ willing to pay any price to obtain a petroleum concession. He had informed the grand vizier of this, but not the shah, and the grand vizier had instructed him to respond that no oil concession was currently available.59 It is unknown whether this proposal was genuine or if it was the minister’s way of extorting more money from Kitabgi. If genuine, its suspicious timing could point to an intrigue having originated in Persia. On his journey, Kitabgi had remembered to send an urgent note to Sir Henry warning him of the potential antagonism of the Persian minister in London. Despite him being a ‘very good man’, Kitabgi stressed that he should not be informed of any proceedings, as he was the brother-in-law of the grand vizier’s long-standing political rival, Amin al-Dawlah.60 A more concerning incident occurred the day after the final draft of the concession was supposed to have been read to the shah, on 23 May. Kitabgi was

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leaving the Atabak’s palace, following another day without updates, when he had an unnerving encounter with Amin-i Khalvat, the first secretary to the shah.61 Amin-i Khalvat asked Kitabgi if he had heard the news that ‘there [had] been a little stop for [his] affair up . . . in the Palace’ and continued by saying that Kitabgi seemed to have forgotten some of his friends during the negotiations.62 This was an unsubtle way of expressing his dissatisfaction with the financial reward he had been promised. Apparently, when Muhandis al-Mamalik had gone to negotiate the government’s cash and share settlement in the concession, he had indiscreetly asked Amin-i Khalvat, his friend and relative, what others were receiving from the deal. He wanted to determine if they were going to earn more than him. As Amin-i Khalvat investigated this, he was enraged to discover that he had himself been given an amount that he considered negligible. As a result, he had decided to instil doubt in the shah’s mind. Faced with this thinly veiled threat, Kitabgi reacted quickly, in light of an earlier exchange he had had with Marriott regarding instructions from London that he could spend a further £10,000. He thus told Amin-i Khalvat that he had just received instructions to reward their closest friends and that he happened to be first on the list and could expect a further £1,000 in cash after the concession’s signing.63 After this unpleasant, yet fortuitous, interaction, Kitabgi saw the Atabak, who had, in the meantime, come back from the shah’s summer palace in Niavaran. He sensed great tension in the grand vizier, as a result of the recent complications, and thus decided to inform him that D’Arcy would pay him a further sum of money on the day of the concession’s signing to prove his loyalty, good intentions and gratitude. The grand vizier was unmoved by this pecuniary promise and replied, furiously, that he should ‘use this amount for those famished individuals who, without any concern for the good of [the] country and its policies, [thought] only of themselves’. He then forcefully asked Kitabgi if he had ‘understood who this [was] about’, as ‘he [was] even capable of warning the Russians!’ He ordered him to resolve the matter immediately and walked away ignoring Kitabgi’s response entirely.64 All of Kitabgi’s efforts suddenly seemed in vain. One unexpected jealousy had jeopardized the entire business and strained his relation with one of the most powerful men in Persia. In moments that must have seemed like an eternity, Kitabgi waited in the Atabak’s estate for an inspiration or an event that would resolve this impasse. The Atabak then suddenly re-emerged from a meeting with the minister of foreign affairs and told Kitabgi, sternly, to ‘consider the affair finished’. Overwhelmed by a mixture of emotions, Kitabgi leaned over to the Atabak and whispered that he had, in his pocket, the signed promise for his personal £20,000 in shares if he wanted them. The grand vizier, still enraged by the situation, told him that he could keep it. Kitabgi left the estate in a daze and, in trying to avoid an unpleasant confrontation with the minister of mines, who had created this entire situation, got lost in the Atabak’s private park. When he finally found his way out and returned home, he informed Marriott that it would all be settled the next day.65 Three days later, however, on 26 May, there were still no news and Marriott and Cotte visited Kitabgi in the most sombre of moods. They reported the catastrophic

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development that the Russians had found out about the negotiations. Sir Arthur had told them that a junior employee of the Persian Ministry of Foreign Affairs had informed the Russian minister in Tehran, who immediately asked St. Petersburg for instructions. Sir Arthur also found out, through his sources, that the Russian minister had, thereafter, held a lengthy and tempestuous meeting with the grand vizier, where he ordered that the concession be rejected or the grand vizier risked exile to Qom and, above all, severing diplomatic relations with Russia.66 Kitabgi’s efforts to shield the grand vizier from Russian pressure had failed, and he understood the fatal implications of this latest development only too well. Two further excruciating days passed, and as Kitabgi sat down for dinner with his son, an unexpected visitor arrived at his residence. Muhandis al-Mamalik’s servant had come to announce that the concession had just been signed by his majesty the shah. Kitabgi leapt from his chair and, as he was writing Marriott a congratulatory note, he received one from him that read ‘The King of Kings has signed. Long live the King! Best Congratulations!’67 The Russian threats had either been fictitious or had somehow failed to destabilize the Atabak. The next day, Kitabgi finally saw the signed concession at the residence of the minister of mines. He then went to see the Atabak, who told him he could go to the British minister, get the concession certified and inform him that General Antoine Kitabgi Khan had been named imperial commissioner. Later that evening, Kitabgi went to see Sir Arthur and, rejoiced by the signing, complimented him in true Persian style:  ‘Excellence, you have been the sun and us the plant, without the sun we could not have produced anything.’68 Kitabgi had actually relied very little on the support of British officials in Persia. Sir Arthur had given small, yet crucial, contributions, but had decided to keep a noncommittal distance from the concession, as Persia had been ‘strewn of late years with the wrecks of so many hopeful schemes of commercial and political regeneration that it would [have been] rash to attempt to predict the future of this latest venture’.69 D’Arcy’s elite gentlemanly status may have thus facilitated a diplomatic contact in Persia but achieved little else. The bias towards him, if any, was weak and devoid of any commitment. The key to his success, at this stage, was his intermediary and his financial resources. The ‘nice pickings among the Persian Ministers’, as Sir Arthur told Lord Lansdowne, totalled somewhere between £101,000 and £110,000, of which £50,000 were in shares.70 Despite some last-minute complications, Kitabgi’s energy, talent, tact and quasi-paranoiac vigilance had resulted in the granting of the D’Arcy Concession on 28 May 1901. D’Arcy praised Kitabgi’s ‘cleverness and skill’ and thanked him for convincing him to undertake the venture in the first place.71 He was also delighted to hear of Kitabgi’s nomination as imperial commissioner and vowed to ‘make [his] task as easy as possible by forcing [his] employees to follow the rules of the concession strictly’.72 Marriott also recognized that ‘highest praise [was] due to Kitabgi’ as he did ‘not believe anyone else could have accomplished the business’.73 Even the grand vizier was pleased with the outcome and told Marriott, Cotte and Kitabgi that the Persians ‘[loved] the British’ and ‘want[ed] them to come and materialize the riches of [their] country. [He would] help and encourage them’.74

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Figure 2.1 General Antoine Kitabgi Khan in 1894. Picture dedicated to his son, Vincent Kitabgi, with the inscription: ‘To my dear hope Vincent – paternal blessings.’ Courtesy of the Kitabgi family.

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Figure 2.2 William Knox D’Arcy at his desk. ©BP plc. ARC100056_001.

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Figure  2.3 A signed picture of Amin al-Sultan, the grand vizier, gifted to General Antoine Kitabgi Khan. Courtesy of the Kitabgi family.

Chapter 3 S E T- U P G R OU N DWO R K A N D S A B O TAG E

The celebratory mood brought about by the signing of the D’Arcy Concession was rapidly followed by the establishment of its operations. Having witnessed the downfall of numerous concessions, Kitabgi ‘want[ed] to keep the management of everything Persian in [his] hands so that the English need[ed] only [to] occupy themselves with exploitation’.1 In the immediate, he sought to educate the British staff about operating in Persia while ‘accustoming the Persian element with European contact’.2 As revealed here for the first time, he also took measures to protect the concession from sabotage and preserve the Persian government’s interests.

Domestic affairs George Bernard Reynolds was the venture’s first British employee to arrive in Persia (see Figure 3.1). He arrived in September 1901, having been appointed the concession’s lead engineer. Though Reynolds had worked in the Public Works Department in India and on oil wells in the Dutch East Indies, he had never worked in Persia. Kitabgi thus sought to teach him essential Persian customs.3 His most important piece of advice was that Reynolds should seize any, and every, opportunity to show ‘how generous the British [were]’, as the frequent and abundant distribution of money would ensure that the local population remained loyal to the concession. Kitabgi was adamant about this point and even offered to pay for any expense of this type himself, should D’Arcy ever refuse to do so.4 He then introduced Reynolds to the grand vizier, the minister of mines and the minister of foreign affairs, who each immediately gave him introduction letters for the various dignitaries of the regions he was planning to visit. The speed at which Kitabgi obtained these meetings and documents justifiably impressed Reynolds, who told D’Arcy, as he was leaving Tehran, that it was ‘a fortnight well spent, in that . . . [he had] been able to converse with [Kitabgi] & learn far more of the business methods in vogue in Persia that [he] could possibly have done had [he] hurried away’. He added that ‘[he] might, in [his] ignorance, have done

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that might have prejudiced the undertaking . . . to have put [his] opinion before [Kitabgi’s], in all matters of procedure [there] – indeed any – would have been folly’.5 As Kitabgi was due to return to Europe, he took measures to ensure that the concession would run smoothly without him. On the political front, he appointed one of his sons, Paul, to look after the concession’s interests in Tehran. Kitabgi sought to place his family in strategic parts of the business, as he feared that the day would come when D’Arcy would no longer need him.6 Apart from personal motives, however, it seemed logical to have an additional intermediary in Tehran, trusted by both the company and the government, who was knowledgeable of Persian customs. It was also cheaper and more effective to hire someone who was already on the spot and had access to the principal decision-makers.7 Reynolds concurred with this decision and Kitabgi leaving ‘would [have] render[ed him] anxious had he not arranged that his son . . . remain [there] for a time’.8 Paul was already helping the concession, despite an offer to become the secretary to the Persian legation in London and D’Arcy’s reluctance to formally engage him. He had befriended tribal leaders that could be of use to the concession and had paid the stipends promised to the various individuals during the negotiations.9 The stipends he distributed totalled £40 a month and were handed out to the grand vizier’s entourage, the minister of mines, the foreign minister and others.10 As Reynolds had just experienced, the financial upkeep of these relationships signified that procedures, which could otherwise take months, were undertaken instantly. Apart from these stipends, gifts were also handed out to people of strategic relevance, such as the customs officials in Baghdad, who could facilitate the transit of equipment into Persia. They were sent two 18-carat gold pocket watches, after the second gold watch had replaced the fur coat, which had originally been requested.11 Even though Kitabgi thought that D’Arcy, ‘who [was] ignorant of [Persian] ways and customs, could find it extraordinary to pay these functionaries’, he was, in fact, not foreign to these kinds of business practices.12 The Mount Morgan Gold Mining Company in Australia, which had made his original fortune, notoriously engaged in intimidation and corruption at multiple levels.13 D’Arcy thus gladly acquiesced. On the drilling front, Kitabgi sought to guide the exploratory efforts while also managing some of the sensitive aspects of operating in Persia. In conjunction with Reynolds and Sir Arthur Hardinge, he believed that explorations should begin near Shushtar, due to the favourable climate and the many reported sightings of oil in the region.14 Herodotus, over two millennia earlier, had described how oil was exploited in pits about 90 kilometres from Shushtar.15 British travellers in the nineteenth century also observed oil in the region, and de Morgan specifically highlighted a place called Masjid-i Sulayman on the road from Shushtar to Malamir.16 The Persian Bank Mining Rights Corporation, which held the rights to exploit Persian petroleum until 1899, also mentioned oil deposits near Shushtar in its prospectus.17 One of the existing oil assets, mentioned in the concessionary text, furthermore, was in Shushtar. During the negotiations, Muhandis al-Mamalik had also mentioned a conversation he had had with the governor of Azerbaijan,

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whereby he had told him that when he had been the governor of Arabistan, he had come across vast amounts of oil. He had even seen a torrent of petroleum spilling into a river and had absolutely no doubts regarding the abundance of oil in southwestern Persia.18 A few years later, it was also rumoured that Lord Curzon had met Reynolds on his grand tour of the Persian Gulf and suggested he should consider drilling in Shushtar.19 As the location seemed obvious, Kitabgi began to tend to some of the more delicate aspects of the Persian operations to facilitate the commencement of drilling. One of the most delicate of these dimensions was religious sensitivity. The Shia clergy could easily ignite religious fervour against a perceived foreign encroachment, as they had done, just a decade earlier, with the tobacco concession. In the case of that ill-fated concession, popular protests had been sparked by a fatwa issued by the chief mujtahid, Grand Ayatollah Shirazi, with disastrous consequences. The grand vizier, Sir Henry and Kitabgi were still traumatized by those events and firmly believed that the fatwa had been instigated by the Russians through a series of underhanded payments.20 Kitabgi was thus convinced that there were ‘very few leaders among them whose religious zeal [was] proof against bribes’ and, in order to protect the drilling operations, he met with the mujtahid of Shushtar, Sayyid Ala al-Din.21 He told the sayyid of the presence of a large petroleum basin split between Ottoman and Persian territory that the concessionaire intended to exploit in order to ensure that its wealth would be enjoyed exclusively on the Persian side. Furthermore, knowing the great rivalry that existed between the sayyid and the Bakhtiyari tribe, he added that the Bakhtiyari chief Haji Ali Quli Khan had already invited the concessionaires to start exploring on his land. These arguments triggered the desired reaction, and the sayyid immediately guaranteed Kitabgi his friendship and that of the Shushtaris. The sayyid also informed Kitabgi that he owned twenty-one producing petroleum wells, near Shushtar, on land that the Bakhtiyari also claimed, but that he would arrange it for them if the concessionaires stopped dealing with the Bakhtiyari altogether.22 In order to cement this relationship, D’Arcy followed Kitabgi’s advice and agreed to pay £200 to ‘some priest at Teheran for using his influence . . . at Shuster’.23 Despite Kitabgi’s efforts and all the recommendations to drill in Shushtar, however, the concession’s drilling operations began in Qasr-i Shirin instead. The concession’s technical advisor in London, Boverton Redwood, had decided that that site seemed more promising.24 This decision wasted years and enormous financial resources, as oil was ultimately discovered where everyone had advised the concessionaires to explore. Regardless of the chosen drilling location, Kitabgi still had to ensure the safety of the operations, and one of the important measures he took was to employ a minor religious figure called Shaykh al-Mulk to tend to any local challenges that arose. It was thought wise for Reynolds to be in the company of someone who was fluent in the Persian language and culture and who also held some religious authority, as it would ‘avoid a lot of difficulties due to the little experience of certain Englishmen who imagine[d] they [were] still in India’.25 D’Arcy, Redwood and Sir Henry all concurred that it was important to have someone like Shaykh al-Mulk on the field, and D’Arcy defended his employment

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by telling Reynolds that ‘the Persians [were] very susceptible persons and [he was] doubtless aware that the Tobacco Concession which was a valuable one was ruined owing to their susceptibilities being ignored’.26 Shaykh al-Mulk often clashed with Reynolds, who thought he was there only to spy for Kitabgi and exploit D’Arcy financially. Despite his portrayal, in the literature, as a rapacious character only seeking to exploit the concession for his personal enrichment, the shaykh seems to have served some genuine purpose.27 On 17 March 1902, for example, despite himself favouring Shushtar as a drilling location, he introduced Reynolds to Muhammad Karim Khan, the tribal leader of the Kalhour tribe, near Qasr-i Shirin, to gather information on nearby oil-bearing locations.28 The tribal leader eventually mentioned the existence of petroleum springs on his lands that he had never disclosed to anyone else. He took the shaykh and Reynolds to see these fields, whereupon Reynolds exclaimed in disbelief that they had just laid eyes on the ‘second Baku’.29 Shaykh al-Mulk then negotiated to rent four hundred square miles of these lands for £100 per annum, and Reynolds thought Karim Khan was ‘crazy to give away these riches for such a sum’.30 During this visit, Reynolds understood the value of local knowledge, as ‘the authority of the Shah was held in low esteem by [their] host, and that no order from Teheran to enable [them] to drill on his property would be of any weight’.31 Shaykh al-Mulk also went to great lengths to avoid and resolve labour disputes. According to him, Croudace, the pipeline surveyor, had hired ‘rascals’ in Baghdad, who ‘started to shout and make a scandal’ as soon as they arrived in Qasr-i Shirin.32 The shaykh advised Croudace to add 1 or 2 tumans to their salaries to calm them down, but he refused and Shaykh al-Mulk paid the expense himself in order to stop the conflict from escalating. He also mentioned a feud between Croudace and a mounted guard, who refused their pay and left enraged. Yet another dispute broke out on Nowruz, the Persian New Year, when Reynolds refused to engage in the common practice of doubling his employees’ pay. He offered them only a quarter more, which sparked a series of furious resignations.33 The shaykh worried that all these incidents were fomenting animosity against the British, and Kitabgi lamented that ‘Reynolds [would] never be cured of the avarice that [he] had perceived in him at Teheran; this being radically contrary to the manners and customs of the country, might create difficulties for [the concession], and [would] raise up a kind of fanatical revolt against the foreign invaders’.34 It was also inconceivable why D’Arcy, with such immense wealth, would risk jeopardizing the venture over such small, yet crucial, expenses. Reynolds was further enflaming local sensitivities by hiring Indians, instead of Persians, for non-technical work. Not only was this against his concessionary obligations, but Kitabgi warned that this practice would ‘necessarily be very badly considered in Persia’. Sir Henry concurred, adding that it was the same path that the Tobacco Régie had taken.35 D’Arcy thus wrote pleadingly to Reynolds that ‘it seem[ed] that the foreigners [he] employ[ed] about [the] camp [were] a constant source of irritation to the Persians all through the district and their employment [would] lead to constant trouble and discontent (if nothing worse) against not only [him] but the enterprise as a whole’. He concluded that it was ‘not as if Persia

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were India where [him] and other Englishmen [would] be master for all time’.36 Following the quick succession of these incidents, Shaykh al-Mulk complained of being in an impossible situation, as no one listened to his advice. This made the situation very dangerous and led him to be ‘very embarrassed’.37 He, therefore, unsuccessfully asked to resign in early April 1902 and repeatedly pleaded to leave the concession’s service thereafter.38

Foreign affairs Just days after the D’Arcy Concession had been granted, the grand vizier had been threatened by a Russian envoy that ‘the repetition of something of [that] kind during his term would not be tolerated by the Imperial Government’.39 The Russians were enraged at the concession and the secretive nature of its negotiations, which had been carried out by a grand vizier widely considered Russophile at the time. At a dinner hosted by Kitabgi, the Persian minister in St. Petersburg, Mushir al-Mulk, further told Kitabgi that ‘the Russians [were] furious against [the Persians] and especially against [Kitabgi] for the exclusivity over the pipelines’.40 As the Russian Empire possessed the vast oilfields of Baku, it was more interested in distributing its products to new markets rather than exploring for new resources. Russian kerosene had already successfully dominated the Persian market with the help of export subsidies, but this was only a small fraction of Baku’s business, which set its sights further afield. The idea of a pipeline from Baku to the Persian Gulf, in order to reach the Indian and Far Eastern markets, was considered as early as 1884, but was initially rejected because of doubts regarding its financial viability and physical security. The project re-emerged shortly after the D’Arcy Concession’s granting, in August 1901, as the price of oil collapsed to nearly half of what it was a year earlier. The tsar himself considered this matter ‘of great importance’, as a cheap transport method to the east, combined with increased influence in Persia, seemed increasingly appealing.41 The Russian government, therefore, began to apply pressure through potent, official methods, just as they had done at the time of the Tobacco Régie.42 They linked the issue of the pipeline with the prospects of a new loan that the Persian state desperately required only a year after having secured its previous one. In September 1901, they thus outlined their conditions for a new 10 million rouble loan, which included a trade agreement, the removal of British influence from the Persian mint, a concession to build a road from the Russian border to Tehran and, most importantly, a concession to build a pipeline from Baku to the Persian Gulf.43 The grand vizier was, once again, faced with a diplomatic Gordian knot, as he needed the loan to pay for the government’s liabilities and the shah’s upcoming trip to Europe, but he could not fulfil Russia’s conditions without violating British interests. The Russians decided to divide the loan negotiations in stages. On 30 October, they thus issued a temporary loan of a million roubles in exchange for the sacking of the British subject in charge of the Persian mint and a pledge that customs

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revenues would be deposited in the Russian-owned bank in Persia.44 Negotiations spilled over into 1902 and intensified as the Russians granted a further temporary loan of a million roubles.45 The Russians were unyielding in their conditions and ‘absolutely refused to afford Persia any financial assistance unless the pipeline asked for to the Persian Gulf was conceded’.46 They argued that the D’Arcy Concession was irrelevant to their proposal as the Russian project related to oil extracted outside Persia. In the meantime, the British began to react and Sir Arthur Hardinge reminded the grand vizier of the concessionary text, which gave ‘the Persian government a good excuse for refusing the Russian demand, on the grounds that the lawyers differ[ed] on the subject (and that these differences [could] only be settled by long litigation), without offending Russia by implying suspicions of her secret political designs in relation to this proposal’.47 These, supposed, secret political designs were to use a pipeline concession as ‘an excuse for sending a host of engineers and surveyors (accompanied by small Cossack detachments for their protection) on the coast of the Persian Gulf, and if they [got] into trouble with the natives there, for establishing a disguised military occupation’.48 By late January 1902, however, the pressure had become unbearable and the grand vizier ceded to Russia’s demands, agreeing to grant them a pipeline concession, provided they took responsibility for all the legal consequences.49 As the Russians were triumphantly finalizing their pipeline concession and executing a personal pecuniary offering to the grand vizier, they received a piece of information, in late February, that, once again, crushed their aspirations. According to the literature, D’Arcy himself had offered a loan of up to £300,000 to the Persian government, but in the primary sources, D’Arcy revealed that he had arranged for a loan of a million pounds from other British investors.50 Regardless of the amount and the source of this offer, D’Arcy’s last-minute intervention had given the grand vizier enough leverage to reject the Russian offer. This, in turn, caused Witte to reluctantly concede on the government’s condition of a pipeline in order to ensure the loan remained in Russian hands.51 Kitabgi was convinced that since the ‘Russians [had not] been able to disrupt [them] on the government side . . . they [would] do everything to win over other partisans’.52 Just days after the loan issue had been settled, in April 1902, he was proven right. Shaykh al-Mulk had been informed that four Russian Muslim subjects from the Caucasus had started fomenting trouble in the holy Shia city of Karbila. During large gatherings, they had tried to rouse public animosity against the concessionaires, who, they claimed, had obtained the concession ‘to ruin the country’.53 These alleged Russian agents were attempting to reignite the religious zeal that had successfully destroyed the Tobacco Concession a decade earlier. For Kitabgi, ‘this question of Kerbala [was] a vital question’, and he sent Shaykh al-Mulk to meet the grand mujtahid, who had originally decreed against the tobacco concession, and secure his support through any means possible.54 Around the same period, on 13 April, an unexpected article appeared in one of the most influential Persian-language newspapers. Habl al-Matin, which was published in Calcutta and enjoyed a wide circulation in Persia, despite having been officially banned, issued a scathing critique of the D’Arcy Concession.

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It argued that the great wealth that petroleum could bring to Persia had been forfeited by oblivious rulers, who ignored science, the law and the ‘political principles of Islam’. The article added that ‘men’s hearts burn[ed] to think that things in Persia should have come to this pass! God grant[ed] there be nothing worse than this in store for [Persians]’. It ended with a proclamation that ‘it [was] no longer possible for the Persians to keep silen[t] and remain patient’.55 The article also pointed out that the concessionaires were violating their obligations by hiring Indians and Afghans instead of Persians. Indeed, as late as October 1902, despite the many warnings, Reynolds still had only six Persian employees out of a hundred. The level of discontent regarding this issue forced the governor of Kirmanshah to formally notify the Persian government and Kitabgi intervened in order to reassure Persian ministers still traumatized by the events of a decade earlier.56 The instigators of the article remain unknown, but the British legation claimed to have evidence that it had emanated from Baghdad and that the author ‘may have been under foreign influence’.57 Russian sources, on their side, confirm that the Russian consul general in Baghdad reported back to St. Petersburg on the drillers’ location and housing, the level of investment made by the company and even the rate at which machinery was being received and by what means.58 This information was gathered, despite the remote locations of the company’s operations and the discretion they employed. The precise information regarding foreign labourers in the article may thus point to the involvement of the Russian consulate in its drafting. The British legation suggested submitting an article to the same newspaper with counterarguments, as the editor was ‘presumably open to persuasion’.59 In the end, however, the negative article had limited effect, as the vast majority of the Persian population was unaffected by the oil concession. Unlike the Tobacco Concession, it was creating a novel industry. Regardless, the concessionaires did not welcome negative publicity, as they had seen witnessed what popular animosity could engender. A few weeks after the article’s publication, doubts also emerged regarding one of Reynolds’s acquaintances in Persia. Reynolds had befriended a British man named Schindler, who had strongly recommended the employment of a Mr Walker. In all probability, the Schindler referred to was Sir Albert HoutumSchindler, who, in 1868, had begun working for the Indo-European Telegraph Department in Persia before becoming the inspector-general of the Persian telegraph service in 1876. Like Kitabgi, he had been given the rank of general in the Persian army and was an advisor to the government on a number of issues, including foreign loans.60 Curzon had called him ‘a sort of deus ex machina required to assist in the solution of most Persian problems’.61 Like Kitabgi, Schindler had also worked in the private sector for some of Reuter’s concerns. He had worked for the Imperial Bank of Persia in 1889, been inspector-general of mines in the Persian Bank Mining Rights Corporation and been in charge of a road concession held by the bank. He was eventually dismissed from all these responsibilities as the mining concerns and the road concession failed, in part, due to his mismanagement.

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After hearing of Reynolds’s friendship with Schindler, Kitabgi asked his son Vincent to immediately warn D’Arcy of ‘Schindler who had been the evil genius of the English in Persia and whose self-interested advice caused such losses in influence and capital to the English in Persia’.62 Kitabgi alleged that Schindler was a Russian spy and that he had intentionally made Persian petroleum interests fail in the past.63 He urged D’Arcy and Redwood to tell Reynolds to cut off all links with Schindler and the other man he had introduced as soon as possible.64 They decided not to telegraph Reynolds, however, as Schindler could have been informed, presumably through his contacts in the telegraph networks.65 For Kitabgi, Schindler’s allegiance and his ‘machiavellianism’ were evident and he would, undoubtedly, have been ‘very disappointed to have been discovered this early in his manoeuvres’.66 There is no corroborating evidence to confirm Schindler’s allegiance to the Russian government, and it is possible that Kitabgi saw him as a threat to his own role in the company. Paranoia over Russian activity, however, was a real factor for the concessionaires. Kitabgi told D’Arcy that he could ‘no longer doubt that there [was] an adversary that vigilantly surveil[ed their] every move and whose duty [was] to study [their] actions to present them in a dark and prejudicial way to the interests of the country, so that they may generate distrust’.67 D’Arcy, for his part, became well aware ‘that the Russians were . . . very angry at [his] getting the Petroleum concession and [were] doing . . . everything to thwart it’.68 One of the principal engineers at the time, furthermore, recalling events over thirty years later, wrote that ‘the main trouble Reynolds and [he] had to contend with was the Russian Govt. secret police, acting in Persia under the orders of Moscow’.69 The importance of having someone familiar with these threats, and how to manage them, was thus primordial to the business venture’s survival.

Internal affairs As per their original understanding, Kitabgi handled operations in Persia while D’Arcy provided the concession’s financial wherewithal. Barely two months after the concession had been granted, with £30,000 having been invested in equipment and personnel, however, D’Arcy admitted that ‘the works [had] reached such dimensions that they [had] already almost surpassed or, in any case, [would] soon surpass [his] capabilities alone’. Citing this and the risk of potential illness, he proposed the creation of a ‘syndicate’ to take over the concession’s responsibilities.70 The issue of the syndicate, which would recur over the following years, is important as it reveals D’Arcy’s true financial situation, his intentions with regards to his other shareholders and his tactics. Kitabgi initially approved the formation of this syndicate, in his role as imperial commissioner, and confirmed this with the grand vizier, subject to approving the statutes that would govern it, knowing the identity of its directors and ensuring that his rights, as imperial commissioner, extended to this new entity as well.71

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The ambiguity of the term ‘syndicate’ led to conflicting interpretations of what this structure actually was. Kitabgi assumed that the syndicate was the first exploitation company as described in the concession. Its formation, as prescribed by the concession, triggered a payment of £20,000 in cash and £20,000 in shares to the Persian government, which Kitabgi thus duly requested. D’Arcy, however, refused this request, affirming that the syndicate was not a company and that this ‘requirement may be the means of ruining the business entirely’.72 This reaction surprised and confused Kitabgi, who, assuming D’Arcy was acting in good faith, decided to overturn his request and reconfirm the approval of the syndicate, subject to seeing the clauses that would actually constitute it.73 By the end of May 1902, over ten months after D’Arcy had first mentioned the idea of the syndicate and shortly after he had conceded to hiring Kitabgi’s son Paul, Kitabgi finally received its articles of association.74 He had previously received the names of the directors, apart from two of them, who could not appear on any documents.75 They included Major General Sir Arthur Ellis, Equerry to the King and Comptroller of the Lord Chamberlain, who was part of the highest ranks of the British nobility. It also included Lord de Ramsey, a Conservative politician and the uncle of Winston Churchill through marriage; Lord Burton, the beer magnate and Liberal politician; Sir Horace Rumbold, the former ambassador to Austria-Hungary; Evelyn Ashley, a Liberal politician and member of the Privy Council; and Henry Lynch, the industrialist with important business interests in Persia.76 The board thus spanned the spectrum of British power and gave D’Arcy representation from the nobility, opposing factions of domestic politics, the Foreign Office and industry. Kitabgi carefully examined the statutes in order to understand the nature of the syndicate, and he trusted D’Arcy’s assertions that this was not the creation of a company. Upon close inspection, however, Kitabgi was ‘pleased to acknowledge that the Statutes of the Parent Syndicate Ltd. as they [stood] no longer envisage[d] the simple creation of beneficiaries to fill the lacunae of the Concession, but constitute[d] the formation of the first Company for the Exploitation of the Concession as planned and prescribed by Article 9 of the Concession’.77 The conditions for the concessionary payment thus held, and Kitabgi also enquired about his own share allotment in this new combine as well as his right to subscribe for an additional 10 per cent of shares as per their original agreement.78 Despite Kitabgi’s conclusions, D’Arcy continued to insist that ‘the “Statuts” were for the Parent Syndicate and not for a Company d’Exploitation’.79 He blamed this misunderstanding on not speaking French and not having done enough to ensure Kitabgi was informed of developments.80 He also applied pressure on Kitabgi regarding this issue in two other ways. He pressed to have it all settled before the shah’s visit to Britain, which was due just a few weeks later, and tried to woo Kitabgi with a financial gift that he had previously promised him for obtaining the concession.81 These tactics failed, however, and Kitabgi continued to insist that, in its current state, the syndicate was the concession’s first company. As such, the Persian government had to be given shares in the syndicate, as mandated by the concession, and receive the payment due to them.82 Sir Henry, for his part, sided

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with Kitabgi and started to distrust D’Arcy, whom he accused of wanting ‘to earn a lot while depriving others’.83 As discussions reached an impasse, D’Arcy gifted Kitabgi a beautiful car costing 26,500 francs and Kitabgi, consequently, sent a redacted version of the syndicate’s articles of association, which made the syndicate a temporary structure.84 This structure would take over D’Arcy’s concessionary obligations and be a majority shareholder of all future corporate structures that originated from the concession and exploited petroleum anywhere in the world.85 In light of what occurred later, this redaction would have had historic consequences, as the Persian government had only secured shares in the first company to be established under the concession. As imperial commissioner, Kitabgi also gave himself the power to audit the company’s accounts and remain informed of all its developments.86 He felt that this arrangement was a fair compromise. Kitabgi was dismayed, however, to receive the statutes re-edited by D’Arcy’s solicitor, which made them similar to the original corporate construct. He was profoundly disappointed by the entire situation and D’Arcy’s solicitor, whom he had always assumed would remain impartial. As a result, Kitabgi threatened to hire his own solicitor, almost a year after D’Arcy first proposed the syndicate. D’Arcy thus decided to ‘abandon the idea with a view to making other arrangements’.87 On the same day D’Arcy gave up on the syndicate, 20 August 1902, he was obliged to gift £4,000 to the grand vizier, £1,000 to the minister of mines and £2,500 to other ministers, as part of the shah’s visit to Britain.88 He also paid Kitabgi £3,500, as part of a larger sum that he had promised him at the onset.89 Despite these onerous gifts and cancelling his annual retreat to Marienbad, however, he did not even get the chance to meet the shah during his visit (see Figure 3.2).90 On the same frustrating, and seemingly interminable, day, D’Arcy also quarrelled with Alfred Marriott, who had been one of his original negotiators and confidants. According to Marriott, this quarrel had come after D’Arcy had become ‘more & more irritable & “difficile”, and much less friendly in his behaviour’.91 In the midst of this particular argument, D’Arcy swore at Marriott, who decided to leave his service on the spot and never return. The reason for this outburst, which has been omitted from the existing literature as ‘Mr. D’Arcy [did] not come at all well out of the matter’, were revealed over thirty years later, when Marriott admitted that D’Arcy had been on the verge of personal bankruptcy and was accumulating increasing amounts of debt.92 Kitabgi’s doubts regarding the true nature of the syndicate thus turned out to have been correct. D’Arcy was trying to benefit from the advantages of a corporation without having to fulfil the financial obligations of the concession. Furthermore, he was being actively disingenuous. While he told Kitabgi repeatedly that the syndicate was not a company, he used the term ‘Parent Oil Company’ when discussing the same structure with his private secretary and members of his network in Britain, America, Norway and Australia, whom he was trying to encourage to invest in the structure as early as September 1901.93 This entire episode is of crucial importance and the sources tell a different story than the existing literature, which portray Sir Henry as too ignorant of business to

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understand what was happening and Kitabgi too endemically greedy to handle the issue of the syndicate appropriately.94 In reality, Kitabgi had not only seen through D’Arcy’s tactics but also, through his objections, foreshadowed decades of ensuing problems between the concessionaires and successive Persian governments. D’Arcy was actively trying to mislead the Persian government into a disadvantageous financial structure and, despite his own financial interests and numerous gifts, Kitabgi had carried out his obligations diligently. Unbeknown to them, Kitabgi had become indispensable to the preservation of the Persian government’s interests in the D’Arcy Concession.

Figure 3.1 Reynolds, Williams and Crush having a picnic. ©BP plc. ARC178509_008.

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Figure  3.2 The Persian imperial visit to the United Kingdom in 1902. The Royal Yacht. Front row: The Prince of Wales, Muzaffar al-Din Shah, Queen Alexandra, King Edward VII, the Princess of Wales. Standing between the shah and Queen Alexandra is Amin al-Sultan and in the middle of the back row, with his head rising above the others, is General Antoine Kitabgi Khan. Courtesy of the Kitabgi family.

Chapter 4 G R AV I T Y T R AG E DY A N D R A P P R O C H E M E N T

Two days before Christmas Day 1902, D’Arcy urgently wrote to the Foreign Office to tell them that an ‘event [had] happened which may seriously affect the Petroleum Concession [he held] from the Persian Government and as [they had] very kindly assisted [him] in the past [he was] emboldened to trouble [them] again’.1 A few days earlier, while travelling through Italy, Kitabgi had unexpectedly died.2 He was the central pillar of the concession’s Persian support system and guaranteed the safety of its interests on multiple levels. His death created a highly problematic vacuum. As the issue was of existential proportions for the venture, D’Arcy appealed directly to the British authorities.

Tragedy The first issue, which required immediate attention, was the appointment of the next imperial commissioner. Kitabgi’s ‘appointment was a very favourable one for [D’Arcy] as he was always most friendly and obliging’, but with persistent pressure from Russia, who were ‘most jealously watching the progress’, D’Arcy was ‘so afraid that at this juncture they may get the Persian Government to appoint someone as Commissioner with whom it [would] be impossible for [him] to work’. He asked the Foreign Office if Sir Arthur Hardinge could be of assistance in this matter by helping him appoint a neutral party or, preferably, one of Kitabgi’s sons.3 Sir Arthur reported back a few days later that the grand vizier had consented to the appointment of one of Kitabgi’s sons and D’Arcy thus had Vincent Kitabgi appointed. Vincent was Kitabgi’s eldest son and he would fulfil his role from London, as his father had wished for him to stay there.4 A few months later, in September 1903, another profoundly unsettling event occurred. Following a protracted period of domestic unrest and intrigue, the grand vizier was forced to resign from his position.5 This was a catastrophic development for the concession, as the grand vizier’s close links with the Kitabgi family, combined with the vast amount of money and shares D’Arcy had gifted him, ensured the political and legal integrity of the endeavour. A different grand

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vizier meant that a new series of payments would have to be made, which was highly undesirable in view of D’Arcy’s precarious financial situation. It also meant that a new grand vizier could be more amenable to Russian demands, which was particularly worrisome in light of the recent attempts by Russia to sabotage the concession’s operations. Furthermore, Russia’s attempts at sabotaging did not seem to be abating. Vincent Kitabgi warned D’Arcy that ‘certainly Russian people will work now more than ever’.6 The Foreign Office, on their side, forwarded D’Arcy a memorandum by a former Indian civil servant that warned there was ‘little doubt that Russia [was] watching the experiment carefully’. This memorandum had reached this conclusion based on three observations. First, Krugeloff, the Russian consul general in Baghdad, whom the British legation had suspected of instigating the Habl al-Matin article, mentioned above, had ‘been making careful enquiries at Kasr i Shirin and spreading money with great liberality’. Second, ‘Césari, a customs official in the Perso-Turkish border, whom [he] believe[d] to be an active Russian agent . . . [was] showing the keenest interest in the D’Arcy scheme, and [lost] no opportunity of disparaging the oil-works and staff ’. Finally, ‘Boris de Chalkournikous, chief geologist with the Russian Govt, [was] now and [had] been for some time at Baghdad, pretending to interest himself in the Babylonian excavations, but [was] evidently there for some other purpose’.7 In addition to this, the Russian consul in Kirmanshah was suspected of trying to agitate drillers against the company. As a result, those in charge of the drilling operations were warned to be particularly careful with drillers from Baku, as they were Russian subjects.8 In January 1904, to mitigate some of the potential damage, Vincent Kitabgi suggested that a new British consul be appointed in Kirmanshah ‘with plenty of show’, ‘owing to the activity of Russia’, and Captain Gough was thus duly appointed a few months later.9 These Russian activities also made the concession acquire a bad reputation in the area. Sir Arthur reported that ‘all sorts of absurd rumours [had] been spread that its objects were mainly political, and that Mr. D’Arcy was erecting fortified buildings, and distributing, on behalf of the British Government, arms and cartridges among the frontier tribes’.10 Furthermore, ‘Mr. Wilson (Messrs. Lynch Bros’. Agent [there]) [told him] that he [had] gathered the impression that the Exploitation Party were not popular . . . or at least that they were looked on somewhat askance by the people’.11 In parallel to these disconcerting developments, D’Arcy acknowledged, in the summer of 1903, that ‘every purse [had] its limit and [he could] see the limit of [his] own’.12 His financial woes had worsened, as expenses continued to increase without any foreseeable revenues. This was further exacerbated by his compliance with the concessionary obligation of forming an exploitation company within two years of the concession’s granting. Despite his efforts to extend the deadline through the auspices of Sir Arthur, D’Arcy thus reluctantly formed the First Exploitation Company Ltd, a week shy of the prescribed deadline, on 21 May 1903.13 This triggered a payment of £20,000 in cash to the Persian government.14 As £5,000 had already been paid, D’Arcy settled the outstanding £15,000, through

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Vincent, and also paid an additional £12,500 to the ‘semi official people’, who had been pledged cash during the negotiations.15 These expenses were all borne by D’Arcy personally, as his plan to create a parent syndicate to raise external funding had failed. As part of his concessionary obligations, he also handed out £20,000 in bearer shares to the Persian government and an additional £30,000 in bearer shares to the Persians who had been helpful during the negotiations (see Figure 4.1).16 The First Exploitation Company had a capitalization of £350,000, which meant the Persian government owned less than 6 per cent of the new company, at this stage, while those who received shares as part of their informal compensation owned approximately 8.5 per cent of the company’s shares in aggregate. Due to his fragile financial situation, D’Arcy was thus obliged to quickly secure external funding in order to prolong the concession’s existence. In July 1903, during his annual retreat to Marienbad, he made the acquaintance of Admiral Fisher, discussed later in detail, who became fiercely enthusiastic about the naval and geopolitical implications of his concession.17 Immediately after this chance meeting, Fisher wrote that D’Arcy had ‘just bought the south half of Persia for OIL . . . He [thought it was] going to be a great thing, and, politically, it [would] capsize Russia, as this oil concession, for which he has already paid 1/4 of a million, [would] practically make the country English’.18 Just a month after their encounter, D’Arcy decided to hold off drilling in southwest Persia ‘until Fisher’s friends [had] decided one way or another’.19 It is unknown whether this referred to private investors introduced by Fisher or to D’Arcy’s loan application to the Admiralty, two months later, which was rapidly rejected.20 Regardless of who Fisher’s friends were, D’Arcy needed a solution urgently, and he turned to other private sources of funding. He held talks with Rockefeller’s Standard Oil and his friend, Major General Sir Arthur Ellis, introduced him to Sir Ernest Cassel and the French Rothschilds.21 The Rothschilds were open to discussions and, at the end of February 1904, D’Arcy and his legal counsel visited Baron Alphonse de Rothschild in Cannes to come to an agreement on terms. D’Arcy’s trip, however, like all his other pourparlers, bore no fruit.22

Indifference Despite the Admiralty’s refusal to assist D’Arcy financially, Lansdowne had been concerned that D’Arcy ‘may be obliged to offer shares to foreigners unless he [was] assisted by Government. As [the] British Government [were] unable to grant any assistance to a scheme of this nature, it [was] represented to [him] that there [was a] danger of [the] whole petroleum concession in Persia falling thus under Russian control’.23 He asked the viceroy of India and the British minister in Tehran for advice. Neither of them were enthusiastic about the concession’s prospects but seemed mildly apprehensive about the Russian government getting ‘hold of [the] concession whether intrinsically profitable or not for political purposes’, as ‘in their hands it would be most dangerous to British interests in Southern Persia’.24

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After D’Arcy’s trip to Cannes proved unsuccessful, Lansdowne again informed Sir Arthur and the India Office that D’Arcy would ‘be obliged to consider the question of foreign cooperation’. He asked if the government of India could be of assistance in the matter, but no help was forthcoming.25 The prospect of losing the D’Arcy Concession to foreign investors seemed increasingly possible, but no one seemed interested in preventing it. Whereas the British government had assisted the concession with minor diplomatic interventions, the provision of financial assistance was out of the question. The D’Arcy Concession was viewed in terms of its broad strategic value in advancing British interests in Persia. The concession increased, even if minimally, the influence of the British informal empire in Persia by contributing to a broader constellation of commercial interests. It was a small step in furthering British interests within the Great Game and an additional excuse to continue intervening in Persian affairs. On its own, however, its continued existence was of negligible value and its fall into Russian hands was moderately undesirable. It is of interest to compare the government’s indifference to D’Arcy’s tribulations, at this stage, with the fate of the first Reuter Concession a few decades earlier, as both seemed to have been abandoned by the British government despite their operations being located in an area of imperial interest. After the Reuter Concession had been granted, the Russian government started to oppose it with many of the same tactics it used against the D’Arcy Concession and the Tobacco Concession. Reuter, similarly to D’Arcy, appealed to the British government for help and declared his intention of making the ‘concession of the highest value to Great Britain’.26 The British government, however, ‘tacitly approved its cancellation’ and the Foreign Office told Reuter that the ‘Government could not bind [itself] officially to protect [his] interests . . . Lord Derby look[ed] upon the undertaking as an entirely private one in which HM’s Govt. [could not] interfere’.27 There was a brief change of heart as the Russians sought to obtain a concession to build a railroad from Jolfa to Tabriz and the British legation used the Reuter Concession as an excuse to oppose it. Once this was settled, however, any hint of official support vanished again. Despite the Reuter Concession appearing to be a godsend for British imperial aspirations in Persia, one of the key characteristics of the Anglo-Russian rivalry was its informality. The British and Russian governments were forced to interact with each other in diplomatic vagaries in order to maintain a malleable ambiguity in which to diffuse any source of conflict. Commercial expansion could never be perceived to be centrally directed or encouraged. Instead, appearing to have been unwillingly and unexpectedly forced to react in order to protect their respective nationals’ interests provided them with the diplomatic flexibility required to avoid direct confrontation. Any overt show of commercial interference could have triggered a similar reaction by the opposing power and, most importantly, dragged the two empires into direct conflict. The Reuter Concession, therefore, unlike the D’Arcy Concession, was handicapped by the immensity of its mandate. The implications of its success made it impossible for the British government to actively support it. Intervening in

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any way would have put the government in too much of a confrontational position with the Russian Empire. This was probably also why Reuter had kept the terms of the concession hidden during his original negotiations.28 This problem was instead astutely avoided by D’Arcy, as he had reassured Lansdowne, during his negotiations, that he had taken ‘care to exclude from its provisions the Provinces bordering on the Caspian Sea. So as to give no umbrage to Russia and in carrying out the rights [he had] acquired, [he would] do [his] utmost to prevent any cause of complaint from Russian subjects’.29 The Reuter Concession and the D’Arcy Concession thus seem to have been abandoned by the British government for opposite reasons. The D’Arcy Concession was too small to matter, while the Reuter Concession was too large to be assisted. In addition to the size of his concession, Reuter had never integrated into the gentlemanly system. He was of German Jewish origins, which differentiated him from much of the British elite. He was also suspected of possessing a very fickle sense of loyalties, which was exacerbated by his attempt to blackmail the British government after sensing their complete indifference. He did so by informing Lord Derby that he had been made an offer for his concession by a Russian company, but that he would reconsider it if the British government helped him secure an appropriate indemnity from the Persian government. The scepticism regarding his loyalties was also caused by a rumour in Tehran that he had sought official protection from the Russian government.30 The British establishment, therefore, had no impetus to come to his assistance. All British investors did not receive the same privileged treatment.

Rapprochement Despite gloomy prospects, a development took place in the Admiralty, which introduced a new consideration at the forefront of imperial priorities and forced a re-evaluation of the D’Arcy Concession’s importance. This consideration had emerged from technical necessities complemented by the forceful encouragements of certain senior members of the Admiralty, such as Lord Selborne and Admiral of the Fleet, John Arbuthnot ‘Jacky’ Fisher. A  sense of urgency regarding the fighting capacity of the navy emerged when the German Navy Laws of 1898 and 1900 were enacted, the French strengthened their fleet in the Mediterranean and the chance of a conflict with Russia increased. These pan-European threats caused Fisher, and other likeminded navy officers, to start lobbying for widespread naval reforms. A  ‘naval revolution’ thus began when Fisher became second sea lord in 1902 and intensified when he became first sea lord in late 1904.31 Fisher was a ‘veritable volcano of knowledge and of inspiration’, according to Winston Churchill, and his endless determination saved the navy from terminal decline by pushing it towards modernization.32 He was 63  years old when he became first sea lord, ‘but still the youngest man of the Navy in brain and heart and energy’.33 When he became second sea lord, ‘he remarked that the ideas of warfare

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of his colleagues were of the bow-and-arrow epoch’.34 The navy had stagnated due to the lack of any serious rivals and was living off its past glories. Lord Charles Beresford, the probable Commander-in-Chief in a naval war of the near future, was reported to have stated in 1902 that ‘he was now 56 years old, with one foot in the grave, and he had only tactically handled three ships for five hours in his life, and that was a great deal more than some of his brother admirals.’35

Fisher, who was known as the ‘oil maniac’ as early as 1886, was passionate about the adoption of fuel oil by the navy, and on 5 August 1903, as he ascended the Admiralty’s ranks, a report by the royal commission on coal supplies was published.36 One of the commission’s objectives was to enquire into coal mines’ ‘rate of exhaustion . . . having regard to possible economies in use by the substitution of other fuel’. It contained a lengthy statement by Boverton Redwood, the concession’s technical advisor and the first and foremost petroleum expert of his day, on the technical benefits of petroleum, which were becoming increasingly evident.37 Fuel oil took less space than coal to store, which meant that ships had much more range. It made ships faster and freed up manpower, as less people were required in the fuelling and refuelling process. It allowed ships to be refuelled at sea and was cheaper and more durable than coal.38 The problem, however, was that Britain had important domestic coal deposits, but no adequate native petroleum springs. The objective, therefore, was to find a secure and consistent oil-producing asset controlled by a loyal British entity. In July 1903, a month before the publication of the royal commission’s report, the Admiralty had already written to Britain’s biggest oil company, the Glasgowbased Burmah Oil Company, to enquire about the possibility of supplying fuel oil.39 Despite it being the most prominent British oil company and exploiting 99 per cent of the oil in India, however, it did not have the means to supply the amounts required.40 Its output represented only 0.89 per cent of world production, while Russia produced 50.9 per cent of the global oil supplies and the United States 42.2 per cent.41 The report, which briefly mentioned the D’Arcy Concession, led to the establishment of a petroleum standing committee in late 1903, with the specific goal of identifying potential sources of petroleum within the British Empire. It was chaired by Ernest Pretyman, the parliamentary and financial secretary to the Admiralty, and advised by Boverton Redwood.42 Redwood had been a consultant to the Burmah Oil Company since 1893 and advised the Admiralty, D’Arcy and the Burmah Oil Company simultaneously (see Figure 4.2).43 He must have realized the synergy that presented itself for the different entities he advised. The Burmah Oil Company wanted more concessions in order to expand its operations, D’Arcy, on the other hand, was on the verge of losing a concession in an area where oil was expected in vast quantities and the Admiralty, for its part, needed large quantities of fuel oil. Redwood thus set out to bridge these entities and advised the Admiralty, in early February 1904, ‘that it would be better to furnish the BOC with such inducements as may be necessary to bring about an adequate extension of their operations than to seek

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to encourage competitive work by others who would necessarily lack the special knowledge and experience which the Burmah Oil had acquired’.44 This course of action was met with probable encouragements from Fisher, who, as discussed above, was interested in the D’Arcy Concession’s prospects and had also just spent the weekend with D’Arcy at Admiralty House in Portsmouth.45 Subsequent to Redwood’s recommendation, Pretyman, seemingly unaware that the Foreign Office and the government of India had given up on the D’Arcy Concession, ascertained that Mr. D’Arcy was . . . in the Riviera negotiating for the transfer of his concession to the French Rothschilds. [He] therefore wrote to Mr. D’Arcy explaining to him the Admiralty’s interest in petroleum development and [asked] him, before parting with his concession to any foreign interests, to give the Admiralty an opportunity of endeavouring to arrange for its acquisition by a British Syndicate.46

The letter from the Admiralty must have seemed like manna from heaven to D’Arcy. Convincing D’Arcy to be rescued was simple. The Admiralty now had to carry out the much harder task of convincing the Burmah Oil Company to invest in Persia. Throughout the years, the company had repeatedly sought the assistance of the government to obtain larger concessions and higher tariffs in India, as they were an easy prey for their aggressive and immense competitors. Even when they had been approached regarding the Admiralty’s fuel oil needs, they lobbied for these protectionist privileges, as they were in the midst of a vicious conflict against Standard Oil and Shell. This time, Pretyman reassured the company that both the government of India and the Admiralty would be ‘anxious and determined’ to strengthen the company’s position in Burma.47 He added time pressure by stating that this positive impetus could not be guaranteed for long, however, as the upcoming elections could lead to a change in government. Pretyman’s overture coincided with a re-emergence of the company’s competitive anxieties as Shell was allegedly applying for prospecting licenses in Burma. The Burmah Oil Company was thus lured into meeting with D’Arcy on 10 August 1904.48 Before the meeting, Pretyman had told Sir John Eldon Gorst, who was liaising with Burmah, ‘that it [was] most desirable that this Concession should remain in British hands and especially from the standpoint of oil supplies for the Navy of the future’.49 The meeting was thus fruitful and it opened the path for a potential partnership. Two days later, D’Arcy, who was anxious to advance negotiations as quickly as possible, sent de Morgan’s original report, another report by Redwood, a copy of the concession and other papers to the offices of the Burmah Oil Company.50 From Marienbad, where he was in the company of Lady Hardinge, he wanted to be informed of all developments and hoped that the directors of Burmah would meet his lead engineers, Reynolds and Rosenplaenter.51 His frequent and anxious correspondence with Redwood in this period demonstrates that a positive outcome was far from certain.52 Even in early November, when D’Arcy received ‘a letter from the Admiralty stating that the Burmah People . . . [would] go with the Persian Business’, he was

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‘quite prepared for another disappointment’.53 This was because any agreement still required the board of Burmah to approve it and Burmah’s chairman ‘was extremely reluctant to become involved. Bearing in mind the load of work that still needed to be done in Persia, he felt that Burmah Oil already had more than enough problems to exercise him’.54 Burmah’s struggle to erect competitive barriers for its Indian business persisted, and it submitted additional proposals to the Admiralty at the end of 1904. It requested a ban on foreign companies acquiring concessions in Burma, the equal treatment of any British companies that gained a concession in the area and the lifting of all restrictions on them regarding the additional acquisition of concessions. They also suggested that the Admiralty, itself, could apply for concessions that the company would then exploit.55 Following these suggestions, in early 1905, the undersecretary of state at the India Office, who had personally undertaken to remove all protective trade measures, which benefitted the Burmah Oil Company, suddenly experienced a change of heart. He claimed that there was a ‘new protectionist spirit’ in government and that the Admiralty had been emphasizing the utmost importance of the Burmese oilfields to the empire.56 The Admiralty’s efforts succeeded and the Burmah Oil Company agreed on terms with D’Arcy on 25 January 1905, with the board approving them on 3 February.57 Finally, in mid-March, Boverton Redwood told the company that he had ‘no hesitation in strongly recommending that [they] should at once make financial provision for the large additional extension of the industry which the immediate requirements of the trade urgently demand[ed]’.58 As the chairman of Burmah stated years later, ‘It may [have been], and very often [was], the case that private and Imperial interests [were] served by the same action, but it was primarily the protection of its Indian investments that took the Burmah Oil Company Ltd. into Persia.’ This investment was, therefore, not an ‘insurance against exploration failure’, as Ferrier posits, but an insurance to preserve the company’s core business.59 Despite the government’s pivotal role in engineering the final agreement between Burmah and D’Arcy, Burmah soon discovered that the government would revert to a position of explicit indifference if confronted with any requests of a direct or specific commitment. A few days after its board approved the deal, Burmah wrote to the Admiralty pleading for such a commitment. They prefaced their plea with an attempt to establish bargaining power over the government and stated that, ‘as explained to Sir John Eldon Gorst, should the concession be obtained and worked . . . it will probably prove of great value to this country as providing a substantial source from which fuel oil could be supplied for the use of the British Navy, besides largely extending this country’s commercial interests in Persia’. They continued, candidly, with the ‘mention that this concession was brought to the notice of [their] clients by the Admiralty’ and then expressed their principal concern, which was to know what protection would be . . . afforded to the Company proposed to be formed . . . in the event of any subsequent attempt on the part of the Shah of Persia to cancel or interfere with the Concession or on the part of Russia or any

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other neighbouring State to hamper the operation of the proposed Company in working the Concession.60

The Foreign Office responded with ‘an extremely good non-committal answer’, that it was ‘impossible that a definite statement should be made in regard to hypothetical contingencies’ but that they could ‘count on such support and protection as British subjects are always entitled to expect from H.M. Govt’.61 D’Arcy, for his part, was ‘very happy . . . that the Persian Business [was] settled’.62 In an unexpected twist, his financial troubles, coupled with the Admiralty’s reforming zeal, had made him and the British government gravitate towards each other. His financial rescue occurred as a result of private and imperial interests coinciding. It was the Admiralty’s new fuel policy that led the government to rescue him and not his initial appeals. The naval impetus behind the resulting agreement does not explain why D’Arcy’s concession was prioritized over other British oil interests in Canada, Australia, Mexico or New Zealand that had been mentioned in the royal commission, however.63 His gentlemanly status may have had a part to play in this. It may also explain why Burmah’s requests had been ignored for years and were acted upon only when a member of the gentlemanly elite needed rescuing. D’Arcy’s gentlemanly status, as well as his close relations with Boverton Redwood and Admiral Fisher, were thus contributing factors to the priority he enjoyed. Boverton Redwood and Admiral Fisher, being gentlemen themselves, knew that D’Arcy subscribed to a shared imperial worldview and that his loyalty to the British government was unquestionable. The trust established by D’Arcy’s membership to the gentlemanly elite thus removed the practical requirement of having to research other oil interests and determine their loyalties.

Coming to terms After Antoine Kitabgi’s death, Vincent, aged 31, took over the helm of the Kitabgi family and the role of imperial commissioner. D’Arcy tried to use Vincent’s inexperience to further his personal objectives in the venture. During the inheritance procedures, for example, D’Arcy had told Vincent, surreptitiously, that he was ‘very glad to be able to tell [him] that [he had] found a way of managing the administration of [his] Father’s Estate without Sir Henry Wolff ’s help . . . In the meantime [Vincent should] do nothing and say nothing to anyone’.64 In the summer of 1903, D’Arcy then attempted, as he had done previously, to enact a supplementary concession in order to create a ‘Parent Company’ in addition to the First Exploitation Company.65 He claimed that he was unable to reveal any details regarding this parent company as a lot depended on the investor that would come into the set-up. Vincent, however, unlike his father and the Persian government before him, hired a solicitor, who made ‘all sorts of difficulties’ regarding this proposal. He even made D’Arcy briefly agree to allow the Persian government to exchange their shares in the First Exploitation Company for an equivalent number of shares in the parent company.66 D’Arcy became increasingly frustrated by this

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opposition, however, and this latest proposal was put to a ‘standstill’, as opposing solicitors could not agree on terms.67 This resistance also led D’Arcy to increasingly distance himself from his associates. Early in 1904, he decided to stop sending copies of the chief engineer’s letters to Vincent Kitabgi as it ‘would not lead exactly to amicable good feeling’.68 Later in the year, he also turned down an invitation to Paul Kitabgi’s wedding even though Paul had proposed to move the date around D’Arcy’s schedule and offered him his late father’s place.69 Over a year later, he also turned down an invitation to the wedding of another brother of theirs, Edouard.70 D’Arcy’s relations with Sir Henry deteriorated as well. After repeated pestering, D’Arcy decided to cut Sir Henry off from any communications relating to the concession.71 Sir Henry then threatened D’Arcy with legal action and decided to inform himself of developments directly from the grand vizier.72 He also sold some of his interests in the concession to Sir Francis Jeune, First Baron St Helier, Lord Davey, Lord Orford and a certain Dr Smith.73 Frictions between D’Arcy and Vincent re-emerged in March 1905 when Vincent was actively scrutinizing the arrangement between D’Arcy and the Burmah Oil Company. D’Arcy had told Vincent that this was a ‘proposed arrangement, which [had] been provisionally arranged’, although, as mentioned above, Burmah’s board had already ratified these terms over a month earlier.74 It is necessary to clarify the situation, as the existing literature, particularly Ferrier, does not clearly differentiate the various phases of the agreement. The agreement with Burmah included the creation of a new company to be called the ‘Concessions Syndicate Limited’. This new entity would serve as Burmah’s Persian subsidiary thus separating its Persian investment from its main business. This company had not yet been incorporated and the agreement between this new company and D’Arcy had, therefore, not been signed. However, the terms governing this relationship had already been set and approved. D’Arcy, instead, told Vincent that the entire arrangement was provisional in order to make him believe that he could still affect the negotiations. Therefore, Vincent sought legal counsel. He enquired about what compensation he could claim in case the agreement with Burmah was carried out without his consent and a definite interpretation regarding his family’s ownership of 7 per cent of the concession. Specifically, he asked whether his family’s interest was 7 per cent of the entire concession or 7 per cent of D’Arcy’s share of the concession, despite having previously expressed his satisfaction with 7 per cent of D’Arcy’s interests.75 The original agreement from 1901 unambiguously gave Kitabgi 7 per cent of the entire concession, but it did not mention potential dilution scenarios, as it was assumed, at the time, that there would be no need for external financing. Once again, an unexpected event occurred, which affected proceedings. Vincent was suddenly dismissed from his role as imperial commissioner, which was, undoubtedly, caused by the prolonged absence of his political protector, Mirza Ali Asghar Khan.76 Unlike the period immediately after Antoine Kitabgi’s death, however, there is no evidence that D’Arcy took any measures to prevent Vincent’s removal from the commissionership. This was despite Muhandis al-Mamalik, the Persian minister of mines, recommending that he ‘energetically

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oppose’ the new appointment, as it could ‘gravely damage him’.77 It is possible that D’Arcy saw this dismissal as an opportunity to put a new working order into effect with a new imperial commissioner and to diminish Vincent’s personal bargaining power with respect to his family’s claims in the business. A few days after Vincent’s dismissal, D’Arcy also recalled Edouard Kitabgi from the drilling sites, where he was employed, and told him his future involvement in the company depended solely on Burmah.78 A month later, in April, Vincent received the joint opinion of a king’s counsel and a junior, who confirmed his ownership of 7 per cent of the concession and all its future corporate incarnations and proceeds, regardless of dilution. They further confirmed his inherited right to subscribe to a further 10 per cent of all shares issued to the public. Vincent transmitted this information to D’Arcy and offered to forego his right to purchase the additional 10 per cent of shares in order to facilitate the negotiation with Burmah. However, he reserved the right to reclaim it, in case an irresolvable dispute arose, and threatened to block the agreement with Burmah if he was not consulted on its final terms.79 D’Arcy waited, and the Concessions Syndicate Limited was finally incorporated on 5 May 1905 as a subsidiary of the Burmah Oil Company, with a capitalization of £100,000.80 He only had to sign the final agreement between himself and this new corporation to finish the process. He replied, five days after the incorporation, to Vincent’s last threatening letter and announced the news of an agreement with Burmah that was acquired ‘at last and after arduous negotiations’. He hoped Vincent would ‘agree with [him] in thinking the terms [were] fair on both sides’ and tried to manipulate Vincent into agreeing to the terms. D’Arcy welcomed Vincent’s promise to forego his right to purchase 10 per cent of future shares arguing that he would not have been able to enforce it with Burmah, in any case, and that that right had been intended exclusively for his father. D’Arcy was clearly ignoring the legal advice that Vincent had received in order to expedite the process. Attached to this letter, D’Arcy sent Vincent an agreement that declared his approval of the deal with Burmah and gave him 7 per cent of what D’Arcy stood to make from the arrangement. Sir Henry had, allegedly, signed a similar agreement by this stage.81 Vincent stood his ground regarding his family’s ownership of 7 per cent of the entire concession, however, which infuriated D’Arcy, who, in turn, replied that it was ‘the most outrageous “condition” that [had] ever been made on [him] in [his] life and [he] should hope [he] know [him] well enough to know that [he would] never be a party to such a transaction’. He threatened ‘to tell the Burmah Co. that [he would] not complete’ if Vincent did not comply with his terms immediately.82 At this impasse, Vincent’s solicitor advised him to change the term ‘Syndicate Company’ to the ‘Company to be formed’, in the eventuality he was willing to accept the terms D’Arcy had sent over.83 This advice further confirms the ambiguous nature of the word ‘syndicate’ and that they still did not know the company had, in fact, already been formed. Vincent thus wrote a final plea to D’Arcy, but to no avail. D’Arcy was unshakeable and repeated that ‘if [Vincent was] desirous of settling the matter all [he had] to [do was] to sign the Paper [he had] sent [him] before . . . This

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. . . [was] the only settlement [he could] consent to’.84 In view of the information he had at the time, Vincent believed he was responsible for the continued existence of the concession. The pressure was too intense and two days later, on 18 May, he agreed to sign D’Arcy’s agreement.85 Two weeks later, as the ink was drying, Paul and Edouard Kitabgi were dismissed from their respective positions in the concession and Shaykh al-Mulk was removed from the drilling sites and kept at half pay.86 D’Arcy blamed Burmah.87 D’Arcy was proud of the ‘terms which [he] had to fight very hard to obtain’, as they were ‘better probably than [he] could have obtained from any other Company’.88 Burmah, through the newly formed Concessions Syndicate Limited, agreed to reimburse an initial £25,000 towards D’Arcy’s total expenditures of £225,000, which he had to return if no oil was found within the three years prescribed by their agreement. Burmah also agreed, within those three years, to spend a minimum of £50,000 searching for oil, with an option of spending a further £20,000. D’Arcy kept the concession, its rights, obligations and property, in trust, while transferring his 300,001 shares of the First Exploitation Company to the new Concessions Syndicate. If oil was found, a further corporation would be created with a capital of £2,000,000. The Concessions Syndicate would own £800,000 of its shares and D’Arcy £1,200,000. D’Arcy would also receive the remaining £200,000 of his reimbursement, and the future company would issue up to £1,000,000 in debenture stock, of which D’Arcy agreed to subscribe to £200,000.89 He would thus end up with 60 per cent of the future company, excluding the amount to be given to the Kitabgis and any further dilutions. In addition to the financial arrangements, special dispositions were taken regarding the chairmanship of the new company. Pretyman recounts that Burmah had agreed to take on the D’Arcy Concession, ‘provided the Admiralty could induce some prominent Imperialist to act as Chairman, and so give the undertaking his imprimatur’.90 Pretyman, therefore, presented the issue to Donald Alexander Smith, First Baron Strathcona and Mount Royal, who had amassed an immense fortune through his involvement in the Hudson’s Bay Company, the Bank of Montreal and the Canadian Pacific Railway. He was also appointed Canadian high commissioner to the United Kingdom in 1896 and was an enthusiastic imperialist, who appears to have been D’Arcy’s neighbour in London.91 Strathcona, ‘after hearing [Pretyman’s] explanation of the position . . . asked [him] . . . whether what [he] was asking him to do was in the interest of the British Navy, and, when [Pretyman] replied “certainly,” [Strathcona] immediately agreed to undertake it . . . it was not so much financial assistance as his moral support that was desired’.92 He also subscribed to £5,000 of the shares in the newly formed Concessions Syndicate Limited and was given the right to purchase £50,000 of the shares and £50,000 of the debentures of the company that would be formed after oil had been found.93 Strathcona was a gentlemanly capitalist or, at least, a gentleman ‘in the making’ due to the Canadian source of his wealth. His presence at the helm of this new entity, at an advanced age, with no particular expertise in the oil industry and with only the empire’s interests at heart, is a reflection of the pervasiveness of the unspoken understanding between economic and political power in the British Empire.

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Having completed arrangements with D’Arcy, the Burmah Oil Company could turn its attention back to the negotiations with the Admiralty over the supply contract. Yet again, ‘quite unexpectedly’, just a few months after the agreement with D’Arcy had been completed, the recently created Committee of Imperial Defence, chaired by the prime minister himself, informed the undersecretary of state for India and the Admiralty that any contract for fuel oil should be made only with companies whose directors and capital were exclusively British.94 As the Burmah Oil Company was the only British company capable of supplying the Admiralty, it removed the risk of any other companies obtaining the supply contract and, more importantly, justified an expansion of its activities in Burma to the detriment of foreign competitors. This did not remove the risk of competition in the Indian market, however, and Burmah thus signed an agreement with Royal Dutch Shell, in October 1905, regarding the pricing of kerosene, with the intention of excluding Standard Oil from India altogether.95 A month after this agreement, on 21 November, the Admiralty finally signed a supply contract with the Burmah Oil Company and, nearly two weeks later, the Conservative government resigned. After all the friction and anxiety, D’Arcy could finally breathe a sigh of relief and concentrate all his efforts on finding oil.

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Figure 4.1 Letter of allotment from William Knox D’Arcy to the Persian government sent to Vincent Kitabgi in his capacity as imperial commissioner. This letter allots 20,000 shares of £1 each in the First Exploitation Company Ltd, 20 June 1903. Courtesy of the Kitabgi family.

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Figure 4.2 Sir Boverton Redwood. ©BP plc. ARC115910W.

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Chapter 5 R E SI STA N C E B A K H T I YA R I N E G O T IAT IO N S A N D G OV E R N M E N T O P P O SI T IO N

The financial injection from the Burmah Oil Company gave D’Arcy the opportunity to search for oil in a new location. The first site they had chosen had proven inconclusive. The drilling operations thus migrated to Khuzistan in southwest Persia. However, before work could commence there, the company had to reach a working arrangement with the powerful Bakhtiyari tribe that dominated the area. This presented the company with a further set of complications regarding their operations in Persia, which they were unable to face by themselves.

New direction When Reynolds temporarily returned to England in March 1903, an American named Rosenplaenter, who had previously worked in Baku and Assam, had become the company’s principal engineer. It was during his tenure that a move southwards had been initially considered, and he had stressed, at the time, that the ‘most important matter . . . [was] to obtain from the Bakhtiari Chiefs the right to drill on their ground’, as all ‘the orders of the Shah would [have been] useless without this permission’.1 Furthermore, the ‘two Chiefs . . . [were] well educated and enlightened men who [were] supposed to have strong Anglophile tendencies’ and the company ‘must not only have their permission, but . . . must also gain their goodwill and their friendship’.2 This sound advice had been given because the Bakhtiyari tribe enjoyed a quasi-autonomous status in Persia. Operating without their consent was impossible due to the prevalence of robberies and violent assaults that were entirely beyond the policing reach of the Persian government. In a lawless area, the tribe’s monopoly over physical force thus took precedence and leverage rested, almost exclusively, with the Bakhtiyari leadership, or khans, as their mere passiveness could result in expensive and, potentially, fatal damage to the company’s operations. Rosenplaenter was eventually prevented from beginning any proceedings with the Bakhtiyari due to D’Arcy’s precarious financial situation.3 The issue

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resurfaced nearly a year later, on 1 April 1904, when Reynolds held a meeting with the Bakhtiyari leadership to agree on some preliminary terms. The khans had requested 10 per cent of the net profits of the oil extracted on their lands and ‘were indifferent to the terms of the Concession and the authority of the Shah’. D’Arcy refused these conditions unless the Persian government reduced the percentage of net profits they were due to receive and when this was turned down, D’Arcy, still under financial duress, decided to continue waiting.4 It was only in 1905, after having secured fresh financing from the Burmah Oil Company, that D’Arcy began to reconsider drilling in Bakhtiyari territory. This time, however, he decided to rely on British authorities and turned to Sir Arthur Hardinge, who ‘promised [D’Arcy] (after having obtained Lord Lansdowne’s consent) that he would help [him] in coming to terms with the Bakhtiari Khans’ and ‘that M. J. R. Preece, C.M.G. [should] carry out the negotiation’.5 Preece was the current consul general in Isfahan and had developed a good working relation with the Bakhtiyari over the years. He had originally gone to Persia to work for the Indo-European Telegraph Department and had then become a covert British agent in Isfahan passing as a telegraph official.6 In late 1890, as the Tobacco Régie began to attract problems, the Foreign Office decided to appoint a consul in Isfahan, after years of discussions, and Preece received this remarkable promotion.7 At the time, Sir Henry Drummond Wolff had opposed Preece’s transition into the diplomatic ranks due to a lack of training and appropriate social background. Despite these remonstrances, Preece kept his post, developed close ties with the Bakhtiyari and had, among many other efforts, negotiated the Bakhtiyari Road Concession in 1895.8 After meeting Preece in person, D’Arcy was ‘convinced that M. Preece [was] not only the best but probably the only man who [could] satisfactorily negotiate with the Bakhtiari’ and thus offered to pay for his expenses in Persia if he led the negotiations. Preece swiftly accepted and the Foreign Office gave him permission to do so on the same day.9 D’Arcy and the Concessions Syndicate signed an agreement with him on 5 August 1905, and two months later, while still consul general in Isfahan and through ‘the great kindness of Lord Lansdowne, Mr J. R. Preece, C.M.G. [was] in Persia for the purpose of completing some satisfactory agreement with the Bakhtiari Chiefs’.10 In addition to his invaluable local expertise, Preece offered the company an additional route into the corridors of British power through his contacts in the Foreign Office and the British diplomatic staff in Persia. He also began regularly forwarding Foreign Office papers to company officials.11

Infinite trouble Preece and Reynolds went to Shalamzar in October to begin negotiations, and the khans were initially ‘amenable but on [the] appearance on scene of Haji Ali Kuli Khan, the complection of affairs changed and it became impossible to work on [the] lines of [the] draft agreement’.12 Haji Ali Quli Khan, bearer of the Sardar Asad title, who had ‘seen more of the world than most Khans, and [had] a greater flow of

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language’, took on the role of lead negotiator throughout the pourparlers, just as he had done ten years earlier in the negotiations for the Bakhtiyari Road Concession ‘much to Preece’s chagrin’.13 He convinced the khans that it was in their favour to become shareholders of any operations that took place on their territory and to refuse to lease any of their lands.14 His first proposal was that the tribe be given 20 per cent of the companies that worked their lands, which was based on the ‘great faith in the capacity of their oil-bearing country; they [thought] that Baku [would] be nothing to it in comparison’. He singled out a specific place ‘Maidan-iMan Naftan (the plain of much naphtha)’, which he was convinced possessed large quantities of oil.15 ‘After infinite trouble’ and great reluctance by Sardar Asad they finally convinced the Bakhtiyari to agree to certain preliminary terms. The Bakhtiyari would receive £2,000 per annum to supply guards, while accepting financial liability for any damages and thefts. This payment would increase by £1,000 per annum if a pipeline was built. Then, when one or several companies were formed to work oil on their lands and when oil had passed through a pipeline, the khans would receive 5 per cent of the shares of those companies. The negotiators reported back that other ‘than [that they saw] no course; they having agreed to it mainly due to [the] personal influence of [the] Consul General’.16 Preece had quickly become the central element in the company’s negotiations with the Bakhtiyari while still carrying out his functions as consul general. As negotiations seemed to enter their concluding stages, however, Sardar Asad received an anonymous letter from Tehran warning him of the dire consequences of doing business with the British. It claimed that if ‘a man [had] intelligence, power and [was] well instructed he [could] protect his country and he [would] prevent the foreigner interfering in his country and if he [could not] turn them away he [would] do his best to prevent their aggression or to limit it’.17 This was the last in a series of letters that had attacked the concession in this period, as a number of hostile letters had also been published in Habl al-Matin. Yet another accusatory letter had been written directly to the Persian government.18 Reynolds alleged that the handwriting in the letter to Sardar Asad was identical to that of Mirza Nasrullah Khan and that all these hostile letters had been written by him at the instigation of his son-in-law, Shaykh al-Mulk.19 Mirza Nasrullah Khan had fought with Reynolds after the latter had refused to reimburse the full costs of his journey back home following his resignation from the company’s services.20 This offence, caused by 35 tumans, was in addition to Shaykh al-Mulk’s own problems with the company. He had been on half pay since June and had attempted to regain his employment on several occasions.21 In addition to the letters above, he had been the probable instigator of a letter by three important mujtahids from Karbila to Major Newmarch, the British consul general in Baghdad, that urged the company to reinstate him, as it was because of ‘the exertions of Sheikh-ul-Mulk that people’s opposition [had] calmed down. He [had come] to Karbala and Nejef and [had] removed many difficulties that were in the way of the Company’.22 Despite these appeals and D’Arcy’s insistence on keeping the shaykh on the company’s payroll, in light of his relation with the shah,

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the directors of Burmah had decided to terminate Shaykh al-Mulk’s employment shortly before Sardar Asad had received this letter.23 Reynolds detested Shaykh al-Mulk and the Kitabgis and went to significant lengths to have them all removed from the company’s payroll. He was thus overjoyed by their departure and had ‘much pleasure in congratulating [Burmah] on being quit of the entire crew, whose sole object [had] been, since they were connected with the undertaking, to exploit Mr. D’Arcy for all they could get out of him’.24 Largely due to Preece’s personal affinity with the khans and Sardar Asad’s belief that Shaykh al-Mulk was a ‘charlatan’, negotiations continued and Preece talked the Bakhtiyari down to 3 per cent of the shares of any future companies established to work on their lands.25 This time, however, it was D’Arcy that was not satisfied with the arrangements as he wanted to give the Bakhtiyari a similar deal to the one he had given the Persian government. D’Arcy instructed the negotiators to convince the Bakhtiyari to agree to a fixed number of shares. He suggested a maximum of £10,000 in each company, because ‘unless some limitation [was] placed this imposition [would] probably render it impossible [to] work [the] enterprise profitably’.26 The share distribution of a company has absolutely no impact on its profitability, but D’Arcy was trying to exploit the Bakhtiyari’s limited knowledge of financial matters to obtain the same favourable deal he had obtained with the Persian government. Unlike the Persian government, however, the Bakhtiyari khans did not fall prey to this deception and refused to accept a fixed number of shares, which forced the company to settle on the 3 per cent they had agreed. Even with this arrangement, Preece was astonished that the khans had accepted the agreement for ‘next to nothing’ and concluded that it was due to them having ‘the very crudest ideas of Companies, shares, and such like things’.27 The Burmah Oil Company, in turn, also agreed to these terms and D’Arcy breathed yet another sigh of relief as he thought that ‘really now [they could] look at Persia as a success’.28

Rejection When the agreement with the Bakhtiyari was finalized, Preece asked the Foreign Office if it should be registered with the Persian Ministry of Foreign Affairs or if, at least, the Persian government should be informed of it, as he had previously done with the Bakhtiyari Road Concession.29 It was decided, following correspondence from the Admiralty to the Foreign Office, that a note should be sent to the Persian government to inform them of the existence of the agreement.30 Unsurprisingly, the Persian government categorically refused to recognize it. They considered that the matter should have been submitted to them before a negotiation ever took place and affirmed that the only document they recognized, concerning the oil business, was the D’Arcy Concession.31 They showed the same indifference to agreements made with the Bakhtiyari that the Bakhtiyari had shown with regards to agreements made with them. This was because the central government struggled to maintain the peripheries under its orbit and it could not, therefore, recognize

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any authority but itself. It had to fight any factors that contributed to the tribes’ strength and autonomy. At the same time that the government refused to recognize the agreement, in January 1906, there was an abrupt change in the Bakhtiyari leadership. One of the only levers of power available to the shah over the tribes was his power to appoint the members of the tribe’s leadership, as they traditionally pledged allegiance to him. The existence of multiple tribal titles, such as ilkhan and ilbayg, allowed him to play off different factions of the tribe against each other and his involvement also meant that the acquisition of titles, through pecuniary methods, was possible and encouraged.32 Sardar Asad, who had been the most vociferous opponent to the agreement and had nearly refused to sign it, became ilkhan, after he had garnered the necessary support in Tehran, and his nephew, Salar Arfa, was appointed ilbayg.33 On hearing the news, Reynolds worried that there was ‘likely to be bloodshed’ due to ensuing intra-tribal feuding, but the trouble for the company was of another kind. The run-up to this new appointment had subjected the former ilkhan and ilbayg, Samsam al-Saltanah and Shahab al-Saltanah, respectively, to significant expenses in their efforts to keep their titles.34 Meanwhile, the newly appointed tribal leaders requested that the guarding payments be made to them, exclusively, which left the former leadership in a very difficult financial situation. The new ilbayg actively lobbied for this outcome by warning the company that this was ‘only the beginning of the work’ and that if ‘these arguments, evasions and objections [were] to be the order of the day [they] must at once cease work’.35 During a consequent meeting between the new ilbayg, Reynolds and the viceconsul at Ahwaz, Captain Lorimer, the ilbayg issued an ultimatum regarding the guarding payments and threatened to stop all drilling operations if they did not comply.36 A  few days later, the former Bakhtiyari leaders, Samsam al-Saltanah and Shahab al-Saltanah, on their side, threatened that they would consider the contract with them breached if the company paid Sardar Asad instead of them.37 The company thus found itself in a difficult position as it was obliged to take sides in an internal tribal conflict. A few days later, the tribal factions reconciled, but, instead of improving relations with the company, it made the tribal rulers present a united front against it.38 Sardar Asad and his former rivals went to the British legation in Tehran on 15 May 1906 to voice their concerns regarding the existing agreement with the oil company, after having been invited to do so by the legation.39 Historically, the British government had sided with the Bakhtiyari in disputes with the Lynch Brothers, over the Bakhtiyari Road Concession, in order to prevent them from falling under Russian influence.40 The Bakhtiyari hoped they could continue to leverage on this factor in competing with the oil company over the British government’s favour. As before, Sardar Asad took the lead and argued that the reason they had concluded the agreement was that they ‘were unacquainted with business matters’ and had agreed to its terms, because of their personal relationship with Preece. They now realized that it was impossible for them to honour the terms of the agreement that they had signed, ‘without realising what they were undertaking’,

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and requested a new agreement or they would, otherwise, bring the matter to the Persian government.41 Specifically, the khans wanted clarity regarding the quantity and type of structures that would be erected on their lands. They also wanted a higher payment for guarding arrangements and wanted it to be increased proportionally to the number of drilling sites. In addition, they sought clarity regarding their liabilities with regards to thefts and damages, wanted the quarterly guarding payments to go to the ilkhan and ilbayg and a prescription that disputes between Persian subjects and foreign employees of the company be adjudicated by a local karguzar.42 Despite hopes that the British government would take their side, Evelyn Grant Duff, the former secretary to the British legation in Tehran, who had recently become the senior British diplomat in Persia in the interim period between Sir Arthur Hardinge’s tenure and that of Sir Cecil Arthur Spring-Rice, told the Bakhtiyari that ‘the British Government could not, as might be the case in Persia, bring pressure to bear upon a company in matters relating to a private business transaction’.43 The situation thus seemed at a standstill. The company could not safely drill in southwest Persia and the Bakhtiyari were uncompromising in their demands. In an effort to bring the negotiations forward and as a result of Lorimer’s recommendation, Reynolds gifted the ilbayg a gold watch and chain.44 More importantly, however, the company recruited Preece as a full-time employee, a few months after his retirement, with the Foreign Office’s consent.45 More than the ‘nominal payment’ he was to receive, D’Arcy wanted to give Preece the assurance that he would become a director of the larger company that would be formed after oil had been found, as he thought that, without this factor, Preece would ‘cease taking any further interest in the business’.46 Charles Wallace, a director of the Burmah Oil Company, thought that this appointment would be welcome, at the present moment, as Preece’s ‘knowledge of and influence in Persia [were] and [would] always be invaluable’, but he could not commit to this because circumstances could change. The matter was left pending and would re-emerge a few years later.47 Regardless, Preece was formally appointed as the company’s political agent for Persian affairs on 11 June 1906.48 Proceedings with the Bakhtiyari thus reopened and, a week after having been employed by the company, Preece issued a response to the khans’ various points. He rejected all of them except their proposal to pay the ilkhan and ilbayg on a quarterly basis.49 D’Arcy, for his part, entertained the idea of giving Sardar Asad 2,000 shares and thought that his Scottish partners would agree to it, ‘but it is a thing they should be seen about and not written to’.50 A final arrangement was still out of reach, however, and D’Arcy was ‘very disappointed that there [was] fresh trouble with the Bakhtiari and . . . afraid it [would] be taken more than badly in Glasgow  – as it [would] make them doubt the validity of all contracts made with Persians’.51 The concessionaires feared that the Bakhtiyari favoured personal relationships over contracts. Edouard Kitabgi described this difference, explaining that the company ‘tried to follow too closely the letter of the contract forgetting that they had to deal with people who [were] unacquainted with laws and contracts and who as soon as there was a difference of opinion thought they had a right to

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ignore their engagements and resorted practically to blackmail in order to carry out their designs’.52 More than a lack of understanding of the notions of laws and contracts, they understood that they held ultimate power over physical safety in an area that provided no legal recourse. They thus used this factor in extracting any concessions they desired.

Decay As a result of the negotiations with the Bakhtiyari, the Persian government decided to involve itself in the workings of the venture and confront the concessionaires regarding their concessionary shortcomings. As disagreements between the khans and the company continued and a renegotiation was seemingly under way, the shah told the khans that they were ‘not allowed to leave Tehran until they [had] made an agreement with the Oil Syndicate which [met] with the Shah’s approval’.53 The Persian government then reiterated that the company could not, without the knowledge or approval of the Persian Government, make with any person an agreement, the stipulations of which affect the rights of the Government. The Persian Government [could not] accept the agreement which the Oil Syndicate propose[d] to make with the Chiefs, and when the draft was sent to the Foreign Office a reply was sent in writing saying that the Persian Government could not accept and certify the agreement in question.54

In this period, the Persian government also granted an oil concession to the Persian minister of war covering the northern regions of Persia.55 Most importantly, however, it began to raise a plethora of objections against the concessionaires. Mushir al-Dawlah had just become prime minister, after he had been the minister for foreign affairs and the author of the government’s official response to the Bakhtiyari agreement. He brought a matter to the attention of the Persian chargé d’affaires in London that would plague relations between the company and the Persian government for years to come. According to Article 4 of the D’Arcy Concession, the concessionaire had agreed to pay a sum of 2,000 tumans per annum to the Persian government as it agreed to take on three existing oil-producing wells.56 The concessionaires had never paid the agreed amount and, according to Preece, this issue was ‘now acute and should have [D’Arcy’s] attention’.57 Reflective of his attitude towards the Persian government and experiencing a sudden reversal regarding the supposed sanctity of contracts, D’Arcy, however, told Preece that the ‘Concession itself throughout [was] so vaguely worded that any clause almost [could] be read in several different ways and most of the leading barristers in London . . . [held that] view’.58 He further argued that, as they had never taken control of Qasr-i Shirin and the other wells, they had no need to fulfil their concessionary obligations.59 Preece correctly believed that this argument ‘had nothing to do with the question’, that the concession was ‘very definite’ on this issue and that it seemed

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to him ‘that the Persian Govt [were] within their right in asking for payment’. Furthermore, as ‘the Foreign Minister [was] now Prime Minister it would be politic on [their] part to conciliate him by giving way gracefully on this point’. Preece, however, suggested wasting time on the issue by delaying any response as the current prime minister could fall at any moment and the Atabak soon come back to power.60 Reynolds, for his part, while acknowledging that they had drilled at Qasr-i Shirin, argued that the government had not lost any tax revenue as a result and that, therefore, the company had no need to fulfil its obligations.61 The Persian government also raised another crucial issue in this period. It realized that it was corresponding with an entity that was completely unknown to it. The chargé d’affaires of the Persian legation in London told Preece that he did ‘not know the Concessions Syndicate Ltd. and they [held] no Concessions from [his] Government and it [was] therefore difficult for [him] to recognise them without further explanation’.62 As outlined in the previous chapter, Burmah’s investment in the D’Arcy Concession and the creation of a new corporation had never been conveyed to the Persian government, as Vincent Kitabgi had been removed from his role of imperial commissioner during the proceedings. When confronted by this, D’Arcy anxiously urged Preece not to say anything about the Persian Gov: authorising the formation of companies . . . because as a matter of fact no notice of the formation of this Co: was ever given the Persian Government as . . . it was not necessary and [he would] see by the Concession itself that notice of all companies working the territory must [have been] given.63

To Burmah, D’Arcy told a different, more reassuring, version of this story by saying that ‘it was then thought that it was a matter that need not be reported to the Persian Government’ and that Kitabgi ‘the then Commissioner of course knew all about it’.64 Finally, to the current imperial commissioner, he maintained the usual deception that the Concessions Syndicate Limited was not a corporation and that, therefore, he had no obligation to show them its statutes.65

Resolution D’Arcy’s increasing disregard for the Persian government resulted in a series of uncomfortable confrontations that he was forced to manage in addition to everything else. The concessionaires were now fighting on two fronts as they were confronted with the Bakhtiyari and the Persian government simultaneously. Regarding the conflicts with the Persian government, Burmah were ‘sorry to learn that affairs in Persia [were] in a bad way, but of course [they would] just require to face the music regardless of the tune. All that [they had to be] very careful of [was] that the Persians [got] no more money of [their] than [they could] help’.66 The option of sending out a dedicated agent to Tehran was discussed internally and further suggested by Evelyn Grant Duff, but it was turned down as D’Arcy believed

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that discussing ‘a question which is already settled and with which the Persian Gov. never had anything to do with would be courting Backsheesh’.67 Furthermore, he did not know who to send and did ‘not care to entrust the matter to any of the Glasgow people’.68 D’Arcy did not even mention any of the Kitabgis for this role. Despite then briefly changing his mind and thinking it was ‘well worth some good man being appointed either in Teheran or to go there and stop all these attempts at extortion’, he decided to wait.69 To placate opposition from Tehran, Preece approached the forthcoming British minister in Tehran, Sir Cecil Spring-Rice, who pledged his support to the concession after Preece had ‘undertaken to do various things for him here which [put] him under obligation to [him]’.70 As he was departing for Persia, Sir Cecil then reiterated his pledge to help the concession in any way he could.71 D’Arcy also entertained the idea of gifting further shares in order to ensure key support in Tehran. In so doing, he detailed the ruse of gifting shares in a subsidiary company that was exposed in the previous chapter. He wrote that if any presents [had] to be made at all it [was] well worth . . . considering whether such presents [could not] as effectively be made by shares in the First Exploitation Co as this [would] only cover one area of the Concession and possibly pay better at the start. Whereas shares given in the Big Co: cover[ed the] 1st Ex: Co and everything else. All the shares hitherto given away [had] been in the 1st Ex: Co.72

On the Bakhtiyari front, the restored ilkhan Samsam al-Saltanah refused to supply the company with guards unless they reached yet another agreement.73 The khans claimed that the money being paid to them for guarding arrangements was not sufficient and ‘that they [could not] consent to compensate the Syndicate for petty robberies’.74 Preece was particularly bothered by the latter request as the ‘Bakhtiari tribesmen [were] adroit robbers, if it was once known among them that their Chiefs were not liable for robberies, petty pilfering and robbery of Arms and tools from the Camp would be the object of everyman in the neighbourhood for miles round, there would be no security and no amount of guards would give that’.75 To prevent this scenario from materializing, Preece decided to take consequential action and write directly to the new foreign secretary, Sir Edward Grey, who had been kept abreast of proceedings. He asked for further assistance from the British government, should the Bakhtiyari be excluded from liability for thefts and damages, as the operation would find itself in an extremely risky predicament.76 Preece further appealed to Sir Edward Grey by telling him that he believed it would ‘greatly facilitate the working of this Oil Concession in the Bakhtiari country if H.M.’s Government were to make the Khans thoroughly understand that H.M.’s Government wish[ed] the affair well and [were] interested in its being a success’.77 Grant Duff, who was now also involved in the negotiations, further suggested that Captain Lorimer should ‘use his good offices’ in the upcoming negotiations, and this was immediately approved by the Foreign Office.78 Preece rejoiced as ‘this show[ed] that they [were] interested in the question and [would] support [them]’.79 He knew, firsthand, how important this official support was to operate

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successfully in Persia and accepted the offer immediately.80 This assistance turned out to be astonishingly effective as, only three days later, the khans dropped all their demands and limited themselves to requesting an additional £500 in guarding payments.81 Captain Lorimer had gone through every point with them, removing any misapprehensions, but he could not reduce their financial claims.82 He suggested giving in to the financial request as any legal recourse would have been futile and serve only to worsen relations between the khans and the company. The concessionaires finally accepted the offer, if the khans made no further claims, and the operations were allowed to proceed undisturbed.83 In addition to helping with the negotiations, the Foreign Office assisted D’Arcy with a variety of other minor matters in this period. They urged the government of India, for example, to lend the company an assistant engineer in order to lay a road to Masjid-i Sulayman.84 Lansdowne had personally written to Curzon to assist in this matter and Curzon, still sceptical of the endeavour, reluctantly agreed ‘if H.M.’s Govt. really attach[ed] importance to the deputation of an Assistant Engineer’.85 The Foreign Office also asked if the company could use ships owned by the government of India to transport explosives to build the road and if the government of India could send them transport drivers as it was in ‘the interests of the country’.86 Apart from acting as the company’s financial intermediary, the British government had thus also become its lead negotiator as well as its recruitment and transport agent. Contrary to Ferrier’s claim that the company ‘regretted that its earlier activities in Persia, in the absence of central authority, required the support of local consular officials’, this chapter has revealed that D’Arcy actively courted official assistance and welcomed it wholeheartedly.87

Chapter 6 U P H E AVA L T H E C O N SE Q U E N C E S O F T H E P E R SIA N C O N ST I T U T IO NA L R EVO LU T IO N

On 3 January 1907, Muzaffar al-Din Shah suddenly died. His fatal affliction may have been precipitated by the events of the preceding months, which had culminated, four days earlier, with the signing of the Fundamental Laws. This historic document curtailed the monarchy’s power and transferred it to a newly elected legislative body, the Majlis, in a tumultuous and transformative period known as the Persian Constitutional Revolution. From now on, Persian monarchs would be subjected to the rule of law instead of incarnating it.

New rules The momentum of the Russian Revolution swept rapidly across Persia. In March 1905, the first of a series of protests took place calling for the dismissal of the director general of the Persian customs. This post, previously held by Antoine Kitabgi, was now in the hands of the unpopular Belgian national Joseph Naus, who had been involved in a number of scandals. Notable among them was a photograph in which he appeared wearing the robes of a cleric while attending a costume party. In December, two thousand people then took sanctuary in the Shah Abd al-Azim Shrine to protest against the governor of Tehran and asked for the creation of a house of justice. In the summer of 1906, more strikes and violent demonstrations took place, which led to fourteen thousand people taking sanctuary, or bast, at the British legation in Tehran. The British legation had been chosen by the Persian resistance because Britain was viewed as a friend of constitutionalism and democracy. This situation, however, placed the British government in an uncomfortable position with regards to the shah and, most importantly, the Russian government, as it gave the impression the British were meddling in the situation. On 30 July, the shah tried to convince the protesters to end the bast by replacing the unpopular grand vizier, but they remained and expanded their demands to include a constitution and a parliament. The shah finally gave in to their demands

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on 9 August, after certain phrasing disagreements were overcome. Notably, the secular constitutionalists had succeeded in removing the religious label of the Majlis, so as to not alienate the Jewish, Armenian and Zoroastrian minorities from the new system of government. Electoral laws were finally enacted on 9 September, and the first session of parliament opened on 7 October.1 The Majlis had the gargantuan task of saving a quasi-sovereign entity from bankruptcy while reversing decades of decline. Among its numerous responsibilities, it acquired sovereignty over most economic matters, including concessions. The company followed these developments closely and, after the electoral laws had been enacted, Preece suggested ‘that gifts should be made to some of the leaders of the popular party’.2 D’Arcy decided against it because ‘things [were] so unsettled there’ but discussed the eventuality with Burmah just in case.3 The concessionaires were preparing to adapt to the new political configuration, but they could never have imagined how quickly and intensely this new system would turn its attention towards them. On 23 December 1906, just two months after its creation and a week before it had ratified the Fundamental Laws, the Majlis held a discussion on the D’Arcy Concession and decided to establish a special committee to investigate it.4 As revealed below, the issue seems to have come up in the Majlis at such an early stage due to an intrigue. This intrigue was particularly effective as it had resonated with what foreign-held concessions represented during this period of national awakening and what the revolutionaries had fought so hard to eliminate, namely, foreign encroachment and the rampant corruption of the Qajar system. It had been the foreign-held Tobacco Concession of 1890 and its aftermath that had first sparked a constitutionalist sentiment across the wider population. Memories of the Tobacco Concession’s aftermath were also the reason why this unexpected event was profoundly unsettling for the concessionaires. They had never undergone this degree of public scrutiny as they had made considerable efforts to avoid it. Antoine Kitabgi had often warned of the catastrophic consequences that unwarranted public attention could have on the concession and D’Arcy had understood, early on, that ‘the less that is published about Persia the better’.5 Now, however, the popular hostility that they had tried so hard to avoid was the impetus behind the new form of government that held the ultimate authority over their legal fate. This rendered the situation vastly more complicated and created an immense amount of anxiety. As Sir Cecil Spring-Rice meekly noted, ‘The incident serve[d] to show that there [was] a disposition to meddle in the concerns of the Syndicate.’6 Eight days after the Majlis hearing, the imperial commissioner, who had taken ‘no interest in the syndicate’s affairs until the Assembly called him to account’, sprang into action.7 The current imperial commissioner was Sadiq al-Saltanah, the former chamberlain to the shah, who had been appointed in 1905 after Vincent Kitabgi’s abrupt dismissal.8 When Amin al-Sultan had left Persia, his rivals had removed his protégé from the post and appointed someone that benefitted them instead. Ain al-Dawlah, Amin al-Sultan’s political nemesis, thus took half of the commissioner’s £1,000 annual salary, and Meftah al-Saltanah, the head of the British section of the Persian Ministry of Foreign Affairs, took a further £300 from

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it.9 D’Arcy had had very little interaction with the new imperial commissioner as he now considered the Persian government a nuisance that had to be actively ignored. Even when Sadiq al-Saltanah travelled to London to meet D’Arcy, he reluctantly agreed, affirming that ‘[he] suppose[d] [he] must out of courtesy see him’.10 Any meaningful form of scrutiny by the Persian government had thus become an entirely alien concept. The situation had now changed drastically, however, and Sadiq al-Saltanah pleaded to see the terms of D’Arcy’s agreement with the Burmah Oil Company and details regarding the new company that had been formed. He claimed to have been previously ‘begging’ to see them even though it had been his right under article 9 of the concessionary act. He also renewed his ‘prayer’ to see the statutes of the First Exploitation Company and reiterated the Persian government’s claims to the 2,000 tumans per annum owed to them for the existing oil springs in Qasr-i Shirin, Shushtar and Daliki.11 Sadiq al-Saltanah’s pleading tone, apart from being polite Persian phraseology, was undoubtedly caused by the novel fear of losing his post if he did not keep the Majlis satisfied. D’Arcy eventually replied, over two months later, with the usual deceptive assertions that the new company was actually a ‘syndicate’ and that they had not impeded others from exploiting the existing oil wells, which meant the payments to the government were not required.12 A month after this insubstantial response, Sadiq al-Saltanah visited the drilling sites, for the first time, ‘with a camera with which he took pictures and asked many questions’ and was given a gelid reception by Reynolds, who thought he was a spy sent by Shaykh al-Mulk.13 A  scenario whereby the new imperial commissioner would have bothered to visit the drilling sites had been unimaginable just a few months earlier. In addition to a revitalized imperial commissioner, the meddling and hostile new government rendered the resolution of outstanding legal issues less likely. Sir Cecil noted that ‘it [was] more than probable that if [they] revert[ed] to the question of the Bakhtiari Agreement the fact [would] become known to the Majlis which in its present temper would [have] undoubtedly adopt[ed] the views of the Persian Government’. Indeed, ‘it would [have] be[en] mere waste of time at the present moment to attempt to induce the Persian Government to modify its attitude’.14 Nearly a month after the initial parliamentary session, on 20 January 1907, the Majlis held a second, lengthier hearing regarding the D’Arcy Concession. This time, Saad al-Dawlah, one of the leading members of the Majlis, publicly questioned the minister of mines, Muhandis al-Mamalik. Despite the political changes, the minister had kept his job and still owned shares in the oil business. He was asked about the proportion of Persian employees in the concession’s operations, the discrepancies between the French and Persian translations of the concession, the dismissal of Vincent Kitabgi, the desirability of erecting refineries in Persia and compensation the concession owed the tribes, who had traditionally extracted petroleum from the sites that were now being worked by the company.15 Sir Cecil noted that Shaykh al-Mulk, Edouard Kitabgi and Sadiq al-Saltanah were in attendance throughout this latter session. He believed that the questions came directly from Shaykh al-Mulk, as he had personally lobbied Saad al-Dawlah

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and recently published a letter in the Majlis newspaper claiming to have been dismissed by the company following a confrontation with Reynolds over his employment of foreign subjects. Whoever it was, it had to be someone with insider knowledge of the concession’s operations due to the nature of the questions posed. The nightmare of public scrutiny, unimaginable a few months earlier, was thus recurring and intensifying, but, according to Sir Cecil, Muhandis al-Mamalik handled the situation well. Regarding the employment of Persians, he read out a statement by the governor of Ramhormoz, which stated that everyone on the drilling site, apart from the managers and engineers, was Persian. Regarding the question of the 2,000 tumans owed to the government, he admitted that the company had not paid them, but justified it by stating that the tribes still had access to the oil springs in question.16 D’Arcy wrote to Preece, the day after this latest hearing, in a sombre and somewhat confused tone probably triggered by the shock of another unforeseen obstacle. It is worth quoting his anxious letter at length in order to accurately convey his state of mind. He told Preece that he doubtless [had] seen . . . that the Persian Parliament was discussing [his] Concession and not in a very friendly spirit. [He did not] see what they [could] do & what [could] be done but it would [he thought] be very useful to know exactly what passed and what the result of the decision was . . . [He] suppose[d] the Minister ([theirs]) at Teheran would do all in his Power to Protect the Concession and see [their] Rights preserved. [He wondered, did] the FO know anything. [He was] not in the least alarmed about it as [he knew] the Concession [was] legal etc. but [he did] not know what effect these indefinite statements may have [had] on the Burmah people. [He took] it if the Persian Government wished to terminate the Concession they could only do it by payment and it would take a fairly Big sum to compensate for the cash expended and value of Concession.17

Despite trying to appear confident regarding the legality of the concession, D’Arcy mentioned its potential cancellation. This was not an eventuality that he would have mentioned lightly and is demonstrative of how seriously he perceived the situation. The parliamentary hearings had shown the concessionaires that it was no longer going to be business as usual and that they could no longer ignore the Persian government. Preece concluded that the company should now ‘look very closely with complying in every way with the concession’.18 They were fully aware of their concessionary shortcomings as well as the weakness of some of their arguments relating to their concessionary violations, which is why these proceedings were extremely distressing. They had never notified the government of their agreement with Burmah, had agreed on terms with the Bakhtiyari despite the government’s protestations and never paid the taxes owed on the three oil-producing assets mentioned in the concession. They were also aware that there were foreigners among their unskilled employees. During his visit to the drilling sites, the imperial

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commissioner noted the presence of a foreign carpenter and asked the company to replace him with a Persian one so as to avoid any further complications.19 Captain Lorimer, for his part, reported thirty-two unskilled foreign employees among the two to three hundred Persian workers.20 In addition to the new legal and political uncertainties, Sir Cecil warned the concessionaires of another strategic threat that had arisen from the changes in the Persian political paradigm. The Majlis had approved the formation of a Persian national bank that would, among its other tasks, take possession of the government’s shares in economic concessions.21 Apart from changing the dynamics of the concessionaires’ relation to their primary indigenous shareholder, it introduced the risk of unwarranted influence by third parties. Sir Cecil told Preece he was ‘quite right to be afraid’, that the president of the Majlis, Sani al-Dawlah, could give a German bank the opportunity to invest in this Persian national bank and that, if a British bank did not intervene, the concession could suddenly find itself with German or Russian shareholders.22 This was also because, as Preece had told D’Arcy, Sani al-Dawlah had been ‘educated in Berlin and is German in every way’ and he had ‘no doubt he is now working in their interest and at their instigation’.23 The German threat was not a new one, but the method in which it could materialize was. Some months earlier, Lord Orford had warned D’Arcy that ‘the Germans [were] doing all in their power both at Teheran and in London to harm the oil business hoping to get hold of it’.24 The Foreign Office had also separately warned D’Arcy that a German group was looking into oil projects in Mesopotamia and that ‘the Germans [had] been trying their best to gain a foothold in Persia’.25 The official attention given to Germany intensified as Russia was engulfed in its own domestic agitation and the Foreign Office grew increasingly wary of German activity anywhere. In mid-1906, D’Arcy had even proposed to form a loan consortium for the Persian government as ‘this German question [had] been brought so prominently before [him] . . . & not because of Orford’s letter’. He instructed Preece to ask his contacts in the Foreign Office if this would be welcomed as they must ‘do all [they could] to show the Persian Gov. what liars the Germans [were]’.26 D’Arcy had stayed fanatically optimistic in a number of desperate situations, but the uncertainty in this period seemed overwhelming. The advent of the constitutional government had created immense legal, political and strategic uncertainty in addition to subjecting the company to heightened levels of public scrutiny. This led to the fear that the concessionaires’ legal shortcomings, complemented by the new tendency of the Persian government to meddle and new international vulnerabilities, could prove fatal to the continued existence of the concession.

New commitments The Burmah Oil Company asked D’Arcy if he knew anything about the first Majlis session after they had read about it in the London Daily Mail.27 He told

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them that their letter was the first he had heard of it, which was untrue, and that the British minister in Tehran would hopefully provide an explanation.28 D’Arcy was trying to buy time as he sought a way of reassuring his principal financiers. The concession was still financially dependent on Burmah, which meant that any news that sufficiently unsettled them could result in the abrupt end of the venture. The second Majlis hearing exacerbated Burmah’s concerns and, immediately afterwards, they sought concrete assurances from the Foreign Office regarding their Persian investment.29 As it was impossible for the government to provide such assurances, the board of the Burmah Oil Company unanimously decided to renegotiate their agreement with D’Arcy on 27 February 1907 and claimed ‘Persian unrest’ was the reason for this sudden need to renegotiate. It is important to note that this was not based on financial considerations as the previous year had been a fruitful one for Burmah.30 The board of Burmah decided to renege on their commitment to subscribe to £800,000 of shares in the big company to be formed if oil was found. In exchange, they increased their short-term commitment to a further £30,000, which brought their total investment to £100,000.31 This shortterm commitment was probably increased to give the last drilling sites a chance of proving oil reserves, because the ‘boring for oil proved far more difficult and expensive than was anticipated’.32 According to the Burmah Oil Company historian Corley, the renegotiations had been triggered by anxieties relating to the excesses of the tribes.33 Reynolds had, in effect, reported, at the end of 1906, ‘of the failure of Messrs. the Bakhtiari Khans to carry out their part of the Agreement’.34 Despite Sardar Asad’s absence and hopes that the Bakhtiyari were ‘not such fools as to attempt to kill the goose that lays the golden egg’, additional complications had arisen.35 The Bakhtiyari threatened to stop the drilling works if they were not paid at the same exchange rate as before and had, once again, expressed discontent with the existing arrangements.36 Reynolds, for his part, reported several robberies and an abysmally low number of guards. In one instance, he went for a surprise visit to one of the drilling sites and found no guards there at all. In another, a driller named MacNaughton had been robbed of £22, because the only guard on duty had been asleep. Reynolds suggested drafting a supplement to their agreement, which would guarantee a supply of forty guards per site to be paid directly by him as he believed their underpayment was the reason behind many of the problems.37 These latest concerns with the Bakhtiyari were not particularly unusual, however, and not important enough to have triggered such a drastic reaction from Burmah. It is arguable that the difficulties with the Bakhtiyari contributed to Burmah’s anxieties regarding Persia, but they were not a sufficient reason to seek a long-term financial exit from the business. Furthermore, while the broad phrase used to justify the renegotiation may have included troubles with the Bakhtiyari, the timing of the decision indicates that the interventions of the Majlis were a determining factor in the desire for this financial renegotiation. The increase in their short-term investment, furthermore, demonstrates that their concerns were with the long-term prospects of the business and not the short-term operational risks on the ground. Otherwise, it would have been a deliberate and considerable waste of money.

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D’Arcy wanted more than Burmah’s increased short-term investment, however, and entered into ‘a hard fight and troublesome time’ to preserve the financial future of his business.38 He convinced Burmah to uphold their commitment to reimburse his £200,000 investment in the venture if the big company was formed but achieved nothing else.39 The financial future of the concession had, therefore, been jeopardized by the events of the Persian Constitutional Revolution as the financial underwriting of the big company had become uncertain. In addition to this, any further uncertainties and threats that emerged from Persia could prove fatal to the business as short-term financing could be further curtailed by the ‘directors on the Board of the Burmah Oil Co . . . [who] thought it [had been] a great mistake for them to have gone into this venture at all’.40

Old characters There emerged unexpected situations during the Persian Constitutional Revolution, which brought back characters from the company’s past. Some of these characters were intentionally brought back to mitigate the impact of recent events, some unexpectedly returned, because of the events of the revolution, and others returned despite efforts to keep them away. These returning actors altered the company’s modus operandi, expanded its support system and, in some cases, frustrated the concessionaires’ efforts to manage the increasingly complex situation. Sir Henry Drummond Wolff, for example, tried to force his way back into the company’s affairs after the first Majlis hearing. He wrote to Burmah to inform them that the Majlis was forming a special committee to investigate the concession and told the Foreign Office that the concession ran the risk of being cancelled at any moment.41 He claimed this was because of the Persian government’s failure to recognize the company’s agreement with the Bakhtiyari and the company’s failure to produce remunerative work within two years of the concession’s granting.42 These unwarranted interventions irritated D’Arcy, who was making immense efforts to manage the repercussions of recent events. He was convinced Sir Henry was instigating nothing but ‘mischief ’ after Sir Henry had ‘quarrelled with him and everyone else over this Persian business’.43 Sir Henry’s meddling was quickly averted, however, and his assertions to the Foreign Office were disregarded. Preece also successfully reassured Burmah by using antisemitic rhetoric and telling them that ‘Sir Henry [was] a great intriguer with an extraordinary acute and active brain. By descent he [was] a Jew, he [had] no belief and [put] no value on truth’.44 Sir Henry was planning to write another letter to the Foreign Office to urge the company to join German interests on the Turkish border, but his own lawyer and D’Arcy’s private secretary strongly urged him to reconsider, because he ‘might wreck the whole business’ in light of Burmah’s current disposition.45 The renegotiations with Burmah also reignited animosities with Vincent Kitabgi, who had to approve the new terms, as a shareholder, and had been told, once again, that ‘it [was] a question of either getting the money from them or

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stopping all work and virtually abandoning the Concession’.46 These rushed, forceful conditions infuriated Vincent, as well as Sir Henry, as they considered they did ‘not know what [was] really going on but when it [was] a question of reducing [their] rights, then only [did they] learn that there [was] a new document to be signed . . . Mr. D’Arcy [had] made himself master of the situation and [they] only exist[ed] in this affair to be systematically put aside’.47 This additional tension, during a highly tumultuous period, was the least of D’Arcy’s worries, however. Above all, D’Arcy had to preserve the concession in light of the new threats that had emerged from the revolution. In order to do this, a few days after the second Majlis hearing, he held a meeting with someone else from the company’s past: Paul Kitabgi.48 The last time they had interacted was in 1905 when Paul had been unceremoniously dismissed and left requesting the reimbursement of informal payments that he had allegedly made during his last three months as the company’s agent.49 The fact that they were meeting at all was, therefore, extraordinary. What was even more astounding was D’Arcy’s subsequent conclusion that it was ‘imperative that he or someone should go to Teheran as soon as possible & remain there’.50 Recent events had created such distress that D’Arcy wanted to appoint someone to look after the company’s interests in Tehran. Considering Paul for the job, after D’Arcy had willingly and happily rid himself of all the Kitabgis, was a clear indicator of how desperate the situation had become. British diplomats had also recommended that the company appoint a dedicated agent in Tehran as they believed that preserving the company’s political interests and legal status was imperative. Sir Cecil independently advised that ‘it would be wise to appoint a Persian like Monsieur Kitabgi with strict instructions’.51 The oriental secretary of the British legation in Tehran, G. P. Churchill, also recommended the appointment of an agent, but he suggested appointing Edouard Kitabgi, instead, as he had ‘rendered the Company services during his present stay at Tehran on the occasion of the interpellation made about the enterprise by the Assembly’.52 Edouard Kitabgi, who was in Tehran, but no longer working for the company, had ‘been busy endeavouring to counteract the evil influence of Sheikh ul Mulk and to dispel the erroneous impressions wilfully spread by him’.53 He seems to have been effective in mitigating the impact of the Majlis hearings, as Churchill reported that Edouard had ‘visited the President, Saad-ed-Dowleh, and many others with the result that the matter had a satisfactory ending and nothing more [was] likely to be said about the oil company by the Assembly where anti-foreign feeling [ran] so high that they [were] only too ready to create difficulties for foreign enterprize’.54 He had also lobbied the minister of mines, who had now ‘succeeded in putting the matter in a favourable light before the principals Members of the Assembly’.55 Following his impromptu return and intervention, Edouard had also recommended the appointment of a dedicated agent in Tehran to liaise with the Persian government, as ‘Mr D’Arcy [had] already distributed an important sum of money both in cash and in shares among those persons who were in the position to assist the enterprise and this should not be lost sight of in attempting to settle the present difficulties . . . This process [could not], however, be put into effect by anyone having an official standing’.56 Vincent Kitabgi, unsurprisingly,

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also supported the appointment of an agent and advised ‘to have Paul start for Teheran with the shortest delay possible’, because ‘his presence at Teheran [was] of the greatest necessity before greater difficulties [arose], as Teheran [had] been too much neglected’.57 Even when it seemed that the whole matter ‘had now been dropped by the Persian Assembly’, Preece thought it did not ‘obviate the wisdom of sending Mr. Paul Kitabji out to Teheran’.58 D’Arcy thus concluded that they ‘had better send out Paul K at once’ and, in early March, Paul was offered a chance to go to Tehran with a yearly salary of £1,500 and travel expenses of £300.59 This was not an insignificant expense, in view of the company’s limited and rapidly decreasing financial resources. In what would appear to be a vengeful act for this employment choice, Edouard Kitabgi sued the company, later that year, for not having given him reasonable notice when terminating his employment back in 1905.60 Despite having taken the decision to send Paul to Tehran, D’Arcy needed to convince his Scottish partners of the wisdom of this appointment, which was very challenging in light of their intense dislike of the Kitabgis. Preece acknowledged that ‘the name [stank] in [their] nostrils and further employment of any of them [was] out of the question’, but D’Arcy persevered, despite the ‘troublesome time’ in their relationship.61 He met with Burmah, in parallel to their financial negotiations, on 16 and 18 March regarding this issue.62 By 25 March, Paul was ‘leaving almost at once’, as Burmah had been reassured that Paul’s ‘sole duty [was] to watch the interests of the Concession and act as an unofficial aid to His Majesty’s Legation in Tehran’.63 Preece informed the Foreign Office that it [was] the intention of the Concession Syndicate to send out to Tehran Mr. Paul Kitabgi. The action of the Assembly as regard the D’Arcy Concession [had] led to this resolve. It seem[ed] desirable that someone on the part of the Concessionaire should be out there watching the course of events. Mr. Paul Kitabgi [would] confine himself to [that] work alone. He [would] have nothing whatever to do with the boring operations going on in the Bakhtiari country and [would] not even be known as the agent to the Concessionaire except to Sir Cecil Spring Rice.64

The Foreign Office and Sir Cecil were glad to accommodate Paul as the company’s agent but wanted him to be overtly acknowledged in this role. D’Arcy reluctantly agreed.65 The events of the Persian Constitutional Revolution also brought back other characters from the company’s past. On 17 March 1907, Mushir al-Dawlah, the head of the Persian government, resigned from his post, because of alleged health issues. It is probable, however, that his resignation was caused by the immense pressures of trying to balance the requests of the shah and the Majlis in this complex period.66 Following this resignation, the shah invited Mirza Ali Asghar Khan to return to Persia. The former grand vizier, who had been instrumental in the granting of the D’Arcy Concession, had protected its early interests and was

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one of its initial shareholders, thus seemed to be on his way back to power. During his absence from Persia, he had remained very close to the Kitabgi family and had spent time with them on his various trips to Europe. In this period of self-imposed exile, D’Arcy repeatedly wished that ‘the day [was] near when he [would] again be in his old place and that [he] hope[d] one of the first acts he [did would] be to reinstate Vincent as Commissioner of the Concession’.67 When reading of the agitations that were taking place in the summer of 1906, D’Arcy further confided to Vincent that he hoped ‘it may mean that [Vincent’s] Friend (and [he] hope[d he] may venture to call him [his] too) [would] soon be the Head of Affairs in Persia again’.68 D’Arcy’s wish came true in April 1907. By 8 April, at the latest, Preece and the Foreign Office knew that Amin al-Sultan was on his way back to Persia and was going to return to his former role.69 On 20 April, however, Amin al-Sultan arrived at the port of Anzali welcomed by a group of armed men, who stopped him from disembarking. The Majlis finally allowed him back on Persian soil on 26 April when he agreed to pledge allegiance to the constitution.70 Upon assuming his functions, Amin al-Sultan decided to work within the newly established order and attempted to mediate between rival domestic factions. A few days after his return, D’Arcy was already making plans for ‘when Vincent [was] Commissioner’ and, indeed, a few weeks later, the Persian legation in London informed Vincent that he had been reappointed imperial commissioner as of 28 May.71 Sardar Asad, who was a good friend of the Kitabgis, also welcomed this appointment, as he thought it would lead to more amicable relations between the Bakhtiyari and the company.72 In an unexpected turn of events, therefore, a new order in Persian politics had brought back an old cast of characters to look after the concession’s interests.

Old problems Among other developments, the events of the Persian Constitutional Revolution rendered an existing threat, long ignored by the concessionaires, imminently relevant. This threat complemented the recurring problems the company had been having with the Bakhtiyari and added to the numerous complications of the period. In the first months of 1907, the Bakhtiyari continued to disrupt the drilling operations by issuing new demands and not fulfilling their existing obligations. They now demanded to be exempt of liability for thefts committed by the tribes of Kuhgiluyah, compensation for all lands being used by the company, including uncultivated land, and the cancellation of their most recent agreement.73 These new demands triggered strong opposition, and Captain Lorimer thought that if they ceded to any of these demands, they would continue to arise for as long as the company operated on their land.74 Reynolds agreed ‘that the future prospects of the enterprise [would] be fatally compromised unless the Syndicate support[ed] with energy the resistance offered to these pretensions’.75 Preece also concurred that these new demands were ‘absurd and [could not] be entertained for a

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moment’ and D’Arcy, for his part, found it ‘most annoying about these Bakhtiari as it [would] cause the Burmah people further alarm’.76 One piece of welcome news for the concessionaires, however, was the shah’s appointment of Shahab al-Saltanah as the new ilkhan in April 1907. Haji Quli Khan’s faction of the tribe thus regained this title, and Paul claimed this was because of the company’s intervention.77 He ensured that this faction of the tribe was reminded of the company’s role in their appointment, so as to retain their enduring gratitude, loyalty and service.78 D’Arcy hoped this meant that ‘the Bakhtiari matter [was] at last settled’, and Preece was ‘hopeful that this appointment may have considerable effect in smoothing over the difficulties that the Oil Syndicate [had] lately been encountering in the Bakhtiari Country and that the work [would] now progress without difficulty and impediment’.79 As usual, however, the rejoicing was premature. Shuja al-Sultan, the head of the Bakhtiyari Guard for the Shah, had made repeated remonstrances to the oil company.80 He had been requesting a separate agreement with the company regarding their operations on his land, as he insisted that his land was private property and could not be considered part of the company’s agreement with the Bakhtiyari.81 This separate agreement would have, undoubtedly, included a pecuniary element, which explains the vigour and endurance with which he pursued it. The company, however, had repeatedly shrugged off his requests and encouraged the Bakhtiyari to resolve this issue internally.82 The Bakhtiyari leadership, on their side, had promised to do so, but had repeatedly failed.83 By April 1907, the situation had changed in favour of Shuja al-Sultan. At the shah’s behest and because of the events of the Persian Constitutional Revolution, Shuja al-Sultan summoned two hundred Bakhtiyari tribesmen to Tehran. Furthermore, the newly appointed ilkhan, Shahab al-Saltanah, was his brother. As a result of this new position of strength, Shuja al-Sultan was determined to keep pursuing his requests and arranged to meet with Sir Cecil. He repeated his desire for a separate agreement and demanded it to be officially recognized by the Persian government. Sir Cecil noted, with concern, that his tone had now become ‘decidedly threatening’ and he expected ‘troublesome negotiations’ ahead.84 Shuja al-Sultan, a protégé of the shah, could now co-ordinate his brother’s actions and the shah’s actions towards the company. They, therefore, presented a united front in requesting the annulment of the current agreement with the Bakhtiyari. Preece wrote, in disbelief, that for ‘the Shuja es Sultan to demand its cancelment in the sort of money or your life way remind[ed] one of old Persia, but with the advent of the “Megla” and constitution it [was] supposed another and milder order of working should prevail’.85 Furthermore, to ‘cancel it or even to acquiesce in such a thing pending the making of another [was] not to be thought of, it would, to use a Persian expression, [put their] beards in their hands to be twisted’. Preece also affirmed that the Persian government had no right to ask for the agreement’s cancellation as they ‘were asked to take note of it but strangely enough they refused, this was a gratuitous courtesy paid to them and in no sense necessary according to the original concession’. The political developments in

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Tehran had thus also affected the company’s standing in the Persian periphery. The concessionaires had no option but to place their hopes in Amin al-Sultan ‘to use his influence both with the Shuja es Sultan and the Ilkhani of the Bakhtiaris to carry out this agreement without . . . hinderances’.86

New system The concessionaires expanded and consolidated their support system to manage the new threats that emerged from Tehran and the periphery. The main pillars of this support system were the Foreign Office, the British diplomatic corps, Preece, Paul Kitabgi, Vincent Kitabgi and Amin al-Sultan. The challenge was to learn the intricacies of the new system and work within it. Thus, as soon as he reached Persia, Paul began gathering information to understand the new political paradigm and activate the new, and existing, elements of the company’s support system. One of the first people he went to see was Sir Cecil. As a result of recent events, the British minister had developed a pessimistic view of the situation and was increasingly sceptical of the oil company’s prospects. According to Paul, he thought ‘that if this state of affairs [continued], it would be best to advise Mr. D’Arcy to abandon the concession rather than to be taken advantage of and make the business fail’.87 This was the second time Sir Cecil had expressed a lack of enthusiasm towards the company. When he had previously recommended that the company hire a dedicated agent in Tehran, he had further suggested ‘that the Legation should only be invoked as a last resource’.88 In view of the current uncertainties facing the company, these kinds of statements and this lack of vigorous support were particularly unsettling. The British legation in Persia had to remain firmly dedicated throughout this sensitive period. D’Arcy thus decided to intervene energetically and told Preece that if he ‘did suggest such a thing seriously he [could not] in the least know the very important interests involved Politically and the amount of money spent on the Business and if [Preece thought] he was serious [he should] see Sir C. Hardinge about it and endeavour to get him to put a little Backbone in Sir C. Rice’.89 Preece followed these instructions and made it clear to the Foreign Office that ‘any slackening of the outward show of interest on the part of the Legation would be disastrous as both Bakhtiari Chiefs and Persian Government according to their Persian natures would at once jump to the conclusion that the Syndicate no longer had the support of H.M.’s Government and would apply the screw in every direction’.90 The Foreign Office was receptive to these concerns and reprimanded Sir Cecil, who felt obliged to justify his earlier statements. He reassured the Foreign Office and the company that ‘nothing was further from [his] thoughts than that His Majesty’s Legation should withdraw its interest and attention from the affairs of the Oil Syndicate, to the importance of which [he was] fully alive’.91 This incident demonstrates the level of intimacy that the company had reached with the Foreign Office as it was in a position to discipline British diplomats that it considered lacking in their support. The Foreign Office’s intervention proved effective and

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any reluctance to leverage on his official capacities had vanished as Sir Cecil told the Bakhtiyari ‘plainly to understand that any representations made to them by Captain Lorimer . . . [were] made with the full support and approval of [the] Legation’.92 D’Arcy took an additional measure involving the British diplomatic corps in Persia that has never been discussed in the existing literature. There is mention of it in a draft of an unpublished internal history project, but, even there, the passage in question has been crossed out.93 In mid-1907, D’Arcy started paying G.  P. Churchill, the oriental secretary of the British legation in Tehran, £30 a month in exchange for privileged information.94 This information included monthly reports that Churchill drafted for the Foreign Office, his summary of proceedings in the Majlis, other internal reports as well as a number of ‘strictly confidential’ documents.95 Churchill also wrote letters informing the company of issues that affected them, including Paul Kitabgi’s activities and other internal goings-on in the legation.96 This correspondence was highly sensitive and Churchill was, in effect, sending out information that he was not authorized to divulge, while receiving payments he was not allowed to receive. Another major pillar of the company’s support system was Amin al-Sultan, who was now president of the council and minister of the interior.97 They developed a growing dependency on him and sought to combine his efforts with those of the British legation in order to manage both the Bakhtiyari and the events in Tehran. Preece was convinced that Amin al-Sultan was Persia’s only hope and that they could ‘count a great deal on the goodwill of the Atabeg, not only because he and his friends [had] considerable interest in the future of the undertaking but because he [was] wise enough to know that it [was] a going concern . . . which the Govt [could] turn into coin’.98 Paul thus spent a considerable amount of time with Amin al-Sultan to see what help they could expect from him and to have his opinion on recent developments. The Atabak thought that it had been a grave mistake to give the title of ilkhan to the same branch of the Bakhtiyari that held the title of ilbayg. It removed the possibility of playing one faction of the tribe against the other, which reduced his ability to keep any abuses under control. Amin al-Sultan reassured Paul that he would take care of changing this situation and, regarding the legal difficulties they encountered with the Persian government, he would investigate the status of these proceedings and D’Arcy could ‘count on him to iron out all the existing difficulties’.99 He thus ordered the minister of mines and the undersecretary of state in the Ministry of the Interior to resolve the outstanding issue of the Bakhtiyari agreement swiftly.100 Amin al-Sultan was certainly ‘not letting the grass grow under his feet’ and Paul continued to lobby him ‘almost every day’.101 Shahab al-Saltanah was finally replaced in June 1907, despite Reynolds having had a more amicable relation with him. Preece thought the ilkhan’s replacement was ‘unfortunate’ but was consoled by the knowledge that if ‘the Atabeg [gave] distinct orders that the Bakhtiari Chiefs [were] to work amicably with [them], then [he had] no doubt but that his orders [would] be attended to’.102 Vincent, for his part, was convinced that ‘all differences with the Bakhtiari were absolutely

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settled through the intervention of the Grand Vizier and that henceforth [they] should have peace and quietness’.103 Captain Lorimer concurred and concluded that the ‘Khans [were] afraid of the Atabak, and [he would] attempt in the first place to stimulate their fear by making use of the threat of submitting [their] complaints to him’.104 The company also depended on Amin al-Sultan to diffuse new intrigues and enemies that had arisen during the Constitutional Revolution. For example, Ala al-Saltanah, the Persian minister for foreign affairs, ‘in no way [hid] his opposition . . . and [had] taken it on himself to avenge himself personally’.105 Preece, with characteristic hostility, thought it was ‘because he [had] not had his palms greased’ but was not concerned as he believed the fate of the concession would soon revert back to the Ministry of Mines, which was headed by ‘Mohandes ul Mamalek who [was] entirely with [them]’.106 Once again their ‘reliance [was] to be placed in the Atabeg Azam both for clearing the atmosphere in the Bakhtiari country and stopping intrigues in Tehran’ and ‘intrigues in Tehran [would] have no effect in drawing a penny from the pockets of those [in Britain], they have definitely made up their minds not to spend anything in greasing the palms of those people there who would but create further difficulties to get more’.107 D’Arcy had concluded in the current situation that ‘Baksheesh [was] at the root of it all and that with [his] consent they [would] never get, as putting every other consideration on one side, if [they] ever dreamt of giving it, which [he did] not, they [were] not stable enough to make it worth [their] while to give away’.108 In light of all the baksheesh over the years, the reluctance to hand out more money seems to have been based on quantities rather than on principle. Paul Kitabgi’s activities spanned other aspects of the new political system as well. He infiltrated anjumans, which were societies that had been instrumental in the rise and maintenance of the constitutional government. Some regional anjumans had been appointed by the Majlis to carry out executive and judicial duties, such as monitoring elections, supervising local governors, collecting taxes, organizing community projects and more. Other anjumans were secret societies that made sure the constitutional order was enforced and safe from hostile opposition. It was in one of these secret anjumans that Paul was involved. The members allegedly asked him many questions and advice on a number of issues. He used this opportunity to ‘dissipate false ideas that [were] made regarding everything that is foreign and concessions that [were] granted to foreigners’ and claimed that the ‘enemies of eight months ago [were] now friends’.109 Paul’s involvement in different aspects of the new Persian political paradigm highlights the extent of the measures undertaken to preserve the company’s interests during the highly complex and turbulent constitutional period. He was part of a broad effort to adjust to the new situation and ensure the concession’s survival.110 Although the influence of the new political system outside Tehran was limited, this did not mean that the concession was exempt from the effects of this fundamental paradigm shift in Persian politics. Contrary to the assertions in the existing literature, therefore, it was revealed that the events of the Persian Constitutional Revolution, the uncertainties that followed and the concessionaires’

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reactions to them had a very significant impact on the Persian oil business.111 The changes that took place in the political environment triggered concurrent legal, financial, physical and strategic threats that challenged the very existence of the D’Arcy Concession. Accurately dissecting these threats demonstrated that the events of this period imperilled the concession’s legal standing in Tehran, as well as its physical operations in the periphery. It was also revealed, for the first time, that informal payments were not exclusively reserved for Persians, as G. P. Churchill received money to divulge privileged government information.

Chapter 7 D I SI N T E G R AT IO N A S S A S SI NAT IO N A N D PA RT I T IO N

As the concessionaires were adapting to new conditions, they received a most unexpected letter on 27 August 1907. The Persian legation in London informed D’Arcy that it had received instructions ‘to reserve the instalments of the salary of the Imperial Commissioner for the Petroleum Concession until further directions’.1 D’Arcy was puzzled by this ‘very extraordinary thing’ and, as his written reaction was en route to Preece, two events occurred, on the same day, that jeopardized the survival of his business.2

Collapse On 29 August, Captain Lorimer sent a report to Sir Cecil Spring-Rice warning of the ‘precarious position’ of the oil company’s drilling operations and its employees in light of a recent rise in violence. This position, he thought, would ‘be aggravated rather than ameliorated in the near future. The question which [had] to be confronted [was] what action Government would take in the case of the occurrence of a serious disturbance resulting in the loss of British lives’. He concluded that, once again, the best course of action was to have Amin al-Sultan intervene as the ‘Khans [were] afraid of the Atabek’.3 Two days later, on 31 August, the Atabak was walking out of the Majlis speaking to Sayyid Abdullah Behbehani when, suddenly, a gunshot was heard, dust was thrown into the air and, in the haze, another shot was fired. When the dust settled, the Atabak was lying dead in front of the Majlis alongside his assassin. Abbas Aqa, a young Azeri money changer from the Tehran bazar and member of a secret anjuman, had murdered Amin al-Sultan and then taken his own life.4 The news of this brutal act reverberated across Persia and signalled that the Constitutional Revolution ‘was no child’s play’.5 The Atabak had been unable to reconcile opposing forces within the new domestic political paradigm. He had revealed these pressures to British diplomats earlier that year and admitted fearing for his life.6 Revolutionaries thought he symbolized a return to pre-revolutionary methods of government and those loyal

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to the shah thought he was being too cooperative with the Majlis. The multiple sources of hostility towards him has led to the development of several theories regarding the motivations and instigators behind this violent deed. One theory attributes the act to radical revolutionaries, another claims it was planned by the shah and yet another speculates that there were two independent plots and that one was executed to the detriment of the other.7 Following the assassination, G.  P. Churchill reported that the president of the Majlis, Sani al-Dawlah, was convinced that the murder had emanated from reactionaries within the shah’s entourage and, in particular, Saad al-Dawlah.8 Saad al-Dawlah had been the Persian minister in Brussels from 1892 to 1902 and Persian minister of commerce in 1905. He had been exiled to Yazd, in 1906, at the instigation of Joseph Naus, the Belgian director general of the Persian customs, and was taken in by the British vice-consulate there. The British chargé d’affaires obtained assurances of his safety from the Persian government as long as he agreed to live outside Tehran. In November 1906, however, having been elected to the new Majlis, he returned to Tehran and embarked on a tireless campaign against the Belgians that led to the dismissal of Naus in February 1907. He then turned his attention towards Sani al-Dawlah, but his ambitions to have him removed had been frustrated. As a result, he resigned from the Majlis in May 1907 and offered his services to the shah to help crush the new parliamentary system.9 In his time in the Majlis, he had also been one of the leading voices against the D’Arcy Concession during the apposite hearings.10 Sani al-Dawlah claimed to have seen evidence that proved Saad al-Dawlah’s involvement in the assassination, and he now feared for his own life. He was looking for official assistance from the British as he wanted to resign from his position and flee the country.11 Sani al-Dawlah’s version of the story was also confirmed to Churchill by a high-ranking officer in the police, who claimed that Saad al-Dawlah had told him, a few days before the assassination, that there was an impending event that would lead to a change of government. The officer further alleged that the investigations into the assassination would be swiftly dropped as a result of pressures from above.12 Sir Cecil Spring-Rice, for his part, was convinced that the plot had emanated from the shah in order to induce chaos and have the Russians intervene on his behalf. These rumours led to another theory regarding Amin al-Sultan’s assassination, which alleges that the shah, through Saad al-Dawlah, had incited a secret anjuman to assassinate the Atabak by convincing its members that the Atabak was going to overthrow the Majlis, at the shah’s behest.13 This convoluted intrigue may explain how both factions were involved in the plot and how its executors remained ignorant of where the orders had originated. It is within this last theory that the letter from the Persian legation in London, cited at the beginning of this chapter, is an interesting element in the mystery of Amin al-Sultan’s assassination. This letter indicates that there was advance knowledge of the Atabak’s demise, from within the government, and that, in the enthusiasm of an impending change of government, the instructions to halt Vincent Kitabgi’s salary had already been issued. It was not otherwise conceivable that

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Amin al-Sultan’s protégé would have been subjected to this sudden remunerative interruption. Furthermore, Vincent was officially dismissed from his post on the same day as the assassination and, before even informing him of his dismissal, the Persian legation in London had told Preece that the Persian government had reappointed Sadiq al-Saltanah as imperial commissioner.14 They further specified that the ‘payment for the month of August and future payments must be made to the Sadigh-os-Salltaneh as formerly and in the usual manner’.15 This order was issued before a new cabinet had even been formed in Persia and, as revealed in the previous chapter, would have financially benefitted the ‘hot-tempered, rude and greedy’ Ain al-Dawlah, who was the shah’s brother-in-law and Amin al-Sultan’s political nemesis.16 The timing of all of these events, therefore, seems to point towards an orchestrated effort, from within the shah’s entourage. The added benefit would have been to reclaim the commissionership and its generous remuneration. This would exclude the possibility of an entirely revolutionary plot and make it highly unlikely that there were two unrelated plots, as they would have had to be coincidentally planned on the same day in order for this latter scheme to work. Regardless of who the conspirators were, the death of Amin al-Sultan was catastrophic news for the concessionaires. The central pillar of their domestic support system had suddenly collapsed at a time when it was desperately required. Preece wrote about this ‘very bad’ news to Burmah and did not hide that it was ‘a sad blow’ for the company as they ‘could count on him to do the best he could for the Concession. He would have kept the Bakhtiari within bound now [he fancied they] may have some trouble both in Teheran and among the Bakhtiaris’.17 Sir Cecil, too, had a sombre outlook on the future. He could not ‘help regarding with grave apprehension the possibility of a renewed and more serious outbreak by which the lives of British subjects and the valuable property of the Oil Syndicate in those regions would be threatened with destruction’. He concluded that ‘in order to avert what would be, at best, a situation of extreme embarrassment, there [were] two courses open to His Majesty’s Government: either to recommend to the Oil Syndicate the complete withdrawal of their employees from Persia, or to afford them adequate protection in the places where they are conducting their operations’.18

Assembly ‘One of the most important diplomatic developments of the first decade of the twentieth century’ also took place on 31 August 1907.19 As the Persian Constitutional Revolution was taking its course, international political configurations had shifted. The 1906 British general elections swept the Conservatives out, after ten years in power, and ushered in a new cast of characters. Among them, Sir Edward Grey, the new foreign secretary, was adamant about obtaining an understanding with Russia over areas of potential conflict in Asia. This would reduce the chances of war while also keeping the Liberal campaign promise of reducing military expenditure.

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Reaching an agreement over Persia had been periodically proposed since the late nineteenth century, but past efforts had failed. The Entente Cordiale, intertwined with the Franco-Russian Alliance, Sir Edward Grey’s recent appointment and the rising German threat, however, offered new impetus to reach an understanding. For the British, anxieties regarding India’s defences had become a recurring theme ever since Napoleon’s plan to invade India in collaboration with Russia. Thereafter, ‘the menacing advance of Russia towards [British] frontiers’, throughout the nineteenth century, did little to quell these concerns.20 Persia, Afghanistan and Tibet were, therefore, seen as a necessary cordon sanitaire between the empires. The narrowing distance between these formal borders translated into narrowing chances of preserving peace and a formal agreement was thus necessary to prevent frictions that could escalate into outright conflict. The Russians, for their part, had consistently dismissed the idea of an agreement with Britain. They had repeatedly refused to compromise on Persia because ‘by acknowledging officially England’s right to act unilaterally in the south, where her influence [was] far from being firmly exclusive, [they would] thereby, ahead of time, voluntarily put up a barrier to [their] further entirely possible movement beyond the limits of Persia’s northern provinces’.21 The government of India also opposed a rapprochement and diverged sharply from Whitehall on this issue. They did not trust the Russians and refused any compromise on what they considered to be their defensive buffer. These differences climaxed with the advent of the Liberal government, and the Foreign Office was obliged to assert its dominance over the government of India. It told them plainly to start planning on how to deal with the consequences of the negotiations rather than question their existence.22 Despite these obstacles and the additional unease created by the Persian Constitutional Revolution, Sir Edward Grey persevered. Finally, the new Russian political actors, shaken by their military defeat against Japan and the domestic unrest created by their own revolution, concluded that it was wiser to secure their existing interests in Persia rather than jeopardize the entirety of their increasingly tenuous position. Grey’s Russian counterparts thus reluctantly joined the negotiating table. They delineated their proposed sphere of influence first. It began in Qasr-i Shirin, went down to Yazd and back up to the Afghan frontier. Incidentally, Qasr-i Shirin was where the concessionaires had first drilled for oil, still maintained operations and had an outstanding dispute with the Persian government regarding their concessionary obligations.23 The Russian sphere included Isfahan as well as Tehran. It comprised seven of the eight major trade routes and eleven of the twelve cities with over 30,000 inhabitants. Grey had given up on making Tehran a neutral enclave in exchange for the right of British subjects to obtain concessions in the neutral zone that was established between the respective spheres of influence.24 Interestingly, the government of India had originally proposed that the British sphere of influence should begin north of Birjand and end in Khaniqin. This proposal was backed by King Edward and would have included the drilling operations of the D’Arcy Concession in Khuzistan. However, Grey rejected this proposal and limited his aspirations to the ‘Sistan triangle’ between Birjand and Bandar Abbas. This area was considerably smaller than the Russian area, and it left the Persian

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Gulf and the drilling operations in Khuzistan entirely in the neutral zone. Despite Grey’s last-minute attempts to get Russia to recognize Britain’s special position in the Persian Gulf, the Russians refused, and Grey conceded again. Negotiations eventually ended on 29 August and the Anglo-Russian Convention was signed on 31 August.25 According to the American minister in Persia, the word in Tehran was ‘that the “Bear” had gotten the “Lion’s” share’.26 The effects of the Anglo-Russian Convention on the D’Arcy Concession were multifarious. By rejecting the sphere of influence proposed by the government of India, Grey had left the concession’s drilling operations in the neutral zone. This made them vulnerable to commercial incursions by Russia and Germany. It also made it harder for the British authorities to intervene formally. The company would thus, in theory, not benefit from the same protections than those afforded to British interests within the designated British sphere of influence. Long-term international strategic concerns had clearly superseded commercial and naval considerations. In addition to this new vulnerability, the news of the Anglo-Russian Convention presented the concession with other difficulties. Despite the assurances made by the British and the Russians in their joint communiqué, that they had ‘not for a moment lost sight of the fundamental principle of the absolute respect of the integrity and independence of Persia’, the agreement was predictably interpreted as a partition by the local population.27 The Habl al-Matin, reflective of public opinion, wrote that from ‘north to south the whole nation [belonged] to [them]. [They were] neither minors who [needed] guardians, nor insane to need a trustee!’28 The Anglo-Russian Convention thus exacerbated existing antagonism towards foreign encroachment and increased the chances of hostility towards any type of foreign presence. The looming threats from the Majlis, religious authorities, tribes, public opinion and others had suddenly been galvanized. Furthermore, this enmity was particularly targeted at the British, as the Persian revolutionaries and general population had thought that Britain supported their recent constitutional efforts. As Kazemzadeh writes, ‘What was unexpected, incomprehensible, and painful was Britain’s participation in the rape of Persia.’29 The Habl al-Matin, again, expressed this particular disappointment by proclaiming that ‘the British Government [had] proved herself to be the enemy of civilization and humanity’.30 Sir Cecil Spring-Rice, too, was horrified by the agreement and felt personally betrayed as he had repeatedly denied its existence to Persian officials. He complained that the Foreign Office had ‘thrown a stone into the windows here and left [him] to face the policeman. Neither Nicolson nor the F.O. [had] informed [him] that the agreement was signed till three days after it had been published . . . This was, [he supposed], a sign that the Persian public opinion was not to be considered’.31 He further confirmed that their position was ‘worse off than the Russians because [the British were] not feared as they [were], and because [the British were] regarded as having betrayed the Persian people’. He told Grey reproachfully that there was ‘at least a prima facie case for those who are ready to criticise [him] for all [he did] either in cooperation with an autocratic power or in opposition to the liberties of smaller nations’.32

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Following orders In the space of a few hours, the oil company had lost its foremost domestic protector and found itself vulnerably placed in the neutral zone of Persia facing galvanized hostility. The situation in Khuzistan rapidly spun out of control. Captain Lorimer reported ‘the situation in a serious light and [anticipated] danger to European life and property’. The Bakhtiyari khans were ‘rapidly losing their control over the tribesman whom impunity [had] freed from their old idea of the inviolability of European lives’.33 Reynolds confirmed this state of affairs, reported on several robberies that had taken place against Europeans and lamented the Atabak’s passing.34 Sir Edward Grey, upon hearing of these developments, instructed Captain Lorimer to leave Ahwaz with any British subjects who felt endangered.35 The real and perceived gravity of the situation required extraordinary measures to salvage the oil company’s operations. The Atabak had died, Vincent Kitabgi had been dismissed and Paul Kitabgi’s service had become of limited use as a result of the Atabak’s death. This left the British government, along with its diplomatic corps and the government of India, as the remaining pillars of the company’s support system. D’Arcy’s initial reaction was that ‘the F.O. should be asked to use every influence they have with the Bakhtiari’.36 Preece visited the Foreign Office, and although he was unable to get any further information on the situation, he thought they would help in any way they could.37 Despite the change of government, the authorities seemed committed to keep supporting British oil interests in Persia. D’Arcy also mobilized personally and obtained a meeting with Sir Charles Hardinge, the permanent undersecretary at the Foreign Office. In the meantime, Preece had come up with an initial idea of how the government could assist. He thought that D’Arcy should ask Hardinge to send a gun boat to a strategic location. As D’Arcy trusted Preece fully in these matters, he concurred and asked him to ‘very kindly write [him] full particulars as to what [he] wish[ed him] to urge on Sir C. Hardinge and say about the Gun Boat and where [he] want[ed] it sent to and if the Officer in Charge [was] to do any special work there’.38 Preece followed up on this suggestion directly with the Foreign Office and said he ‘would propose, if it [was] possible . . . having the “Stationaire” (the Comet?) from Baghdad brought up to Ahwaz for a spell’.39 That this request came directly from the concessionaires and with such precision is missing from the existing literature and is crucial as it demonstrates the extent to which the response to the events of 31 August was carefully coordinated. Preece also told the Foreign Office that with patience and tact the storm [could] be weathered but . . . to do this very strong support [was] necessary from His Majesty’s Government. For the employees of the oil company to have [had] to leave the work they [had] been carrying on now for 18  months . . . would [have been] simply disastrous, all the plant would [have been] looted and the boring destroyed. Every endeavour should be made to avert such a catastrophe.40

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In early October, D’Arcy finally met with Sir Charles, who ‘was quite alive to the importance of the case and would do all that he could and he [was] now considering what that [was]’.41 Sir Charles consequently contacted the Admiralty regarding Preece’s suggestion of sending the Comet to Ahwaz.42 Following Preece’s guidance, D’Arcy suggested four additional measures to Sir Charles.43 These included a ‘special appeal’ by the British government to the Bakhtiyari, an increase in the consular escort in Ahwaz, a visit to Reynolds by Captain Lorimer and, finally, the ‘despatch from India of a special body of men with a European in charge to guard the works’. Sir Charles thought that any appeal to the Bakhtiyari would be wasted as they would not be ‘amenable to any influence of a purely moral nature’. He also particularly objected to the despatch of men from India ‘since the passage of any considerable body of men through Persia, beyond the ordinary reliefs for the various Consular escorts could not fail to arouse susceptibilities and mistrust’.44 This was even more problematic in light of the freshly signed Anglo-Russian Convention. Any brusque military movement could jeopardize the agreement and trigger similar actions by the Russians that, in turn, could drag the empires into a, potentially explosive, cycle of troop movements across Persia. Apart from the appeal and the troop movement, however, Sir Charles hoped to execute the other measures imminently, as the Foreign Office had already discussed Lorimer’s travel ‘for the protection of British lives and property’ as well as the reinforcement of the consular guard a few weeks earlier.45 By mid-October, the Foreign Office thus began implementing the measures suggested to them by D’Arcy and Preece. The Comet was sent to Ahwaz and, despite D’Arcy’s belief that this would be one of the most effective measures against tribal unrest, the Foreign Office warned the concessionaires ‘that the effect produced by the “Comet” [could] only be a moral one and that there [was] a chance of its not being great’.46 Indeed, much like an actual comet, its effect was aesthetic and from a distance. The Bakhtiyari were not impressed. The Foreign Office was still awaiting the approval of the government of India regarding the increase of the consular guard at Ahwaz. They needed this approval to arrange Captain Lorimer’s visit to the drilling site in Ramhormoz and, as the move was still pending, they could not inform the Persian government of this action. Therefore, they decided, in the meantime, to ‘let the Persian authorities and the Bakhtiari Khans understand that His Majesty’s Government [were] greatly interested in the safety of the officials and property of the Syndicate, for which they [would] be held responsible’.47 This was the kind of special appeal that the concessionaires had requested and that the Foreign Office had previously deemed of little value. In late October, the Foreign Office asked the Treasury for funding for the situation in Ahwaz as ‘an increase in the British Consular guard [was] essential with a view to the protection of the British subjects engaged in prospecting for oil in the neighbourhood, an undertaking which, it [was] hoped, [would] open up a wide field for British enterprise’.48 The Treasury was unmoved by this request, however, and thought there was a case to be made to decrease the consular infrastructure in

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Persia in light of the Anglo-Russian Convention.49 After an additional plea by the Foreign Office, the Treasury responded bluntly, that they could see no reason why any responsibility should be undertaken for the protection of any other persons. The increased guard at Ahwaz appear[ed] . . . to be required mainly for the protection of the employees of the Oil Syndicate; and [Their] Lords [were] unable to see any sufficient reason for imposing a charge of £1,920 per annum on the public funds of this country for such a purpose.50

This reaction from the Treasury reveals that the Foreign Office was taking measures beyond what could be considered the norm in protecting British oil interests in Persia. These measures, furthermore, were explicitly undertaken to protect the oil operations and not any other British commercial interests in the region. The D’Arcy Concession evidently held a privileged position in the pantheon of British commercial interests. As the Foreign Office was striving to implement the concessionaires’ suggestions, the situation with the Bakhtiyari blazed. After an altercation back in late June, a driller named Harris had been beaten and stoned by tribesmen. The company had referred the case to Paul Kitabgi, hoping that he would have the Atabak intervene decisively. The Atabak had sent a telegram to the head of the telegraph service at Shushtar, but Churchill thought both the wording and the recipient of the telegram were inadequate.51 In October, among all the other agitation, the situation had still not been resolved and the British legation seized this opportunity to take forceful action against the Bakhtiyari. The acting minister in Tehran, Charles Marling, wrote to the new Persian minister for foreign affairs, Ala al-Saltanah, expressing the dissatisfaction with the incident and the fact that no measures had been undertaken to prevent such excesses in the future. As a result of the failure to deal with this incident and accusations by the Bakhtiyari that the oil syndicate’s employees had prevented locals from accessing water, the syndicate stopped the payment of the extra £500 that they had agreed in their last contract with the Bakhtiyari.52 Captain Lorimer then ‘had the two principal culprits in the Harris case soundly flogged and ejected from the village with their families. The immediate local effect of this action [was] described as excellent’ and the concessionaires were delighted.53 These punitive measures, however, caused a threatening reaction from the Bakhtiyari. They expressed fear that their long-standing friendship with the British had been ‘strained to the breaking point’. Despite their respect and friendly sentiments towards Preece, which had been ‘the reason of [their] friendship with the English Government’, they could not accept the ‘overbearing and harsh’ methods of Captain Lorimer.54 Preece admitted that ‘although [they were] backed up to the utmost by the Foreign Office, the Bakhtiari Chiefs [had] evidently [their] beards in their hands and if they [were] not made contented the work must perforce stop’. He concluded that payments to the Bakhtiyari should resume in full as ‘such enormous interests [were] involved that it [was] not worth [their] while to sacrifice them for the sake of a few Krans’.55

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Sir Edward Grey followed the situation closely and asked Marling if he still considered ‘an increase of the guards of the Consul at Ahwaz desirable and important’.56 He also asked Marling to make it clear to the Persian government that the British government would ‘hold them responsible if British lives or property [were] endangered owing to action of Bakhtiari Khans, from whom they should exact satisfactory guarantees’.57 Marling quickly telegraphed back the words of Captain Lorimer, who considered the increase of the guard ‘important and urgent’.58 Thus, on 29 November, Lieutenant Arnold Wilson received orders to take twenty men from the 18th Bengal Lancers under his command and start making his way to Persia from India. By an extraordinary coincidence, Wilson sat with Jacques de Morgan, the archaeologist who had first reported oil seepages in Persia, on the ship taking him to his new mission. As Wilson admitted, the ‘detachment which [he] brought out was ostensibly intended to reinforce the guard of the Ahwaz Consulate, though in practice it was to protect the drillers until the attempt to find oil was successful or was abandoned’.59 The Foreign Office also admitted that the ‘increase of the guard has been decided upon as a temporary measure with the object of affording some assistance and protection to the employés and property of the Oil Syndicate in view of the importance attached by His Majesty’s Government to the maintenance of British enterprize in South West Persia’.60 What Grey had considered impolitic a few weeks earlier was now taking place under the guise of an increase in the consular guard. British troops were making their way to Persia from India with a European in command in order to protect the oil company’s drilling operations. Every single one of the company’s proposed measures was now, therefore, being faithfully implemented by the British government. The uncertainty and chaos, which had resulted from the events of 31 August, led the government towards a deeper involvement in the company’s security than ever before and to take steps that had been unimaginable before then. The relationship between the government and the company had thus reached a new level of symbiosis.

Change of guard The events of 31 August led to a drastic reconfiguration of the company’s support system in Persia. Amin al-Sultan had been murdered and Vincent Kitabgi had been replaced by Sadiq al-Saltanah, which meant that the post of imperial commissioner was no longer held by one of the company’s insiders. In November, the British chargé d’affaires in Tehran suggested that pressure should be put on the Persian government to replace the acting commissioner with someone more preferable and to threaten to stop paying the commissioner’s salary if nothing was done.61 This proactive suggestion by the legation was declined by Preece, however, who thought it was unnecessary at the moment. They had cordial relations with the Persian legation in London, which was their first point of contact, and had

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no grounds to dismiss Sadiq al-Saltanah so that the proposed action would ‘only convert a passive friend into an active enemy’.62 Paul Kitabgi, unlike his brother Vincent, still had a chance to adapt to the new political situation in order to effectively secure the concession’s interests and his employment. He moved quickly as ‘it was not for [him] to remain lamenting but to see from which side the wind was going to blow’.63 He started frequenting Saad al-Dawlah sensing that he would become influential in the new government or, as Churchill put it disparagingly, he ‘managed to worm himself into Saad-edDowleh’s good graces’.64 Indeed, only a few days after the Atabak’s assassination, on 13 September, Saad al-Dawlah was swiftly, and perhaps suspiciously, named minister of foreign affairs. Paul had already worked for Saad al-Dawlah during his tenure in Brussels and thus found himself in a privileged position. He was swiftly appointed as his private secretary.65 This good luck was short-lived, however, as Saad al-Dawlah resigned from his post only fifteen days later, following protestations from his subordinates.66 His ‘fall was a great blow to’ Paul and, having ‘taken sides with the Saad he [was] of course very “mal vu” at the F.O. where the whole staff [was] dead against him.’67 It had been a great risk to affirm any loyalties during such a volatile political period and, having lost any form of influence, Paul was now able to achieve very little. He made the situation worse by continuing to work with Saad al-Dawlah and advising him on a law against anjumans, which made the powerful anjumans hostile to both of them. He also complained about being kept ignorant of the company’s proceedings with the Bakhtiyari and wondered why he was still being paid if he was not informed of situations where he thought he could be helpful.68 This may have been a regrettable sentiment to express, as he was dismissed from his post just nine days later.69 Paul vigorously appealed to keep his job, even with a reduced salary, and proclaimed his great value to the concession as he had ‘friends in all circles’, but it was to no avail.70 The Kitabgis had, once again, all been removed from the company’s operations. Saad al-Dawlah was eventually replaced by Ala al-Saltanah, who Preece thought was bad news for the concession as he had previously been hostile to them.71 D’Arcy was wary that they ‘must keep the Gov. up to the mark now that that old scoundrel of a Minister [was] in power again’.72 His tenure was also shortlived, however, and he was dismissed on 26 October, just a few weeks after his appointment.73 The situation in Persia’s internal affairs was only getting worse and more volatile. Churchill reported in November that as ‘to the general state of the country [he was] sorry to say it [was] worse’.74 The conflict between the shah and the Majlis had exacerbated and British prestige had been severely hit. By December, the situation had become ‘extremely bad’ and Churchill did ‘not intend to be alarmist or to exaggerate the condition of anarchy into which [the] country [had] fallen, and it [was] true that these Eastern countries [had] an extraordinary power of resisting imminent disintegration’, but the situation had become critical.75 D’Arcy lamented this current ‘state of chaos’ and, surprisingly, ‘only hope[d] Russia [would] step in’.76

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Phenomenal state of tranquillity The British government had complied with the company’s unprecedented request for armed support. Establishing their own physical dominance, hoping that the situation would eventually improve, was seen as the only realistic way of keeping the concession alive in a lawless region of a crumbling state engulfed in a tumultuous revolution. The effect of Lieutenant Wilson and his men in Persia was almost immediate. Captain Lorimer reported from the ground that ‘since the suspension of November instalment and the arrival in the country of the Indian guard, a quite phenomenal state of tranquility [had] supervened, which [he hoped would] continue . . . as long as the Indian guard remain[ed there], and the policy of boldly resisting the Devil [was] persisted in’.77 Despite minor disagreements with the Bakhtiyari over robbery compensations, guarding arrangements and an incident with one of the company employees getting caught in ‘suspicious circumstances with a woman’ in Ramhormoz, peace persisted.78 Even the issue of outstanding instalments was resolved.79 Sir Edward Grey was overjoyed to inform the board of the company of ‘the beneficial effect which this measure [had] produced on the attitude of the population towards His Majesty’s Vice-Consul at Ahwaz and his companions as well as towards the staff of the Syndicate’.80 The concessionaires could not have hoped for a better outcome and Preece responded that it was ‘somewhat difficult to put into adequate language the thanks of the Syndicate to His Majesty’s Government for the great assistance and support afforded them not in the instance but throughout all their endeavours to develop the oil question, but they [did] thank them and that most heartily’.81 Captain Lorimer, for his part, considered ‘that the result of the dealings of the Syndicate, supported by His Majesty’s Diplomatic and Consular Officers in Persia, with the Khans . . . [had] been to reduce them from an attitude of overweening confidence to one of respect’.82 The concessionaires could finally enjoy a moment of operational tranquillity as the situation seemed to have been contained. The mobilization of Indian troops by the British government to preserve Persian oil interests was one of the most significant acts undertaken to ensure the survival of the D’Arcy Concession. This intervention saved the concession and placed the concessionaires in a vastly superior position of strength. They no longer had to depend on the Bakhtiyari for their physical security, worry about political events in Tehran, depend on the Persian government to moderate the excesses of the tribe and wonder about the British government’s level of commitment. The arrival of Lieutenant Wilson and his men was, therefore, one of the most important turning points in the company’s fate. It is at this point, and not earlier, that one may argue that the company was no longer affected by political developments in Tehran. Churchill reported on a failed assassination attempt against the shah, which was ‘of course confidential as well as in fact all the rest’ and an ever worsening situation in April and May, but this was no longer a direct concern for the concessionaires.83 The only dimension in which the Persian government was

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still relevant was regarding issues pertaining to the concession’s legal standing. In an extraordinary turn of events, the uncertainty caused by the occurrences of 31 August had thus led to the vast strengthening of the company’s position in Persia and to the cementing of its relationship with the British government.

In search of liquidity As one major dimension of the business entered a state of calm, however, another faced grave challenges. On 15 April 1908, the chairman of the Burmah Oil Company ‘reported that the £30,000 which the Board had sanctioned to carry out the testing operations in Persia, was now practically all spent, and a decision would have to be come to as to whether the drilling operations at Masjid i Suleiman were to be continued or the whole enterprise abandoned’.84 They issued an ultimatum to D’Arcy. They would pledge a final £20,000 to continue drilling in Persia only if D’Arcy matched their investment. If D’Arcy did not agree to these terms by 30 April, ‘the Board would then consider whether they would not at once abandon the operations in Persia entirely’.85 D’Arcy was at an impasse. It was impossible for him to come up with ‘£20,000 or anything, and what to do [he knew] not’.86 It was a desperate situation. He sent the usual £30 cheque for G. P. Churchill to Preece and hoped ‘this may not be the last, as from the stand the Burmah people are taking – it may be – as they decline[d] to go on after the 30th April unless [he agreed] to find half the expenditure – and this [he could not] do’.87 Burmah further emphasized the seriousness of their stance by reiterating their scepticism of achieving success in Persia during their annual general meeting on 29 April. There, they unequivocally proclaimed that ‘unless satisfactory results [were] shortly obtained this enterprise [would] be abandoned’.88 In the meantime, the drilling operations had migrated. Reynolds had told D’Arcy, at the end of September 1907, that he was going to move the drilling operations to Masjid-i Sulayman. He eventually began work there on 23 January 1908, and as he was drilling down two wells, Burmah’s ultimatum expired.89 A final instruction was sent to him, on 14 May, ‘to put the two wells at Masjid-i-Suleiman down to 1,500/1,600 feet and if no oil [was] found at this depth, to abandon operations, close down, and bring as much of the plant as [was] possible down to Mohammerah’ before shipping it all to Burma.90 By then, he had managed to drill down to 933 feet in well number one and 563 feet in well number two.91 As in every other location, the conditions were harsh and technical difficulties abounded. On 16 May, Reynolds reported that the bit unscrewed itself from the sinker and got stuck in well number one, which meant that he may have to drill through it. He noted ‘a strong smell of gas – petroleum gas – in [that] hole, but the shale in which the tool now [was], [was] too sticky to contain much gas & would not let much pass through it, so, till [he could] drill deeper, [they could not] get any further evidence’.92 On 21 May, as Reynolds was fighting the elements and struggling with machinery, Churchill reported ‘a rumour here that oil had been struck in great quantities but [he supposed] it was a canard’.93 Indeed, nothing

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could be further from the truth, as Reynolds had struck a bed of salt in the second well and found no trace of oil or gas. The climate was becoming increasingly unbearable as the heat rose to 43 degrees Celsius in the shade. Reynolds did, however, manage to recover the bit from well number one and could finally drill through the last few hundred feet before having to abandon everything and write off the last seven years of his work in Persia. As the final stretch of drilling resumed in well number one, he reported the continued smell of gas that could ‘be seen rising from the hole in sunlight’.94 The only way to save the business now was to either find financial or petroliferous liquidity. As the first option was impossible and the second depended on the last few hundred feet of drilling, prospects seemed grim.

Chapter 8 P R E S SU R E S T R I K I N G O I L A N D R A I SI N G M O N EY

People everywhere heard what had happened. Even the Persian king learned that an oily liquid had been discovered in the place where the priests had hidden the altar fire. – 2 Maccabees 1.33 A thundering boom roared across the Persian desert in the early morning of 26 May 1908. On the footsteps of an ancient Zoroastrian temple, which once housed an eternal flame, a torrent of murky petroleum gushed 1,180 feet up the earth’s crust and jetted 60 feet into the air.1 The ensuing black rain and intoxicating smell of sulphur overwhelmed the drillers, who rushed to master the force of nature they had unleashed. This was the birth pang of modern petroleum extraction in the Middle East. Years of gruelling exploration had finally come to fruition and Reynolds had ‘the honor to report . . . that . . . at about 4 A.M. Oil was struck in No. 1 Hole’.2 The oil strike had occurred four miles from Shushtar in the appropriately named ‘plain of oil’, Maidan-i Naftun, two days short of the seventh anniversary of the D’Arcy Concession and moments before the company was due to pack up its equipment, dismiss its employees and leave Persia (see Figure 8.1). Shushtar, incidentally, was the location that had been advised to the concessionaires by a multitude of people at the very beginning of the venture’s operations. As the drillers tamed the awesome energy that manifested itself before them, the financiers and lawyers in Britain tamed the phenomenal cash flow expected from this event. The plethora of financial interests, which had developed over the years, crystallized around the long-awaited corporate structures that would bring the business into its next phase.

Political pressure The striking of oil sparked a flurry of messages. Reynolds sent a letter to the chairman of the Burmah Oil Company and also gave instructions to send two separate telegrams from Basra and Bushihr.3 Independently, Lieutenant Wilson

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wired the British diplomatic corps in Bushihr, from Shushtar, with an instruction to look up two biblical verses, which contained within them the phrases ‘that he may bring out of the earth oil to make a cheerful countenance’ and ‘the flint stone into a springing well’.4 Major Cox, the political resident in Bushihr, in turn, telegraphed the government of India and the British legation in Tehran on 28 May.5 The legation also telegraphed the government of India as well as the Foreign Office, which, in turn, informed Preece.6 Reynolds and Preece then both independently informed the Concessions Syndicate on 2 June.7 The British consular staff in Ahwaz had also, somehow, been informed of the strike and rejoiced that the concessionaires had ‘found the right hole at last’. The news spread in Ahwaz and, as ‘a consequence, the European residents [had] despatched a telegram congratulating’ Reynolds.8 D’Arcy, on his side, claimed, on 1 June, that there had still been ‘no word at all confirming Paul K’s cable and . . . this [was] explicable as all hands would [have been] trying to control the fountain and measure the daily yield before Reynolds would cable’. D’Arcy thus first received the news from the recently unemployed Paul Kitabgi, who himself had heard the news from the British legation in Tehran and had, meanwhile, also informed his brother Vincent.9 In a short period of time, the news of the oil strike had thus demonstrably travelled far and wide in an environment renowned for its lack of discretion. As Rosenplaenter had told the concessionaires a few years earlier, it was ‘perfectly impossible . . . to keep anything secret’ in Persia.10 The news had also been spread through the use of the Persian telegraph system, which was prone to surveillance.11 The Kitabgis, for their part, had kept cordial relations with the Persian court. Successive shahs had always been keen on receiving news regarding the progress of the oil explorations. As early as 1903, the Kitabgi brothers had been keeping Muzaffar al-Din Shah abreast of developments and ‘His Majesty the Shah [had] given orders that Edouard Kitabgi Khan [was] to give him news every week from Kasr-i-Shirin’.12 At the time, D’Arcy had been ‘very glad to hear that H.M.  the Shah [was] taking such an interest in the Concession, and [he hoped] it [would] continue’.13 Muhammad Ali Shah had also been concerned with the concession and had personally instructed the concessionaires to alter the recipients of the imperial commissioner’s salary in the summer of 1907.14 It is thus likely, due to the number of people who had found out about the oil strike, the abundant use of the telegraph system and the Kitabgis’ recent unemployment, coupled with their desire to curry favour with the monarch, that the shah had found out about the oil strike before the concessionaires’ official announcement to the Persian legation on 24 June.15 The possibility that the shah had heard the news early on is interesting as, just a few days after the oil strike, on 4 June, the shah and his entourage suddenly left to Bagh-i Shah with the Persian Cossack Brigade. Just as Reynolds feared that the oil ‘pressure [was] entirely beyond [his] control’ in the second boring, the shah started putting immense pressure on the Majlis to give him back the political power his father had lost.16 There ensued a series of failed negotiations and, on 23 June, after oil had reached the surface with ‘considerable violence’, the head of the Cossack Brigades, Colonel Liakhov, led hundreds of his men into Tehran to shell

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the Majlis and restore the shah’s absolute control over Persia.17 Thus began the Lesser Autocracy and a civil war that engulfed the nation in a violent struggle for its political future.18 Soon after the coup, Paul Kitabgi was unexpectedly appointed legal advisor to the Persian Ministry of Foreign Affairs. For G. P. Churchill, ‘how he obtained it [was] a mystery . . . The Russians hate[d] him & so [did] everyone [he] imagine[d]. Saad ed Dowleh [was] very angry with him too. Ala es Sultaneh [he knew] much mistrust[ed] him so who got him the post [was] a mystery’.19 Perhaps, he had been rewarded for providing the monarch with a valuable piece of information.

Legal pressure The coup presented no challenges to the company’s physical operations due to the presence of Lieutenant Wilson and his men. Wilson, himself, admitted that his ‘ “captivity” [was] due to the fresh “constitutional” troubles . . . As oil [had] been found and as prospects [were] now good, the Home Government wish[ed] to ensure that the D’Arcy Exploration Company may continue their work without hindrance. They [were] ready to send more men if need be. But for troubles in Persia [he] should be back in India’.20 D’Arcy could thus observe the new political chaos engulfing Persia with a certain insouciance. He commented, in a noticeably more relaxed fashion than before, that ‘things at Tehran look[ed] bad and [would] not [he] imagine[d] be better until the Shah [was] bombed or dethroned – [he] hear[d] he [drank] like a fish’.21 Despite the weakness of the Persian government, the turmoil of the revolution and Wilson’s presence in Khuzistan, however, the D’Arcy Concession was still upheld by, and subjected to, Persian law. From D’Arcy’s perspective, it was essential that the Persian government be given no excuse to endanger the concession’s legal standing now that oil had been found. From the Persian perspective, the legal relationship with the company was the last remaining way in which it could exert any form of leverage. On 23 June, the day Liakhov and his men besieged the Majlis, D’Arcy asked Preece if he could ‘sometime have a look at the Concession & see if [they had] to give any notice on anything on finding oil – as it [was] so important that all the conditions in the Concession should be now complied with’.22 Nearly a month after the oil strike, on 24 June, Preece thus formally informed the Persian legation in London.23 The Persian legation acknowledged the news and told the concessionaires that it had been decided that the imperial commissioner would now reside in London.24 Much like the first Majlis had done before him, the reinstated shah spurred the imperial commissioner into action. He deployed him to where he could access the concessionaires directly and made him take on a vastly more active role in protecting the government’s interests. Amid the chaos in Persia, the shah’s keen interest in the oil concession was undoubtedly caused by the promise of great riches, which was particularly relevant in light of the abysmal financial condition of the Persian government.25

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The imperial commissioner Sadiq al-Saltanah proposed to meet the concessionaires as soon as he reached London and pressed on certain issues immediately. He wanted to know what steps would be taken, now that oil had been found, and how the outstanding issues with the Persian government would be resolved. In light of previous interactions, he hoped that, this time, the concessionaires would ‘be so very kind as to put [him] in a position to comply with this wish of [his] Government & enable [him] to exercise [his] function with efficiency both towards [his] Government & to [themselves]’. He reiterated his desire to see D’Arcy’s agreement with Burmah, as he had still not seen it, and added ‘that [he] should have been consulted previously in the negotiation or completion of the said agreement or agreements & [he] must officially take note of this & reserve all the rights of [his] Government with reference thereto’. Further to this, he wished ‘a copy of agreement or agreements & any further information on the subject which may be useful to assist [him] in safeguarding the interest of the Persian Government’.26 The concessionaires were unsettled, as Sadiq al-Saltanah’s tone had become ‘distinctly aggressive’.27 Preece sent a short and vague response as he convened with D’Arcy and the Burmah Oil Company in order to determine the best way of dealing with the energized commissioner.28 He drafted a second ‘fighting’ reply ‘intended to put him in his place and it [was] written assuming that [they did] not wish to give him the copies he [asked] for. [He thought], however, that the matter require[d] very careful consideration . . . as there [was] more in this letter than appear[ed] on the surface’.29 Preece worried that the concession could be cancelled and sold off to the Germans so he advised ‘to keep [their] weather eye open’.30 Unlike his nonchalance to political developments, D’Arcy was genuinely preoccupied by the legal developments of his operations. He asked Preece ‘to send the short non fighting reply’, because he saw ‘all this as highly important as the concession or its rights must not be jeopardised’.31 He further asked Preece to take his time in replying and proposed that his lawyer meet with the commissioner, in person, to iron out the outstanding difficulties.32 Preece thus told Sadiq al-Saltanah that they needed to wait for news regarding the third boring and the return of financiers to town in the winter before proceeding with anything.33 After nearly two months of silence, in November 1908, Sadiq al-Saltanah grew increasingly impatient. After having waited for years for the formation of a company and now ‘that everybody [was] in town and [they had] such satisfactory reports of No. 3 well’, he pressed the concessionaires for information, as ‘the Imperial Government naturally [were] somewhat disappointed and anxious’ and thought ‘that this matter should [have received] their serious attention’. Furthermore, the issue of outstanding payments, regarding the existing oil wells, had still not been settled. The imperial commissioner stated that, as Reynolds had been working those fields, ‘there [was] not the slightest doubt that the yearly revenue accumulated since the Concession was granted [was] payable by the Concessionaire to the Imperial Persian Government’ and he enquired as to when he could expect the issue to be resolved.34

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In parallel, Preece had also received a telegram from the Persian chargé d’affaires in London, who received further questions from Tehran. The shah’s government was very ‘much concerned at the delay in forming a Company and . . . they [did] not think due interest [had] been taken in the Concession or that the work [had] been adequately pressed forward’. They also asked if they could arrange for an advance on their share of net profits and if the concessionaires would consider buying the shah’s shares in the forthcoming company as well as his shares in the First Exploitation Company.35 The shah was clearly trying to extract as much liquidity as possible from the concession in this troubled political period, and, very importantly, he expected shares in the company that was going to be formed. Therefore, there remained three outstanding issues with the Persian government. These were information regarding D’Arcy’s agreement with the Burmah Oil Company, payments due for the three existing oil wells and information regarding the forthcoming company. D’Arcy’s lawyer suggested refusing the first, paying the second and giving limited information on the third.36 Preece thus bought further time by replying to the imperial commissioner three weeks after his last letter and telling him he would reply to his queries at some later date. He also suggested that they should all meet with D’Arcy ‘some day in the future when Mr. D’Arcy [was] in town’.37 It was thought that wasting time and meeting in person, as D’Arcy suggested, would be the best way to achieve satisfaction regarding all the outstanding issues.38 D’Arcy’s lawyer, Manisty, eventually met with the Persian legation’s lawyer, Lumley, in November, and it is of use to quote Manisty’s report on the meeting, at length, in order to reveal the attitude of the concessionaires towards the Persian government. Through an exceptional act of verbal acrobatics, Manisty claimed that, contrary to the imperial commissioner’s misguided assumptions that the agreement with the Burmah Oil Company was for the ‘working of the Concession’; it was nothing of the kind . . . it was simply an Agreement entered into by [D’Arcy] with the Burmah Oil Company, and through them with the Syndicate they had themselves formed, in order that [D’Arcy] might have the advice and assistance of this powerful and experienced Company, in searching and experimenting for the finding of Oil; consequently it was not in any sense an Agreement contemplated by the Concession, notice of which was to be given to the Imperial Commissioner, or the contents of it communicated to him.

This statement was unequivocally false and intentionally misleading. Every here and there Mr Lumley interposed to ask the effect of the Agreement – each time [Manisty] repeated that it was a private Agreement between [D’Arcy] and the Oil Company; – of course it dealt with remuneration and consideration to be given to the Oil Company, but that [D’Arcy] could no more go into the details of it with the Imperial Commissioner, than [he] could go into the details of any arrangement [he] might make with [his] Bankers.39

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Lumley continued to prod Manisty in order to find out if they had come to any arrangements regarding shares in the concession, and Manisty kept responding that it was a private matter, which was blatantly untrue according to the terms of the concession. Quoting Article 11 of the concession, Lumley further ‘pointed out that [they] were to establish by Agreement with the Commissioner, such supervision as the Commissioner might think expedient to safeguard the interests of the Imperial Government; and he complained that no such Agreement had been entered into’.40 Antoine Kitabgi had drafted this clause in order to be informed of the concession’s workings and make sure everyone’s interests were being looked after, including his own. He had access to most documents at the time, but, after his death, this provision had been increasingly ignored. Manisty claimed that this clause referred specifically to the annual payment of 16 per cent of net profits and would only be applicable after the forthcoming company had been formed. Lumley absolutely rejected this interpretation and argued it should be in force from the signing of the concession and should include D’Arcy’s expenditure book. At this latter suggestion, Manisty ‘laughed . . . and asked him what he would suggest in actual words’.41 Again, it is important to note that Antoine Kitabgi had had access to the company’s accounts as had Vincent Kitabgi in his role of imperial commissioner.42 Lumley finished the meeting by mentioning Sadiq al-Saltanah’s frustration at not being able to report anything back to his government and Manisty thus advised D’Arcy ‘to see the Commissioner from time to time and to endeavour to give him something or another, which will enable him to write something to his Government’.43 As before, there was a conscious effort by the concessionaires to keep the Persian government ignorant of the workings of the concession, and this latest meeting was merely a continuation of that policy. As the meeting had not resolved any of the outstanding issues, D’Arcy decided to waste more time. Sadiq al-Saltanah wrote to Preece on 8 December and again on 15 December asking for news as all the issues he had brought up were still pending.44 On 22 December he thanked D’Arcy for the pheasants he had been sent but, again, asked Preece for news.45 Regarding the outstanding payments for the existing oil wells, he stressed that ‘the matter [had] been long put off, it [was] most desirable that further delay should be avoided’.46 He was consistently ignored. The imperial commissioner persisted, and, in January 1909, D’Arcy finally responded to the issue of the existing wells by using the excuse that had become routine for years and that had never satisfied the Persian government, namely, that the existing oil wells were not being worked by the concessionaires and that, therefore, he did not have to pay any arrears on them.47 The Persian prime minister thus instructed Sadiq al-Saltanah to ‘claim energetically from the Concessionaire the overdue amount owing on account of the 2,000 tomans a year for Shuster, Ghasre Shirin & c. Should they not admit the claim, the matter must be referred to Arbitration according to Clause 17 of the Act of Concession’.48 Sadiq al-Saltanah persevered, but, by the end of March, he had still not received a satisfactory answer.49 More importantly, neither him nor his legal representatives had received any information regarding the forthcoming company.50

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Structural pressure As a consequence of pressure from the Persian government, other shareholders, a third showing of oil and the desire to recuperate his considerable investment, D’Arcy began regularly pressuring the Burmah Oil Company to form the new company. He was ‘desirous that the matter should not be delayed longer than is absolutely necessary as [he was] being continuously worried by those interested. There [was] of course also to be considered [his] Position with the Persian Gov’.51 The Burmah Oil Company, conversely, seemed unconcerned by time pressure and gave vague assurances in respect of the incorporation process, which were ‘very unsatisfactory’ to D’Arcy.52 Time was clearly on their side now as it would help them extract better conditions from D’Arcy and give them further confirmation of the value of their investment as more wells were being drilled. Burmah finally started proposing arrangements regarding the creation of the ‘big co’ in late 1908.53 They proposed a new agreement for the forthcoming issue of shares and debentures. Instead of the £1,000,000 in debenture stock agreed upon in 1905, they would issue half of that amount as debenture and the other half as preference shares.54 This would reduce their risk as debenture was secured by the company’s property. D’Arcy ‘expressed himself forcibly’ against this new agreement as it could open him up to legal claims from his partners or, alternatively, open another round of conflictual negotiations with them.55 He thus asked that, in exchange for accepting these new terms, Burmah would indemnify him against any claims, but they categorically refused, asking him, instead, to convince his partners that he was negotiating a better deal for them.56 D’Arcy reluctantly abided and told Vincent Kitabgi that he had ‘been able to arrange something better for [them]’.57 In addition to this, Burmah’s plan was that the forthcoming company would own 90 per cent of the First Exploitation Company and 97 per cent of another company that would be formed in order to fulfil the concessionaires’ obligations to the Bakhtiyari tribe. The Persian government would own 4 per cent of the First Exploitation Company and the Persian individuals, who had received shares as part of the initial negotiations for the D’Arcy Concession, would own the remaining 6 per cent. Despite Manisty’s assurances to Vincent Kitabgi that this would ‘be a very important, and it is believed, a very prosperous company’, the Persian government’s shareholding and voting rights had been effectively limited to 4 per cent of a subsidiary company. As their shares were worth £20,000 and the parent company would have an authorized capital of £2,000,000, the Persian government ended up with 1 per cent of the value of the parent company but without any shares or voting rights in it. Furthermore, the Persian government, as well as the other Persian shareholders, would not hold their shares themselves, as they would be held in safekeeping by the First Exploitation Company.58 This configuration thus achieved Burmah’s goal of separating Bakhtiyari interests from the rest of the operations and reducing the shareholding and voting rights of the Persian government to next to nothing. Unlike Reuter, who had given the Persian government an opportunity to purchase a fifth of his company’s shares prior to its

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listing in 1889, Burmah and D’Arcy had completely shut the Persian government out of the process.59 The Bakhtiyari, on their end, had been informed of the oil strike a few weeks before the Persian government during a visit to London, but, like the imperial commissioner, they had not been informed of the structure their interests would take.60 As per the combine detailed above, the Bakhtiyari would own 3 per cent of the shares of a subsidiary company that worked their lands. Burmah had some concerns regarding the potential consequences of this configuration, however. Having a separate Bakhtiyari company was a way ‘of easing the burden which the Agreement with the Bakhtiari [laid] upon [them], but [they were] not at all sure that [they were] not “seeking for trouble” by adopting such a policy, as if the Bakhtiaris eventually [came] to understand the true inwardness of things, they [were] not the people to lie down to the position’.61 Furthermore, speaking of the big company’s prospectus, Burmah’s lawyers thought that stating that the Bakhtiyari company had ‘been formed for convenience in administration’ was ‘too suggestive of a device to give the Bakhtiari Chiefs a smaller shareholding than they would otherwise have been entitled to’.62 The phrase was thus removed. In addition to the unfavourable structuring, it was added in the statutes of the Bakhtiari Oil Company Limited that the ‘subscribers to the present Issue [would] be entitled to participate pro rata in all future Issues of Capital’. There was only one subscriber to the Bakhtiyari company during that issue, which was the forthcoming parent company controlled by Burmah. This phrasing was intentional and the external Glaswegian lawyers advising Burmah thought that it ‘[could not] of course be intended to mean what it [said]’. It would have meant that the parent company could, if it so wished, be the sole subscriber to any future share issues of the Bakhtiyari company and thus entirely dilute its other shareholders. The lawyers suggested amending it to include any shareholders of the company at the time of an eventual share issue, which would have included the Bakhtiyari, as they would receive their shares at a later stage.63 Having multiple interlinked corporations also led to a dilemma for Burmah. A doubt emerged as to whether each corporation had to pay a percentage of its annual net profits to the Persian government as per article 10 of the concession.64 Article 10 clearly stated that the concessionaire would have to pay the Persian government 16 per cent of the annual net profits of ‘any and all’ companies formed. Regarding this issue, Burmah had even considered altering the concessionary text, but the ‘plan of approaching the Persian Government with a view to amending the wording of the Concession before attempting to bring out the Company or Companies must be set aside [they thought], for it would involve interminable delay, a mission to Teheran, and incalculable baksheesh’.65 Burmah’s Glaswegian lawyers, Boyd, Miller and Thompson, thought ‘it would only be equitable that the royalty should not be charged on the proportion of the profits of the main Company derived from the First Exploitation Co. and the Bakhtiari Oil Co.’ Although they ‘fear[ed] that legally the Persian Government would have the right to do so. Apart from the objection of delay [they] would

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favour approaching the Persian Legation on the subject’.66 Despite it, arguably, being a double payment on the same profits, even Burmah’s lawyers suggested trying to reach an agreement with the Persian government in order to avoid future problems. Burmah concluded, however, without consulting the Persian government, that only the big company would pay 16 per cent of its annual net profits.67 In addition to all these measures, a leading legal expert, Sir Francis Palmer, was asked to give his opinion on whether the Persian government had to be consulted regarding the formation of the parent company at all. The stakes had, by then, become even more significant, because, according to Redwood, ‘taking an even liberal discount off for his constitutional optimism’, Persia would become ‘in all human probability the biggest oil producer in the world  – bar none’.68 Palmer concluded that as this [was] a Persian concession and relate[d] to land and rights in Persia, it [was] obvious that there [could] be no complete and satisfactory transfer unless and until the Persian Government recognize[d] the transferee and enter[ed] into privity with such transferee so that it may properly be predicated of the transferee that he [had] assumed all the engagements and responsibilities within the meaning of the concluding words of Article 9.69

Ferrier mentions Palmer’s letter, but fails to mention this crucial section of it, which demonstrates Burmah’s desire to keep the Persian government as ignorant of these proceedings as possible.70 It is also very important to note that the Persian government had only been liaising with D’Arcy, and his staff, and thus still had no knowledge of Burmah’s role in the process.

Financial pressure In addition to the Persian government and the Bakhtiyari, the venture’s other shareholders had to be accommodated into the new structure. D’Arcy’s arrangement with Burmah included the reimbursement of his expenses as well as a number of shares. The final prospectus of the parent company cites a reimbursement of slightly over £203,000.71 D’Arcy further settled on 170,000 shares of the Burmah Oil Company in exchange for all his interests in the D’Arcy Concession. These were to be split up between himself, his original partners and other sub-purchasers. The new parent company would have an authorized capital of £2,000,000, of which £1,000,000 would be in ordinary shares. Of these £1 ordinary shares, 570,000 would go to the Burmah Oil Company, 400,000 to the Concessions Syndicate Limited and 30,000 to Lord Strathcona. Burmah owned approximately 95 per cent of the Concessions Syndicate Limited, with most of the balance being owned by Lord Strathcona. Thus, Burmah controlled approximately 95 per cent of the ordinary shares of the new company and Lord Strathcona the remaining 5 per cent. As D’Arcy’s group’s shares were worth approximately £900,000 at the

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time, the Burmah Oil Company had a capitalization of £2,270,000 and the new big company would have an authorized capital of £2,000,000, D’Arcy’s group would own approximately 21 per cent of the combined value of the two entities.72 His group had been diluted to approximately 45 per cent of the value of the shares of the forthcoming big company, down from the 60 per cent originally agreed in 1905, but, as they would hold Burmah shares, they had hedged their risk by having interests in Burmah’s other operations as well. Sir Francis Palmer confirmed that D’Arcy required the ‘approval and consent’ of Vincent Kitabgi and Edouard Cotte in order to agree to Burmah’s new arrangement. He could not ‘imagine any clearer words conferring on them an equitable interest in the concession and the profits thereof. They by virtue of that [were] part owners with Mr. D’Arcy’, which was not the case for Sir Henry Drummond Wolff ’s interests and those of his sub-purchasers.73 D’Arcy dreaded the prospect of another confrontation with his historic associates. He contacted the Kitabgis to settle the matter in early March, and Vincent decided to go to London, from Egypt, to deal with the matter in person.74 Apart from the delay caused by the trip and despite D’Arcy’s apprehensions, Vincent rapidly approved the proposal and the Kitabgis accepted 11,900 shares in the Burmah Oil Company in exchange for all their rights in the concession.75 Cotte also rapidly approved D’Arcy’s arrangements and accepted his 3 per cent allocation, 30 per cent of which went to Arthur Somerville, who had purchased a portion of Cotte’s interests in 1902.76 As soon as his partners had accepted their shares, D’Arcy officiated his own arrangement with Burmah, which felt ‘like signing away a child’.77 Sir Henry Drummond Wolff, for his part, had gathered a series of sub-purchasers throughout the years. Shortly after the oil strike, he communicated with Henry Lynch about the future of the venture, and it was revealed that Lynch had a financial stake in the business in addition to his other dealings with the venture, which included financial intermediation, general shipping and the purchase of oil for his steamers.78 Sir Henry had died in late 1908, which complicated the process of allocating his shares. It became much more difficult to verify claims over the ownership of his interests.79 The British minister in Tehran, Sir George Barclay, for example, claimed to have purchased £200 of Sir Henry’s interests, but it was impossible to verify.80 In addition to Kitabgi, Cotte and Sir Henry’s sub-purchasers, D’Arcy allocated shares to a number of other individuals. They were all allocated their shares in advance of the public listing, as they would have had to otherwise appear on the prospectus due to the outstanding shares owed to them. This list of individuals is interesting in light of what was to happen in the following years. It included Percy Mitchell, Andrew Umphray, William Buxton, Phillip Lovell Hampden Canning, George Gordon Powell, W.  Alsager Elgood, the Duke of Marlborough, Judge Wilson, Mr and Mrs Smith, Lady St Helier and Georges Lampre.81 Allocations were also made to several members of the Marriott family and Alfred Marriott made a failed, last-minute appeal to honour a promise made to his cousin regarding half of an additional percentage in the venture.82 Finally, Lord Strathcona purchased 5 per cent of D’Arcy’s shares to ensure he owned 5 per cent of the entire Persian oil company.83 Burmah supported this as long as they could purchase them back at

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the time of his death, and they also made sure that they had the first right of refusal over any shares that would be disposed of from the ‘D’Arcy crowd’.84 Despite the numerous pressures and conflicts, D’Arcy and Vincent Kitabgi eventually reconciled after the various arrangements had been settled. Vincent congratulated D’Arcy on the ‘successful termination of a business that [had] undoubtedly required a great amount of worry and care for so many years’. He further thanked him for everything and ‘trust[ed they would] continue to bear the same friendly relationship that [they] had in the past. If [they] had any friction at all [D’Arcy] must admit that it [had] been for [their] ultimate mutual benefit, although perhaps [Vincent had] at times unwittingly caused annoyances to [him]’.85 D’Arcy, for his part, ‘never [could] and never wish[ed] to remember such unpleasant things as [were] associated with the word friction. [He had] forgotten it all and only remember[ed] that [Vincent had] at all times helped [him] all [he] could in the business of the concession and [he] did what [he] always said [he] would – Keep the Persian people quiet’.86

On board As the legal and financial structuring of the parent company was proceeding, the concessionaires undertook the important task of constituting a suitable board of directors. The individuals approached to be part of the board, as well as the individuals and institutions involved in its constitution, reveal the extent to which political and economic elites cooperated to enshrine the interests of the company. Following the oil strike, the Foreign Office had alluded to this synergy of interests when they told D’Arcy that it was ‘most desirable from the point of view British interests, both political and commercial, that it should be undertaken . . . since if it [was] not there [was] every likelihood that the business [would] be secured and worked by the subjects of a foreign Power’.87 Board members were thus not selected for their expertise in the oil industry or their knowledge of Persia but for their membership to different elements of the imperial establishment. In the first days of 1909, D’Arcy approached Lord Milner for the chairmanship of the board.88 Milner was an imperial grandee who had served a long tenure in South Africa as governor of the Cape Colony and high commissioner of South Africa before becoming administrator, and later governor, of the Transvaal and Orange River Colony. When they approached him for the chairmanship, he had retired from public life, after refusing the viceroyalty of India, and now occupied himself with various business interests, the Rhodes Trust and the council of Toynbee Hall.89 D’Arcy told Milner that he had approached him for the great commercial prospects of the business and especially ‘because of the very great Political Interests involved’.90 Milner possessed the stature of a prominent imperialist that was required for the chairmanship of the big company, and he had the necessary contacts and experience to ensure that the company would remain at the top of imperial priorities. Lord Lansdowne, now opposition leader in the House of Lords, informed Charles Hardinge that he too had written to Lord

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Milner regarding this position.91 However, at the end of January, Hardinge, who was now seemingly involved in the process, informed D’Arcy that Lord Milner had refused the position because of his other commitments.92 Lansdowne went on to recommend Sir Edward Hope by passing through Hardinge again.93 Hope was ‘the Father of the Wife of Lord Lansdowne’s Eldest Son’. D’Arcy thought this recommendation should ‘have the most serious and favourable consideration’ because it would ensure the continued support of Lansdowne’s son, the Earl of Kerry, who could be of use with the Foreign Office and the House of Lords through his father.94 D’Arcy also proposed Lord Cromer as an alternative.95 Evelyn Baring, first earl of Cromer, was the grandson of one of the founders of Barings Bank and had been consul general of Egypt for over twenty-three years.96 By this stage, however, Burmah had already approached Lord Strathcona for the chairmanship after Pretyman, the former parliamentary and financial secretary to the Admiralty, expressed surprise that they had not contacted Strathcona in the first place.97 He had, after all, been introduced as a potential chairman during the initial negotiations between D’Arcy and Burmah in 1905.98 Strathcona, now aged 88, thus met with Wallace, a director of the Burmah Oil Company, and agreed to be the chairman of the board on the condition that he received the necessary blessings from the first lord of the Admiralty.99 Wallace told Strathcona that none of the directors of Burmah had had the occasion of seeing the first lord, but that they had seen Admiral Fisher, Rear Admiral Winsloe and other admiralty officials, who were all fully versed regarding the importance of their business. He further told Strathcona that the first lord would, undoubtedly, rely on those persons for information.100 Regardless and perhaps on Strathcona’s insistence, Reginald McKenna, the first lord of the Admiralty, subsequently summoned another director of Burmah, Adamson, to go and see him. The details of this conversation are unknown as Adamson decided not to relay the results of this conversation in writing, but the results were seemingly positive as, only a few days later, ‘Lord S . . . got good assurances from the 1st Lord of the Admiralty, and he accept[ed] the Chairmanship’.101 The Burmah Oil Company also approached Sir Hugh Barnes to be a member of the board. Barnes, now a member of the Council of India, had formerly been foreign secretary to the government of India and lieutenant governor of Burma.102 He was willing to join the board but needed the blessing of Charles Hardinge and the secretary of state for India, Lord Morley, before he could confirm. Hardinge, who would have undoubtedly given his permission, was with the king in Berlin and ‘Lord Morley [was] himself favourably inclined & would [have] like[d him] to accept [their] offer But he [had] to be careful about giving permission & want[ed] to be sure of his ground’.103 Ten days later, however, he surprisingly rejected Barnes’s request to join the board. Barnes was ‘disappointed & vexed’ and thought there was ‘no probability of his reconsidering the matter’.104 D’Arcy’s own suggestions for the board included Preece, Prince Francis of Teck and Pretyman, ‘if Pretyman consent[ed]’.105 The directors of Burmah objected to Preece’s membership, probably because it would have given D’Arcy an ally on the board.106 Strathcona, for his part, offered to help secure Prince Francis of

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Teck, or ‘detective’, as he was referred to in the correspondence. Strathcona also recommended a writer to the signet named Garson for the board, but Burmah’s directors were reluctant, as they thought it could give D’Arcy an excuse to have Preece on the board.107 There remained Pretyman, who would have been an invaluable asset for the company’s relation to the Admiralty. Although he was no longer in the Admiralty, he was still very much concerned by their fuel requirements, and he met Wallace several times in early 1909.108 They discussed the issue of the board, but Pretyman refused because ‘if he went back to the Admiralty, even though he then resigned his Directorship, he would be in a false position altogether’. That being said, ‘if the present First Lord of the Admiralty were to send him a note asking him to join the Board he would [have] be[en] willing to reconsider his position’. Wallace thus consulted Strathcona, who said he would think about it for a day and consider whether to ask McKenna. Wallace noted that if they did not get Pretyman, they could ask Garson to join the board without being obliged to invite Preece as well.109 Adamson, for his part, thought ‘it would be most desirable to have Pretyman on the Board’ and asked Wallace to have Lord Strathcona ‘use his influence’.110 Wallace tried to meet McKenna regarding this issue, but the first lord directed him towards the Admiralty’s director of contracts, Sir Frederick Black.111 Sir Boverton Redwood had, meanwhile, also spoken to Pretyman, who had told him he ‘was willing, or perhaps even anxious, to join [them] if he could get a note from Mr. McKenna. Under these circumstances it [was] a pity that Mr. McKenna refuse[d] to see [him], as [he] would scarcely care to broach this subject  – a subject of some delicacy  – to any but the head’.112 Black agreed to meet Wallace in early March, but, eventually, Pretyman did not join the board.113 Suddenly, however, Lord Morley had reconsidered Barnes’s situation and decided to give him his blessing to join the company’s board.114 The reasons behind this sudden change of heart remain unknown, but, as the rest of the process has demonstrated, it is likely to have involved informal pressures of some sort. The big company’s board of directors would, therefore, have a prominent imperialist at its helm and include members from several dimensions of the British imperial establishment. The remaining board members were Charles William Wallace and James Hamilton, who were directors of Burmah, John Cargill, who was the chairman of Burmah, D’Arcy and Charles Greenway, discussed in detail later.

Investor confidence By the end of March, the final details of the prospectus were being completed in anticipation of the initial public offering, and Burmah wanted to make the investment as attractive as possible (see Figure  8.2). It wanted to emphasize its intimate relationship with the Admiralty. By demonstrating this strong link, they could convince investors that they had already secured a sizeable and solvent client, while also demonstrating that the company had potent political protection.

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The latter was an essential attribute as Persia was not seen as a stable environment to investors in the City.115 The Admiralty had, after all, introduced the company to the opportunity in Persia and had a direct interest in securing a British-owned source of oil within the British sphere of influence. When discussing board nominations, Pretyman had made this clear, as he ‘soon passed on to the subject that was uppermost in his mind – viz. that “the Admiralty had put [the company] in the way of this splendid oil strike” and that he looked to [them] not to forget it’. Wallace, in turn, responded that ‘when [they were] making satisfactory profits in Persia  – and not till then [could] the Admiralty, or he, expect [them] to even consider the possibility of being patriotic in a pecuniary sense’.116 Burmah thus confidently sent a draft of the prospectus to the Admiralty emphasizing the strength of their relationship. Shortly afterwards, however, Redwood phoned the company with ‘strong objections’ regarding the passage relating to the Admiralty. They did not want it made public that the suggestion to develop Persian oilfields had come from them. When the company noted ‘that the statement [was] absolutely true Redwood [told them] that the Admiralty would go so far as to deny the statement’. He ‘would justify their denial on the grounds that “everything done at the Admiralty [was] recorded, there [was] no record of this and consequently it [could not] be true!” ’117 What the company surprisingly failed to foresee was that the Admiralty could never admit to supporting specific commercial interests publicly even if they did so in private. The company thus settled on a much milder statement involving the Admiralty. The final prospectus stated that it was common knowledge that the British Navy [had] hitherto been hampered in its desire to substitute Oil for Coal by the difficulty of ensuring regular supplies when they [were] most wanted -in time of war- and that it [had] consequently long been desirous of seeing other sources of supply opened up. Hitherto Burma (where the Admiralty [had] contracts with the Burmah Oil Company, Limited) [had] been practically the only source of supplies in regular quantities in the British Dominions. The outlet of the Company’s Pipe lines, though not in the British Dominions, [would] be at the Head of the Persian Gulf, and so under British control. The development of these fields [was] therefore calculated to be of immense benefit to the British Navy, and substantial contracts for Oil Fuel may [have been] confidently looked for from the Admiralty as soon as the Company’s works [were] in a sufficiently forward state to enable it to enter into them.118

This revised statement contained publicly available information and was less objectionable to the Admiralty, while still conveying the message Burmah wanted to get across to prospective investors, namely that the Admiralty was looking for a secure supply of oil, that Burmah was already doing business with them, that the area of operations was under British control and that prospective supply contracts were highly probable.

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The presence of Lieutenant Wilson and his troops was also a crucial element in acquiring investor confidence. Despite the uprisings in Tabriz and the ensuing siege, the region around the oil operations remained the ‘quietest part of the country’.119 This prevailing peace, as well as the cost of maintaining the guards, led Hardinge to suggest the withdrawal of Lieutenant Wilson and his troops from Khuzistan. If they were deemed vital, Hardinge thought that, at the very least, the costs of their upkeep should be borne by the oil company.120 A few weeks after this suggestion, however, in the final days of 1908, the anjuman of Isfahan pleaded with the Bakhtiyari to join forces with the revolutionaries and liberate Isfahan. As part of the tribe had already proclaimed itself loyal to the shah, Samsam al-Saltanah called for a tribal council, and it was decided that the tribe would descend onto Isfahan and fight to protect the constitution. On the morning of 3 January 1909, the Bakhtiyari thus entered Isfahan, and by noon, they had taken control of the city.121 The Bakhtiyari’s conquest of Isfahan, unlike the violence in Tabriz, had direct implications on the company’s operations. The tribe they dealt with on a daily basis had just been dragged into a national conflict and fractured. This put the company in an awkward position, as it had to maintain good relations with both sides of the civil war. It also placed the company in the middle of the tribe’s warring factions, which began to fight over the company’s guard payments and threaten to wreck the company’s operations.122 This situation led D’Arcy to being ‘very insistent’ on retaining the guard and the Burmah Oil Company executives, on their side, considered it ‘the height of folly . . . to let the Guard go until after the issue of the Shares’ as it was ‘essential . . . to be in a position to assure nervous investors that [they had] the protection of British Troops’.123 By the end of January, however, the ‘Government’s attitude in the matter of the Guard [was] of rather a cheeseparing nature’.124 This risked plunging the company back into the vulnerabilities and uncertainties it had fought so hard to mitigate.

Figure  8.1 Well no.  1 in Masjid-i Sulayman on the footsteps of an ancient Zoroastrian temple. The site of the first oil strike in the Middle East. ©BP plc. ARC179496.

Figure  8.2 Map of Persia attached to the investor’s prospectus of the Anglo-Persian Oil Company in 1909 showing oil sites, Persian borders and the area covered by the concession. Public domain.

Chapter 9 A BU SE P OW E R , P R I V I L E G E A N D AU T HO R I T Y

The Anglo-Persian Oil Company was incorporated on 14 April 1909, and its initial public offering took place five days later. The ‘issue had been a great success’ and ‘nothing like the rush of applications . . . [had] ever been known in Glasgow before, it being impossible at times to get inside the bank at all, and all day long the public were standing five to ten deep at the counter with their applications’.1 The artisanal operation spearheaded by D’Arcy, Reynolds and Kitabgi had become the third largest oil company in Britain after Shell and its own principal shareholder, the Burmah Oil Company. Its financial future seemed finally secure.

Exploitation The listing of the Anglo-Persian Oil Company was not universally celebrated. D’Arcy, for one, concluded that he had ‘made an extremely bad deal’ in light of how popular the shares had been.2 More importantly, the Persian government had finally been able to ascertain what arrangements had been taken. A few days after the listing, Sir Edward Grey thus received a telegram from the British legation in Tehran stating that the Persian government felt ‘their interests [had] been ignored in the issue of the shares of the Anglo-Persian Oil Company, Limited’. The Persian minister for foreign affairs had told them ‘that the Persian Government consider[ed] their rights prejudiced by the illegal action of the concessionaire and [would] not ratify the statutes of the new Company which they [could not] recognise’.3 This historic act could have proven disastrous to the newly listed company. The minister for foreign affairs further requested that the imperial commissioner’s salary be paid to him instead of Sadiq al-Saltanah starting from May, which made the situation ‘rather awkward’ as the company had to follow orders from the Persian government while still having to deal with Sadiq al-Saltanah in his capacity as imperial commissioner.4 In addition to this, the dispute over the existing wells

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had not been resolved. In late May, Wallace offered to settle the matter by paying half of the rent due from 1901 to May 1909 and the full rent then on, but this was rejected by the imperial commissioner, who requested a final answer to the whole matter by the following week.5 By the end of June, the Persian government was still pressuring the company over the three wells and threatened to go to arbitration if payment was not forthcoming.6 A few days later, however, a series of events took place, which led this reinvigorated opposition to vanish. On 13 July, following a series of military victories, Bakhtiyari troops from the south and other revolutionary troops from the north entered Tehran. Three days later, Muhammad Ali Shah was deposed in favour of his 12-year old son, Ahmad Shah, and the Persian government had, once again, been violently overthrown.7 The Bakhtiyari, on their side, had not been ‘motivated by only altruistic nationalist sentiments’. The recent oil discoveries had been an important factor for the Bakhtiyari leadership ‘to temporarily shelve the differences and participate in the reconquest of Tehran’.8 The oil strike had thus also been a factor in the Constitutional Revolution’s development and provided an impetus and an opportunity for the Bakhtiyari to seize power. Sardar Asad was appointed joint interim cabinet head, alongside Sipahdar, and was then made a member of the Directory in August 1909.9 Other members of the tribe had also been made governors and given influential positions.10 The tribe that the company dealt with on a regular basis had thus suddenly gained a prominent role in the central government and the previous regime was no longer in a position to trouble the company with protestations. For the company, it was assumed that these events would not ‘interfere with the peace in [their] part of the country’, but it was still ‘thought advisable not to withdraw [the] Indian Guard for the time being’.11 However, after the Foreign Office had withdrawn its funding, and as a result of pressure from the Bakhtiyari, the guards eventually left Khuzistan on 25 September 1909.12 Lieutenant Wilson remained in Persia and was promoted to acting consul in Muhammarah, where he spent his time ‘in connection for the most part with the Oil Company’s affairs’.13 Soon after their seizure of Tehran, it was the Bakhtiyari’s turn to enquire about their status in the company and the Foreign Office asked to clarify the matter as ‘both His Majesty’s Minister at Tehran and Consular Officers on the spot [found] themselves in some perplexity on the subject’.14 The dilemma was regarding ‘the number and nature of the shares to be allotted to the Bakhtiari Khans’. Sir Edward Grey requested ‘an authoritative statement of the exact position of the Khans with regard to the different companies to be formed in order that they may receive a clear explanation of it and that future misunderstandings may thus be avoided’.15 The company could not understand how a misunderstanding had arisen as, in their opinion, the prospectus explained everything clearly.16 After having received this stern response from the company, one official in the Foreign Office was ‘still in some doubt whether the Company [had] meant to swindle the Khans or not’.17

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Abuse of power The financial success of the public listing rendered the company a competitive target for its commercial rivals. Combined with the political and financial turmoil in Persia, this gave rise to a new type of threat for the concessionaires. By the end of 1909, the Persian government was, once again, in desperate need of financial liquidity. It applied to the Russian and British governments for a loan and, in parallel, sought financing from private entities.18 In December, the Foreign Office informed Anglo-Persian that a British subject was actively looking to purchase the Persian government’s oil shares.19 D’Arcy was extremely annoyed by this and believed that the Foreign Office should intervene and ‘be persuaded not to treat this English Financier in this instance in the “ordinary course of Business” whatever credentials or guarantees he [gave] – as it [was] not an ordinary business’. The situation was particularly concerning, because of the risk of shares ending up in foreign hands. D’Arcy thought that ‘considering the consistency with which [he had] always worked for this Concession to be in English hands and have got it there – it would be too ridiculous for the F.O. now to indirectly undo all [he had] done’. He suggested forming a syndicate to buy half of the Persian government’s shares and then barring them from selling the other half. Another option involved the British government buying the other half as he had previously suggested to Sir Charles Hardinge. He thought this ‘would be a great coup for the Govt. almost a Suez Canal over again’.20 Wallace brought this matter to the Foreign Office and disingenuously claimed that the company was concerned that the Persian government could be deprived of its revenue. He then appealed for help as they had ‘entered upon this undertaking largely with the assistance and wholly, [they believed], with the approval of the British Govt’.21 He also spoke to the assistant undersecretary of state, Mallet, ‘at some length’, about the possibility of the British government buying a portion of the Persian government’s shares but ‘understood from him that the Treasury would not listen to anything of the kind’.22 It was unfathomable for the British government to buy shares in the oil business. Wallace could not see how they could stop the Persian government from selling its shares and a meeting of the Anglo-Persian board was thus called to discuss the matter.23 The Foreign Office consequently informed the company that the name of the representative of the financier currently in Tehran was Horace Blake and that they had ‘obtained the name of the mysterious Financier, but having obtained it under the deal of confidence, [were] unable to divulge it’.24 They, thereafter, instructed the British minister in Tehran ‘not to support the application of Mr. Horace Blake . . . The effect of this, Mallet’s secretary told [the company], [would] . . . be to choke off Mr. Horace Blake altogether, and . . . if Mr. Horace Blake [went] direct to the Persian Government the Persian Government would refer to Sir George Barclay before doing anything’.25 This incident may relate to an event discussed by Kazemzadeh, who writes of the arrival of two individuals in Tehran in December 1909, who had offered the

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Persian government a loan secured by their oil shares. They had revealed their plans to the Foreign Office, and the Foreign Office had promised to keep their plans strictly confidential in order to shield them from Russian meddling.26 The Foreign Office, however, had, suddenly and surprisingly, betrayed their trust and informed the Russians of these plans in order to sabotage their loan proposal. They had also warned the Persian government about dealing with them. The final lender, behind this proposal, had been the London-based Samuel & Co. Kazemzadeh mentions Samuel and his partner Walter Levy but does not specify which Samuel it was.27 Research reveals that Walter Levy was the husband of Marcus Samuel’s daughter and that, therefore, it is, most likely, that the final entity behind this financial manoeuvre was the oil magnate behind Shell.28 What indicates that these two incidents may be the same is that, during a trip to Persia on ‘other business’, Preece had negotiated a £100,000 loan to the Persian government secured by their shares in the oil company and in exchange of a separate mining concession.29 Charles Greenway later commented that at the time it was agreed that the loan should be made by the A.P.O.C., as a Syndicate representing Sir Marcus Samuel was endeavouring to buy the P. Govts. interests in A.P.O.C. and had made a definite offer of £200,000 for Samuel, and it was considered undesirable that A.P.O.C. shares and Royalties should fall into their hands.30

There remain two discrepancies between the incidents, however. The first was that the situation was initially communicated to the company as an attempted purchase of shares and not a loan, but this may have simply been an error. The second discrepancy is the name of the intermediaries, as Kazemzadeh reports two intermediaries named Woolf and Osborn, whereas the Foreign Office gave the company the name of Horace Blake.31 This may have been done in an effort to conceal the identity of the intermediaries, as per their original promise to the lenders, or, perhaps, to prevent the company from intervening directly. In May 1910, the Persian government was approached by another financial group, Seligman Brothers, to provide them with a substantial loan collateralized by their oil shares.32 Interestingly, Seligman Brothers also had a connection with the oil industry as they had been instrumental in the formation of Standard Oil.33 Like the Samuel group, Seligman notified the Foreign Office of its intentions, and the Foreign Office had, once again, reported the matter to the Russian authorities. The Persian government still applied for a £1,200,000 loan from Seligman in October, however, and Seligman informed the Imperial Bank of Persia that this loan would be used to pay off the Persian government’s debts to them. The bank never responded, but the Foreign Office told Seligman that the Imperial Bank of Persia was in talks for their own loan to the Persian government and, as the British government favoured this latter scheme, they could not support Seligman’s proposal. This was extraordinary as the Imperial Bank of Persia had ‘had no intention of lending Persia any more money’ and had even turned down two applications for a loan in September and October of that year.34

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The Seligman group was furious and told the Foreign Office that, in the future, should the Persian Government ever require a fresh loan, no responsible firm would negotiate, knowing that at the eleventh hour the Foreign Office [was] liable to be used in support of a competing house, in spite of the fact that a formal application [had] been made by the Persian Government and the fact noted by the Foreign Office; in other words, it [meant] that the Imperial Persian Bank [could] dictate what terms they liked to the Persian Government.35

On 8 May 1911, soon after Charles Greenway had been appointed one of its directors, the Imperial Bank of Persia eventually granted the Persian government a loan of £1,250,000.36 The British government and the company were thus working together to preserve the shareholding of the company in its current state. As a consequence, they were choking off alternative sources of funding for the Persian government.

Abuse of trust The company’s listing led to a large influx of capital, which in turn led it to vastly expand its operations. Negotiations with the Bakhtiyari became necessary in order to purchase land around the drilling sites and for the laying of a pipeline. The Bakhtiyari, in their new position of strength and in Preece’s absence, rejected Reynolds’s initial offer of £10,000 in March 1910 and very quickly threatened to cease all the company’s operations unless their own conditions were accepted.37 Despite the consul at Ahwaz, Lieutenant Ranking, being present in the negotiations and an intervention by Sir George Barclay in Tehran, negotiations failed.38 It was decided to postpone the negotiations until the following year, and, in order to accept this, the khans requested £5,000, which the managing agents considered ‘of course, pure extortion’. They had consented ‘to this large amount by the knowledge that if [they] came away, without concluding any agreement at all, the Company’s work would almost certainly be stopped, and by the fear that some act of violence would take place’.39 The company prepared for the following year’s negotiations and, in light of the failed pourparlers, deemed it judicious to let the British consul lead the negotiations.40 Lloyd, one of the company’s managing agents, further suggested that Greenway should pressure the Foreign Office to bring about the replacement of the current ilkhan and ilbayg and the company should drill outside the Bakhtiyari area, even if they found no oil, just in order to gain some leverage over them.41 Another form of leverage the company was employing was the withholding of the Bakhtiyari’s shares in the Bakhtiari Oil Company. As per their original agreement, Greenway had no intention of handing over the Bakhtiyari their shares until the pipeline had been completed, but he sought a legal opinion to see if he could also make the shares non-transferable.42 He further instructed the managing agents in Persia to tell the Bakhtiyari how ‘extremely foolish’ it would be for them to sell

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their shares in light of their potential value. Meanwhile, he would also ‘get the Foreign Office to intervene in the same way as they [had] done in respect of the Persian Government’s interest’.43 By the time negotiations recommenced, it was ‘admitted on all sides that the question of compensation for land to the Bakhtiaris [had] become more acute, more complicated, & more troublesome than ever realised’.44 The Bakhtiyari were still the most powerful entity in Persia and had been made aware of ‘the great value of the Oilfields which were currently talked of as being of far greater extent and value than the Baku Oilfields’. Sardar Asad, ‘the strongest political force in Persia’, who had ‘designs on the Regency or on the Throne itself ’, was ‘in particular counting numerous “chickens” in respect of both the Government’s and Bakhtiari’s interests in the Concession’.45 In addition to this, a ‘fresh danger’ had surfaced. The sayyids of Shushtar claimed hereditary rights over the oil stream and lands of Maidan-i Naftun. Despite assertions that this was all ‘quite a new revelation’, Kitabgi had prepared for this impending conflict at the onset of the concession and had even made D’Arcy pay the sayyids £200 in order to foster good relations.46 The payments from nearly a decade earlier, however, were no longer relevant and to ‘arrive at a settlement . . . one [was] faced with a most difficult, a most intricate, and a most complicated business’.47 Ritchie, the engineer in charge of pipelines, was going to meet the Bakhtiyari, ‘as a friend’, in order to extract information, and it was also decided that the company would have a new negotiator.48 Reynolds had not adapted well to the advent of new management structures and had failed in the 1910 negotiations.49 Following Greenway’s trip to Persia in the beginning of 1911, he was thus unceremoniously dismissed from the company’s service and it was decided, following Lieutenant Wilson’s recommendation, that the company would leave ‘the Political work into the hands of Dr. Young’.50 Dr Young had joined the company as a medical officer in 1907 and, by opening the company’s hospital to locals, had caused ‘an improvement in the relations with the natives of all classes’.51 He had already successfully negotiated with the Bakhtiyari in early 1909 when he had been summoned by Shahab al-Saltanah to look after his ill son. On this occasion, Young had initiated a conversation, regarding new guarding arrangements, and proposed that the Bakhtiyari guards would have to be under the command of the company’s manager, who would also be responsible for executing all the payments to the guards.52 The Bakhtiyari were moved by Young’s ‘kindness for which [they would] ever feel grateful’ and agreed to sign an additional agreement days before the public listing.53 This incident furthered Young’s influence among the heads of the tribe and thus made him eminently suitable to carry out the land negotiations.54 In accepting his new role, Young suggested ‘that he should not be given the title of “Political Officer”, as that would probably lessen his influence with the Khans by making them regard him as an “official” to be wary of ’.55 This was consented to and it was also agreed that he would report directly to the managing agents.56 As he prepared for the negotiations, he agreed with Greenway that the Bakhtiyari’s shares should be withheld, as it was ‘the only lever against’ them. Captain Grey

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also agreed with this and Young would tell the Bakhtiyari that the shares would have to be handed over to them in a formal occasion where the khans, the consul and himself would have to be present. This ploy would give them ‘time till next winter at least’.57 Young believed the shares were ‘very good “bait” ’ but also that it was wise for the Bakhtiyari to think of themselves as partners in the business as it would align their interests with the company.58 On 29 April, after difficult and protracted negotiations, Young and Ranking finally settled on £22,000 for ‘a very large tract of country – some 9 square miles – practically all oil bearing’.59 This ‘was the last reduction that any mortal being could have got these Khans to accede to’, and it included the £5,000 from the previous year’s failed negotiations.60 The outcome was a success and ‘everyone [was] of opinion that [they] got a bargain’.61 The fields manager had even told Ranking ‘that he thought £50,000 would not have been an excessive sum to pay for the lands now acquired, and as a relative matter of prices stated that a few years [before], 27 acres of oil land were sold for £500,000 in Baku’.62 Even Sir Edward Grey expressed satisfaction with Ranking’s intervention in the negotiations and ‘his proceedings [were] warmly approved’.63 Young eventually signed the agreement, on behalf of the Bakhtiari Oil Company and the First Exploitation Company, but not AngloPersian, because ‘someone might have enlightened the Khans on the point and at a later period they might have asked for shares in the A.P.O.C. as well to which they have no right to whatever’.64 Following the agreement, the Bakhtiyari had still not received their shares. Young claimed he knew of several buyers willing to purchase their shares, including one of the Kitabgi brothers, who would then probably pass them on to Russian or German buyers. This had to be prevented and Young was ready to ‘give them a hundred excuses’. The scare over the Persian government’s shares had been mitigated as Sir George Barclay had ‘extracted a promise from the Foreign Minister in Tehran to the effect that no sales would be made without reference to the Legation. But no such arrangement [had] been come to with the Khans & [he] doubt[ed] if they would keep it even if they made the promise’.65 The handover was thus delayed, and they eventually made the shares non-transferable. They were aware ‘that the Khans [would] “kick” if the script [could not] be negotiated’, but it would ‘at least ensure a certain delay’ and they could ‘later make the delivery when the Bakhtiaris [were] less likely to be in touch with probable purchasers’.66 By March 1912, three years after the Bakhtiari Oil Company had been created, the Bakhtiyari had still seen no sign of their shares and they were still being used as a bargaining tool.67 As with the Persian government’s shareholding, the British government and the company were working together to ensure that the Bakhtiyari’s shares did not change hands.

Shuster Two weeks after the Bakhtiyari negotiations had ended and four days after the loan from the Imperial Bank of Persia had been finalized, on 12 May 1911, a US

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citizen named Morgan Shuster arrived in Persia.68 He had been entrusted with the, arguably impossible, task of reorganizing Persia’s finances. The Persian government had decided it needed a team of foreign experts to try and salvage its dire financial situation, but the constraints of the Russian and British imperial chokehold limited the possible nationality of this much needed assistance. In the end, it was decided that a team from the United States would be acceptable due to the country’s lack of strategic interests in the Middle East. President Taft himself was ‘delighted to know that [Shuster had] accepted the position of financial adviser and Treasurer General of the Persian Empire’.69 As Shuster was battling endemic corruption in Persia and two imperial behemoths in order to fulfil his duties, a meeting took place in London regarding the arrangements that had been made with the Persian government during the formation of the Anglo-Persian Oil Company. In July 1911, the former Persian minister in London, Prince Ala al-Saltanah, and his son, the current Persian minister in London, met with one of the company’s solicitors, Frank Crisp.70 It is likely that in the midst of evaluating the Persian government’s financial assets and with the assumption that the shares would be of immense value, Shuster instructed Ala al-Saltanah to go to London to make enquiries. The nature of the questions asked during this meeting reveal the incorrect assumptions that the Persians held regarding their position in the company’s final arrangements and the frustrations that had developed since the listing. The Persian government incorrectly assumed, for example, that its shares were of a special class that set them apart from other shareholders. They also strongly objected that their shares were not being publicly traded. Crisp told them, in response, that this did not impede the Persian government from disposing of their shares privately. In reality, however, this was not a viable option, as discussed above, due to the measures taken by the company and the British government to prevent any transfer of the government’s shares. Ala al-Saltanah also asked if the government’s shares in the First Exploitation Company could be traded for shares in the Anglo-Persian Oil Company and Crisp told him that this was absolutely impossible. Ala al-Saltanah was misleadingly told that such an exchange would not be in the Persian government’s best interest anyways, as the shares in Anglo-Persian had limits on their profitability whereas the shares in the First Exploitation Company did not. Crisp blamed most of the issues on the concessionary text as the company could only give shares to the government of ‘the first company founded under the concession’.71 As previously exposed, Kitabgi had attempted to correct this flaw early on, when D’Arcy had tried to establish a parent company, which he called a syndicate. Ala al-Saltanah also enquired about the Bakhtiari Oil Company, which came as a complete surprise to the Persian government, and Crisp responded that this arrangement was, once again, in the government’s interest as the company would have otherwise been obliged to give the Bakhtiyari 3 per cent of AngloPersian. Despite the multitude of misleading responses, the resurfacing of these issues two years after the company’s listing proves that the Persian government had been consistently and intentionally ignored during the corporate and financial structuring of Anglo-Persian and that once they had understood the nature of the

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arrangements, after a period of national chaos, they came to view them as a grave injustice.72 Independently of this interaction, the company watched Shuster’s mission in Persia with great apprehension. They had even warned the Foreign Office regarding his choice to head the treasury gendarmerie. Charles Greenway hoped they would ‘forbid’ this appointment and warned them that ‘Major Stokes was entirely identified with the most extreme nationalists in Persia and attended the meetings of their anjumans. He was as anti-British as he was anti-Russian and lost no chance of denouncing the iniquity of British policy in Persia especially as regards the difficulties which have been put in the way of loans’.73 It seemed that Stokes’s affinities for the Persian constitutionalist cause had qualified him as ‘anti-British’ from the company’s perspective. Originally, the Foreign Office had had no issue with Major Stokes’ appointment as long as he resigned from his position in the government of India, but, a few weeks after this letter, they changed their mind, ‘warning the Persian Government that it ought not to persist in the appointment of Major Stokes’. Astonishingly, they also acknowledged Russia’s right to take any measures it deemed necessary.74 In the end, Shuster’s mission in Persia came to an abrupt end, as did Persia’s constitutional government, following Russian military intervention. Amid the chaos, the existing arrangements with the company remained unchanged.

Striking abuse Following the oil strike and the latest injection of capital, the company’s operations expanded rapidly, the workforce grew and there were hundreds of patients being treated in the company hospital.75 Dr Young’s correspondence provides insights into the working and living conditions of ordinary workers, which have been sparingly documented in the existing literature, if at all. The company’s operations were the workers’ first exposure to industrialization as the labour force in Khuzistan consisted mostly of peasants and pastoral nomads. They quickly joined the ranks of the company as unskilled workers in masonry, construction, transport and more.76 These laborious occupations and poor working conditions resulted in frequent accidents and illnesses, which were complemented by cases of violent abuse. Accidents often occurred due to the very tenuous state of the workers’ dwellings. In 1908, for example, two dwellings had collapsed, seriously injuring their inhabitants. Stones fell as both roofs collapsed and fractured one man’s leg in two places and the ribs of another, who remained unconscious for twelve hours.77 By 1910, when employment numbers began to swell to the thousands, no measures had been taken with regards to dwellings for the local labour force. They had ‘no proper tents or houses, and . . . a large number of labourers, all [found] a miserable shelter under some patched up black tent, but chiefly under ground in non-ventilated crevices which they [dug] out for themselves, trusting to luck and good weather to save them from coming to grief in stormy winter days’. In

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these areas, ‘waste collect[ed] & sewage [was] spread over wide areas’. For Young, that ‘it [had] already become an undesirable slum [was] not surprising to those who [were] acquainted with the native [there], that this slum [was] too near [to them was] also a fact to be reckoned with sooner or later’. He thought that the company would eventually have to provide some form of lodging to prevent the risk of infectious diseases, the development of slums near staff quarters and the annoyance of having to clear these villages out if they settled near drilling sites.78 Young’s dehumanization of the Persian worker made him view their desperate conditions as an inconvenience more than anything else. Harsh climactic conditions also caused problems. Persian summers were unpleasant for European workers, but they had ‘all kept in fair health’ during most of the period.79 For the locals, the ferocious heat proved far more dangerous. In one instance, a new rig had caused abscesses, boils and ulcers on the hands of labourers, because the ‘iron material which they [had] to handle [became] so frightfully hot during the day that no human hand [could] touch it’. Two workers had been caused ‘such disablement that they [had] to be fed by their fellow labourers’, and Young thus recommended that the company provide them with protective gloves.80 The climate also caused serious cases of heat-stroke with one worker, who ‘narrowly escaped death’. The tribesmen also retained their old habits of drinking from the rivers, which caused severe intestinal complications, such as colic, diarrhoea and dysentery. One labourer nearly swallowed a fish while drinking from the river, and Young ‘hoped the experiment proved beneficial to both’.81 There were outbreaks of malaria, which proved fatal in the case of one worker in 1908, who collapsed and was left ‘unobserved all day under a burning sun’.82 For Young, the summer months ‘could have had nothing more than a paper wall between [them] and hell’.83 Later, in the autumn, European workers had ‘all been well’, but local patients became ‘more varied and more serious’ with cases of severe, and at times fatal, fevers and pneumonia.84 The local workforce was also subjected to frequent cases of ‘abuse and illtreatment’, which even ‘induced H.M.’s Government to make representations to [the company’s] Directors’. Despite a company ‘circular’, serious cases of abuse continued and ‘striking the Lurs’ became a ‘growing evil’.85 According to Young, the European employees thought ‘the country was theirs, that they could do with the people as they liked’.86 In 1911, for example, there were two serious cases that Young reported. An engineer named Martin had abused a native worker to such an extent that he ‘was unconscious for eight hours and, as a matter of fact, might well have succumbed’.87 Martin was already on his third offence and had denied any wrongdoing, while admitting to his colleagues that he had almost ‘killed the blighter’. An employee named Melvie had assaulted one of his workers, who, in turn, had responded in kind. This was potentially explosive as it was the first instance of a local worker striking back a European and could have established a dangerous precedent. Young thought that ‘if it were for insolence, striking would perhaps be pardonable. But on almost every occasion the native [was] being struck for laziness or some other offence where a fine or dismissal would meet

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the case’. He also believed that they had to always take the side of the European employee, even if he had been in the wrong, and that the local worker could, in no circumstance, know that a European employee had been castigated in any way. Furthermore, the ‘alarming’ increases of ‘accidental injuries’ made it harder and harder for him to justify all these instances to the khans, who would eventually start doubting his word. He worried that the day would come when there could be serious reprisals from the khans and suggested including a clause in the contracts for all new European recruits specifying the penalties of fining and potential dismissal for aggravated assaults.88 Young eventually suggested a minor fine of 50 krans for Martin and the local worker who had responded to Mr Melvie’s attack was set to receive a ‘damn good hammering’.89 The punishment, which Young witnessed to ensure it ‘[was] properly carried out’, stirred a response by a local crowd, but he eventually managed to calm them.90 As for ‘poor Melvie’, ‘it would have been cruel to beat Melvie with both ends of the stick’, so he ‘begged’ Ritchie, the pipeline supervisor, to ‘deal leniently with Melvie’. Any serious punishment would have set a bad precedent and damaged the ‘prestige’ of the European workforce, ‘even though [they were] in the wrong to a certain extent’. Young did not usually report these kinds of incidents, but felt he needed to report Melvie’s case ‘for apart from its gravity, it might have led to stoppage of work on the well, worry with the Khans & then Consular assistance, the source of which would have been of importance to mention. Besides, these things spread & [were] made much of by outsiders’.91

Abuse of privilege The expansion of the company’s operations had some devastating effects on the local population. For others, the company’s expansion presented extraordinary personal opportunities, which have been omitted from the existing literature. Charles Greenway, board member of the Anglo-Persian Oil Company, had joined the services of Charles William Wallace, the current managing director of AngloPersian, in 1876 and had then joined the Calcutta office of Shaw, Wallace & Co. in 1893, which had been the marketing agent of the Burmah Oil Company. Greenway had successfully expanded Burmah’s business in India and was then recalled by Wallace to assist in Persian matters.92 A few days after the public listing, in early May 1909, he prepared the draft documentation for the establishment of a managing agent for the Anglo-Persian Oil Company.93 This managing agent would take the form of a company called Lloyd, Scott & Co., which was eventually incorporated in January 1910.94 The managing agent would constitute an additional layer of management in the already complex configuration of the Persian oil concession. Lloyd, Scott & Co. would be the agent of Anglo-Persian ‘with full power to deal with the Company’s affairs and interests in Persia subject to the direction of the Board’.95 This system of interconnected management structures in the company’s operations led to some confusion and a number of conflicts of interest. The managing agent was remunerated with a 5 per cent commission on direct sales, an

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allowance for expenses and, importantly, the permission to broaden its activities to a whole range of commercial opportunities that included trading, banking, shipping and more. Greenway was appointed managing director of this company upon its incorporation but had already taken on that role since Anglo-Persian’s listing. From the onset, he was determined to give the managing agents ‘supreme control in all local matters’.96 Greenway fully realized the extraordinary opportunity that this set up gave him to enrich himself and, as early as July 1909, he was already exploring possibilities.97 The first opportunity he identified regarded the construction of residential housing and office buildings. Burmah decided that, instead of building these facilities themselves, Lloyd, Scott & Co. would undertake this and charge the company rent. Thus, Greenway asked a partner in Persia, Lloyd, to ‘secure the land cheap, or as “backsheesh” ’, because ‘the investment should be a good one’.98 Greenway also initiated negotiations with the Hamburg-American Line as his ‘political relations, both with the Persian Government and the local sheikhs, would doubtless be helpful’.99 Indeed, Greenway had quickly made business contacts in Persia. He had been directly involved in the negotiations with Shaykh Khazal over the lands for the refinery in Abadan. A few days after Anglo-Persian’s public listing, Reynolds, who had already met Shaykh Khazal in March 1906 and had given him a gold watch to foster good relations, formally opened negotiations with the shaykh and his close adviser, Haji Rais, who was ‘the power behind the Shaikh, and [could] make or mar [their] negotiations with the Shaikh, being at the present time the strongest man in Arabistan’. During these land negotiations, Haji Rais ‘quite unblushingly asked for 1,000 shares on the understanding that they were of a value of £1 each, and added that he wished to buy another 1,000 shares’.100 The existing literature forgets to mention that the ‘backsheesh’ for ‘services rendered’ by Haji Rais was swiftly approved.101 Furthermore, the Foreign Office assured the shaykh that it would protect him and his descendants from any encroachments on his status quo from the part of the Persian government, regardless of whether it was ‘absolute or constitutional’. They also granted him a loan of £10,000.102 During these negotiations, Greenway had wanted to make it clear to Haji Rais that Lloyd, Scott & Co. held the ‘pursestrings’ of Anglo-Persian, with regards to the ‘backsheesh’. This would put Haji Rais in a position of ‘obligation to L.S. & Co., inasmuch as the payment or otherwise of the backsheesh was dependent on their goodwill’. He would then ‘be quite ready to give some quid pro quo for influencing such a substantial amount of backsheesh as this’.103 This was important, because Haji Rais controlled much of the commercial flow in the area. It was thus paramount to secure his support and that of his family.104 It did not take long for Greenway to embark on a series of business dealings with Haji Rais and, by the end of the year, the managing agents were dealing in rice and tea with him while exploring other import-export opportunities.105 In the following months, Greenway also tried to form a mining Syndicate in Persia as part of the loan arrangements discussed above. This scheme included D’Arcy as one of its founding shareholders and Preece as its lead negotiator.106 He

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also made Lloyd, Scott & Co. the agents of the Royal Insurance Co. and suggested laying the ‘foundations of a Banking business’.107 Following these initiatives, he tried to secure a railway concession and was already arranging underhanded payments and a further loan of £100,000 to the Persian government.108 As mentioned, he was also appointed director of the Imperial Bank of Persia in 1910. The Anglo-Persian Oil Company had turned into a veritable bonanza for Greenway and his partners.

Figure 9.1 Enjoying the works. ©BP plc. ARC178509_020.

Chapter 10 A B E R R AT IO N T H E G OV E R N M E N T ’ S SHA R E P U R C HA SE

Despite fantastic personal prospects for some of its directors, the Anglo-Persian Oil Company found itself, once again, in dire financial straits. The building of the refinery had become an operational nightmare due to delays in personnel and materiel as well as repeated technical failures. When it had intermittently operated, the output was highly inadequate, which forced the company into disadvantageous distribution agreements. This led to a notable shortfall in revenues, which, coupled with fierce competitive pressures and the company’s inability to solicit further funding from the financial markets, was bringing the entire endeavour to the brink of financial extinction.1 The company seemed to have reached another impasse and only an extraordinary event could rescue it.

Energy Winston Churchill was appointed first sea lord in October 1911 and Admiral Fisher became his principal adviser and confidant.2 There began a reinvigorated drive towards the Admiralty’s adoption of oil and, in December 1911, the committee on the use of oil fuel in the Navy was established by the fourth sea lord, Captain Pakenham. It held preliminary hearings, which concluded, in February 1912, that a more thorough inquiry was required.3 The Naval programme of April 1912 later committed four battleships to oil and, in May, Churchill proposed the creation of a royal commission on fuel oil. This commission would reaffirm the Admiralty’s commitment to oil and determine the most advantageous method of procuring it. Following a serious disagreement with Fisher over certain appointments in the Admiralty, Churchill wooed him back, during an impromptu trip to Naples, and made him agree to serve as the commission’s chairman.4 The commission finally received its royal warrant on 31 July and began its operations in late September.5 Churchill instructed Fisher to find ‘oil in sufficient quantities and at a reasonable price in peace, & without interruption in war’.6 It is important to note that when proceedings began, there was no mention of employing public funds to purchase shares in an oil-producing company and, as mentioned in the previous chapter,

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the Treasury would not even envisage such an eventuality. There was also no implication that the Admiralty needed to choose only one supplier. Both of these actions were, arguably, contrary to the purported objective of the Admiralty, which was simply to devise the best arrangement with which to supply itself with fuel oil. As with everything else, Fisher employed extraordinary vigour and passion in this endeavour and the commission heard evidence from a wide-ranging group of individuals regarding oil sources around the world. It reviewed prospects in the Ivory Coast, the Gold Coast, Madagascar, Galicia, Romania, Russia, Egypt, Trinidad, India, Canada, China, the United States, Mexico, Japan, South Africa, Australia, Panama, the Dutch East Indies, Argentina, Peru and Persia among others.7 It also reviewed potential oil resources in the British Isles, as tar oils, creosote oils and blast-furnace oils could be produced from British coal. Particular attention was paid to Scottish shale oil, which the Admiralty was already purchasing, and it was estimated that, in case of urgent need, 100,000–130,000 tons of it could be produced per annum.8 If the Admiralty purchased these Scottish fields, it was also argued that the state would own a cheap, reliable and high-quality source of oil.9 Other sources around the empire, in Canada, Australia, Tasmania, Trinidad and New Zealand, were also studied carefully.10 The domestic options, however, were not substantial enough, cheap enough in some cases and, perhaps, not gentlemanly enough to capture the interest of the Admiralty and the commission.11 Redwood concurred with Fisher that the complication was finding desirable suppliers that were also unquestionably loyal.12

Informalities It would be facile, in light of what has already been revealed, to assume that the government was going to give in to any of Anglo-Persian’s demands. The company officials themselves held this assumption at the beginning of the proceedings. Anglo-Persian’s senior management thus approached the preliminary hearings of December 1911 with a great degree of confidence. After some curt, impatient responses, Lord Strathcona ignored the questions that were being posed to him and delivered a statement regarding his involvement with the company. He explained that it was not as ‘a mercantile company that [he] looked upon it, but really from an Imperial point of view’. He had declined to take part in any new companies for the past 15  years, ‘but Lord Selborne [had been] very insistent indeed, so [he] consented to do it . . . it was wholly and solely . . . with a view really of having this liquid fuel for the Government that [he had] consented to have anything to do with it’. When they had finally struck oil and were looking to form the big company, he had refused to continue his association with the company until he had received McKenna’s blessing and until the government gave him assurances that they ‘would give every assistance that they properly could’. The committee went on to ask Strathcona about competing oil interests in Canada, which he, unsurprisingly, dismissed as unworkable. He, then, abruptly interrupted

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the discussion on Canadian oil to pronounce that he had ‘really nothing more to say’ and left the meeting.13 It all seemed rather obvious to him, so he saw no point in wasting time with formalities. The formalities continued, however, with the establishment of the royal commission on fuel oil in 1912. The directors of Burmah immediately rejoiced ‘that [they were] going to have such a good friend on the Royal Commission on Liquid Fuel for the Navy’.14 Although they do not mention whom, it is probable they were referring to Boverton Redwood, who would go to great lengths to help the company during the commission’s hearings. In addition to this useful friendship, Greenway had the opportunity of having several secret meetings with the Foreign Office and the Admiralty before the commission began its formal operations. It was in these secret meetings that he initially proposed that the British or Indian governments give the company a subsidy of £100,000 per annum so that it could raise the £2,000,000 it desperately required to finish the refinery, lay additional pipelines and develop ulterior fields. He also requested an exemption from import duties into India and the ‘utmost influence’ of the government to help the company secure the Mesopotamian concession.15 The Admiralty and the Indian government would then agree to purchase all the fuel oil the company could produce, up to 500,000 tons per annum, and have the right to appoint one or two members on the board of the company and its subsidiaries.16 Greenway concluded from these preliminary secret meetings that the Admiralty were ‘ “red hot” for some arrangement with [them]’ as they were ‘very anxious to preserve Persia for all time as a source of supply of Fuel Oil for the British Navy’. This would prevent Shell from securing a monopoly, which would, in turn, prevent sudden price increases and potential supply shortages in times of war. D’Arcy and Redwood considered this state of affairs ‘to be a unique opportunity for effecting a great “coup” ’, and further confidential meetings were proposed with representatives of the Admiralty, the Foreign Office and the India Office.17 D’Arcy, meanwhile, began his own informal efforts to establish a rapport with one of the principal decision-makers in the process. He contacted Lady St Helier, one of his shareholders and friends, for help. Lady St Helier was a prominent socialite of the late nineteenth and early twentieth century, who had inherited shares in the company from her husband and had a close connection with the Churchills.18 She had introduced Winston Churchill to her great-niece, Clementine Hozier, who would eventually become his wife, and she had even hosted their wedding reception.19 Churchill, who affectionately called her ‘Aunt Mary’, admitted that she had been one of the most important figures in his life as, apart from introducing him to his wife, she had also been solely responsible for getting him his post at the Admiralty.20 After having received D’Arcy’s appeal for help, Lady St Helier quickly saw ‘Winston’ and claimed that he ‘promised that Hopwood would communicate immediately with [D’Arcy]’.21 The Admiralty then wrote directly to D’Arcy to tell him that ‘Lady St. Helier [had] forwarded [D’Arcy’s] letter to [Churchill], and that he [thought] it would be of advantage if [D’Arcy] would call on the Additional Civil Lord, Sir Francis Hopwood, who would be glad to see [him]’.22 It is also worth noting, as previously mentioned,

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that the Duke of Marlborough, Winston Churchill’s first cousin and close friend, was one of D’Arcy’s friends and a historic shareholder in the concession. This was the duke who had inherited a bankrupt estate and married Consuelo Vanderbilt to rebuild Blenheim Palace and his family’s fortunes.23 Furthermore, Churchill’s uncle through marriage, Lord de Ramsey, was on the board of directors of the original syndicate that D’Arcy had attempted to form in 1902. D’Arcy thus seems to have had multiple options with which to elicit Winston Churchill’s personal attention.

Formalities Fisher believed in the importance of keeping Anglo-Persian an independent British company but had no intention of using public funds to do so. He wrote to Sir Ernest Cassel to see if he would be interested in investing in Anglo-Persian, but Cassel had no interest in entering the oil business.24 The commission then issued a statement specifically addressing this issue in November 1912. They admitted that it was not understood to be within the province of the Royal Commission to recommend Government financial assistance being given to develop oil areas. [They had] no financier on the Royal Commission, nor [was] the Commission so constituted as to be able to discriminate with exactitude as to the rival claims of, say, the Anglo-Persian Oil Company, the Nigeria Bitumen Corporation, the Trinidad Oil-fields, Sir H. Blake’s Newfoundland venture, Mr. Mackenzie’s Mount Sinai claims, and many more, all desirous of Government aid.

Furthermore, they felt ‘confident that available supplies of oil-fuel for the next 20  years [would] be so abundant that [they] need not trouble about national control or trade monopolies, and that [they] may safely go on buying in the cheapest market for the time being’.25 The commission’s statement was released five days before Greenway’s interview with the Royal Commission, on 19 November, and was, evidently, bad news for the company. Greenway continued the line of argument that the company had pursued in the previous enquiry. He reaffirmed that the Anglo-Persian Oil Company had been created ‘at the direct request and insistence of the Admiralty’. He went further and stated that, in effect, the company had always operated under the assumption that the government would take control of its fields once they had been appropriately developed, as they assumed ‘that it was the desire of the British Government that [the Persian] field should be developed and exploited for the benefit of British interests’. He also emphasized that the company was in possession of ‘the biggest oil concession, not only in British, or British-controlled, territory, but also, perhaps, in the whole world’. Greenway concluded that, as the company was now producing, it had to decide whether it would align itself with the Admiralty as they believed the Admiralty had desired, or whether they would

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instead find an alternative arrangement with Shell. Moreover, Shell, according to the information available to them, would soon be under the direct control of the German government.26 From his preceding secret meetings, he had been made aware of the government’s fear of a Shell monopoly and foreign influence over it. He was thus capitalizing on that apprehension to give the commission no alternative but to recommend an immediate investment in Anglo-Persian. In the hearing, Sir Boverton Redwood then asked Greenway how much time he thought they had left before they would be forced to cede to Shell, and Greenway responded, dramatically, that he thought it was already too late, as Sir Francis Hopwood had told him that there was no interest in his proposal. Before having completely given up, however, he had met with Sir Edward Grey, who had said he would endeavour to intervene in their favour, as the company would certainly ‘pass into foreign hands’ if the Admiralty did not intervene immediately.27 Overall, Greenway thought that his hearing had gone ‘most successfully’, as the commission’s members were ‘most sympathetic’ to his appeal. Lord Fisher, especially, ‘kept [him] talking in Pall Mall for a considerable time’ after the hearing as he was ‘most emphatic that something must done at once – both to secure Mesopotamia and to maintain British control over A.P.O.C.’28 Despite Greenway’s immediate optimism, however, Redwood warned him, in strict confidence, that there had been ‘political objections’ to his proposal centred on the vulnerability of Persia in the case of a war. Greenway was amazed by these objections as he thought that, regardless of any agreement with the Admiralty, they could reasonably expect, and even demand, military protection in the case of a war or other impending dangers. He thought this had been proven by the troops sent to protect their operations a few years prior. ‘Therefore it [seemed] somewhat extraordinary that this obligation  – which [would] always exist  – should [have been] considered a difficulty in connection with the proposed Contract.’ He asked if he could intervene in any way to make his point in subsequent occasions but realized that what Redwood had told him was strictly confidential.29 Redwood seemingly intervened in this matter himself, however, as demonstrated in some of the subsequent hearings held by the commission. In its hearing with Reynolds, for example, Redwood was guiding Reynolds into making a point regarding the beneficial effect of the company’s operations on relations between the British and Persians. To this effect, Redwood casually asked Reynolds to read a note that he had prepared prior to the hearing. Regarding the note, Reynolds stated, revealingly, that Redwood had mentioned this to him in private, but that this was ‘rather outside the scope of the present enquiry, and had [he] not warned [him] that [he] intended alluding to it, [he] should not have felt warranted in making any reference to it’. Astonishingly, Redwood made Reynolds agree, through this note, that he had ‘succeeded in getting on perfectly good terms’ with the locals and that he ‘never had any molestation’.30 Redwood continued this narrative during a subsequent hearing with Rosenplaenter and made him state that he had never felt that he ‘personally, or that [his] men personally, [had been] in any danger’. He asked this twice to make sure the point was well understood by the commission and also asked Rosenplaenter

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to speculate on the immensity of the Persian oilfields, even though Rosenplaenter had been in Persia a decade earlier and drilled, for the most part, in a different area than the one where oil had been found.31 Moreover, Redwood himself intervened in the hearings. In reassuring another member of the commission and prefacing his statement with the disclaimer that it was ‘not for [him] to make the statement’, he compared the risks present in Persia to the early years of the Baku oilfields and made a point of reminding the commission of how ‘absolutely unique’ the concession was in terms of its territorial extent.32 Complementing Redwood’s efforts, D’Arcy continued to mobilize his personal network. He asked Greenway if Lord Brassey would ‘do for the “Bridge” ’ and added that he ‘could also get at Churchill’.33 Greenway, for his part, added further pressure on the Admiralty by telling them that the German government had asked them for a quote to supply fuel oil and, before responding, he wanted to know if they had any objections.34 Greenway knew only too well what kind of objections this would elicit and he hoped that, in addition to the Shell menace, a reference to Shell’s increasingly monopolistic behaviour, and Redwood’s efforts, the government would be spurred into taking immediate favourable action.

A simple decision Greenway did elicit a reaction, but it was not the one he anticipated. Less than a week after his letter, Sir Edward Grey responded that, despite their desire to support them in their application for the Mesopotamian concession, there would ‘be great objections to the proposal that the Admiralty should themselves embark or recommend the Secretary of State for India in Council to embark, upon a policy of finding two million pounds of Capital for a British Company operating in territory which although presumably largely subject to British influence is nevertheless foreign territory’. Furthermore, this policy could be used as a basis to invest in other similar concerns ‘in which the arguments for similar action might prove to be equally or even more cogent, especially if the fields were in actual British territory, and within a shorter open sea voyage in the United Kingdom than the route from the Persian Gulf ’. Grey further hoped that Anglo-Persian would not enter into an arrangement with Shell and observed that all the assistance they had provided, over the years, ‘both in obtaining their concession in Persia and in other ways, was given on the understanding that the enterprise would remain British and it would be a matter of great surprise and regret if [their] Company made any arrangement whereby a syndicate predominantly foreign obtained control of their interests in that country’. He further added ‘that, in such a contingency, [their] Company could not of course hope to obtain from His Majesty’s Government the same support as in the past’.35 Grey felt rightfully betrayed by Greenway’s letter after all the efforts the Foreign Office had undertaken to preserve the company and threatened to stop supporting the company if they decided to combine with Shell.

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Prospects for the company were about to become even bleaker as the commission started considering other options. Two weeks after Grey’s admonishing letter, Fisher wrote, in a ‘private and secret letter’ to Sir Francis Hopwood, that he thought Deterding, Shell’s managing director, had been ‘quite the best witness [he had] ever heard’.36 Deterding had come under particular scrutiny during the hearings, regarding Shell’s dominant foreign shareholding through the ‘combine’ with Royal Dutch and its consequent vulnerability to foreign, potentially German, influence.37 The Dutch concerns controlled a dominant portion of the combine, having 60 per cent of its shareholding, which is why the commission wondered if the company would side with Dutch interests in the case of a policy divergence with Britain.38 Despite this line of questioning, Fisher had no doubts regarding Deterding’s loyalties and tried to convince Churchill of this by telling him that a vast majority of his tankers flew the British flag, he had purchased an estate in Norfolk and his son was schooled at either Rugby or Eton.39 Furthermore, to Fisher, Deterding embodied the combined qualities of Napoleon and Cromwell, and he had ‘outflanked the supine Anglo Persian Oil Company in acquiring in conjunction with the Deutsche Bank the fabulous oil riches of the Garden of Eden in Mesopotamia!’40 That is why he strongly recommended that the Admiralty immediately sign an ‘eternity contract’, subject to two years’ notice, with Shell for fuel oil at 60 shillings a ton delivered to the United Kingdom. This was the same price that Sir Marcus Samuel had offered a few months earlier after which prices had increased by ‘leaps & bounds!’ Then that price was too high, but, now, it was ‘exceptionally moderate’. Fisher thus beseeched Hopwood to finalize an agreement with Deterding ‘at once before his Dutch proclivities reassert[ed] themselves!’ Fisher was conscious that, considering freight costs, they could buy Persian oil at 55 shillings a ton, ‘but Remember’, he underlined four times, ‘that no one single area even if so prolific as either Mexico or Persia [could] be depended upon! Whereas Deterding [had] now oil areas all over the world’. His final recommendation was to immediately agree to buy up to 250,000 tons of oil a year, from Shell, with an option of buying up to 500,000 tons, and to spread the remaining balance of the Admiralty’s needs between Persia and Mexico. Fisher finally appealed to Black, the director of contracts, and told him ‘that he [would] simply be a d--d fool’ if he did not obtain Shell’s offer in writing. He reckoned this should be done immediately and without any regard for any other negotiation with the Mexican and Persian oil companies.41 Hopwood, for his part, completely concurred with Fisher’s recommendation in private, and he had been working tirelessly with the director of contracts to finalize this arrangement.42 The Royal Commission went on to formally recommend this course of action to the Admiralty. They urged ‘immediate favourable consideration’ to Shell’s offer ‘in association with the offers from Lord Cowdray and the Anglo-Persian Oil Company, and such Roumanian and American and other offers as may have been received by the Admiralty, the object being to spread the Admiralty orders as widely as possible’.43 At the end of February 1913, for Fisher and the Royal Commission, therefore, Shell was by no means a menace, but a favoured

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option. The solution the commission proposed, although skewed towards Shell, was a balanced solution that hedged between three different suppliers. It also did not require any investment of public funds into the purchasing of shares in an oil company.

Mexican standoff A major part of the Royal Commission’s recommendation included oil from the Mexican Eagle Oil Company. This company, owned by Weetman Pearson, was now a major British oil producer and bore striking parallels with the Anglo-Persian Oil Company. Like D’Arcy, Pearson entered the oil business in 1901 with no prior experience in the industry, spent many expensive years looking for oil and had his major oil strike in the summer of 1908. This oil strike, much like Anglo-Persian’s, was in a nation outside Britain’s formal imperial orbit undergoing profound domestic political change and with an overbearing powerful neighbour. Pearson, analogously to D’Arcy, could be considered a gentlemanly capitalist or, at least, a gentleman ‘in the making’. He was a Liberal Member of Parliament from 1895 to 1910 before being made Lord Cowdray in 1910. He possessed excellent inroads into the British governing spheres and, similarly to D’Arcy, had assimilated into the ranks of the British elite through his business accomplishments, although, as Garner points out, he may not have fully assimilated due to his relatively humble origins from Yorkshire.44 There were also parallels in the political manoeuvrings they employed in the countries in which they operated. In Mexico, Porfirio Diaz exercised near absolute power in similar fashion to the shah in Persia. As was the case in Persia, therefore, personal relationships cemented through gifts, bribes, fees and other incentives were crucial in ensuring the stability of the company’s local operations.45 Again, as in Persia, the Madero Revolution in 1910 introduced a new governing paradigm with new political protagonists.46 There were also parallels with the assistance they received from the British government. Like the HMS Comet being sent to protect the oilfields in Ahwaz in 1907, a detachment of the Royal Navy’s squadron in the Barbados was sent to protect Pearson’s Mexican oil interests.47 There were also important parallels in the risks the respective companies faced. In Mexico, ‘there was the possibility that the oil fields would be taken over and destroyed, as an act of random revolutionary violence as retaliation for failure to pay “taxes” or ransoms demanded by local revolutionary caudillos’.48 The two ventures were subjected to similar international risks as well. Similarly to the looming Russian influence from the north in Persia, the United States watched developments on the rest of the American continent and the presence of expanding British oil interests caused concern. Occupation, by US troops, both in Veracruz in 1914 and in northern Mexico in 1916, meant that ‘the threat of foreign invasion was anything but idle’.49 This was, once again, mirrored on the Persian side with the perennial Russian threat, which eventually resulted in the Russian occupation of northern Persia.

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Both companies also had historical links with the Admiralty, as Pearson had received a number of government contracts, including the refurbishment of the Admiralty harbour in Dover.50 Most importantly, both entities sought to be the Admiralty’s fuel supplier of choice, both failed to meet the Admiralty’s technical specifications in February 1913 and both sought similar features to a prospective deal.51 Pearson, like D’Arcy, actively lobbied the British government to take a financial stake in his operations in order to prevent his important British enterprise from falling into foreign hands. He approached Churchill regarding the risk of being acquired by a foreign interest already in June 1912 and the chancellor of the exchequer, Lloyd George, in December 1913.52 In exchange for £5,000,000, Pearson pledged not to sell his shares to foreign interests and dedicate the major part of his production to the Admiralty, which would then ‘have all the oil they require for both peace or war’.53 Investing in the Mexican Eagle Oil Company was eventually shunned even though it was in a more advanced stage of production than the Persian option and ended up being a much more important supplier to the Admiralty during the First World War. Garner concludes that Cowdray’s proposal to the government failed because imperial and strategic interests were more important in Persia, Britain did not want to stir any more tension with the United States over Mexico, the Admiralty was uncertain about the quality of the product being produced and because of the ‘hostile reaction’ which a deal between a Liberal peer and a Liberal government would lead to in the press.54 It is arguable that Russian sensitivities, which were of equivalent, if not greater, importance, were at stake in Persia, AngloPersian’s situation in Persia was far more tenuous than Cowdray’s in Mexico and, as demonstrated during the war, the quality of oil in Persia was far more inept for the Admiralty’s needs. The explanation for Cowdray’s failure thus lies primarily in Garner’s last argument relating to the uneasy proximity of Cowdray to the Liberal government, which was especially relevant in light of the Marconi and Indian Silver scandals.55 Indeed, in April 1913, Fisher was irritated by an article in the London Mail that insinuated that ‘there was going to be a bigger scandal than the Marconi’.56 A  month later, in May, ‘Fisher had taken fright at the paragraph in the “TIMES” hinting at “scandals” with regard to a Mexican oil contract, and [suggested the Admiralty] do without it’.57 In June, the Daily Mail further mentioned the ‘strong-and, [they hoped], baseless-rumours regarding oil contracts for the navy [which] are exercising the public mind scarcely less than Ministers’ dealings in Marconi shares’.58 In addition to the company being owned by a Liberal peer, dealings with the Mexican Eagle Oil Company were even more subject to scrutiny, as Lloyd George’s son and Winston Churchill’s brother-in-law were both associated with it. This was in addition to the rumours that there had been investments in the company at the ministerial level and attacks on Fisher’s former ownership of Shell shares that he had sold at a loss. Searle thus argues, convincingly, that with ‘Opposition newspapers baying at their heels, it would have been politically suicidal for them to have’ undertaken Cowdray’s investment proposal.59 Among his many fortunes, D’Arcy thus had

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channels through which to reach key decision-makers without creating public discomfort.

Power In March 1913, a week after the commission recommended Shell, supplemented by Mexican and Persian supplies, Greenway, unexpectedly and triumphantly, reported back to Burmah that the Government, by which [he meant] all heads of the Admiralty, the responsible Members of the Cabinet and the Members of the Royal Oil Fuel Commission, [had] now agreed to withdraw from their previous attitude and [had] decided that they must give [Anglo-Persian] any financial assistance that may be necessary . . . as this [was] the only part of the world under British control from which they [could] rely with any confidence on sufficient supplies to meet their requirements.60

A few days later, Sir Francis Hopwood confidentially confirmed this to Fisher as the ‘ “powers” seem[ed] much more disposed than [he] anticipated to deal seriously with Greenway’s proposition as to big business with the Anglo-Persian Company’.61 The ‘powers’ had suddenly decided that southwest Persia was now under British control, despite Sir Edward Grey calling it foreign territory only a month earlier. With the assumption that Anglo-Persian was now the only major British oil concern in British-controlled territory, the company could extract almost any conditions it wanted. Winston Churchill seems to have been the driving force behind this sudden change of stance. On 9 July, he told Grey that the board of the Admiralty unanimously considered the development of Anglo-Persian’s supplies ‘indispensable’. Furthermore, he had no doubt that the company would receive some form of considerable financial assistance from government and acknowledged that such an arrangement would embody ‘several features unusual in Government contracts’.62 In a Cabinet Committee meeting the next day, regarding the purchase of Anglo-Persian shares, Churchill reiterated ‘that this was, in his opinion, the soundest course from an economic point of view for the Government to follow’.63 A few days later, he introduced the matter to Parliament by stating that their ‘ultimate policy [was] that the Admiralty should become the independent owner and producer of its own supplies of liquid fuel’.64 In the same speech, Churchill also stated, however, that the Admiralty should depend on ‘no one quality, on no one process, on no one country, on no one company, and no one route, and on no one oil field . . . Safety and certainty in oil lie in variety, and in variety alone’.65 Churchill had thus, seemingly, settled on a twotier strategy to fulfil the Admiralty’s oil needs. The long-term policy would be the control of its own oilfields and the interim policy would be to source oil from a diverse set of suppliers. Despite a brief disagreement with the company over

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financial guarantees, where Churchill threatened to permanently discontinue all negotiations, Churchill had become determined to finalize a deal with AngloPersian, as quickly as possible, in order to fulfil his long-term objectives for the Admiralty.66 The Foreign Office, for their part, needed little convincing, despite their momentary friction with Greenway, as they had groomed the company for years and this course of action furthered British influence in Persia. As for the other elements of government, both the India Office and the government of India had been entirely ignored during the process due to their lack of enthusiasm.67 As mentioned, Fisher’s recommendations had also been completely ignored. In fact, Churchill does not even seem to have communicated his strategy with Fisher, as the latter was frustrated by what was occurring as early as April 1913 and wanted to wind up the commission.68 He even told Hopwood that he realized he would ‘push the Persian oil as being now the only avenue left open as [they seemed] to have lost both California and Deterding . . . Like the foolish virgins in the Bible the door [was] now shut and [they couldn’t] get the oil anywhere!’69 By June, Fisher was becoming decidedly impatient as everyone on the commission felt there was ‘absolutely no more to be said on the subject than what appear[ed] in [their] some thousand pages of print and [their] conclusions . . . [were] definite and conclusive and no good purpose [was] served by [their] continuance in being. Indeed it only [led] to false inference that there [was] yet something to be discovered-and there [was] not!’70 Churchill, as in the rest of these proceedings, ignored Fisher’s recommendation and extended the commission’s lifetime.71 Fisher expressed further frustration in July when Sir Marcus Samuel went to see him, ‘at his urgent request’, after hearing rumours that he was going to be attacked in Parliament. Fisher had ‘already many times reiterated that [it was] a stupid mistake to attack any oil company as the Admiralty want to get oil from all quarters’, and he told ‘Samuel that [he] fully shared his admiration of Mr. Deterding and that if [he] were the First Lord [he] should get him knighted tomorrow and make a contract with him for his fleet of 64 oil tankers in case of war being appropriated for naval use and would now make an “eternity” contract with him for oil’.72 It was not until September that Redwood finally convinced Fisher that accepting Anglo-Persian’s proposals was the wisest course of action for the government.73

Opposition Churchill’s remaining obstacle was Parliament. Hopwood was afraid that the Cabinet would find serious Parliamentary objections to it, as there would without doubt be very strong criticism – party and otherwise – of any scheme that might be adopted, and this one would be open to the one that the Government were embarking on a speculation pure and simple with little prospect of ever getting their money back again.74

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Churchill had had the idea of sending out an additional commission to the oilfields in Persia to allay some of the parliamentary opposition he could face. As Marian Jack points out, the commission appeared to be ‘an ex post facto justification’ to counter any forthcoming criticism and allay anxieties coming from the Treasury rather than convince anyone at the Admiralty as they had already made up their minds.75 In September, the Admiralty thus finally announced a commission to Persia headed by Admiral Slade, which Churchill had been anxious to send out for months.76 Despite being frustrated by the delays this commission would cause, Greenway was delighted that ‘in Slade [they had] an enthusiast in regard to the potentialities of the Persian Oilfields’, and, impatient of receiving the commission’s findings, he sent a coded telegram to one of the managing agents in Persia to receive news on the commission’s first impressions.77 The managing agent wrote back that Slade had ‘informed [him] confidentially that the Commission [were] quite satisfied with oilfields production’.78 The final report of the commission was thus predictably positive and Admiral Slade wrote, in November, that it seemed ‘to be a thoroughly sound concession, which may be developed to a gigantic extent with a large expenditure of capital. It would put [the navy] into a perfectly safe position as regards the supply of oil for naval purposes if [they] had the control of the company and at a very reasonable cost’.79 Furthermore, ‘it would be a national disaster if the concession were allowed to pass into foreign hands, and that all possible steps should be taken to maintain the Company as an independent British undertaking’.80 Redwood thought the conclusions were ‘splendid, and the occurrence [was] most opportune. It [was] a happy dispensation of providence that [they] should be furnished at the present juncture with such incontrovertible evidence of the wisdom of the action which is being taken. It was the one thing needed to convince the sceptical’.81 In February 1914, Churchill thus informed the Cabinet that negotiations had been completed and urged them to immediately finalize all the necessary steps.82 In March, there was a momentary apprehension as Churchill noticed that the share prices of both Burmah and Anglo-Persian had inexplicably risen, and he wanted to ensure that this phenomena had no connection to any form of insider trading. This was particularly relevant in light of the aforementioned article in the Times a year earlier that announced ‘that very circumstantial, detailed rumours [were] being spread with regard to oil contracts for the Navy, and that allegations [were] being made of personal connections of Ministers and others with would-be contractors’.83 Churchill had also been particularly tense after having almost given Sir Hugh Barnes confidential documents regarding the government’s negotiations as he was not aware Barnes was on the company’s board of directors concurrently to his position in the India Office.84 The two concerns that had come up in the present investigation were the purchase of shares by Lord Kitchener and Walter Cunliffe, who was the governor of the Bank of England and had been privy to the Cabinet pourparlers regarding the deal.85 Redwood, however, once again, intervened on behalf of the company and, with considerable effort, ‘fully succeeded in removing any erroneous impression which the unfounded rumour had created’.86

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Churchill tried to minimize the parliamentary exposure of his grand plan. The Treasury, however, insisted that any public financing operation required the formal approval of Parliament. Churchill suggested, therefore, that only the financial portion of the deal should require parliamentary approval. This would ‘rebut the implication that Parliamentary sanction to the agreement itself [was] necessary’. Furthermore, any efforts to refer the matter to select committee had to be ‘strenuously resisted’, as it would ‘in all probability wreck the scheme’.87 Thus, the agreement with Anglo-Persian was signed on 20 May, by which time Churchill was anxious to present the bill to Parliament ‘as he has got all his arguments ready for his speech and [wanted] to get them off his chest’.88 Opposition to the deal had begun even before the parliamentary hearings. Dr Dvorkovitz, the Russian editor of the Petroleum Review and technical advisor to the Admiralty and Shell, wrote articles in the review and held meetings to protest against the deal.89 He argued that there were large amounts of fuel oil available in the open market and that providing assistance to Anglo-Persian, over other oil companies in the British Empire, was a grave injustice.90 Churchill had warned against over-reliance on one oil source in July 1913, but Dvorkovitz argued that the investment of public funds in Anglo-Persian would achieve exactly that. He could only explain the deal by open ‘favoritism shown to the Burmah Oil Company’.91 There were also some protestations from Anglo-Persian shareholders. A  shareholder had told Greenway that he had serious reservations regarding acquiring the government as the primary shareholder of the Anglo-Persian Oil Company. He lamented that existing shareholders would be diluted, AngloPersian would give up its independence and shareholders would not be given the right to participate in the forthcoming capital increase.92 These apprehensions were shrugged off by the company, which was anxious to finalize the deal. Churchill finally gave his speech to the Commons on 17 June. After affirming that the Navy was irrevocably committed to oil, he asked the House to debate on whether his Persian proposal was the best way forward for government. He even asked more fundamental questions on whether this was ‘a legitimate method for a Government, a modern Government, to adopt’.93 To reassure the House, he clarified that the deal with Anglo-Persian was not intended to make Persia the only source of fuel for the Admiralty, but only an ‘important contributory source as regards quantity and as a powerful controlling influence as regards price. It [was] one of several sources, one of several methods, one of several companies, one of several fields with which [they were] concerned, and it [was] only one of them, but it [would] exercise a dominating influence over [their] relations with all the others’.94 He further assured that they had ‘not acted with precipitancy in this matter’ as for ‘many years it [had] been the policy of the Foreign Office, the Admiralty, and the Indian Government to preserve the independent British oil interests of the Persian oil-field, to help that field to develop as well as [they] could and, above all, to prevent it being swallowed up by the Shell or by any foreign or cosmopolitan companies’.95 Churchill also countered arguments against the principle of government being involved in commercial enterprises by citing the examples of shipbuilding with the royal dockyards, the manufacture of cordite and

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Whitehead torpedoes.96 Speaking over multiple interruptions by Samuel Samuel, Marcus Samuel’s brother and member of Parliament for Wandsworth, Churchill then attacked the oil monopolies and their desire to raise prices by controlling world production.97 Criticism in the House spanned many aspects of the deal and included the risk of over-relying on one source, the lack of British control over Persia, the unstable state of Persia itself, Russia’s potential reaction to the deal, the secrecy surrounding the deal, the government being a shareholder of a commercial undertaking, investing ‘enormous sums of public money in a commercial speculation’, hidden motives of partitioning Persia through the deal, lack of storage facilities and more.98 George Lloyd, member of Parliament for Staffordshire, stated that nobody denied ‘the properties [were] valuable, but what if the property [was] afterwards shattered and harried, the whole of that country and the whole of [their] properties [was] surrounded by material which [was] far more inflammable than the oil which [they sought]’.99 Samuel Samuel, for his part, gave an impassioned speech trying to disprove the assumption that there were monopolies in the oil industry but to no avail.100 The vote eventually passed with an overwhelming 254 votes in favour and 18 against. Later that day, Churchill asked Greenway if he had been satisfied and told him that he had ‘managed to carry the House’ due to ‘his attack on Monopolies and Trusts . . . but that of course Samuel had largely assisted by his obviously interested attacks!’ Samuel would, ‘of course, have a good deal to say on Monday and [would] no doubt deliver the attack on B.O.C. which Samuel tried to get in to his speech in the debate, but which the Speaker stopped him from delivering’.101 All seemed to have been resolved satisfactorily. Churchill had thus used the argument of a Shell menace to push the deal through parliament and convince his colleagues in the Cabinet, but it appears to have been more of a rhetorical tool than a deeply held belief. Fisher, who was imbued with the same genuine energetic patriotism as Churchill and who shared the same devotion towards the fighting capabilities of the Admiralty, had not considered Shell to be a menace. On the contrary, he had encouraged Churchill, until the very end of the process, to give them a prominent role in supplying fuel to the Admiralty. The menace of a monopoly having a stranglehold on the oil market certainly played a part in the government’s calculations, as some of the existing literature argues, but it was one of a number of considerations.102 After the Parliamentary vote, the Treasury still refused to execute the transaction, as Churchill failed to specify that the first payment to Anglo-Persian was to be done without reference to the House. On 7 July, Churchill, thus, had to stand before the Commons for a second time and debate the issue again. Further opposition to the arrangement was tabled. John Gretton, the member from Rutland, called it a ‘speculative adventure’, claiming that the ‘whole matter [was] covered with a veil of impenetrable secrecy, and the First Lord [appeared] to glory in the secrecy with which he [had] shrouded this operation’.103 Lord Beresford, Fisher’s nemesis and member for Portsmouth, had ‘to raise [his] protest against what [he] consider[ed] a gambling transaction’.104 The second vote, however, also passed with 228 in favour of the bill and 48 against.105 The British government

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would now own a majority stake in the Anglo-Persian Oil Company through an act that Marian Jack has called ‘unique and can perhaps best be described as an aberration of British government policy’.106

Parthian shot The Persian government had been characteristically ignored throughout these proceedings and had, unexpectedly, become business partners with the British government. In addition to this, the company had actively attempted to prejudice its interests. In February 1914, they asked the Foreign Office to help them reduce the percentage of annual net profits they had to pay to the Persian government by 3 per cent. They argued this was to compensate for the 3 per cent shareholding they had agreed to give the Bakhtiyari in the Bakhtiari Oil Company.107 This was dishonest on multiple levels, however, as the Persian government had never recognized the company’s agreement with the Bakhtiyari and the Bakhtiyari’s payments were distributed from the profits of the Bakhtiari Oil Company, which was a subsidiary of the Anglo-Persian Oil Company. Additionally, article 10 of the D’Arcy Concession mandated that the Persian government be paid 16 per cent of the net profits of any and all companies formed. As detailed above, however, this clause had been actively disregarded since the formation of Anglo-Persian. The issue of profit percentages re-emerged when Greenway was suggesting edits to Admiral Slade’s commission report, ahead of its release. He thought it ‘very inadvisable to give the Persian Government any ground for claiming that they [were] entitled to 16% of the profits of every Company formed under the Concession’ as had been mentioned in clause 7 of the proposed report. Greenway explained that they had previously concluded that the Persian government would not have the right to double payments, but it was ‘quite possible that the Persian Government may at some future time try to give this interpretation to the wording of the Concession and therefore it [was] not desirable for [them] to publish under the imprimatur of the British Government any reference that might later on be held to give some support to such a contention’.108 The company was also trying to prejudice the Bakhtiyari by offloading debt to the Bakhtiari Oil Company. In 1914, a loan of £120,000 owed by Anglo-Persian to Burmah was arbitrarily shifted to the Bakhtiari Oil Company.109 This eased AngloPersian’s debt burden, stifled potential opposition based on public money being used to pay off debts and diminished the Bakhtiari Oil Company’s profitability.110 Greenway eventually sent the imperial commissioner the agreement with the government, after it had been signed, and refused to send him the details of the supply contract.111 He thought it ‘unnecessary and inadvisable to meet the Commissioner’s wishes’.112 The Admiralty concurred.113 The question of conferring with the Persian government on the impending deal between the Anglo-Persian Oil Company and the British government had come up in Parliament. Ponsonby, the member of Parliament for Stirling Burghs,

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wondered if the opinion of the Persian government had even been considered or if that had been considered ‘an unnecessary formality’. He lamented what had been the policy of the British Government too often to concentrate attention on the material development of a country without sufficient regard to the welfare and the liberties of the inhabitants to whom that country belong[ed] . . . [They thought] in [their] arrogance that, of course, British capital and British enterprise [could] do nothing but confer an immediate benefit and advantage on a country in such a backward state as the Persian Empire. That may or may not be the case. Persia had a complete civilization when [the British] were walking about in skins.114

Grey responded to this critique by saying that there had ‘been no need to consult them . . . The concession [was] purely one to be dealt with between the British Government and the Anglo-Persian Oil Company’.115

Chapter 11 A F T E R M AT H C O N C LU SIO N S A N D FA L L O U T

The position of a Company which is working under a Concession from one Government (Persian) but depends on the goodwill of a provincial administration (Arab and Bakhtiari) and the military and moral support of a third (British and Indian), with a head office in Glasgow, dealing with the Foreign Office (in London) and a Foreign Dept. (Simla) through local officers (in Persia) is not easy.1

The British Empire Within a relatively short period of time, a speculative investment in Persia evolved into one of Britain’s largest oil companies. It did so with the active assistance of the British government, which took crucial measures, at repeated intervals, to rescue it from financial and operational collapse. In the period covered by this book, the British government acted as the endeavour’s financial intermediary, diplomatic representative, security detail, lead negotiator, human resource agent, commercial protector, end client and principal shareholder. By revealing the extent of the government’s involvement in the Persian oil business and the personal interactions that underpinned the process, this book has contributed to a better understanding of the relationship between economic and political forces in the British Empire. Strategic considerations of informal imperial advancement, gentlemanly capitalism, events in the imperial periphery and fundamental military-imperial considerations all contributed to an intertwining of private and imperial interests. The magnitude of these concurrent factors fluctuated at several time junctures, and three interventions by the British government, in particular, marked its increasing rapprochement to the Persian oil business. These were the orchestration of the Burmah Oil Company’s investment in D’Arcy’s venture, the dispatching of Lieutenant Wilson to Persia and the purchase of a majority of the Anglo-Persian Oil Company’s shares. In view of Antoine Kitabgi’s death, Amin al-Sultan’s resignation, Russian sabotage and impending personal bankruptcy, D’Arcy attempted a rapprochement

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with the British government, early on, in order to rescue his investment. D’Arcy’s urge to seek official assistance was not unusual and neither was the rationale for the British government to assist him. His concession operated in a territory of imperial interest, as Persia was one of the main fronts on which the British and Russian empires fought a bitter feud of informal influence. Assisting the D’Arcy Concession would have thus advanced British interests in Persia. As Fisher wrote after he first met D’Arcy, ‘politically, it [would] capsize Russia, as this oil concession . . . [would] practically make the country English’.2 D’Arcy, furthermore, was a gentlemanly capitalist, who shared the worldview and social reference points of other gentlemen, and was, therefore, supposed to be naturally favoured by, and have greater access to, key decision-makers within the British political establishment. When he initially appealed to the Admiralty for financial assistance, however, he was promptly rebuffed. The foreign secretary, who had also involved himself in this appeal, had asked the government of India and British diplomats in Persia if there were any other official routes, or motivations, to rescue D’Arcy, but there was no forthcoming enthusiasm from anyone. At that stage of development, the D’Arcy Concession advanced British interests in Persia, but it did so only as part of a broader constellation of British commercial interests and was of marginal value by itself. This relative insignificance, complemented by the highly speculative nature of its business, made minor diplomatic interventions, like those that were undertaken during the venture’s early days, perfectly acceptable. Anything further, however, incurred efforts, which seemingly outweighed the benefits of keeping the D’Arcy Concession in existence. A  gentlemanly bias, coupled with the concession’s strategic location, was, therefore, insufficient in preventing the Admiralty from rejecting D’Arcy’s initial request for financial help, nor were they sufficient to warrant the help of the Foreign Office or the government of India. It was a major turning point within the Admiralty, which provided the impetus to intervene. The increasingly obvious benefits of petroleum, in a period of reforming zeal spearheaded by Admiral Fisher, led to the creation of a Petroleum Standing Committee, whose objective was to identify oil sources within the empire. If the Admiralty was seriously considering a switch to oil, Britain had to ensure it had its own reliable, safe and abundant supply, because, as Cain and Hopkins explain, ‘the navy was not only the key to the defence of Britain herself, but also the crucial safeguard for the enormously complex chain of economic interests which Britain had built up over centuries and without which she was just an offshore island of Europe rather than a great world power’.3 Petroleum, as the navy’s prospective fuel, had thus become a central component in Britain’s imperial infrastructure. This major development happened to coincide with D’Arcy’s financial troubles and led to the first key intervention by the government. Boverton Redwood, who was advising the Admiralty, D’Arcy and the Burmah Oil Company contemporaneously, realized that a unique opportunity had presented itself.4 A  gentlemanly investor had a, potentially enormous, oil source in an area of imperial interest, the Admiralty needed oil and another British company, the Burmah Oil Company, was looking to expand its operations. While the Admiralty

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would not invest in the D’Arcy Concession directly, it could engineer a private solution. Thus, the Admiralty wooed Burmah. For years, Burmah had appealed to the government to give them more concessions and higher tariffs to protect their position in the Indian market. Perhaps as a result of them being capitalists of a non-gentlemanly variety, these requests had always been shunned. Then, in early 1905, after Burmah had held advanced talks with D’Arcy, the undersecretary of state at the India Office underwent an apparent Damascene conversion. Following the Admiralty’s advice, he began to appreciate the ‘new protectionist spirit’ in government and the importance of Burmah’s oilfields to the empire.5 The Burmah Oil Company subsequently agreed on terms with D’Arcy. D’Arcy’s financial rescue thus occurred as a result of private and imperial interests coinciding. It was the Admiralty’s new fuel policy that had motivated the government to engineer D’Arcy’s rescue and not his initial appeals. It was, however, his gentlemanly status and the informal imperial interests in Persia which made his concession a priority among a multitude of existing oil projects. If the Admiralty’s objective had been simply to increase the availability of Britishowned oil, it could have encouraged the Burmah Oil Company to develop its own operations, regardless of location. Instead, the company was made to invest specifically in Persia. D’Arcy’s lack of options also meant that Burmah could have imposed almost any kind of offer on him, including the outright purchase of the concession at a loss. The resulting outcome, however, kept D’Arcy as a majority shareholder, while reimbursing him the expenses he had incurred. As D’Arcy, himself, expressed, he was proud of the ‘terms which [he] had to fight very hard to obtain’ as they were ‘better probably than [he] could have obtained from any other Company’.6 This favourable outcome may have been a result of the Admiralty’s direct pressure. It may also have been a result of Burmah’s efforts to preserve and develop their core business. D’Arcy was a valuable gentlemanly asset who could help them strengthen their relationship with the British government. In light of their failed past efforts, offering him an advantageous deal thus seemed like a good strategy. The initial impulse to salvage D’Arcy’s investment originated from strategic considerations in the metropole, but the subsequent impulse to intervene, and the shape that intervention took, was determined by the imperial periphery. Following Burmah’s investment, the British government began to assist the venture more actively and the first such intervention came with the company’s move to Khuzistan. The Persian government’s inability to live up to its concessionary obligation of ‘taking all measures required to ensure the safety . . . [of] the material and equipment needed by the company, and to protect the representatives, agents and employees of the company’ meant that the concessionaires were forced to negotiate a parallel agreement with the Bakhtiyari in order to drill.7 When these impending negotiations had been mentioned to Sir Arthur Hardinge, he suggested that D’Arcy call upon the acting consul in Isfahan. Preece’s knowledge of the tribe and his relationship with its leading members, coupled with his position of authority, allowed him to take the leading role in the negotiations and achieve a satisfactory deal.

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The rapprochement between the British government and the D’Arcy Concession was further catalysed by the Persian Constitutional Revolution. This development disrupted the venture’s political, legal and operational environment. The newly elected Majlis had discussed the D’Arcy Concession, less than three months after its creation, and decided to make the imperial commissioner accountable to them. They also set up a special parliamentary committee to investigate the concession’s operations. Subsequent parliamentary deliberations on the matter caused increasing concern and D’Arcy even considered the possibility of the concession’s outright cancellation. This ‘Persian unrest’ also caused the Burmah Oil Company to significantly curtail its long-term financial commitments to the venture.8 The return of an old cast of characters, as a result of the events of the Constitutional Revolution, heralded a moment of tranquillity, which was brusquely interrupted on 31 August 1907, when Amin al-Sultan was brutally assassinated, and the AngloRussian Convention was signed. Both of these developments, taking place only hours apart, plunged the business into an extremely vulnerable position as their foremost domestic protector had been murdered and their drilling operations had been relegated to the newly established neutral zone of Persia. The venture thus found itself caught in the crossfire of domestic political factions and international rivalries. In order to prevent a complete disaster, D’Arcy organized an emergency meeting with Sir Charles Hardinge where he enumerated precise instructions that the Foreign Office gradually executed. By the end of 1907, the situation had become untenable. Following Preece’s original suggestion and D’Arcy’s subsequent request, the government dispatched a group of armed men from India to protect the drilling operations. The move had been made under the guise of an increase of the consular guard at Ahwaz but was aimed specifically at preserving D’Arcy’s operations. This measure, born out of an unprecedented level of coordination between the company and the government, had initially been shunned by the Foreign Office for fear of it provoking ‘susceptibility and mistrust’, which was particularly relevant in light of the freshly signed Anglo-Russian Convention.9 The Treasury had also objected to the plan as it saw no rationale in spending public money to protect one specific commercial concern. Despite these objections and risks, however, Lieutenant Wilson and twenty of his men from the 18th Bengal Lancers made their way to Persia. Events in the imperial periphery had dragged the British government into reluctantly intervening. On the company’s side, this intervention represented a major turning point as it was no longer at the mercy of the tribes, the events of the Constitutional Revolution or the Persian government. It had also received a concrete sign of the British government’s commitment. Despite all the government’s assistance, the discovery of abundant oil reserves in 1908, the successful listing of the Anglo-Persian Oil Company’s shares and certain directors’ personal gains, however, the business faced renewed financial troubles. The costs of building a refinery had escalated, no substantial revenues were forthcoming and their ability to raise funding had been exhausted. The company, once again, looked to the British government for salvation.

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By 1912, Winston Churchill had taken steps towards the ‘fateful plunge’ of converting the navy to oil. He had created the royal commission on fuel oil and convinced Fisher to chair it. Throughout the commission’s proceedings, ‘government departments and commissions were almost besieged by oil companies seeking to involve the State in their affairs’, both within and outside the empire.10 The commission had been spoilt for choice and favoured a balanced solution that hedged its risk over multiple suppliers. It had also clearly expressed itself against investing public money in specific commercial concerns. Fisher was in favour of salvaging Anglo-Persian, but, like in 1905, he believed that a private solution was the only way of achieving this. He also became increasingly enthusiastic about Shell, and a formal recommendation was made to the board of the Admiralty to have Shell become its principal supplier, complemented by Persian and Mexican supplies to a lesser extent. That Anglo-Persian would become one of the Admiralty’s suppliers, even a preferred supplier, may have logically transpired. However, its selection above all other existing interests to benefit from substantial public financing under a Liberal government was far from being a given and fundamentally counterintuitive. It was, after all, a failing company outside the formal boundaries of the British Empire appealing to a government that had pledged reduced military spending and which had plenty of other options. Churchill, however, who had been encouraged to consider Anglo-Persian by his close friend, Lady St Helier, had devised a two-tier strategy for the Admiralty’s fuel needs. In the short term, the Admiralty would buy from multiple sources, so as to spread its risk among several suppliers, and in the long term, it would possess its own oil assets. This would place it in an unchallenged strategic position. Through chance and perseverance, D’Arcy thus officiated a marriage of public and private interests, in the summer of 1914, that would last over eighty years, when the British government acquired a majority of the Anglo-Persian Oil Company’s shares. Informal social influences had helped save a business in the informal imperial sphere originally obtained through informal payments.

The Persian Empire As the British government and the oil venture increasingly intertwined, the Persian government’s standing in the D’Arcy Concession eroded. The great promise of riches and a say in the future development of its native oil resources vanished as a result of opaque legal and financial manoeuvres, British imperial pressures, early ineptitudes and revolutionary chaos. This process was only temporarily set back by an intermediary that looked after the Persian government’s early interests. When this protection perished, however, predatory commercial behaviour prevailed and three major events precipitated the downfall of the Persian government’s stake in the concession. These were Burmah’s investment in the D’Arcy Concession, the creation of the Anglo-Persian Oil Company and the British government’s acquisition of a majority of Anglo-Persian’s shares.

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The decision to grant the D’Arcy Concession was taken under imperial duress. The grand vizier had initially shunned the project due to the problems caused by previous British concessions. The pressures of being an informal battleground for the Anglo-Russian rivalry, however, gave the Persian government limited autonomy. Having conceded, the Persian government then committed two historic errors. The first was to accept a fixed number of shares, instead of a percentage of them, and the second was to accept those shares solely in the first company to be created after the signing of the concession. This was partially offset by the stipulation that they were to receive 16 per cent of the annual net profits of any and all companies to be formed. Persia’s arbitrary legal system, in combination with its inferior economic development, meant that it had not developed sophisticated commercial law nor the corporate instruments prevalent in Britain. As proven by subsequent appeals, it was incorrectly assumed, by the Persian authorities, that the shah could request further shares, at will, in any of the companies formed. This asymmetry of financial expertise, complemented by the full backing of the British Empire, gave the British concessionaires an advantage related to the corporate structuring of the concession and the channelling of its various cash flows, which they eagerly exploited. These concessionary imbalances made a neutral third-party essential to preserving the Persian government’s interests. Kitabgi took on this crucial role despite the flagrant conflict of interest resulting from him being a shareholder of the concession contemporaneously to holding the post of imperial commissioner. He also carried out this role despite being one the principal authors of the concessionary text and thus partially culpable of its shortcomings. D’Arcy tested Kitabgi’s effectiveness in this role, early on, by attempting to exploit the flaws of the concessionary text and proposing the creation of a ‘syndicate’. He wanted to use this structure to raise funding from his network without making it seem like the first exploitation company described in the concession. This would allow him to secure additional financing without having to pay the money and shares contractually owed to the Persian government. Kitabgi, who had understood what D’Arcy was trying to achieve, proposed the creation of a parent company instead, in which the Persian government would hold shares. This would have resolved one of the principal flaws of the concession and allowed D’Arcy to continue his fundraising plan. Kitabgi’s resistance and a lengthy exchange of contractual drafts eventually led D’Arcy to give up on the whole scheme. Despite a litany of gifts to sway his judgement, Kitabgi had fulfilled his custodial duties to the Persian government diligently. Kitabgi’s untimely death, in late 1902, was a major turning point for all parties. D’Arcy found himself without his principal intermediary, and the Persian government no longer had a vigilant party protecting its rights. Kitabgi’s eldest son, Vincent, took over the role of imperial commissioner and, in March 1905, D’Arcy reintroduced the matter of a syndicate. This time, it was a corporate structure that was part of a broader arrangement he had concocted with the Burmah Oil Company. This arrangement had already been ratified by D’Arcy and the Burmah Oil Company when D’Arcy informed Vincent. He pretended,

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however, that everything was still provisional so as to make Vincent believe he could have a say in the negotiations. Through misinformation and psychological pressure, coupled with Vincent’s unexpected dismissal from the role of imperial commissioner, D’Arcy successfully obtained his approval and the dilution of his family’s stake in the business. Most importantly, Vincent’s sudden dismissal had created a vacuum, which allowed D’Arcy to conclude his agreement with Burmah without ever notifying the Persian government. The Persian government had thus, unbeknown to it, had its shareholding relegated to a subsidiary company and substantially diluted. D’Arcy’s manoeuvre marked the beginning of a period of increasing disregard towards the Persian authorities. Following the negotiations with the Bakhtiyari, the company had only reluctantly informed the Persian government of their agreement, after Preece had insisted that it was the correct action to follow. The government reacted with predictable fury as the agreement actively undermined its sovereignty. As a result, the Persian government attempted to reassert itself in concessionary affairs. It granted an oil concession to the minister of war for the northern regions and raised the issue of the taxes owed on the three existing producing oil wells in Dalaki, Qasr-i Shirin and Shushtar. Most importantly, it began questioning the machinations of the concessionaires as it realized that it was communicating with an entity that it had never dealt with in the past and that, in their mind, had no connection to them or the concession. This was the parent company to which their own holdings had become a subsidiary. This situation, which D’Arcy had created in violation of his concessionary obligation, meant that the Persian government did not even know who ultimately held the decisionmaking power in the new corporate structure. Thus, even if they had had the power and the desire to negotiate a better arrangement, they did not know whom to approach formally. The government’s urge to scrutinize the concession’s operations ended abruptly, as Persia entered a state of disarray caused by the events of the Constitutional Revolution. When the revolutionary chaos began to settle, the new constitutional government, that had arisen from a popular movement, started looking into the workings of the concession again. It revived the dormant imperial commissioner Sadiq al-Saltanah, who began to enquire about his government’s rights. D’Arcy and his legal advisors, in turn, wasted time and sowed confusion by continuing to falsely insist that the Concessions Syndicate Limited, which had become the parent company of the concession, was not actually a company. These pressures were relieved by the return of Amin al-Sultan on the political scene in 1907, but this interregnum was brusquely interrupted, on 31 August, when he was assassinated on the steps of the Majlis. The ensuing arrival of Lieutenant Wilson in Khuzistan inoculated the company from the direct aftermath of this violent event and diminished its vulnerability to Persian political developments. Less than a month after oil was struck, in the spring of 1908, following a deluge of domestic and international messages relaying the news, the shah and his Cossack Brigades bombarded the Majlis. The ensuing tumult did not, however, stop the reinstated shah from instructing the imperial commissioner to go to London

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the day after his coup. The Persian government urgently requested information regarding D’Arcy’s arrangement with Burmah, payment for the three existing oil wells and clarity regarding the plans to be made following the discovery of oil. D’Arcy decided, once again, to waste time, ignore the imperial commissioner, when possible, and confuse him in a litany of vagaries, when necessary. In the midst of this confusion, Burmah created a new parent company called the Anglo-Persian Oil Company, which was publicly listed in the spring of 1909. The Persian government had been entirely shut out of the process and had received no shares in the new company. It had been relegated to a 4 per cent shareholding of a subsidiary company, which equated to the value of 1 per cent of the parent company. It had also been denied its concessionary right to 16 per cent of the annual net profits of each company formed, as the concessionaires had decided to ignore this stipulation entirely. The Persian government had thus, without even having been informed, been reduced to an infinitesimally small shareholding, deprived of the payments it was owed and given absolutely no say in the running of its indigenous oil resources. Just days after Anglo-Persian’s listing, when the Persian government was planning to react forcefully to the new structure, Bakhtiyari military victories and the continued developments of the Constitutional Revolution engulfed Persia into further chaos. The prospect of oil riches was one of the motivations for the Bakhtiyari’s involvements in the Constitutional Revolution and, following their rise to power, concessionary concerns were shelved by the central government, which they now controlled. It would be years later, in 1911, during Morgan Shuster’s short tenure as Persia’s treasurer general, that questions re-emerged regarding the government’s standing in the concession. These questions, posed by Prince Ala al-Saltanah during a trip to London, were highly indicative of the Persian government’s expectations and their ignorance of the corporate transformations that had occurred as a result of Anglo-Persian’s creation and listing. With Shuster gone and Russia’s subsequent ground invasion, these enquiries seemingly ceased again. A final development enshrined the Persian government’s impotence with regards to its domestic oil resources. This was the British government’s purchase of a majority of Anglo-Persian’s shares. As per usual, the Persian government had been ignored in the process. It suddenly found itself under the corporate dominance of the Royal Navy. This construct had a number of negative consequences. On a financial level, the company’s majority shareholder was also its principal client. This presupposed a downward pressure on prices, as the government’s investment was made without consideration for profit. This dynamic would negatively impact the Persian government’s only revenue source from the concession, which was based on the company’s annual net profits. The British government, instead, would benefit from cheap oil, a sizeable shareholding, income tax and dividends. There was an evident asymmetry of power as well. As Greenway stated during the First World War, the Anglo-Persian Oil Company had become ‘virtually a Government department desirous of doing its best for the Nation’.11 Any protestation against the company would thus now also be directed towards the British Empire, which

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could impose almost anything it desired on the weak, fragmented and unstable Persian state. The strategy of time-wasting, confusion and misinformation, aimed at keeping the prying Persian government at bay, had thus succeeded. In combination with the turbulent events of the Constitutional Revolution, which rendered the government’s efforts highly irregular and disjointed, a grossly inequitable situation had been created and allowed to persist. The resulting imbalance plagued the relationship of the company, and, by extension, the British government, with subsequent Persian governments for decades to come. The Persian state had proved no match for the combined strength of economic and political power emanating from the British Empire. This book has revealed the tactics used to subjugate the Persian government’s interests in the D’Arcy Concession as well as the government’s non-uniform efforts to enforce its concessionary rights. Through novel sources it has also shed light on the original negotiations, early sabotage attempts, the effects of the Constitutional Revolution and the multitude of unofficial payments handed out to Persian dignitaries and a British diplomat. It also exposed the harsh conditions of Persian labourers, British efforts to sabotage the Persian government’s funding options, the dishonest practices employed in structuring corporations around the concession and the private gains that the company’s directors were generating for themselves. Further research into eventual additional Persian sources could add texture to the timing of the Persian government’s reactions and the role that the anticipation of oil wealth may have had on the protagonists of the Constitutional Revolution.

Fallout Just over a week before the bill approving the British government’s purchase of shares in the Anglo-Persian Oil Company passed through Parliament, Archduke Franz Ferdinand had been assassinated in Sarajevo. Six days after the agreement received its royal assent, Britain entered the First World War. Fuel oil became a central element in the war effort as it powered cars, trucks, motorcycles, tanks, ships, submarines, airplanes and zeppelins. Securing its supply became a major concern and the vulnerabilities of the Persian oilfields were at the forefront of war planners’ minds. During the conflict, Shell took centre stage as it supplied oil from multiple sources and coordinated its delivery to British forces across different theatres. After the hostilities had finally ended, Curzon proclaimed that the ‘Allied cause had floated to victory upon a wave of oil’ and the French Senator Henry Bérenger added that the ‘blood of the earth’ had become the ‘blood of victory’.12 Thereafter, the oil industry dominated Anglo-Iranian relations for the major part of the twentieth century. Iran, as the country was renamed in 1935, spent most of the century trying to correct the gross inadequacies of the D’Arcy Concession. Shortly after taking power in the 1920s, Reza Shah launched a renegotiation, spearheaded by his prime minister, Teymourtash, as he sought to finance his ambitious national plans. He told the chairman of the company, John

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Cadman, that ‘the authority of the company must know that neither the Iranian Government nor the Iranian people agree with the D’Arcy Concession . . . No more can Iran tolerate the enormous profits from its oil going into pockets of foreigners while at the same time being dispossessed of its oil wealth’.13 In 1932, the heated renegotiations reached a standstill. Reza Shah famously threw the concession in the fire and formally cancelled it thereafter. The British government referred the matter to the League of Nations and threatened, at the Permanent Court of International Justice, ‘to take all such measures as the situations may demand for that company’s protection’.14 Reza Shah refused the jurisdiction of the court, however, and the League of Nations subsequently urged mediation. Within a few months, a new agreement was reached, which corrected some of the defects of the original concession. The territory covered by the concession was reduced by nearly four-fifths, the company agreed to forego its exclusivity over pipelines and the Persian government was paid £1,000,000 to settle past claims. Further to this, the Iranian state would own 20 per cent of the company’s shares and have representation on its board. Most importantly, it was decided that a new royalty payment of 4s. per ton was to be paid to the government with an additional payment of at least £750,000 per annum. The company also agreed to pay a 4 per cent tax to the Iranian government with a minimum payment of £230,000 a year. Finally, the company agreed to invest in the Iranian labour force so as to gradually replace its foreign employees with local ones.15 In conjunction with the state, the company officially changed its name to the Anglo-Iranian Oil Company in 1935. The agreement proved beneficial to the Iranian government, which saw its oil revenues substantially increase. It also gave it a financial stake in the company’s worldwide operations. The new arrangement was prone to other problems, however. The new royalty formula, although more profitable, was based on a fixed amount per ton of oil, which did not allow the state to profit from rising prices. In addition to this, although the government now benefitted from dividends, it had no say in how they were determined. The Iranian government continued to be completely subjected to the business decisions of the company and, by extension, the British government. The basic asymmetry of power over the company’s operations had not been resolved and neither had the fact that the British government was making more money from the company through taxes than the Iranian government overall. The national animosity against the company thus persisted and intensified. One Dr Mossadegh was elected to the Majlis, by capitalizing on this animosity, and, in 1944, he helped pass a law that made parliament the supreme authority on foreign concessions. In 1947, another law was passed that called to review the terms of the government’s agreement with the Anglo-Iranian Oil Company. Negotiations opened in 1948 and similar issues re-emerged. The Iranian state demanded a fifty-fifty profit split, as was being practiced in Venezuela, and wanted to address the imbalance caused by British taxation and dividend limits and increase the presence of Iranians in the company’s ranks. Despite some agreement, this round of negotiations proved unsuccessful, however, as its resulting conclusions died out in the Iranian parliament.16

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Following re-election in 1950, Mossadegh chaired a special oil committee, which recommended the nationalization of the Iranian oil industry. A  bill endorsing this policy eventually passed both the Majlis and the Senate in 1951. Following Mossadegh’s appointment as prime minister, a law calling for the implementation of the nationalization was enacted on 1 May. The newly formed National Iranian Oil Company was to expropriate all of the British company’s assets and put them in the hands of the Iranian state. At the time, Iran had the world’s largest refinery, was the second largest exporter of oil and possessed the third largest reserves. It also supplied 85 per cent of the British Navy’s fuel.17 In addition to the company’s immense value to Britain’s defence and industrial might, there was a broader fear that the nationalization of Iran’s oil could trigger a domino effect that would ruin all Western oil companies. The consequences of this could prove catastrophic, and British memos reveal that they believed ‘the security of the free world [was] dependent on large quantities of oil from Middle Eastern sources’.18 The British government thus responded forcefully to Mossadegh’s actions. They evacuated all the company’s British personnel, enforced an embargo on Iranian oil, froze Iranian assets in Britain and strengthened their military presence in the Persian Gulf.19 The company, on its side, used all legal avenues to pursue anyone who dealt in Iranian oil. The company was acting in unison with the British government to preserve its interests and, as a result of these actions, Iranian oil production plummeted. In response, Mossadegh broke off all diplomatic relations. To resolve the impasse, a number of proposals were put forward to the Mossadegh government. These included the fifty-fifty profit split that had been requested, large financial advances and acknowledging the Iranian government’s ownership of its oil assets while entering into a long-term purchasing agreement with the Anglo-Iranian Oil Company. In a later proposal, an international consortium was proposed, which would have no role in controlling or managing Iran’s oil. Mossadegh, however, rejected anything short of complete nationalization and pourparlers ended abruptly in 1953. Thus ensued the CIA’s maiden coup, in conjunction with the United Kingdom, which overthrew Mossadegh’s premiership. As the historian Ervand Abrahamian has put it, it was a ‘joint British-American venture to preserve the international oil cartel’.20 The inequities of the D’Arcy Concession and its implementation have thus negatively impacted Anglo-Iranian relations, US-Iran relations, Iranian governments and the Iranian people for the major part of the twentieth century and beyond. In an impassioned speech to the International Court of Justice in The Hague, Mossadegh had lamented that ‘that which could have led to our national wealth became the cause of our various afflictions and unbearable misfortunes’.21

Appendix I T H E D ’ A R C Y C O N C E S SIO N

Author’s translation from the original French text. FO 881/9758, Persia: Concession. Concession granted to Mr W. K. D’Arcy, 28 May 1901. Between the government of His Imperial Majesty the Shah of Persia, on one hand, and William Knox D’Arcy, rentier, resident of London, No. 42, Grosvenor Square (hereafter referred to as ‘the concessionaire’), on the other, the following has been agreed and decided:

Article 1 The government of His Imperial Majesty the Shah bestows the special and exclusive privilege to explore for, find, exploit, develop, make suitable for trade and transport and sell natural gas, petroleum, asphalt and ozokerite in the entire territory of the Persian Empire for a duration of sixty years from the date of the present deed.

Article 2 This privilege shall include the exclusive right to lay all necessary pipelines from the deposits of one or more of the aforementioned products to the Persian Gulf, as well as any additional necessary distributing lines. It shall also include the right to build and upkeep all wells, reservoirs, stations and equipment related to pumping, accumulation and distribution, factories and other works and arrangements deemed necessary.

Article 3 The Persian imperial government grants all uncultivated lands belonging to the state, free of charge, to the concessionaire, that his engineers will deem necessary for the construction of all or a part of the works mentioned above. As

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for cultivated lands belonging to the state, the concessionaire will have the right to purchase them at the market rate of the particular province. The imperial government also allows the concessionaire to purchase any other lands or buildings necessary, with the consent of their owners, on conditions that may be mutually agreed but without it being allowed to overcharge for said properties. Holy places and all their extensions, within a radius of 200 Persian archines, are formally excluded.

Article 4 As three petroleum springs in Shushtar, Qasr-i Shirin in the province of Kirmanshah and Dalaki near Bushihr are leased to private individuals and produce an annual revenue of 2,000 tumans to the government, it has been decided that these three springs are included in this concessionary deed, in conformity with Article 1, on condition that, in addition to the 16 per cent mentioned in Article 10, the concessionaire will pay an annual fixed sum of 2,000 tumans to the imperial government.

Article 5 The trajectory of the pipelines will be determined by the concessionaire and his engineers.

Article 6 Notwithstanding what has been set forth above, the privilege bestowed by this deed will not extend to the provinces of Azerbaijan, Ghilan, Mazandaran, Asdrabad and Khorassan, on the express condition that the Persian imperial government shall not grant any other person the right to build a pipeline to the rivers of the south or to the southern coast of Persia.

Article 7 All land granted by this deed to the concessionaire or that he may have acquired in the manner prescribed by Articles 3 and 4, as well as exported products, will be free from all taxes during the term of this concession. All necessary materials and equipment required for the exploration, exploitation and development of resources and for the construction and development of pipelines will enter Persia without any taxes or import duties.

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Article 8 The concessionaire shall immediately send out to Persia one or more experts, at his expense, to explore the region where there exist, as he believes, the aforementioned products, and in case the expert’s report were satisfactory to the concessionaire, he will immediately send to Persia, at his own expense, all the necessary technical personnel, exploitation equipment and machines to drill and sink wells to prove the value of the property.

Article 9 The Persian imperial government allows the concessionaire to establish one or more companies for the working of the concession. The names, governing statutes and the capital of these companies will be determined by the concessionaire, and its administrators will be chosen by him, on the express condition that he will give official notice of the formation of each company to the imperial government by way of the imperial commissioner and will present their governing statutes along with the locations in which they will operate. This company or these companies will enjoy all the rights and privileges bestowed to the concessionaire but will also assume all his duties and responsibilities.

Article 10 It will be specified in the contract between the concessionaire and the company that the latter shall, within one month of the formation of the first exploitation company, pay a sum of 20,000 pounds sterling in cash and an additional 20,000 pounds sterling in paid-up shares of the first company formed, according to the preceding article, to the Persian imperial government. It will also pay the said government an annual sum equivalent to 16 per cent of the annual net profits of any and all companies set up according to the aforementioned article.

Article 11 Said government shall be free to appoint an imperial commissioner, who will be consulted by the concessionaire and the administrators of the companies to be established; he will supply all useful information at his disposal and will inform them of the best course of action to follow in the interest of the enterprise. He will establish, together with the concessionaire, the supervision which he will judge to be necessary in order to safeguard the interests of the imperial government. The powers of the imperial commissioner will be laid out in the governing statutes of

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the companies to be established. The concessionaire will pay the commissioner an annual sum of 1,000 pounds sterling for his services from the date of the formation of the first company.

Article 12 The labourers employed by the company will have to be subjects of His Imperial Majesty the Shah, apart from the technical staff as well as the directors, engineers, drillers and foremen.

Article 13 In any location where it can be established that the local inhabitants procure petroleum for their own usage, the company will have to supply them the quantity they previously used free of charge; this quantity will be determined according to their own accounts, subject to the supervision of local authorities.

Article 14 The government of His Imperial Majesty commits to taking all measures required to ensure the safety and execution of the subject of this concession and for the material and equipment needed by the company, and to protect the representatives, agents and employees of the company. The imperial government having thus carried out its duties, the concessionaire and the companies created by him will not, under any pretext, claim damages from the Persian government.

Article 15 At the expiry of the present concession all materials, buildings and equipment used by the company will become the property of said government and the company will have no right to any indemnity.

Article 16 If, within two years of the signing of this concession, the concessionaire has not established the first of the companies mentioned in article 9, the present concession shall be considered null and void.

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Article 17 In the eventuality of any questions or differences arising between the parties regarding the present concession, its interpretation and the rights and responsibilities of either party, these shall be submitted for arbitration to two arbitrators, in Tehran, one of whom will be appointed by each party, and by a third arbitrator who will be nominated by the other arbitrators. The decision of the arbitrators, or in the event of a disagreement, that of the third arbitrator, will be considered final.

Article 18 This deed of concession is made in duplicate in the French language and translated into Persian with the same meaning; in the event of a disagreement relating to language, the French text shall prevail. Tehran, May 1901

Appendix II B IO G R A P H IC A L D E TA I L S

Ala al-Saltanah, Prince Mirza Muhammad Ali Khan (1838–1918):  Persian minister in London on various occasions. Minister of foreign affairs intermittently in 1906 and 1907. Prime minister in 1913. Barclay, George (1862–1921): British minister in Tehran from 1908 to 1912. Barnes, Sir Hugh Shakespear (1853–1940): Lieutenant governor of Burma from 1903 to 1905. Member of the Council of India from 1905 to 1913. Board member of the Anglo-Persian Oil Company from 1909 to 1940. Black, Sir Frederick (1863–1930): Director of Navy contracts from 1906 to 1914. Cadman, John (1877–1941):  Professor of mining and petroleum technology at Birmingham University from 1908 to 1920. Member of the Admiralty commission on fuel oil in 1913. Appointed director of the Anglo-Persian Oil Company in 1923 and chairman in 1927. Cassel, Sir Ernest Joseph (1852–1921): Prominent merchant banker and financier. Friend of Edward VII and Winston Churchill. Churchill, George Percy (1877–1973): Oriental secretary at the British legation in Tehran. Churchill, Winston Leonard Spencer (1874–1965): First Lord of the Admiralty from 1911 to 1915. Cotte, Edouard: Agent of Baron Julius de Reuter. Originally sent Kitabgi reports on oil showings in Persia. Crisp, Frank (1843–1919):  Solicitor for the Anglo-Persian Oil Company from 1909 to 1919. Senior partner of Morris Ashurst, Crisp & Co. Curzon, George Nathaniel, first marquess Curzon of Kedleston (1859– 1925):  Viceroy and governor general of India from 1899 to 1905. Made Earl Curzon of Kedleston in 1911. D’Arcy, William Knox (1849–1917):  Prominent financier. Principal investor in the D’Arcy Concession named after him.

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de Morgan, Jacques (1857–1924): Chief archaeologist of the French mission to Persia, who originally stumbled across oil in Persia. Fisher, John Arbuthnot, first Baron Fisher (1841–1920): Second sea lord from 1902 to 1903. First sea lord from 1904 to 1910. Chairman of the royal commission on oil fuel and engines from 1912 to 1913. Grant Duff, Sir Evelyn Mountstuart (1863–1926):  Secretary of the British legation in Tehran from 1903 to 1906. Senior British diplomat in Persia in the summer of 1906 in the interim between Sir Arthur Hardinge’s tenure and Sir Cecil Spring-Rice’s tenure. Greenway, Charles (1857–1934):  Managing director of Lloyd, Scott & Co. in 1910. Director of the Anglo-Persian Oil Company from 1909 to 1934. Managing director of the Anglo-Persian Oil Company from 1910 to 1919. Hardinge, Sir Arthur (1859–1933): British minister in Tehran from 1900 to 1905. Hardinge, Charles, first Baron Hardinge of Penshurst (1858–1944): Undersecretary at the Foreign Office in 1903. British ambassador to Russia from 1904 to 1906. Permanent undersecretary of state for foreign affairs from 1906 to 1910. Viceroy of India from 1910 to 1916. Made Baron Hardinge of Penshurst in 1910. Khan, Mirza Ali Asghar (1858–1907):  Also referred to by honorific titles of Atabak and Amin al-Sultan and political position of grand vizier. Appointed grand vizier in 1885, 1896 and 1907. Assassinated on 31 August 1907. Close family friend of the Kitabgi family. Kitabgi, Antoine (1843–1902):  Imperial commissioner from 1901 to 1902. Principal intermediary in negotiations for D’Arcy Concession. Kitabgi, Edouard (1876–1948): Son of Antoine. Assistant to Reynolds on drilling fields. Kitabgi, Paul (1872–1946): Son of Antoine. Agent of D’Arcy in Tehran in 1902 and again in 1907. Kitabgi, Vincent (1871–1946):  Eldest son of Antoine. Imperial commissioner from 1902 to 1905 and again in 1907. Lorimer, David Lockhart Robertson (1876–1962):  Vice-consul for Arabistan from 1903 to 1909. Consul for Kirman and Baluchistan and assistant to the political resident in the Persian Gulf from 1912 to 1914. Lynch, Henry Finnis Blosse (1862–1913): Businessman, traveller and politician. Considerable business interests in Persia. Founder of Persia Committee in 1908. Marling, Charles (1862–1933): Counsellor of the British legation in Tehran from 1906 to 1909. Chargé d’Affaires of British legation in Tehran in 1910.

Biographical Details

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Marriott, Alfred: D’Arcy’s envoy in negotiations for D’Arcy Concession. Cousin of D’Arcy’s personal secretary. McKenna, Reginald (1863–1943): First Lord of the Admiralty from 1908 to 1911. Home secretary from 1911 to 1915. Muhandis al-Mamalik, Mirza Nazim al-Din Khan Ghaffari: Minister of mines from 1898 to 1907. Minister of public works from 1907. Firm supporter of Amin al-Sultan. Mushir al-Dawlah (1873–1935): Mushir al-Mulk until 1907. Persian minister in St Petersburg in 1902. Minister for foreign affairs in 1907. Minister of justice from 1908 to 1909. Pearson, Weetman Dickinson, first viscount Cowdray (1856–1927): Director of Mexican Eagle Oil Company from 1908 to 1919 after having invested in Mexican petroleum in 1902. Petty-Fitzmaurice, Henry Charles Keith, fifth marquess of Lansdowne (1845– 1927): Secretary of state for foreign affairs from 1900 to 1905. Instrumental in the negotiations leading up to the D’Arcy Concession and Burmah’s investment in the D’Arcy Concession and helped in forming the big company’s board in 1909. Preece, John Richard (1843–1917): British consul in Isfahan from 1891 to 1906. Political agent of the D’Arcy Concession from 1906 onwards. Pretyman, Ernest George (1860–1931): Civil lord of the Admiralty from 1900 to 1903. Secretary to the Admiralty from 1903 to 1906. President of the Admiralty oil committee from 1903 to 1906. Qajar, Muhammad Ali Shah (1872–1925): Persian monarch from 1907 to 1909. Qajar, Muzaffar al-Din (1853–1907): Persian monarch from 1896 to 1907. Ranking, Lt James Gabriel Lancaster (1883–1915): British consul at Ahwaz from 1907 to 1911. Redwood, Sir (Thomas) Boverton, first baronet (1846–1919): First and foremost petroleum expert of his time. Technical advisor to the Burmah Oil Company from 1893 to 1919. Technical advisor to William Knox D’Arcy and the Anglo-Persian Oil Company from 1901 to 1919. Technical advisor to the Admiralty and the Mexican Eagle Oil Company. Member of the royal commission on fuel and engines from 1912 to 1914. Knighted in 1905 and made baronet in 1911. Reynolds, George Bernard (1852/3–1925):  Lead engineer from 1901 to 1911. General manager from 1908 to 1909 and again in 1910. Ritchie, Charles: Chief engineer in charge of supervising the construction of the company’s first pipeline in 1909. Rosenplaenter, C. B.: American engineer on the drilling fields. Took over drilling briefly from Reynolds during his absence.

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Saad al-Dawlah, Mirza Javad Khan:  Minister of commerce in 1905. Elected member of Majlis in 1906. Minister of foreign affairs for fifteen days in 1907. Sadiq al-Saltanah:  Imperial commissioner from March 1905 to June 1907 and from September 1907 to August 1918. Samsam al-Saltanah, Najaf Ali Quli Khan (1852–1930):  Ilkhan and ilbayg between 1903 and 1912. Governor of Isfahan from 1908 to 1910. Minister of war and minister of interior in 1911. Prime minister from 1911 to 1913. Sani al-Dawlah, Murtaza Quli Khan (1856–1911): President of Majlis from 1906 to 1907. Minister of education in 1907. Minister of finance in 1908. Sardar Asad, Haji Ali Quli Khan (1856–1917): Minister of interior from 1909 to 1910. Minister of war in 1910. Bakhtiyari tribal leader, who was one of the fiercest negotiators to face the concessionaires. Shahab al-Saltanah, Ghulam Husain Khan: Ilbayg in 1905. Ilkhan in 1907, then ilbayg again in 1907. Shuja al-Sultan, Lotf Ali Khan (1862–1946):  Chief of the personal guard of Muhammad Ali Shah. Opposed the Bakhtiyari march on Tehran in 1909. Shuster, William Morgan (1877–1960):  Treasurer general of Persia in 1911. Citizen of the United States of America. Smith, Donald Alexander, first Baron Strathcona and Mount Royal (1820– 1914): Prominent businessman and politician in Canada. Served as chairman of the Anglo-Persian Oil Company from 1909 to 1914. Spring-Rice, Sir Cecil Arthur (1859–1918): British minister to Persia from 1906 to 1908. Walpole, Robert Horace, fifth earl of Orford (1854–1931): Originally introduced his uncle, Sir Henry Drummond Wolff, to William Knox D’Arcy. Wilson, Sir Arnold Talbot (1884–1940): Lieutenant in the Indian army. Stationed in Ahwaz from 1907 to 1909. Acting consul in Muhammarah from 1909 to 1911. British commissioner of the Turco-Persian frontier commission from 1913 to 1914. Wolff, Sir Henry Drummond Charles (1830–1908): British Minister in Tehran from 1887 to 1890. Introduced Antoine Kitabgi to William Knox D’Arcy. Young, M. Y. (1880–1950): Medical officer of the Anglo-Persian Oil Company in Persia in 1907. Chief medical officer of the Anglo-Persian Oil Company in Persia from 1909 to 1926 and political officer from 1911.

NOTES Chapter 1 1 P. Frankopan, The Silk Roads: A New History of the World (London: Bloomsbury, 2016), p. 332. 2 J. Darwin, The Empire Project: The Rise and Fall of the British World-System, 1830– 1970 (Cambridge: Cambridge University Press, 2009), p. 141. 3 J. A. Hobson, Imperialism: A Study (London: James Nisbet, 1902: rpt Cambridge: Cambridge University Press, 2010), pp. 242–3. 4 Ibid., pp. 51–66. 5 J. A. Hobson, Imperialism: A Study (London, 1988), p. 59, as cited in P. J. Cain and A. G. Hopkins, British Imperialism 1688–2000 (Harlow : Longman, 2002), p. 33; J. A. Hobson, The Evolution of Modern Capitalism (London: Walter Scott, 1894; rpt Adamant Media Corporation, 2005), p. 235. 6 Hobson, The Evolution of Modern Capitalism, p. 60. 7 V. I. Lenin, Imperialism: The Highest Stage of Capitalism (Bombay: People’s, 1930), p. 8. 8 Cain and Hopkins, British Imperialism. 9 Ibid., pp. 32–43. 10 One criticism is that of Daunton, for example, who questions the basic premises of gentlemanly capitalism and argues that the ‘lines of demarcation between City, industry and land were shifting and complex, frustrating any attempt to construct neat formulas’. He demonstrates the extent of interconnectedness between industrial concerns and the City while also showing the lack of cohesion amongst supposed gentlemanly capitalists. M. Daunton, ‘“Gentlemanly Capitalism” and British Industry 1820–1914’, Past and Present, 122 (1989): 151. 11 A. Porter, ‘“Gentlemanly Capitalism” and Empire: The British Experience since 1750?’, Journal of Imperial and Commonwealth History, 18(3) (1990): 289. 12 R. Robinson, Studies in the Theory of Imperialism, ed. R. Owen and B. Sutcliffe (London: Longman, 1972), pp. 117–42. 13 H. Katouzian, The Persians (New Haven: Yale University Press, 2009), p. 154. 14 J. Gallagher and R. Robinson, ‘The Imperialism of Free Trade’, Economic History Review, 6(1) (1953): 6–7. 15 Ibid. Whereas the concept of informal empire has been widely accepted, the underlying reasons for choosing informal imperialism over other types of imperialism have been the subject of debate. Gallagher and Robinson concluded that ‘British policy followed the principle of extending control informally if possible and formally if necessary’ (p. 13). Darwin, however, argues that the choice of exerting informal imperial dominance may have been an acceptance of the limitations of British power rather than an active policy, let alone a preferred option, of British imperialism. Informal empire was thus ‘a commercial-diplomatic regime fashioned to the circumstances of a particular region, not a portmanteau policy to be applied willynilly’, and it ‘seems wiser to conclude that their failure to intervene more forcefully

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16

17

18

19 20

21 22 23 24 25 26

27 28 29 30 31 32 33 34 35 36

Notes than they did in any particular setting was more likely to reflect doubts about the efficacy of action than confidence in masterly (informal) inactivity’. J. Darwin, ‘Imperialism and the Victorians: The Dynamics of Territorial Expansion’, English Historical Review, 112(447) (1997): 614–42. FO 60/615, Memorandum by Curzon, 21 September 1899, as cited in F. Kazemzadeh, Russia and Britain in Persia 1864–1914: A Study in Imperialism (London: I.B. Tauris, 2013), p. 342. The government of India was, understandably, more concerned about maintaining a Persian buffer under British control. Whereas Whitehall tended to see the issue with more detachment, the Indian government viewed it as a matter of survival. G. N. Curzon, Persia and the Persian Question (London: Longmans, Green, 1892), i, pp. 3–4. The joke regarding Curzon’s Persia and the Persian Question, at the time, was that he had used ‘I’ so often that the printer had run out of the letter. His imposing ego was also the subject of poems in his Oxford days, which would end with the verse ‘George Nathaniel Curzon is a very important person’. This is the apocryphal origin of the acronym VIP. M. Farmanfarmaian and R. Farmanfarmaian, Blood & Oil: A Prince’s Memoir of Iran from the Shah to the Ayatollah (New York: Random House Trade Paperbacks, 2005), p. 94. Cartoon in Punch, or The London Charivari, 13 December 1911. J. Malcolm, History of Persia (London, 1815), ii, p. 303, as mentioned in H. Amirahmadi, The Political Economy of Iran under the Qajars: Society, Politics, Economics and Foreign Relations 1796–1926 (London: I.B. Tauris, 2012), p. 76. Curzon, Persia and the Persian Question, i, p. 433. FO 60/665, Hardinge to Lansdowne, 27 April 1903, as cited in Kazemzadeh, Russia and Britain in Persia, p. 453. Amirahmadi, The Political Economy of Iran under the Qajars, pp. 80–6. Curzon, Persia and the Persian Question, i, pp. 438–44. Amirahmadi, The Political Economy of Iran under the Qajars, pp. 158–60. Reuter realised that the speed of delivery was the critical competitive factor. He started with carrier pigeons until mail trains caught up and moved on to the telegraph as it expanded its network. He was famously responsible for having broken the news of Abraham Lincoln’s assassination several hours ahead of his rivals. Charles Wintour, ‘Reuter, (Paul) Julius de, Baron de Reuter in the Nobility of Saxe-Coburg and Gotha (1816–1899)’, rev. M. Clare Loughlin-Chow, Oxford Dictionary of National Biography (Oxford: Oxford University Press, 2004), http://www.oxforddnb.com/view/ article/37890. H. Rawlinson, England and Russia in the East (London: J. Murray, 1875), pp. 124–5. Curzon, Persia and the Persian Question, i, pp. 3–4. L. Lockhart, The Record of the Anglo-Iranian Oil Co. Ltd. (unpublished, 1938), i, Foreword. L. Lockhart, ‘The Causes of the Anglo-Persian Oil Dispute’, Journal of the Royal Central Asian Society, 40(2) (1953): Abstract. BP 87232, Anglo-Iranian Oil Company to Philip Graves with copy to Lockhart, 15 May 1939. Ibid., Laurence Lockhart to Alfred Marriott, 17 December 1935. Ibid., Lockhart reply to edits, 10 June 1936. BP 131441, John Cadman to R. Watson, 21 February 1936. H. Longhurst, Adventure in Oil (London: Sidgwick and Jackson, 1959). BP 78135, Lockhart to Taylor, 31 October 1958.

Notes

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37 38 39 40

Ibid., Longhurst to Lockhart, 22 September 1958; emphases in the original. Ibid., Lockhart to Taylor, 5 January 1959. Ibid., Lockhart to Taylor, 10 January 1959. Ibid., Lockhart to Young, 3 November 1958; and Archie Chisholm to Jim, 31 December 1958. 41 Ibid., Young to Lockhart, 1 November 1958. 42 R. W. Ferrier, The History of the British Petroleum Company, vol. 1 (Cambridge: Cambridge University Press, 1982). 43 A. Zischka, La Guerre Secrète Pour le Pétrole (Paris: Payot, 1934).

Chapter 2 1 Kazemzadeh, Russia and Britain in Persia, p. 357. 2 ‘Jacques de Morgan’, http://www.annales.org/archives/x/morgan.html; R. de Mecquenem, ‘Les Fouilleurs de Suse’, Iranica Antiqua, 15 (1980): 6–7; BP 87232, Marriott to Lockhart, 19 December 1935; P. Amiet, ‘De Morgan, Jacques’, Encyclopaedia Iranica (December 1994), http://www.iranicaonline.org/articles/ de-morgan. De Morgan was originally looking for ozokerite, a type of natural wax, for a Bakhtiyari chief. 3 KFP, Papers of General Antoine Kitabgi Khan, report on Persian oil deposits by Edouard Cotte, undated. This report was considered lost in Ferrier, British Petroleum, p. 30. 4 In just a few months in 1876, he lost most of his businesses as a result of the Bulgarian uprisings, the curious death of Sultan Abdulaziz and the remonstrances of his creditors. L. Davoudi, ‘Divine Spark: The Prelude to the Tobacco Régie of 1890’, Iranian Studies, 47(4) (2014): 505–18. 5 KFP, Diaries of General Antoine Kitabgi Khan, 3 October 1879. The banker was Antoine Alléon. 6 Ibid., resumed accounts. 7 KFP, Letters of General Antoine Kitabgi Khan, Kitabgi Khan to unknown, 2 June 1900. 8 Ibid., Kitabgi Khan to Ekisler, 26 September 1898. 9 H. D. Wolff, Rambling Recollections (London: Macmillan, 1908), p. 329. 10 Gulbenkian would later regret not investing in this ‘very wild cat’ and framed a motto that reminded him to ‘never give up an oil concession’. D. Yergin, The Prize: The Epic Quest for Oil, Money, and Power (New York: Simon & Schuster, 1993), p. 187. 11 KFP, Letters of Kitabgi Khan, Sir Henry Drummond Wolff to Kitabgi Khan, 25 November 1900; BP 87232, Marriott to Lockhart, 19 December 1935. 12 KFP, Letters of Kitabgi Khan, Drummond Wolff to Kitabgi Khan, 25 January 1901. 13 Ferrier, British Petroleum, p. 30; Robert Brown, ‘D’Arcy, William Knox (1849–1917)’, Oxford Dictionary of National Biography (Oxford: Oxford University Press, October 2007), http://www.oxforddnb.com/view/article/37341. 14 W. Mineau, The Go Devils (London: Cassell, 1958), p. 4. 15 Cain and Hopkins, British Imperialism, p. 336. A gentleman in the making usually made his fortune outside Britain and had to undergo an adaptation period in order to fully integrate into the domestic British elite. This social aspiration could prove useful to British imperial projects as they would take greater risks than already established elites. The term “re-making” is coined in this context as D’Arcy had already been a

166

16 17

18 19 20 21 22 23

24 25 26 27 28 29 30

31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49

Notes member of the British elite before his family lost everything. His consequent fortune had thus started a process of reintegration into elite circles. BP 70279, William Knox D’Arcy to Marriott, 20 July 1901. This Ottoman oil concession would later be known as the Mesopotamian oil concession. KFP, Papers of Kitabgi Khan, Agreement between William Knox D’Arcy, General Antoine Kitabgi Khan and Edouard Cotte, 1 March 1901; BP 33592, D’Arcy to Drummond Wolff, 11 March 1901. KFP, Letters of Kitabgi Khan, Edouard Cotte to Kitabgi Khan, 8 January 1901. Ibid., D’Arcy to Kitabgi Khan, 1 March 1901. KFP, Diaries of Kitabgi Khan, 16 February 1901. Ibid., 19 April 1901. Ibid. Persia used a farming system of customs and taxes where tax farmers were liable for a certain sum to the central government and were allowed to keep any excess. This system was widely abused and opposed by Kitabgi during his tenure as director general of Persian customs. During his negotiations for the Tobacco Régies of 1886 and 1890, he had managed to avoid the farming system’s application to the tobacco industry. KFP, Diaries of Kitabgi Khan, 19 April 1901. Ibid., multiple entries, 1886–90. Ibid., evening, 12 May 1901. Ibid., 19 April 1901. Davoudi, ‘Divine Spark’, 505–18. KFP, Diaries of Kitabgi Khan, 19 April 1901. KFP, Letters of Kitabgi Khan, Philomène Kitabgi to Drummond Wolff, 11 April 1901. Kitabgi communicated with Sir Henry by writing to his wife in order to avoid raising any suspicions at the telegraph office, which was often targeted by Russian espionage. He would later also develop a numerical code to communicate with London. Ibid., Drummond Wolff to Philomène Kitabgi, 12 April 1901. KFP, Diaries of Kitabgi Khan, 19 April 1901. BP 87232, Marriott to Lockhart, 19 December 1935. KFP, Diaries of Kitabgi Khan, 19 April 1901; FO 60/731, Sir Arthur Hardinge to Lord Lansdowne, 26 April 1901; and D’Arcy to Lansdowne, 27 June 1901. KFP, Diaries of Kitabgi Khan, 19 April 1901 and 21 April 1901. Ibid., 19 April 1901. Ibid., 21 April 1901. Ibid. Ibid., 18 January 1890. Ibid., 21 April 1901. FO 60/731, Hardinge to Lansdowne, 26 April 1901. KFP, Diaries of Kitabgi Khan, 4 May 1901. Ibid., 27 April 1901. Ibid., evening, 12 May 1901. FO 60/731, Hardinge to Lord Lansdowne, 30 May 1901. KFP, Diaries of Kitabgi Khan, 4 May 1901. Ibid., 14 May 1901. Ibid., evening, 14 May 1901. FO 60/731, Hardinge to Lansdowne, 30 May 1901. KFP, Diaries of Kitabgi Khan, 17 May 1901.

Notes 50 51 52 53 54 55 56 57 58 59 60 61

62 63 64 65 66 67 68 69 70 71 72 73 74

167

Article 11 of the D’Arcy Concession as translated at the end of this book. KFP, Diaries of Kitabgi Khan, 19 May 1901. Ibid., 21 May 1901. Ibid., 17 May 1901. BP H17/47, as cited in Ferrier, British Petroleum, p. 38. KFP, Diaries of Kitabgi Khan, 21 May 1901. FO 60/640, Hardinge to Lansdowne, 12 May 1901, as cited in Ferrier, British Petroleum, p. 36. KFP, Diaries of Kitabgi Khan, 22 May 1901; Curzon, Persia and the Persian Question, i, p. 559. KFP, Diaries of Kitabgi Khan, 22 May 1901. Ibid., 21 May 1901. KFP, Letters of Kitabgi Khan, Philomène Kitabgi to Drummond Wolff, 23 March 1901. KFP, Diaries of Kitabgi Khan, 23 May 1901 and 24 May 1901. Anecdotally, Amin-i Khalvat was the only blonde Persian that Dr Feuvrier, Nasir al-Din Shah’s physician, had come across in his journeys. J. Feuvrier, Trois Ans à la Cour de Perse (Paris: F. Juven, 1900), p. 61. KFP, Diaries of Kitabgi Khan, 24 May 1901. Ibid. Ibid. Ibid.; emphasis in the original. Ibid., 28 May 1901. Ibid. Ibid., 31 May 1901. FO 60/731, Hardinge to Lansdowne, 30 May 1901. FO 800/137, Hardinge to Lansdowne, 29 May 1901. BP 69454, D’Arcy to Kitabgi Khan, 15 August 1902; KFP, Letters of Kitabgi Khan, D’Arcy to Kitabgi Khan, 13 August 1901. KFP, Letters of Kitabgi Khan, D’Arcy to Kitabgi Khan, 14 July 1901. BP H17/47, as cited in Ferrier, British Petroleum, p. 41. KFP, Diaries of Kitabgi Khan, 31 May 1901.

Chapter 3 1 KFP, Diaries of Kitabgi Khan, 3 December 1901. 2 KFP, Letters of Kitabgi Khan, Kitabgi Khan to D’Arcy, 9 October 1902. 3 R. Sorkhabi, ‘George Bernard Reynolds: A Forgotten Pioneer of Oil Discoveries in Persia and Venezuela’, Oil-Industry History, 11(1) (2010): 157. 4 KFP, Diaries of Kitabgi Khan, 12 September 1901. 5 Ibid., 16 September 1901; KFP, Letters of Kitabgi Khan, Reynolds to D’Arcy, 30 September 1901. 6 KFP, Diaries of Kitabgi Khan, 30 November 1901. 7 KFP, Letters of Kitabgi Khan, Kitabgi Khan to Vincent Kitabgi, 4 April 1902. 8 Ibid., Reynolds to D’Arcy, 30 September 1901. 9 Ibid., Kitabgi Khan to Vincent Kitabgi, 10 April 1902, 17 April 1902 and 30 November 1901; 18 April 1902.

168

Notes

10 Ibid., 6 May 1902. 11 KFP, Diaries of Kitabgi Khan, 16 May 1902; BP 69403, Jenkin to Reynolds, 16 May 1902. 12 KFP, Diaries of Kitabgi Khan, 16 May 1902. 13 E. Eklund, ‘An Incident at Mount Morgan: Company and Class Loyalties in a Central Queensland Gold Mining Town, 1882 to 1902’ (unpublished paper, delivered 2012, Australian Mining History Conference). 14 KFP, Diaries of Kitabgi Khan, 12 September 1901. 15 BP 87232, A. T. Wilson to Sir Arthur Hirtzel, 22 June 1928. 16 A. Khazeni, Tribes & Empire on the Margins of Nineteenth-Century Iran (Seattle: University of Washington Press, 2009), pp. 115–16; MEC GB165-0241, Evening News Saturday Magazine, 13 October 1951. 17 BP 87232, Memorandum on the Persian Bank Mining Rights Corporation, undated. 18 KFP, Diaries of Kitabgi Khan, 18 May 1901. 19 BP 87232, Statement by Sir Louis Dane, undated. 20 A. K. S. Lambton, ‘The Tobacco Regie: Prelude to Revolution I’, Studia Islamica, 22 (1965): 119–57. A fatwa is an Islamic decree. 21 FO 60/660, A. Hardinge to Lansdowne, no. 55, Secret, Teheran, 1 April 1902 as cited in Kazemzadeh, Russia and Britain in Persia, p. 394. 22 KFP, Diaries of Kitabgi Khan, 8 July 1901. 23 BP 71222, D’Arcy to Jenkin, 1 January 1902. 24 T. A. B. Corley, ‘Redwood, Sir (Thomas) Boverton, First Baronet (1846–1919)’, Oxford Dictionary of National Biography (Oxford: Oxford University Press, January 2008), http://www.oxforddnb.com/view/article/47996; KFP, Diaries of Kitabgi Khan, 22 November 1901. 25 KFP, Diaries of Kitabgi Khan, 30 November 1901. 26 Ibid.; KFP, Letters of Kitabgi Khan, D’Arcy to Reynolds, 31 August 1902. 27 Ferrier, British Petroleum, pp. 56–7. 28 KFP, Diaries of Kitabgi Khan, 28 June 1901. 29 Ibid., 22 April 1902. 30 Ibid., Report by Shaykh al-Mulk, 1902. 31 KFP, Letters of Kitabgi Khan, Reynolds to D’Arcy, 22 March 1902. 32 Ibid., Shaykh al-Mulk to Kitabgi Khan, 6 April 1902. 33 Ibid., Kitabgi Khan to Vincent Kitabgi, 22 April 1902. 34 KFP, Diaries of Kitabgi Khan, 28 November 1901. 35 BP 69454, Kitabgi Khan to Redwood, 31 January 1902; KFP, Papers of Kitabgi Khan, Drummond Wolff to D’Arcy, 11 April 1902. 36 KFP, Papers of Kitabgi Khan, D’Arcy to Reynolds, 31 August 1902; emphasis in the original. 37 Ibid., Letters of Kitabgi Khan, Shaykh al-Mulk to Kitabgi Khan, 6 April 1902. 38 Ibid., Kitabgi Khan to Vincent Kitabgi, 9 April 1902. 39 B. V. Anan’ich, ‘Rossiia i kontessia d’Arsi’, Istoricheskie Zapiski, 66 (1960): 281. 40 KFP, Diaries of Kitabgi Khan, 19 September 1901. 41 Anan’ich, ‘Rossiia i kontessia d’Arsi’, 281–3. 42 Kazemzadeh, Russia and Britain in Persia, p. 250. 43 Ibid., p. 284. 44 Ibid. 45 Ibid., p. 286. 46 FO 60/660, Argyropoulo to Lamsdorf, February 1902.

Notes

169

47 Ibid., Memorandum for Abbas Quli Khan in conversations with Amin al-Sultan, 26 January 1902. 48 Ibid., Enclosure no. 1, Hardinge to Lansdowne, No. 14, Confidential, Tehran, 1 February 1902. 49 Kazemzadeh, Russia and Britain in Persia, p. 382. 50 Ibid. p. 383; BP 71375, D’Arcy to Preece, 1 July 1906. 51 Kazemzadeh, Russia and Britain in Persia, p. 383. 52 KFP, Letters of Kitabgi Khan, Kitabgi Khan to Vincent Kitabgi, 6 May 1902. 53 Ibid., Shaykh al-Mulk to Kitabgi Khan, 6 April 1902. 54 Ibid., Kitabgi Khan to Vincent Kitabgi, 6 May 1902, and Kitabgi Khan to Drummond Wolff, 6 June 1902. 55 FO 60/731, Erskine to Lansdowne, 23 June 1902. 56 KFP, Letters of Kitabgi Khan, Kitabgi Khan to D’Arcy, 11 October 1902. 57 FO 60/731, Erskine to Lansdowne, 23 June 1902. 58 Anan’ich, ‘Rossiia i kontessia d’Arsi’, p. 289. 59 FO 60/731, Erskine to Lansdowne, 23 June 1902. 60 John D. Gurney, ‘Houtum-Schindler, Albert (1846–1916)’, Encyclopaedia Iranica (December 2004), http://www.iranicaonline.org/articles/houtum-schindler-albert. 61 Curzon, Persia and the Persian Question, i, p. 477. Schindler had helped Curzon write Persia and the Persian Question. Gurney, Encyclopaedia Iranica. 62 KFP, Letters of Kitabgi Khan, Kitabgi Khan to Vincent Kitabgi, 12 May 1902 and 6 May 1902. 63 Ibid., Vincent Kitabgi to Kitabgi Khan, 4 May 1902 and 6 May 1902. 64 Ibid., D’Arcy to Vincent Kitabgi, 9 May 1902. 65 Ibid., Vincent Kitabgi to Kitabgi Khan, 6 May 1902. 66 Ibid., 12 May 1902. 67 Ibid., Kitabgi Khan to D’Arcy, 26 June 1902. 68 KFP, Papers of Kitabgi Khan, D’Arcy to Reynolds, 31 August 1902. 69 BP 87232, McKeever to Lockhart, 19 November 1935. 70 KFP, Letters of Kitabgi Khan, D’Arcy to Kitabgi Khan, 14 July 1901 and 13 August 1901. 71 Ibid., Kitabgi Khan to D’Arcy, undated in reply to letter of 13 August 1901; Ali Asghar Khan to Kitabgi Khan, 22 December 1901; and Kitabgi Khan to D’Arcy, undated in reply to letter of 13 August 1901. 72 Ibid., D’Arcy to Kitabgi Khan, 16 February 1902. 73 Ibid., Kitabgi Khan to D’Arcy, 24 March 1902. 74 Ibid., D’Arcy to Kitabgi Khan, 30 May 1902. 75 Ibid., D’Arcy to Kitabgi Khan, 27 March 1902; and D’Arcy to Vincent Kitabgi, 30 May 1902. 76 BP 69454, D’Arcy to Kitabgi Khan, 27 March 1902. 77 KFP, Letters of Kitabgi Khan, Kitabgi Khan to D’Arcy, 6 June 1902. 78 Ibid., 7 June 1902. 79 Ibid., D’Arcy to Vincent Kitabgi, 16 June 1902. 80 Ibid., 20 June 1902. 81 Ibid., D’Arcy to Kitabgi Khan, June 1902. 82 Ibid., Kitabgi Khan to D’Arcy, 26 June 1902. 83 Ibid., Vincent Kitabgi to Kitabgi Khan, 11 July 1902 and 7 July 1902. 84 Ibid., 8 July 1902. 85 KFP, Papers of Kitabgi Khan, Draft statutes by Kitabgi Khan, 17 July 1902.

170

Notes

86 Ibid., Minutes of meeting at Manisty’s, 22 July 1902. 87 KFP, Letters of Kitabgi Khan, Kitabgi Khan to D’Arcy, 25 July 1902; BP 71039, D’Arcy to Jenkin, 20 August 1902. 88 BP 71072, p. 25. 89 Ibid.; KFP, Diaries of Kitabgi Khan, 30 November 1901. 90 KFP, Letters of Kitabgi Khan, Vincent Kitabgi to Kitabgi Khan, 25 May 1902. 91 BP 87232, Notes by Alfred Marriott, undated. 92 Ibid., Lockhart to Marriott, 2 March 1937 and Notes by Alfred Marriott, undated. 93 BP 71039, D’Arcy to Jenkin, 20 August 1902, 14 September 1901, 25 August 1902 and 12 November 1901. 94 Ferrier, British Petroleum, p. 52.

Chapter 4 1 2 3 4

5 6 7

8 9 10 11 12 13 14 15 16 17

18 19 20 21 22

FO 60/731, D’Arcy to Foreign Office, 23 December 1902. KFP, Letters of Vincent Kitabgi, Vincent Kitabgi to D’Arcy, 25 December 1902. FO 60/731, D’Arcy to Foreign Office, 23 December 1902. Ibid., Sir Arthur Hardinge to Foreign Office, 30 December 1902; KFP, Letters of Vincent Kitabgi, Vincent Kitabgi to Ali Asghar Khan, 6 April 1903; FO 60/731, D’Arcy to Foreign Office, 2 January 1903. Kazemzadeh, Russian and Britain in Persia, p. 456. BP 129950, Vincent Kitabgi to D’Arcy, 21 September 1903. FO 60/731, Dobbs to Lawrence, 4 March 1903. Henry Dobbs, at this stage, had been working in the political department of the government of India and was undertaking a long journey across Persia. Sir Walter Lawrence, for his part, was Lord Curzon’s private secretary. BP 70494, Rosenplaenter to Jenkin, 7 November 1903. BP 129950, Vincent Kitabgi to D’Arcy, 2 January 1904, 6 January 1904; and D’Arcy to Vincent Kitabgi, 26 April 1904. IOR/L/PS/10/143, A. Hardinge to Lansdowne, 27 January 1904. Ibid., Lorimer to Foreign Department, government of India, 7 July 1904. BP 71039, D’Arcy to Jenkin, 28 July 1903. FO 60/731, D’Arcy to Foreign Office, 19 March 1903. KFP, Letters of Vincent Kitabgi, Hargraves to Vincent Kitabgi, 26 May 1903. Ibid., D’Arcy to Vincent Kitabgi, 30 May 1903, 20 July 1903; Vincent Kitabgi to Manisty, 15 June 1903. Ibid., D’Arcy to Vincent Kitabgi, 10 June 1903. Fisher to Need, 18 July 1903, as cited in J. A. Fisher, Fear God and Dread Nought: The Correspondence of Admiral of the Fleet Lord Fisher of Kilverstone, ed. A. J. Marder (London: Cape, 1952), p. 275. Ibid. BP 87232, D’Arcy to Moulton, 8 August 1903, as cited in Lockhart, Record of the Anglo-Iranian Oil Co., p. 47. Ferrier, British Petroleum, p. 60. BP 131708, D’Arcy to Manisty, 7 April 1904; Lockhart, Record of the Anglo-Iranian Oil Co., p. 28 and 49. BP 131708, extracts from Lockhart, Record of the Anglo-Iranian Oil Co., p. 49.

Notes

171

23 FO 60/731, Lansdowne to Curzon, 7 December 1903. 24 Ibid., Curzon to Foreign Office, 1 November 1905; A. Hardinge to Lansdowne, 24 December 1903. 25 Ibid., A. Hardinge to Foreign Office, 12 March 1904. 26 FO 60/405, Reuter to Granville, 12 September 1872, as cited in Kazemzadeh, Russia and Britain in Persia, p. 100. 27 Ibid., p. 129; FO 60/406, Foreign Office to Reuter, 27 March 1874. 28 Kazemzadeh, Russia and Britain in Persia, p. 104. 29 FO 60/731, D’Arcy to Lansdowne, 27 June 1901. 30 Kazemzadeh, Russia and Britain in Persia, p. 132. 31 A. J. Marder, From the Dreadnought to Scapa Flow: The Royal Navy in the Fisher Era, 1904–1919 (London: Oxford University Press, 1961), i, p. 13. 32 W. S. Churchill, The World Crisis: 1911–1918 (New York: Simon & Schuster, 2005), p. 51. Admiral Fisher had an ebullient personality, which comes across in his letters. He is credited with coining the phrase “OMG” (initials for “Oh My God”) in a letter to Winston Churchill in 1917. He also enjoyed finishing his letters with extravagant phrases such as ‘yours until charcoal sprouts’ and ‘yours until hell freezes over’. 33 R. H. S. Bacon, The Life of Lord Fisher of Kilverstone (London: Hodder and Stoughton, 1929), as cited in Marder, Dreadnought to Scapa Flow, i, p. 14. 34 Marder, Dreadnought to Scapa Flow, i, p. 8. 35 Ibid., p. 7. 36 Ibid., p. 45. 37 Parliamentary Papers (1904), Royal Commission on Coal Supplies, Second Report of the Royal Commission on Coal Supplies: Volume II, Minutes of Evidence and Appendices, http://babel.hathitrust.org/cgi/pt?id=hvd.hnf7u3;view=1up;seq=7. 38 J. D. Henry, Oil Fuel and the Empire (London: Bradbury, Agnow, 1908), p. 66. 39 ADM 116/3807, Admiralty to Burmah Oil Company, 24 July 1903. 40 T. A. B. Corley, A History of the Burmah Oil Company 1886–1924 (London: Heinemann, 1983), p. 82. 41 Parliamentary Papers (1904), Royal Commission on Coal Supplies, Second Report of the Royal Commission on Coal Supplies: Volume II, Minutes of Evidence and Appendices, http://babel.hathitrust.org/cgi/pt?id=hvd.hnf7u3;view=1up;seq=7. 42 BP 131809. 43 Separately, he had also partnered with D’Arcy in a turquoise mine. BP 71039, D’Arcy to Jenkin, 25 January 1903. 44 ADM 116/3807, Redwood to Jenkin, 3 February 1904. 45 BP 131708, D’Arcy to Manisty, 2 February 1904, as cited in Lockhart, Record of the Anglo-Iranian Oil Co., p. 49. 46 BP 131708, E. G. Pretyman to Greenway, 30 April 1919, as cited in Lockhart, Record of the Anglo-Iranian Oil Co., p. 49. 47 Corley, Burmah Oil Company, pp. 82–4. 48 Ibid., p. 102. 49 FO 60/731, Pretyman to Gorst, 10 August 1904. 50 BP 71039, D’Arcy to Jenkin, 12 August 1904. 51 Ibid., D’Arcy to Jenkin, 13 September 1904 and 20 August 1904. 52 BP 71223, D’Arcy to Jenkin, 8 September 1904. 53 BP 71039, D’Arcy to Jenkin, 8 November 1904; BP 71223, D’Arcy to Jenkin, 12 January 1905. 54 Corley, Burmah Oil Company, p. 103.

172 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91

Notes BP 131809, citing Cargill to Admiralty, 2 December 1904. Corley, Burmah Oil Company, p. 88. Ferrier, British Petroleum, p. 70. BP 129108, Redwood to Burmah Oil Company, 16 March 1905. Burmah Oil Company chairman’s Speech at Annual General Meeting, 1927, as cited in Ferrier, British Petroleum, p. 69. BP 70139, Burmah to Foreign Office, 9 February 1905. FO 60/731, Davidson to Graham, 24 February 1905; Foreign Office to Boyd and Miller, 24 February 1905. BP 71223, D’Arcy to Jenkin, 26 January 1905. The Second Report of the Royal Commission on Coal Supplies as published on http:// babel.hathitrust.org/cgi/pt?id=hvd.hnf7u3;view=1up;seq=7, pp. 194–6. KFP, Letters of Vincent Kitabgi, D’Arcy to Vincent Kitabgi, 29 April 1903; emphases in the original. Ibid., D’Arcy to Vincent Kitabgi, 11 July 1903. Ibid. Ibid., 31 August 1903. BP 69401, Jenkin to Rosenplaenter, 3 February 1904. KFP, Letters of Vincent Kitabgi, D’Arcy to Vincent Kitabgi, 12 July 1904. Ibid., Letters of Edouard Kitabgi, D’Arcy to Edouard Kitabgi, 4 December 1905. BP 71039, D’Arcy to Jenkin, 20 February 1903. KFP, Letters of Vincent Kitabgi, D’Arcy to Vincent Kitabgi, 11 July 1903; Drummond Wolff to Vincent Kitabgi, 23 July 1903. BP 87232. KFP, Papers of Vincent Kitabgi, Instructions to Counsel, March 1905. Ibid. and memorandum regarding Mr W. P. Norton’s interview with Mr Kitabgi Khan, 9 February 1905. BP 129950, Vincent Kitabgi to D’Arcy, 16 March 1905. KFP, Letters of Vincent Kitabgi, Muhandis al-Mamalik to Vincent Kitabgi, 18 March 1905. Ibid., D’Arcy to Vincent Kitabgi, 24 March 1905 and 25 March 1905. Ibid., Vincent Kitabgi to D’Arcy, 19 April 1905. Ferrier, British Petroleum, p. 72. KFP, Letters of Vincent Kitabgi, D’Arcy to Vincent Kitabgi, 10 May 1905. Ibid., 14 May 1905. Ibid., Norton to Vincent Kitabgi, 15 May 1905. Ibid., D’Arcy to Vincent Kitabgi, 16 May 1905. Ibid., 18 May 1905. Ibid., 2 June 1905; BP 69407, Concessions Syndicate Ltd to Shaykh al-Mulk, 5 June 1905. KFP, Letters of Vincent Kitabgi, D’Arcy to Vincent Kitabgi, 2 June 1905. Ibid., 10 May 1905. Ferrier, British Petroleum, pp. 70–1. BP 131708, E. G. Pretyman to Charles Greenway, 30 April 1919, as cited in Lockhart, Record of the Anglo-Iranian Oil Co., p. 49. A. A. den Otter, ‘Smith, Donald Alexander, First Baron Strathcona and Mount Royal (1820–1914)’, Oxford Dictionary of National Biography (Oxford: Oxford University Press, January 2011), http://www.oxforddnb.com/view/article/36132.

Notes

173

92 BP 131708, Pretyman to Greenway, 30 April 1919, as cited in Lockhart, Record of the Anglo-Iranian Oil Co., p. 49. 93 Ferrier, British Petroleum, p. 72; BP 57431, Concessions Syndicate Ltd to Miller, 4 August 1905. 94 ADM 116/3807, Committee of Imperial Defence to Under Secretary of State for India and copy to Admiralty, 10 August 1905, as cited in Corley, Burmah Oil Company, p. 90. 95 Corley, Burmah Oil Company, pp. 88–92.

Chapter 5 1 Ferrier, British Petroleum, p. 62; BP 70494, Rosenplaenter to Redwood, 3 July 1903. 2 BP 70494, Rosenplaenter to Redwood, 3 July 1903. 3 BP 87232, D’Arcy to Moulton, 8 August 1903, as cited in Lockhart, Record of the Anglo-Iranian Oil Co., p. 47. 4 Ferrier, British Petroleum, p. 67. 5 FO 60/731, D’Arcy to Foreign Office, 15 June 1905. 6 H. Walcher, In the Shadow of the King: Zill al-Sultan and Isfahan under the Qajars (London: I.B. Tauris, 2008), p. 107. 7 Ibid., p. 184. 8 Ibid., p. 109; Khazeni, Tribes & Empire, p. 120. 9 FO 60/731, D’Arcy to Foreign Office, 15 June 1905. 10 BP 62337, Agreement between William Knox D’Arcy and Concessions Syndicate Ltd, 5 August 1905; BP 69403B, D’Arcy to Foreign Office, 26 September 1905. 11 For example, BP 70325, Preece to Hamilton, 8 November 1906. 12 FO 60/731, Reynolds and Preece to Concessions Syndicate Ltd, 25 October 1905. 13 BP H17/89B, Reynolds to Concessions Syndicate Ltd, 4 December 1905, as cited in Ferrier, British Petroleum, p. 76; G. R. Garthwaite, ‘The Bakhtiyari Khans, the Government of Iran, and the British, 1846–1915’, International Journal of Middle East Studies, 3(1) (1972): 32. 14 FO 60/731, Reynolds and Preece to Concessions Syndicate Ltd, 25 October 1905. 15 J. R. Preece, ‘Report on the Negotiations with the Chiefs of the Bakhtiari Tribes for the Exploitation of Naphtha in their Country’, 27 November 1905, as cited in Khazeni, Tribes & Empire, p. 121. 16 FO 60/731, Reynolds and Preece to Concessions Syndicate Ltd, 25 October 1905. 17 BP 177167, Reynolds to Concessions Syndicate Ltd, 4 December 1905. 18 Ibid., Reynolds to First Exploitation Company Ltd, 9 August 1905; BP 71223, D’Arcy to Jenkin, 12 November 1905. 19 BP 177167, Reynolds to Concessions Syndicate Ltd, 4 December 1905; BP 78739, Reynolds to First Exploitation Company Ltd, 5 January 1906. 20 BP 177167, Reynolds to First Exploitation Company Ltd, 9 August 1905. 21 BP 69407, Concessions Syndicate Ltd to Shaykh al-Mulk, 5 June 1905. 22 BP 177167, Translation of Shaykh Mazandarani, Shaykh Yazdi and Sayyid Kashani to Major Newmarch, 29 July 1905. 23 BP 69407, D’Arcy to Shaykh al-Mulk, 7 September 1905; BP 71223, D’Arcy to Jenkin, 4 November 1905. 24 BP 78739, Reynolds to First Exploitation Company Ltd, 5 January 1906.

174

Notes

25 Ibid. 26 FO 60/731, D’Arcy to Reynolds, attached in D’Arcy to Foreign Office, 2 November 1905. 27 J. R. Preece, ‘Report on the Negotiations with the Chiefs of the Bakhtiari Tribes for the Exploitation of Naphtha in their Country’, 27 November 1905, as cited in Khazeni, Tribes & Empire, p. 122. 28 BP 71223, D’Arcy to Jenkin, 13 November 1905. 29 FO 60/731, Grant Duff to Foreign Office, 22 November 1905. 30 Ibid., Armstrong to Maxwell, 24 November 1905; Foreign Office to Grant Duff, 28 November 1905. 31 BP 69833, Grant Duff to Grey, 7 January 1906. 32 Garthwaite, ‘The Bakhtiyari Khans, the Government of Iran, and the British’. 33 Khazeni, Tribes & Empire, p. 121; Garthwaite, ‘The Bakhtiyari Khans, the Government of Iran, and the British’, p. 33; BP 78739, Reynolds to Concessions Syndicate Ltd, 17 January 1906. 34 BP 78739, Reynolds to Concessions Syndicate Ltd, 17 January 1906; Garthwaite, ‘The Bakhtiyari Khans, the Government of Iran, and the British’, p. 33. 35 BP 78739, Salar i-Arfa to Reynolds, 13 February 1906. 36 Ibid., Reynolds to Concessions Syndicate Ltd, 26 February 1906. 37 Ibid., 16 March 1906. 38 Ibid., 28 March 1906. 39 BP 69833, Grant Duff to Foreign Office, 18 May 1906; Khazeni, Tribes & Empire, p. 124. 40 Garthwaite, ‘The Bakhtiyari Khans, the Government of Iran, and the British’, p. 32. 41 BP 69833, Grant Duff to Foreign Office, 18 May 1906. 42 Ibid. A karguzar was an agent of the Persian Ministry of Foreign Affairs, whose primary responsibility was to arbitrate disputes between Persians and foreigners. 43 Ibid. 44 BP 78739, Reynolds to Lorimer, 6 June 1906. 45 Walcher, In the Shadow of the King, p. 401. 46 BP 78739, D’Arcy to Wallace, 1 June 1906. 47 Ibid., Wallace to D’Arcy, 1 June 1906. 48 BP 70325, Concessions Syndicate Ltd to Preece, 11 June 1906. 49 BP 69833, Memorandum by Preece, 18 June 1906. 50 BP 71375, D’Arcy to Preece, 17 July 1906. 51 Ibid., 24 June 1906. 52 KFP, Papers of Edouard Kitabgi, Memorandum by Edouard Kitabgi, 21 March 1906. 53 BP 69833, Grant Duff to Foreign Office, 9 July 1906. 54 Ibid., Mushir al-Dawlah to Grant Duff, 26 July 1906. 55 BP 70139, Preece to Grey, 17 July 1906. 56 Ferrier, British Petroleum, p. 640. 57 BP 70325, Preece to Concessions Syndicate Ltd, 15 August 1906. 58 BP 71375, D’Arcy to Preece, 7 July 1906. 59 Ibid., 28 August 1906. 60 BP 70325, Preece to Concessions Syndicate Ltd, 15 August 1906. 61 BP 78723, Reynolds to Graham, 18 September 1906. 62 BP 64321, Meidi al-Sultanah to Preece, 20 August 1906. 63 BP 71375, D’Arcy to Preece, 25 August 1906; emphasis in the original. 64 BP 70139, Nichols to Hamilton, 30 August 1906; Jenkin to Hamilton, 27 August 1906.

Notes

175

65 BP 69530, D’Arcy to Imperial Commissioner, undated. 66 BP 57431, Hamilton to Preece, 13 July 1906; emphases in the original. 67 BP 71375, D’Arcy to Preece, 12 July 1906; BP 69833, Grant Duff to Foreign Office, 31 July 1906. 68 BP 71375, D’Arcy to Preece, 12 July 1906. 69 Ibid., 21 July 1906; BP 70325, Preece to Concessions Syndicate Ltd, 15 August 1906. 70 BP 70325, Preece to Concessions Syndicate Ltd, 15 August 1906. 71 Ibid., Preece to Hamilton, 10 September 1906. 72 BP 71375, D’Arcy to Preece, 18 September 1906. 73 BP 69833, Reynolds to Foreign Office, 17 October 1906. 74 Ibid., Foreign Office to Preece, 29 October 1906. 75 Ibid., Preece to Foreign Office, 30 October 1906. 76 Ibid., Grant Duff to Grey, 7 January 1906. 77 Ibid., Preece to Grey, 19 October 1906. 78 Ibid., Grant Duff to Ilkhan, 1 October 1906. 79 BP 70325, Preece to Hamilton, 30 October 1906. 80 BP 69833, Preece to Grey, 30 October 1906. 81 Ibid., Foreign Office to Preece, 2 November 1906. 82 Ibid., Report by Captain Lorimer attached in Foreign Office to Preece, 7 December 1906. 83 Ibid., Hamilton to Preece, 14 November 1906. 84 FO 60/731, D’Arcy to Foreign Office, 26 September 1905. 85 Ibid., Lansdowne to Curzon, 4 October 1905; Curzon to Foreign Office, 1 November 1905. 86 BP 78739, Morton to India Office, 18 June 1906; Lorimer to Recruiting Staff Officer for Punjab Mahometans, 20 April 1906. 87 Ferrier, British Petroleum, p. 11.

Chapter 6 1 J. Afary, Iranian Constitutional Revolution (New York: Columbia University Press, 1996). 2 BP 71375, D’Arcy to Preece, 18 September 1906. 3 Ibid. and 30 September 1906. 4 BP 70139, Foreign Office to Preece, 27 February 1907. 5 Ibid., D’Arcy to Jenkin, 21 January 1904. 6 BP 69833, Spring-Rice to Foreign Office, 14 January 1907. 7 FO 248/923, Memorandum by G. P. Churchill enclosed in letter from Cox to SpringRice, 26 April 1907. 8 George P. Churchill, Biographical Notices of Persian Statesmen and Notables August 1905 (Calcutta, 1906), p. 60. 9 FO 248/923, Memorandum by Sir Cecil Spring-Rice, 25 May 1907. 10 BP 71223, D’Arcy to Jenkin, 20 September 1905. 11 KFP, Papers of Vincent Kitabgi, Sadiq al-Saltanah to D’Arcy, 1 January 1907. 12 BP 69529, D’Arcy to Sadiq al-Saltanah, 3 March 1907. 13 BP 71072, Reynolds to Burmah Oil Company Ltd, 11 April 1907. 14 BP 69833, Spring-Rice to Foreign Office, 14 January 1907.

176 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54

Notes BP 70139, Spring-Rice to Grey, 27 January 1907. Ibid. BP 71375, D’Arcy to Preece, 21 January 1907. BP 70325, Preece to Hamilton, 1 February 1907. FO 248/923, Sadiq al-Saltanah to Reynolds, 7 April 1907. Ibid., Lorimer to Political Resident in the Persian Gulf, 15 April 1907. ‘Persian Parliament’, Kalgoorlie Western Argus (8 January 1907), p. 36. BP 70139, Spring-Rice to Preece, 21 March 1907. BP 69529, Preece to D’Arcy, 25 January 1907. BP 64043, Orford to D’Arcy, 29 June 1906. FO 60/731, D’Arcy to Foreign Office, 19 September 1905; BP 71375, D’Arcy to Preece, 1 July 1906. BP 71375, D’Arcy to Preece, 1 July 1906. BP 70325, Hamilton to D’Arcy, 18 January 1907. BP 71375, 20 January 1907. Corley, Burmah Oil Company, p. 128. BP 77/49/18, BOC Board Meeting, 27 February 1907, as cited in Ferrier, British Petroleum, pp. 81–2. BP 178541, Minutes of Meeting of the Directors of the Burmah Oil Company Ltd, 27 February 1907. KFP, Letters of Vincent Kitabgi, Manisty to Vincent Kitabgi, July 1907. Corley, Burmah Oil Company, p. 128. BP 78723, Reynolds to Lorimer, 31 December 1906. BP 69833, Preece to Hamilton, 23 November 1906; BP 71375, D’Arcy to Preece, 1 January 1907. BP 71375, Foreign Office to Preece, 28 November 1906; Preece to Hamilton, 23 November 1906. BP 78723, Reynolds to Lorimer, 31 December 1906. BP 71375, D’Arcy to Preece, 1 March 1907. BP 77/49/18, BOC Board Meeting, 20 March 1907, as cited in Ferrier, British Petroleum, p. 82. BP 129950, Powell to Drummond Wolff, 31 May 1907. BP 69529, Preece to Hamilton, 3 March 1907. IOR/L/PS/10/143, Spring-Rice to Grey, 16 July 1907. BP 71375, D’Arcy to Preece, 4 May 1907 and 1 July 1906. BP 70325, Preece to Hamilton, 1 May 1907. KFP, Papers of Vincent Kitabgi, Powell to Drummond Wolff, 31 May 1907. KFP, Letters of Vincent Kitabgi, D’Arcy to Vincent Kitabgi, 8 August 1907. BP 69454, Vincent Kitabgi to Drummond Wolff, 9 August 1907; emphasis in the original. BP 71375, D’Arcy to Preece, 5 February 1907. BP 71572, Paul Kitabgi to D’Arcy, 2 August 1905. BP 71375, D’Arcy to Preece, 5 February 1907. BP 69833, Spring-Rice to Foreign Office, 26 April 1907. FO 248/923, Memorandum by G. P. Churchill enclosed in Sir Cecil Spring-Rice’s Despatch No. 42, 27 February 1907. BP 70139, Spring-Rice to Grey, 27 January 1907. FO 248/923, Memorandum by G. P. Churchill enclosed in Sir Cecil Spring-Rice’s Despatch No. 42, 27 February 1907.

Notes

177

55 BP 70139, Spring-Rice to Grey, 27 January 1907. 56 BP 70325, Report by Edouard Kitabgi, 21 March 1907. 57 BP 71375, Vincent Kitabgi to D’Arcy, 26 January 1907; Vincent Kitabgi to Preece, 4 March 1907; emphasis in the original. 58 BP 70325, Preece to Hamilton, 3 March 1907. 59 BP 71375, D’Arcy to Preece, 15 February 1907; BP 129950, Preece to Vincent Kitabgi, 3 March 1907. 60 BP 71584, Statement of Claim of Edward Kitabgi Khan against the First Exploitation Company, 26 June 1907. 61 Ibid., Preece to Hamilton, 15 April 1907; BP 71375, D’Arcy to Preece, 1 March 1907. 62 KFP, Letters of Vincent Kitabgi, D’Arcy to Vincent Kitabgi, 12 March 1907. 63 BP 71375, 25 March 1907; BP 71572, Preece to Hamilton, 26 March 1907. 64 Ibid., Preece to Foreign Office, 23 March 1907. 65 Ibid., 20 May 1907. 66 E. G. Browne, The Persian Revolution of 1905–1909 (Washington, DC: Mage, 2006), p. 139. 67 KFP, Letters of Paul Kitabgi, D’Arcy to Paul Kitabgi, 9 February 1906. 68 Ibid., Letters of Vincent Kitabgi, D’Arcy to Vincent Kitabgi, 31 July 1906. 69 BP 69833, Preece to Foreign Office, 8 April 1907. 70 Afary, Iranian Constitutional Revolution, p. 99. 71 BP 71375, D’Arcy to Preece, 4 May 1907; KFP, Letters of Vincent Kitabgi, Persian Legation in London to Vincent Kitabgi, 28 May 1907. 72 KFP, Letters of Vincent Kitabgi, Sardar Asad to Vincent Kitabgi, 3 June 1907. 73 BP 69833, Foreign Office to Preece, 2 April 1907. 74 FO 248/923, Lorimer to Political Resident at Bushihr, 6 March 1907. 75 BP 69833, Foreign Office to Preece, 25 March 1907. 76 Ibid., Preece to Foreign Office, 8 April 1907; BP 71072, D’Arcy to Preece, 7 April 1907, p. 107. 77 Churchill, Biographical Notices, p. 16. 78 BP 71572, Paul Kitabgi to Preece, 24 May 1907. 79 BP 71375, D’Arcy to Preece, 4 May 1907; BP 69833, Preece to Foreign Office, 1 May 1907. 80 BP 69833, Spring-Rice to Foreign Office, 26 April 1907. 81 BP 78723, Shuja al-Sultan to D’Arcy, 9 June 1906, attached in Reynolds to Concessions Syndicate Ltd, 25 June 1906; and BP 69833, Mushir al-Dawlah to Grant Duff, 3 June 1906. 82 BP 69833, Reynolds to Lorimer, 31 December 1906. 83 Ibid., Sardar Asad to Abbas Quli Khan, 7 June 1906. 84 Ibid., Spring-Rice to Foreign Office, 26 April 1907. 85 Ibid., Preece to Foreign Office, 23 May 1907. 86 Ibid., 3 June 1907. 87 BP 71572, Paul Kitabgi to Preece, 24 May 1907. 88 BP 69833, Spring-Rice to Foreign Office, 26 April 1907. 89 BP 71375, D’Arcy to Preece, 12 June 1907. 90 BP 69833, Preece to Foreign Office, 23 May 1907. 91 Ibid., Spring-Rice to Foreign Office, 16 July 1907. 92 Ibid., with side notes by Preece. 93 BP 71072, draft of ‘The Early History of the D’Arcy Concession’, p. 115.

178

Notes

94 BP 71374, various cheques to G. P. Churchill; BP 71375, D’Arcy to Preece, 30 October 1907; and BP 71399, Churchill to Preece, 31 January 1908. 95 BP 71399, G. P. Churchill to Preece, 26 January 1908. 96 Ibid., 18 July 1907. 97 BP 69833, Foreign Office to Preece, 6 May 1907. 98 BP 71572, comments by Preece on Paul Kitabgi to Preece, 22 June 1907; comments and translation by Preece, 11 June 1907, of Paul Kitabgi to Preece, 24 May 1907. 99 Ibid., Paul Kitabgi to Preece, 24 May 1907. 100 Ibid., 10 July 1907. 101 BP 69833, Preece to Hamilton, 1907; BP 71572, Paul Kitabgi to Preece, 26 July 1907. 102 BP 71572, comments by Preece on Paul Kitabgi to Preece, 22 June 1907. 103 BP 71375, Vincent Kitabgi to Preece, 13 July 1907. 104 IOR/L/PS/10/143, Lorimer Report, 29 August 1907. 105 BP 71572, Paul Kitabgi to Preece, 22 June 1907. 106 BP 69833, notes by Preece on translation of Paul Kitabgi to Preece, 22 June 1907. 107 BP 71572, Preece to Paul Kitabgi, 22 June 1907. 108 BP 71375, D’Arcy to Preece, 12 June 1907. 109 BP 71572, Paul Kitabgi to Preece, 24 August 1907. 110 Preece commented on Paul’s involvement with the anjumans in his customary racially charged language. He stated that Mr Paul Kitabji [was] an Armenian. The chief instigators and workers in these secret societies [were] Armenians from Baku (Russians) and these [were] the men to whom he mainly refer[red]. The Armenian from early historical period has always been a low dirty intriguer quarrelling with his masters and plotting against them. The Persian Armenian today while a very low type of animal [was] no mean descendant of the ancient stock. (Ibid., annotations by Preece on Paul Kitabgi to Preece, 24 August 1907) 111 Ferrier labels the revolution a ‘new element’ but emphasizes the absence of central authority in the Persian periphery. He subsequently ignores the effects of the Constitutional Revolution on the concession. Ferrier, British Petroleum, p. 73. Yergin also argues that the company was immune to the political events of this period as ‘the new political system proved unstable, and its authority was very weak outside the capital’ (Yergin, The Prize, p. 145).

Chapter 7 1 2 3 4 5

BP 69529, Persian Legation in London to Preece, 27 August 1907. BP 71375, D’Arcy to Preece, 1 September 1907. IOR/L/PS/10/143, Lorimer to Spring-Rice, 29 August 1907. Afary, Iranian Constitutional Revolution, p. 112. W. Smart to E. G. Browne, 5 December 1907, as cited in Browne, The Persian Revolution, p. 151. 6 N. R. Keddie, ‘The Assassination of the Amin as-Sultan’, in C. E. Bosworth (ed.), Iran and Islam (Edinburgh: Edinburgh University Press, 1971), p. 322. 7 Ibid., p. 315. 8 Ibid., p. 323.

Notes

179

9 Churchill, Biographical Notices, p. 75. 10 FO 416/31, Memorandum by George P. Churchill entitled ‘Summary of Proceedings of Persian National Assembly’, enclosed in Spring-Rice to Grey, 30 January 1907, as cited in Ferrier, British Petroleum, p. 92. 11 Keddie, ‘The Assassination of the Amin as-Sultan’, p. 323. 12 Ibid., p. 324. 13 Ibid., p. 326. 14 BP 71572, Paul Kitabgi to Preece, 21 September 1907; BP 69529, Vincent Kitabgi to Preece, 7 September 1907. 15 BP 69529, Persian Legation in London to Preece, 6 September 1907. 16 J. Calmard, ‘ʿAyn-al-Dawla, Soltān ʿAbd-al-Majīd Mīrzā Atābak-e Aʿzam (1261– 1345/1845–1926)’, Encyclopaedia Iranica (December, 1987), http://www.iranicaonline. org/articles/ayn-al-dawla-soltan-abd-al-majid-mirza. 17 BP 70325, Preece to Hamilton, 5 September 1907. 18 IOR/L/PS/10/143, Spring-Rice to Grey, 13 September 1907. 19 K. Wilson, ‘Creative Accounting: The Place of Loans to Persia in the Commencement of the Negotiation of the Anglo-Russian Convention of 1907’, Middle Eastern Studies, 38(2) (2002): 35. 20 PRO 30/57.30, a note on the Military policy of India by Lord Kitchener, July 1905, as cited in B. J. Williams, ‘The Strategic Background to the Anglo-Russian Entente of August 1907’, Historical Journal, 9(3) (1966): 360. 21 Copy of a memorandum of the Minister of Foreign Affairs, ‘1900. Personnel et trèssecret. No. 29’, Krasnyi Arkhiv, 5(18) (1926): 4–18, as cited in Kazemzadeh, Russia and Britain in Persia, p. 336. 22 R. L. Greaves, ‘Some Aspects of the Anglo-Russian Convention and Its Working in Persia, 1907–14–I’, Bulletin of the School of Oriental and African Studies, University of London, 31(1) (1968): 72. 23 BP 69830, Foreign Office to Preece, 23 April 1908. 24 Greaves, ‘Some Aspects of the Anglo-Russian Convention’, p. 77. 25 Ibid., pp. 75–8. 26 American Department of State 8570/12, Richmond Pearson to Root, 6 November 1907, as cited in ibid., p. 80. 27 Grey to Spring-Rice, 7 September 1907, as cited in Greaves, ‘Some Aspects of the Anglo-Russian Convention’, p. 79. 28 Habl al-Matin, 11 September 1907, no. 114, p. 2, as cited in J. Afary, Iranian Constitutional Revolution, p. 132. 29 Kazemzadeh, Russia and Britain in Persia, p. 501. 30 Habl al-Matin, 30 September 1907, no. 11, as cited in ibid., p. 502. 31 Spring-Rice to Chirol, September 1907, as cited in C. Spring-Rice, The Letters and Friendships of Sir Cecil Spring-Rice: A Record, ed. S. Gwynn (London: Constable, 1929), ii, p. 103. 32 Ibid., Spring-Rice to Grey, 13 September 1907. Spring-Rice may have been more forthcoming than usual in expressing his disappointment with Grey as they were contemporaries at Eton and Oxford along with George Curzon. They had, therefore, known each other for a long time. 33 BP 69833, Foreign Office to Preece, 16 September 1907. 34 BP 71072, Reynolds to unknown, 2 October 1907, p. 118. 35 BP 69833, Foreign Office to Preece, 16 September 1907. 36 BP 71375, D’Arcy to Preece, 20 September 1907.

180 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80

Notes BP 69833, Preece to Hamilton, 20 September 1907. BP 71375, D’Arcy to Preece, 24 September 1907; emphasis in the original. BP 69833, Preece to Foreign Office, 30 September 1907. Ibid. BP 71375, D’Arcy to Preece, 5 October 1907. Ibid., 10 October 1907. Ibid., D’Arcy to Preece, 12 October 1907. BP 69833, Foreign Office to D’Arcy, 11 October 1907. Ibid., Foreign Office to Preece, 26 September 1907. Ibid., C. Hardinge to D’Arcy, 11 October 1907 and 17 October 1907. Ibid., 16 October 1907. IOR/L/PS/10/143, Foreign Office to Treasury, 22 October 1907. Ibid., 30 October 1907. Ibid., Treasury to Foreign Office, 6 November 1907. BP 71399, G. P. Churchill to Preece, 18 July 1907. BP 69833, Marling to Ala al-Saltanah, 9 October 1907. Ibid., Foreign Office to Preece, 26 October 1907; Preece to Foreign Office, 3 November 1907. Ibid., translation of letter from the ilkhan and the ilbayg to a Persian friend, October 1907. Ibid., Preece to Reynolds, 23 November 1907. IOR/L/PS/10/143, Grey to Marling, 12 November 1907. Ibid., 16 November 1907. Ibid., Marling to Grey, 16 November 1907. A. Wilson, S.W. Persia: Letters and Diary of a Young Political Officer 1907–1914 (London: Readers Union, 1942), pp. 18–20. BP 69833, Foreign Office to Preece, 31 December 1907. Ibid., 30 November 1907. Ibid., Preece to Foreign Office, 2 December 1907. BP 71572, Paul Kitabgi to Preece, 14 September 1907. BP 71399, G. P. Churchill to Preece, 11 October 1907. BP 71572, 21 September 1907. Churchill, Biographical Notices, p. 75. BP 71399, G. P. Churchill to Preece, 7 November 1907. BP 71572, Paul Kitabgi to Preece, 4 December 1907. BP 69401, D’Arcy to Paul Kitabgi, 13 December 1907. BP 71572, Paul Kitabgi to Preece, 8 January 1908 and 14 December 1907. Ibid., handwritten comments by Preece on Paul Kitabgi to Preece, 21 September 1907 and 22 June 1907. BP 71375, D’Arcy to Preece, 10 October 1907. BP 71572, Preece to Hamilton, 27 October 1907. BP 71399, G. P. Churchill to Preece, 7 November 1907. Ibid., 6 December 1907 and undated. BP 71375, D’Arcy to Preece, 29 November 1907. BP 69833, Captain Lorimer to Consul General at Bushihr, 22 January 1908. BP 69830, Foreign Office to Preece, 13 February 1908; BP 172108, Reynolds to Cargill, 19 February 1908. BP 69830, Marling to Foreign Office, 21 March 1908. Ibid., Foreign Office to Preece, 23 April 1908.

Notes

181

81 Ibid., Preece to Foreign Office, 25 April 1908. 82 Ibid., Foreign Office to Preece, 19 May 1908. 83 BP 71399, G. P. Churchill to Preece, 28 February 1908, 24 April 1908 and 21 May 1908. 84 BP 178541, Burmah Oil Company Ltd Minutes, 15 April 1908. 85 Ibid. 86 Lockhart, Record of the Anglo-Iranian Oil Co., p. 99. 87 BP 71072, D’Arcy to Preece, late April 1908, p. 124 (heavily crossed out). 88 BP 178541, Annual General Meeting of the Burmah Oil Company Ltd, Minutes, 29 April 1908. 89 BP 71375, D’Arcy to Preece, 28 September 1907; Ferrier, British Petroleum, p. 87. 90 BP 172108, William Milne & Co. to Reynolds, 14 May 1908. 91 Ferrier, British Petroleum, p. 88. 92 BP 172108, Reynolds to Cargill, 16 May 1908. 93 BP 71399, G. P. Churchill to Preece, 21 May 1908. 94 BP 172108, Reynolds to Cargill, 24 May 1908.

Chapter 8 1 Eternal flames were often fuelled by naturally occurring hydrocarbon seepages in antiquity. G. Etiope, Natural Gas Seepage (Cham: Springer International, 2015), pp. 183–93. 2 BP 172108, Reynolds to Cargill, 26 May 1908. 3 Ibid. 4 Wilson, S.W. Persia, p. 42. 5 IOR/L/PS/10/143, Marling to Government of India, 29 May 1908; Major Cox to Secretary to the Government of India in the Foreign Department, 28 May 1908; and Marling to Government of India, 29 May 1908. 6 Ibid.; BP 178502, Foreign Office to Preece, 3 June 1908. 7 BP 70275, Reynolds to Concessions Syndicate Ltd, 2 June 1908; Hamilton to Preece, 2 June 1908. 8 Ibid., British Consulate in Ahwaz to unknown, 3 June 1908. 9 BP 71072, D’Arcy to Preece, 1 June 1908, p. 125. 10 BP 70494, Rosenplaenter to Jenkin, 7 November 1903. 11 Coded telegrams were used by some, but this was not always the case. 12 BP 129950, Vincent Kitabgi to D’Arcy, 28 January 1903 and 1 October 1903. 13 KFP, Letters of Vincent Kitabgi, D’Arcy to Vincent Kitabgi, 4 October 1903. 14 Ibid., 5 July 1907. 15 BP 69529, Preece to Persian Legation in London, 24 June 1908. 16 BP 172108, Reynolds to Cargill, 6 June 1908. 17 BP 70275, British Consulate in Ahwaz to unknown, 3 June 1908. 18 Kazemzadeh, Russia and Britain in Persia, pp. 523–4. 19 BP 71399, G. P. Churchill to Preece, 14 August 1908. 20 Wilson, S.W. Persia, p. 55. 21 BP 71374, D’Arcy to Preece, 19 June 1908. 22 Ibid., 23 June 1908. 23 BP 69529, Preece to Persian Legation in London, 24 June 1908.

182 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68

Notes Ibid., Persian Legation in London to Preece, 28 June 1908. Kazemzadeh, Russia and Britain in Persia, pp. 537–8. BP 69529, Sadiq al-Saltanah to Preece, 18 August 1908. Ibid., Preece to D’Arcy, 23 August 1908. Ibid., Preece to Sadiq al-Saltanah, 22 August 1908. Ibid., Preece to Hamilton, 22 August 1908. Ibid., Preece to D’Arcy, 23 August 1908. BP 71374, D’Arcy to Preece, 24 August 1908; emphasis in the original. Ibid., 25 August 1908 and 27 August 1908. BP 69529, Sadiq al-Saltanah to Preece, 4 November 1908. Ibid. BP 70325, Preece to Hamilton, 3 November 1908. BP 71374, D’Arcy to Preece, 20 November 1908. BP 69529, Preece to Sadiq al-Saltanah, 25 November 1908. BP 71374, 22 November 1908. BP 69529, Manisty to D’Arcy, 26 November 1908. Ibid. Ibid. KFP, Papers of Kitabgi Khan, Minutes of Meeting regarding Parent Syndicate, 22 July 1902; Papers of Vincent Kitabgi, Brief accounts of Expenditures, 31 October 1903. BP 69529, Manisty to D’Arcy, 26 November 1908. Ibid., Sadiq al-Saltanah to Preece, 8 December 1908 and 15 December 1908. Ibid., Sadiq al-Saltanah to D’Arcy 22 December 1908. Ibid., Sadiq al-Saltanah to Preece, 22 December 1908. BP 70015, D’Arcy to Sadiq al-Saltanah, 18 January 1909. Ibid., Sadr-e Azam to Sadiq al-Saltanah, undated. Ibid., Sadiq al-Saltanah to D’Arcy, 31 March 1909. BP 69539, Lumley to Manisty, 5 March 1909. BP 70139, D’Arcy to Hamilton, 30 September 1908. Ibid., Hamilton to D’Arcy, 1 October 1908; D’Arcy to Greenway, 2 October 1908. BP 71374, D’Arcy to Preece, 20 November 1908; BP 69539, Burmah Oil Company Ltd to Wallace, 15 January 1909. Ferrier, British Petroleum, pp. 70–1. BP 69539, Wallace to Adamson, 21 January 1909. Ibid., Burmah Oil Company Ltd to Wallace, 15 January 1909. KFP, Letters of Vincent Kitabgi, D’Arcy to Vincent Kitabgi, 13 January 1909. Ibid., Manisty to Freeman, 18 March 1909. G. Jones, Banking and Empire in Iran: The History of the British Bank of the Middle East (Cambridge: Cambridge University Press, 1986), i, p. 31. BP 69830, Preece to Foreign Office, 11 June 1908. BP 69539, Glasgow to Wallace, 22 January 1909. Ibid., Thompson to Wallace, 31 March 1909. Ibid., Boyds, Miller and Thomson to Hamilton, 27 January 1909. Ibid., Wallace to Adamson, 21 January 1909. Ibid., note by Wallace, 25 January 1909. Ibid., Boyds, Miller and Thomson to Hamilton, 27 January 1909. Ibid., Wallace to Adamson, 28 January 1909. Ibid., 6 February 1909.

Notes

183

69 Ibid., Memorandum of Questions for the Opinion of Counsel and of Opinion by Sir Francis B. Palmer, 12 March 1909. 70 Ferrier, British Petroleum, p. 103. 71 BP 131441, Prospectus of the Anglo-Persian Oil Company Ltd, 19 April 1909. 72 Ibid. 73 BP 69539, Memorandum of Questions for the Opinion of Counsel and of Opinion by Sir Francis B. Palmer, 12 March 1909. 74 KFP, Papers of Vincent Kitabgi, Notes by Walter Freeman, March 1909. 75 Ibid., Vincent Kitabgi to D’Arcy, 23 March 1909. 76 BP 69539, Statement by Edouard Cotte, 21 March 1909; Memorandum of Questions for the Opinion of Counsel and of Opinion by Sir Francis B. Palmer, 12 March 1909. 77 Ibid., D’Arcy to Wallace, 23 March 1909. 78 KFP, Papers of Vincent Kitabgi, Lynch to Drummond Wolff, 18 July 1908; BP 172108, Reynolds to Lynch Brothers, 1 July 1908. 79 BP 69539, Thomson to Crisp, 13 March 1909. 80 BP 71399, G. P. Churchill to Preece, 5 November 1908. 81 BP 178541, Burmah Oil Company Ltd Minutes, 7 April 1909 and 13 April 1909. 82 Ibid., 7 April 1909 and 13 April 1909; BP 69539, Marriott to Manisty, 15 April 1909. 83 BP 178541, Burmah Oil Company Ltd Minutes, 7 April 1909. 84 BP 69539, Adamson to Wallace, 5 March 1909; Wallace to Adamson, 4 March 1909. 85 KFP, Letters of Vincent Kitabgi, Vincent Kitabgi to D’Arcy, 19 May 1909. 86 Ibid., D’Arcy to Vincent Kitabgi, 25 May 1909. 87 IOR/L/PS/10/143, Foreign Office to D’Arcy, 12 September 1908. 88 BP 69539, D’Arcy to Milner, 4 January 1909. 89 Colin Newbury, ‘Milner, Alfred, Viscount Milner (1854–1925)’, Oxford Dictionary of National Biography (Oxford: Oxford University Press, October 2008), http://www. oxforddnb.com/view/article/35037. 90 BP 69539, D’Arcy to Milner, 4 January 1909. 91 Ibid., C. Hardinge to D’Arcy, 11 January 1909. 92 Ibid., C. Hardinge to D’Arcy, 27 January 1909. 93 Ibid., Lansdowne to C. Hardinge, 27 January 1909. 94 Ibid., D’Arcy to Wallace, 27 January 1909; emphases in the original. 95 Ibid., 3 February 1909. 96 J. G. Darwin, ‘Baring, Evelyn, First Earl of Cromer (1841–1917)’, Oxford Dictionary of National Biography (Oxford: Oxford University Press, January 2008), http://www. oxforddnb.com/view/article/30583. 97 BP 69539, Burmah Oil Company Ltd to Pretyman, 2 February 1909. 98 Ibid., Wallace to Adamson, 21 January 1909. 99 Ibid., 6 February 1909. 100 Ibid., Wallace to Strathcona, 10 February 1909. 101 Ibid., Adamson to Wallace, 13 February 1909; Wallace to Adamson, 15 February 1909. 102 Frances Bostock, ‘Barnes, Sir Hugh Shakespear (1853–1940)’, Oxford Dictionary of National Biography (Oxford: Oxford University Press, 2004), http://www.oxforddnb. com/view/article/53561. 103 BP 69539, Barnes to Wallace, 9 February 1909. 104 Ibid., 19 February 1909. 105 Ibid., D’Arcy to Wallace, 7 February 1909.

184 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124

Notes Ibid., Wallace to Adamson, 8 February 1909. Ibid., Adamson to Wallace, 16 February 1909. Ibid., Wallace to Adamson, 21 January 1909. Ibid., 17 February 1909. Ibid., Adamson to Wallace, 18 February 1909. Ibid., Wallace to McKenna, 20 February 1909; Admiralty to Wallace, 23 February 1909. Ibid., Wallace to Strathcona, 24 February 1909. Ibid., Black to Burmah Oil Company Ltd, 25 February 1909. Ibid., Wallace to Strathcona, 3 March 1909. Cain and Hopkins, British Imperialism, p. 353. BP 69539, Wallace to Adamson, 21 January 1909. Ibid., Wallace to Cargill, 29 March 1909. BP 131441, Prospectus of the Anglo-Persian Oil Company Ltd, 19 April 1909. BP 172108, Young to Reynolds, 10 July 1908. FO 416/38, no. 290, Hardinge to D’Arcy, 1 December 1908, as cited in Ferrier, British Petroleum, p. 127. Khazeni, Tribes & Empire, pp. 164–8. BP 69830, Lorimer to Barclay, 18 February 1909. BP 71374, D’Arcy to Preece, 9 January 1909; BP 69539, Unknown to Adamson, 22 January 1909. BP 69539, Unknown to Wallace, 25 January 1909.

Chapter 9 1 BP 77/49/18, BOC Board Minutes, 23 April 1909, as cited in Ferrier, British Petroleum, p. 110; BP H17/166, Cargill to Wallace, 20 April 1909, as cited in ibid. 2 BP 69539, Greenway to Pratt, 28 April 1909. 3 Ibid., Foreign Office to Preece, 27 April 1909. 4 BP 70015, Foreign Office to Preece, 3 April 1909; Maxwell to Preece, 21 May 1909. 5 Ibid., Wallace to Sadiq al-Saltanah, 19 May 1909; Sadiq al-Saltanah to Wallace, 19 May 1909. 6 KFP, Letters of Vincent Kitabgi, D’Arcy to Vincent Kitabgi, 24 June 1909. 7 Afary, Iranian Constitutional Revolution, pp. 252–3. 8 Ibid., p. 386. 9 Ibid., p. 258. Sipahdar had been instrumental in the military efforts of the nationalist movement and was later appointed prime minister. The Directory, or National Council, was an emergency governing committee of the restored constitutional government. 10 Ibid., p. 260. 11 BP 67437, Greenway to Lloyd, 16 July 1909. 12 BP 69830, Report by Dr Young entitled ‘The Governorship of Bakhtiaristan’, undated; BP 71072, Reynolds to Glasgow, 27 March 1909, p. 138a; BP 70275, Wallace to Lloyd, Scott & Co., October 1909. 13 Wilson, S.W. Persia, p. 98, 114. 14 BP 69830, Foreign Office to Anglo-Persian Oil Company Ltd, 26 August 1909. 15 Ibid.

Notes

185

16 Ibid., Wallace to Foreign Office, 3 September 1909. 17 FO 371/717, Minute regarding Anglo-Persian Oil Company Ltd to Foreign Office, 3 September 1909, no. 33286/19109, as cited in G. Jones, The State and the Emergence of the British Oil Industry (London: Macmillan, 1981), p. 140. 18 Kazemzadeh, Russia and Britain in Persia, pp. 549–52. 19 BP 69539, Wallace to Foreign Office, 26 December 1909. 20 Ibid., D’Arcy to Wallace, 23 December 1909. 21 Ibid., Wallace to Foreign Office, 26 December 1909. 22 Ibid., Wallace to D’Arcy, 26 December 1909. 23 Ibid., Cargill to Wallace, 29 December 1909. 24 Ibid., Wallace to Preece, 30 December 1909. 25 Ibid., Wallace to D’Arcy, 30 December 1909. 26 FO 371/954, Woolf to C. Hardinge, 8 April 1910, as cited in Kazemzadeh, Russia and Britain in Persia, p. 552. 27 FO 371/954, Grey to Nicolson, 18 March 1910, as cited in Kazemzadeh, Russia and Britain in Persia, p. 552. 28 Samuel family tree, A Genealogical Survey of the Peerage of Britain as Well as the Royal Families of Europe (2013), http://www.thepeerage.com/p11830.htm. 29 BP 69830, Anglo-Persian Oil Company Ltd to Lloyd, Scott & Co., 9 September 1910. 30 BP 70397, Greenway to Fleming, 5 December 1912. 31 Kazemzadeh, Russia and Britain in Persia, p. 552. 32 Ibid., p. 555; BP 68971, Report on Messrs Greenway and Hamilton’s visit to Persia, 1911. 33 D. A. Wren, ‘J. and W. Seligman Archives at the Harry W. Bass Business History Collection’, Business History Review, 74(1) (Spring 2000): 117. 34 Kazemzadeh, Russia and Britain in Persia, pp. 555–6. 35 FO 371/958, Seligman Brothers to the Foreign Office, 25 October 1910, as cited in ibid. 36 Jones, Banking and Empire in Iran, i, p. 110; BP 69831, Contract between Imperial Government of Persia and Imperial Bank of Persia, 8 May 1911. 37 Ferrier, British Petroleum, p. 139; BP 70275, Lloyd, Scott & Co. to Anglo-Persian Oil Company Ltd, 29 March 1910. 38 Ibid., Foreign Office to Greenway, 9 April 1910; Lloyd, Scott & Co. to Anglo-Persian Oil Company Ltd, 29 March 1910. 39 Ibid., 10 April 1910. 40 BP 69830, unknown to unknown, undated. 41 BP 70275, Lloyd to Anglo-Persian Oil Company Ltd, 23 April 1910. 42 Ibid., Greenway to Lloyd, Scott & Co., 18 February 1910. 43 BP 70335, Greenway to Lloyd, Scott & Co., 18 February 1910. 44 Ibid., Memorandum on Bakhtiyari Affairs by Dr Young, 12 January 1911. 45 BP 68971, Report on Messrs Greenway and Hamilton’s Visit to Persia, 1911; BP 64689, Report on Messrs Greenway and Hamilton’s Visit to Persia, 28 April 1911; BP 68971, Report on Messrs Greenway and Hamilton’s Visit to Persia, 1911. 46 BP 64689, Memorandum on Bakhtiyari Affairs by Dr Young, 12 January 1911; BP 71222, D’Arcy to Jenkin, 1 January 1902. 47 BP 64689, Memorandum on Bakhtiyari Affairs by Dr Young, 12 January 1911. 48 Ibid., Ritchie to Lamb, 5 March 1911. 49 BP 70275, Greenway to Black, 18 March 1910.

186

Notes

50 BP 64689, Report on Messrs Greenway and Hamilton’s Visit to Persia, 28 April 1911; BP 67437, Greenway to Black, 7 October 1910. 51 Ferrier, British Petroleum, p. 697; BP 172108, Reynolds to Concessions Syndicate Ltd, 15 July 1908. 52 BP 69830, Memorandum by Dr Young, 28 February 1909. 53 Ibid., Ghulam Husain Khan and Jafar Quli to Concessions Syndicate Ltd, 23 February 1909; Lorimer to Reynolds, 28 March 1909. 54 BP 67437, Greenway to Lloyd, 25 February 1910. 55 Ibid., Greenway to Black, 7 October 1910. 56 BP 64689, Report on Messrs Greenway and Hamilton’s Visit to Persia, 28 April 1911. 57 Ibid., Young to Lamb, 27 March 1911. 58 Ibid., 17 April 1911. 59 BP 70335, Young to Lamb, 29 April 1911 and 26 April 1911 60 Ibid., 4 May 1911. 61 Ibid., 1 May 1911. 62 BP 69830, Ranking to Foreign Office, 9 June 1911. 63 Ibid., Foreign Office to Greenway, 14 July 1911. 64 BP 70335, Young to Lamb, 10 May 1911. 65 Ibid., 13 October 1911. 66 BP 69830, Unknown to Young, 9 November 1911. 67 BP 70335, Young to Lamb, 7 March 1912. 68 The coincidence that the American envoy’s last name was the same as what company officials called Shushtar (the city closest to the first oil strike) is not lost on the author. 69 LoC, MSS39941, W. Morgan Shuster Papers, President W. H. Taft to Morgan Shuster, 16 February 1911. 70 Churchill, Biographical Notices, p. 4. 71 BP 63984, Crisp to Greenway, 21 July 1911. 72 Ibid. 73 FO 371/1192, Treasury Gendarmerie, Minute by Norman, 17 July 1911, as cited in Kazemzadeh, Russia and Britain in Persia, p. 587. 74 M. Shuster, The Strangling of Persia: A Personal Narrative (Washington DC: Mage, 2006), p. 73. 75 BP 172108, Young to Reynolds, 10 July 1908. 76 Khazeni, Tribes & Empire, p. 125. 77 BP 172108, Young to Reynolds, 19 March 1908. 78 BP 63984, Special Report by Dr Young, 4 February 1910. 79 BP 172108, Young to Bradshaw, 3 August 1908. 80 Ibid., Young to Reynolds, 11 July 1908. 81 Ibid., Young to Bradshaw, 3 August 1908. 82 Ibid., 4 September 1908. 83 Ibid., Young to Reynolds, 25 December 1908. 84 Ibid., Medical Report by Dr Young, 2 November 1908 and 4 December 1908. 85 BP 71449, Ritchie to unknown, 28 August 1911. 86 BP 70335, Young to Lamb, 24 July 1911. 87 BP 71449, Ritchie to unknown, 28 August 1911. 88 BP 70335, Young to Lamb, 24 July 1911. 89 BP 71449, unknown to unknown, undated; BP 70335, Young to Lamb, 24 July 1911. 90 BP 70335, Young to Lamb, 24 July 1911 and 31 July 1911.

Notes

187

91 Ibid., 10 August 1911. 92 T. A. B. Corley, ‘Greenway, Charles, First Baron Greenway (1857–1934)’, Oxford Dictionary of National Biography (Oxford: Oxford University Press, 2004), http:// www.oxforddnb.com/view/article/40994. 93 Ferrier, British Petroleum, p. 129. 94 BP 67437, Financial News, 21 January 1910. 95 Anglo-Persian Oil Company Ltd Board Minutes, 25 May 1909, as cited in Ferrier, British Petroleum, p. 116. 96 BP 78/63/1, Greenway to Hamilton, 11 July 1910, as cited in Ferrier, British Petroleum, p. 130. 97 BP 67437, Greenway to Walpole, 20 August 1909. 98 Ibid., Greenway to Lloyd, 23 July 1909. 99 Ibid., Greenway to Rittmeister, 23 July 1909. 100 BP 78739, Reynolds to Concessions Syndicate Ltd, 19 March 1906 and BP 71072, p. 84; BP 71072, Reynolds to Concessions Syndicate Ltd, 24 April 1909, crossed out section on p. 140. 101 BP 67437, Greenway to Walpole, 20 August 1909; BP 71072, crossed out section on back of p. 140. 102 T. Wilson, A Précis of the Relations of the British Government with the Tribes and Shaikhs of Arabistan (Calcutta: Superintendent Government Printing, 1912), p. 37, as cited in Garthwaite, ‘The Bakhtiyari Khans, the Government of Iran, and the British’, p. 36. 103 BP 67437, Greenway to Walpole, 20 August 1909; emphasis in the original. 104 Ibid., 30 July 1909. 105 Ibid., Memorandum by Wallace, undated ; Greenway to Lloyd, 16 December 1909. 106 BP 70397, Greenway to Cargill, 10 December 1909; Greenway to Fleming, 4 April 1910. 107 BP 67437, The Royal Insurance Co. Ltd to R. G. Shaw & Co., undated; Greenway to Black, 24 March 1910. 108 BP 70397, unknown to Greenway, 18 November 1912; Greenway to unknown, 4 December 1912; Greenway to Fleming, 5 December 1912.

Chapter 10 1 2 3 4 5 6 7 8

9

Ferrier, British Petroleum, pp. 148–57. Marder, Dreadnought to Scapa Flow, p. 264. BP 131809, Admiralty Committees, 1901–13. FISR 1/11, Fisher to W. Churchill, 22 April 1912; W. Churchill to Fisher, 15 May 1912. M. Jack, ‘The Purchase of the British Government’s Shares in the British Petroleum Company 1912–1914’, Past & Present, 39 (1968): 148. FISR 1/11, W. Churchill to Fisher, 16 May 1912. FISR 6/1, Oil Reports of 1912 enclosed in Final Report of the Royal Commission on Fuel and Engines, 10 February 1914, pp. 196–203. Ibid., Memorandum as to Principal Sources of Supply and General Prospects in various Oil-Producing Countries Enclosed in Final Report of the Royal Commission on Fuel and Engines, 10 February 1914, pp. 65–6. FISR 1/12, Peddie to Fisher, 13 August 1912.

188

Notes

10 FISR 6/1, Memorandum as to Principal Sources of Supply and General Prospects in various Oil-Producing Countries Enclosed in Final Report of the Royal Commission on Fuel and Engines, 10 February 1914, pp. 65–6. 11 FISR 1/13, Beilley to Fisher, 28 June 1913. 12 FISR 1/12, Redwood to Fisher, 1 February 1913. 13 BP 71221, Minutes of Meeting of the Departmental Committee of Fuel Oil, 29 December 1911. 14 BP 131809, Cargill to Finlay, 24 July 1912. 15 D’Arcy and his associates had been striving to secure a Mesopotamian concession ever since they had finalized the Persian concession. They had battled German, American and other interests unsuccessfully. For more on the Mesopotamian Concession, see M. Kent, Oil and Empire: British Policy and Mesopotamian Oil 1900–1920 (London: Macmillan, 1976). 16 BP 71221, Greenway to Cargill, 19 September 1912. 17 Ibid. 18 Lady St Helier’s husband had been a sub-purchaser of Wolff ’s interests. 19 K. D. Reynolds, ‘Jeune, (Susan Elizabeth) Mary, Lady St Helier (1845–1931)’, Oxford Dictionary of National Biography (Oxford: Oxford University Press, April 2016), http://www.oxforddnb.com/view/article/51948. 20 CSCT 3/15, W. Churchill to St Helier, 2 December 1914. 21 BP 71221, St Helier to D’Arcy, undated. 22 Ibid., Admiralty to D’Arcy, 8 November 1912. 23 M. Shelden, Young Titan (London: Simon & Schuster, 2013), p. 18. 24 FISR 1/11, Cassel to Fisher, 18 September 1912. 25 FISR 6/1, Memorandum Regarding the Provision of Financial Aid in Developing Oil Areas, 14 November 1912. 26 BP 71221, Royal Commission on Fuel Oil, Minutes of Session, 19 November 1912. 27 Ibid. 28 Ibid., Greenway to D’Arcy, 19 November 1912. 29 Ibid., Greenway to Redwood, 14 December 1912. 30 FISR 6/1, Minutes of Session, undated. 31 Ibid., Minutes of Session, 10 December 1912. 32 Ibid., undated. 33 BP 71221, D’Arcy to Greenway, 16 January 1913. 34 Ibid., Greenway to Admiralty, 29 January 1913. 35 Ibid., Foreign Office to Greenway, 5 February 1913. 36 FISR 1/13, Hopwood to Fisher, 17 March 1913; Fisher to Hopwood, 27 February 1913; emphasis in the original. 37 FISR 6/1, Minutes of evidence taken before the Royal Commission on Fuel and Engines, 26 February 1913, pp. 53–4. 38 Ibid. 39 CHAR 13/21/71–73, Fisher to W. Churchill, 6 May 1913. 40 CHAR 13/43/26, Fisher to W. Churchill, 25 May 1914; FISR 1/13, Fisher to Hopwood, 27 February 1913. 41 FISR 1/13, Fisher to Hopwood, 27 February 1913; emphases in the original. 42 Ibid., Hopwood to Fisher, 17 March 1913. 43 FISR 1/12, Secretary of the Royal Commission on Fuel Oil to the Secretary of the Admiralty, 26 February 1913.

Notes

189

44 P. H. Garner, British Lions and Mexican Eagles: Business, Politics, and Empire in the Career of Weetman Pearson in Mexico, 1889–1919 (Stanford: Stanford University Press, 2011), p. 15. 45 Ibid., p. 83. 46 Ibid., p. 166. 47 Ibid., p. 197. 48 Ibid., p. 203. 49 Ibid. 50 Ibid., p. 47. 51 FISR 6/1, Confidential Memorandum Enclosed in Admiralty Letter, 26 February 1913. 52 CHAR 13/9/71, Cowdray to W. Churchill, 14 June 1912. 53 Garner, British Lions and Mexican Eagles, p. 222. 54 Ibid., p.223. 55 G. R. Searle, Corruption in British Politics 1895–1930 (Oxford: Clarendon, 1987), p. 217. 56 FISR 6/9, Minutes of Royal Commission on Fuel and Engines, 22 April 1913. 57 CHAR 13/19/125–128, Hopwood to W. Churchill, 29 May 1913. 58 Searle, Corruption in British Politics, p. 213. 59 Ibid., pp. 214–15. 60 BP 71221, Greenway to Adamson, 6 March 1913. 61 FISR 1/13, Hopwood to Fisher, 17 March 1913. 62 CHAR 13/22A/133–134, W. Churchill to Grey, 9 July 1913. 63 BP 71221, Memorandum of Meeting with Cabinet Committee formed to consider question Admiralty Contract for Oil Fuel, 10 July 1913. 64 [Hansard], Parliamentary Debates, 5th ser., lv, cols. 1474–5 (17 July 1913). 65 Ibid., 1477. 66 BP 71221, Minute by Mr Wallace of an interview on the 28th July at the House of Commons with the Chancellor of the Exchequer, the First Lord of the Admiralty, and others. 67 Jones, The State and the Emergence of the British Oil Industry, p. 162. 68 FISR 1/13, W. Churchill to Fisher, April 1913. 69 Ibid., Fisher to Hopwood, 15 May 1913; emphasis in the original. 70 Ibid., 16 June 1913. 71 Ibid., Hopwood to Fisher, 16 June 1913. 72 Ibid., Fisher to Hopwood, 12 July 1913. 73 BP 71221, Wallace to Greenway, 14 September 1913. 74 Ibid., Greenway to Cargill, 17 December 1913. 75 Jack, ‘Purchase of the British Government’s Shares’, p. 158. 76 BP 71221, Greenway to Cargill, 23 July 1913. 77 Ibid., 18 August 1913. 78 Ibid., Walpole to Greenway, 18 November 1913. 79 BP 78127, Anglo-Persian Oil Company Ltd. internal document, December 1913. 80 Ibid., Admiralty Commission on the Petroleum Resources of the Countries Adjoining the Persian Gulf, Second Interim Report, 26 January 1914. 81 BP 71569, Redwood to Greenway, 28 April 1914. 82 CAB 37/119, W. Churchill to Cabinet, 16 February 1914. 83 FISR 1/13, ‘Oil for the British Navy’, Motor Ship and Motor Boat, xviii(462) (15 May 1913): 116.

190 84 85 86 87 88 89

90 91

92 93 94 95 96 97 98 99 100 101 102

103 104 105 106 107 108 109 110 111 112 113 114 115

Notes CHAR 13/19/93–94, W. Churchill to Crewe, 1 May 1913. BP 71569, Greenway to Redwood, 12 March 1914. Ibid., Redwood to Greenway, 13 March 1914. ADM 116/1687C, W. Churchill Memorandum to Cabinet, 10 March 1914. BP 71569, Greenway to Cargill, 14 May 1914. FISR 1/11, Black to Fisher, 5 July 1912; C. Tippett and M. Wolfe, ‘Canadian Oilmen Appear in Borneo’s History Books’, Newsletter of the Petroleum History Society, viii/4 (1997): 3; BP 71341, Notes on Petroleum Review Article of 6 June 1914. BP 71341, Extract from Dr Dvorkovitz’s Speech at Meeting held on 9 June 1914. BP 106394, Report of the Proceedings of a Meeting of Members of the Oil Trade and Gentlemen Associated with the Petroleum Industry, held at Winchester House on 10 June 1914 for the Purpose of Protesting Against the Proposed Agreement by which the Government Intend to Sink £2,200,000 in Persia. BP 71569, Stoop to Greenway, 27 May 1914. Parl. Debs., 5th ser., lxiii, col. 1131. Ibid., 1133. Ibid., 1139. Ibid., 1149. Ibid., 1149–50. Ibid., 1153–224. Ibid., 1156. Ibid., 1222. BP 71341, Greenway to Cargill, 19 June 1914. CHAR 13/31/25-25a, W. Churchill to Cabinet, 9 June 1914. Geoffrey Jones argues that Greenway’s use of the Shell menace convinced the government to become financially involved in the company, and he discounts the pre-existing relationship between the company and the Admiralty. Jones also argues that Anglo-Persian’s proposal was ideally timed, as the price of fuel oil was increasing rapidly, and its operations were ideally located, as the Foreign Office sought to consolidate British interests in the Middle East in view of a rising German threat. G. Jones, The State and the Emergence of the British Oil Industry, pp. 146–73. Parl. Debs., 5th ser., lxiv, cols. 1033–4. Ibid., 1035. Ibid., 1054. Jack, ‘Purchase of the British Government’s Shares’, p. 168. BP 78127, Minutes of Meeting at Admiralty, 3 February 1914. BP 71569, Greenway to Slade, 27 April 1914. BP 71341, Hamilton to Greenway, 8 July 1914. Ibid., Greenway to Hamilton, 18 June 1914. BP 71569, Greenway to Sadiq al-Sultanah, 29 May 1914. BP 71341, Greenway to Black, 11 June 1914. Ibid., Admiralty to Anglo-Persian Oil Company Ltd., 4 June 1914. Parl. Debs., 5th ser., lxiii, col. 1177. Ibid., 1187.

Chapter 11 1 Wilson, S.W. Persia, p. 84. 2 Fisher to Need, July 18, 1903, as cited in Fisher, Fear God and Dread Nought, p. 275.

Notes 3 4 5 6 7 8 9 10 11 12 13 14 15 16

17 18 19 20 21

191

Cain and Hopkins, British Imperialism, p. 390. Ferrier, British Petroleum, p. 31. Corley, Burmah Oil Company, p. 88. KFP, Letters of Vincent Kitabgi, D’Arcy to Vincent Kitabgi, 10 May 1905. Article 14 of the D’Arcy Concession as translated in Appendix I of this book. BP77/49/18, BOC Board meeting, 27 February 1907, as mentioned in Ferrier, British Petroleum, p. 81. BP 69833, Foreign Office to D’Arcy, 11 October 1907. G. Jones, ‘The British Government and the Oil Companies 1912–1924: The Search for an Oil Policy’, Historical Journal, 20(3) (1977): 648. ADM 1/8537/240, Greenway to Barnes, 3 March 1916, as mentioned in ibid., p. 658. Speeches by G. N. Curzon and H. Bérenger on 23 November 1918 to the Inter-Allied Petroleum Conference, as mentioned in Yergin, The Prize, p. 183. As cited in M. Malek, ‘Oil in Iran between the Two World Wars’, in V. Martin (ed.), Anglo-Iranian Relations since 1800 (London: Routledge, 2005), p. 129. British government note in League of Nations, Official Journal, 8 December 1932, p. 2303, as cited in ibid., p. 131. Ibid., p. 132. P. Mina, ‘Oil Agreements in Iran (1901–1978): Their History and Evolution’, Encyclopaedia Iranica (July 2004), http://www.iranicaonline.org/articles/ oil-agreements-in-iran. E. Abrahamian, A History of Modern Iran (Cambridge: Cambridge University Press, 2008), p. 118. FO 371/Persia 1951/98608, Memorandum on Persian Oil, British Ministry of Fuel, as cited in ibid., p. 119. Ibid., p. 117. Ibid., p. 118. N. Nabavi (ed.), Modern Iran: A History in Documents (New Jersey : Markus Weiner, 2016), p. 142.

BIBLIOGRAPHY Primary sources Manuscripts and archival sources Cambridge, Churchill College, The Churchill Archives Centre – CASR, The Papers of Sir Cecil Spring-Rice, 1856–1985 – I, Papers, 1856–1955 – 3, Persian [Iranian] Legation Papers, 1900–1937 – 1, Persian [Iranian] Embassy papers and correspondence with Persians – CHAR, The Papers of Sir Winston Churchill, Chartwell Papers – 2, Public and Political: general, 1898–1945 – 128, Public and Political: correspondence and other papers relating to the proposed merger of the Burmah/Anglo-Persian and Royal Dutch/Shell oil companies, 1923 – 4, The Anglo-Persian Oil Company (Acquisition of Capital) Act, 1914 – 13, Official: Admiralty, 1911–1915 – 2, Admiral of the Fleet 1st Lord Fisher: correspondence, 1911 – 5, Letter book (includes Public and Political, and General Political Letters by WSC), 1911–1914 – 6A, Correspondence and First Lord’s Minutes, 1911–1915 – 9, Correspondence and memoranda, 1912 – 13, Correspondence and First Lord’s Minutes, 1912 – 14, Admiral of the Fleet 1st Lord Fisher: correspondence, 1912 – 15, Admiral of the Fleet 1st Lord Fisher: correspondence, 1912 – 16, Admiral of the Fleet 1st Lord Fisher: correspondence (copies), 1912 – 19, Correspondence and memoranda, 1913 – 20, Correspondence, 1913 – 21, Admiral of the Fleet 1st Lord Fisher: correspondence, 1913 – 22A, Correspondence and First Lord’s Minutes (carbon copies), 1913 – 23, Cabinet and other prints, 1912–1913 – 26, Correspondence and memoranda, 1914 – 29, Correspondence and First Lord’s Minutes (carbon copies), 1914 – 31, Cabinet and other prints, 1914 – 43, Correspondence (found in Cabinet Office), 1911–1915 – 21, Official: Cabinet, 1908–1915 – 11, Official: Cabinet: Foreign affairs: Prints, 1908–1910 – 16, Official: Cabinet: Foreign Office telegrams, 1909–1910 – 19, Official: Cabinet: printed papers, 1907–1910 – 28, Official: Cabinet: Foreign Office: daily telegrams, 1911

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– 3, Lady Spencer-Churchill’s correspondence and personal papers, 1885–1970 – 15, Various correspondence. Letters to CSC from Asquith, Mrs H. H. Asquith (‘Margot’), Sir Edward Grey and Lloyd George. Letters from WSC to his aunt, Lady St Helier and verse (undated) by WSC – FISR, The Papers of 1st Lord Fisher of Kilverstone – 1, Official Correspondence, 1871–1919 – 11, Subjects include: the Super-Active class; naval education, and the likelihood of widening the basis from which the officer class is drawn; the supplementation of the naval estimates to meet new German developments; plans for the reform of the Committee of Imperial Defence; sources and supply of oil fuel, 1911–1912 – 12, Subjects include: tests on a gas engine and fuel oil; proposal for the Admiralty to acquire a Scottish mineral oil works or shale field to supply the navy; the production of alcohol as fuel; the Vickers Single Cylinder engine; oil storage; Anglo-Persian Oil; submarine manoeuvres, 1912–1913 – 13, Subjects include: the advantages of a contract with Royal Dutch-Shell for oil; the use of oil fuel by the French navy; the establishment of a committee on oil fuel; oil storage; the Scottish shale oil industry; submarine, 1913 – 6, Material relating to the Oil Commission – 1, Report of the Royal Commission on Fuel and Engines, 1912–1913 – 2, Material relating to the Oil Commission, 1912–1913 – 3, Material relating to the Oil Commission, 1913 – 4, Material relating to the Oil Commission, 1913 – 5, Material relating to the Oil Commission, 1913 – 6, Material relating to the Oil Commission: discussion papers, 1912 – 7, Material relating to the Oil Commission: discussion papers, 1912 – 8, Material relating to the Oil Commission: discussion papers, 1912–1913 – 9, Material relating to the Oil Commission, 1913 – 10, Material relating to the Oil Commission: Admiralty Oil Committee: minutes of evidence, 1913 – 11, Material relating to the Oil Commission: evidence and discussion, 1913 – 12, Material relating to the Oil Commission: evidence of W. Fraser, 1913 – 13, Material relating to the Oil Commission: miscellaneous papers, 1911–1912 – 14, Material relating to the Oil Commission: miscellaneous papers, 1912–1913 – 15, Material relating to the Oil Commission: Minutes of evidence Vol. 3, 1913 – 16, Material relating to the Oil Commission: miscellaneous papers, 1913–1914 – 17, Material relating to the Oil Commission: miscellaneous papers – 18, Material relating to the Oil Commission: miscellaneous papers, pamphlets and books, 1912–1914 – 16, Letters from Fisher to George Lambert and papers collected by Lambert, 1901–1971

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– 1, Subjects include: disputes between Fisher, Admiral Lord Charles Beresford [Commander-in-Chief, Mediterranean Fleet] and Admiral Charles Robertson; hints that Winston Churchill [First Lord of the Admiralty] wanted to recall Fisher; the report of the royal commission on fuel oil, 1907–1914 – MCKN, The Papers of Reginald McKenna, 1883–1994 – 3, Public: Admiralty, 1906–1915 – 12, Correspondence with members of Parliament. Correspondents include: Sir Charles McLaren [later 1st Lord Aberconway] on subjects including shipbuilding (3); George Wyndham on the docks at Dover [Kent] (2); Edmund Lamb (2); Ernest Pretyman on subjects including oil fuel and restoring good feeling in the Navy, 1908–1910 – 6, General: Fisher Correspondence, 1908–1920 – 4, Letters to McKenna and Pamela McKenna. Letters from Fisher on subjects including: Sir Marcus Samuel [later 1st Lord Bearsted]’s new oil company; Fisher’s visit to Italy; stories from 2nd Lord Esher [earlier Reginald Brett] on the position of Herbert Asquith [Prime Minister, later 1st Lord Oxford and Asquith]; Fisher urging McKenna to use Maurice Hankey to prepare the Admiralty case for the Imperial Conference; the naval estimates; McKenna’s health; Fisher’s relations with Winston Churchill [First Lord of the Admiralty]; schemes for compulsory service and increasing the army estimates. Other correspondents include: Sir Marcus Samuel asking Fisher to be director of his new oil company in Sarawak [Malaya, later Malaysia], 1911

Coventry, University of Warwick, Modern Records Centre, BP Archive, ©BP plc – – – – – – – – – – – – – – – –



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INDEX Admiralty conversion to oil 43–4, 47, 108, 125–6, 142–3, 145 facilitating D’Arcy Concession investment 44–6, 51, 141–3 importance to empire 43–4, 142 informal links to D’Arcy Concession 41, 44–5, 47, 127, 129–30, 141–2 royal commission on fuel oil 125–9, 131–2, 134–5, 145 sending Comet to Ahwaz 87, 132 Slade commission 136, 139 supply contract 44, 51, 108, 131, 133–6, 145 Ain al-Dawlah 66, 83 Ala al-Saltanah 78, 88, 90, 97, 118, 148 Amin al-Sultan see Mirza Ali Asghar Khan Amin-i Khalvat 21, 167 n. 61 Anglo-Iranian Oil Company 7–8, 150–1 Anglo-Persian Oil Company board of directors 60, 105–7, 127, 136 chairmanship 50, 105–6 financial problems 125, 127, 144 financial structuring 50, 70–1, 101–4, 118–19, 139, 145 government purchase 113, 137, 139, 141, 145, 148 labour abuse 119–21 operations 115, 119–20, 121, 123 prospectus 102, 103, 104, 107–10, 112 public listing 109, 111, 115, 144, 148 Anglo-Russian convention 83–5, 87–8, 138, 144 Anglo-Russian rivalry D’Arcy Concession 14–17, 41–3, 22, 142, 146 Great Game 3–4, 6, 41–3 Tobacco Concession 6, 29, 31–2, 42 anjumans 78, 81–2, 90, 109, 178 n. 110 Atabak see Mirza Ali Asghar Khan

Bakhtiari Oil Company 57–8, 101–2, 112, 115–17, 118, 139 Bakhtiyari Anglo-Persian disputes 115, 121 autonomy 55–6, 58–9 concessionaire disputes 59–60, 63, 70, 74–6, 88, 91 concessionaire negotiations 56–60, 63–4, 143, 147 guarding arrangements 59–60, 63–4, 70, 91, 116, 143 internecine feuds 59, 86, 109 in government 109, 112, 148 land sale negotiations 115–17 leadership 59 military campaigns 109, 112, 148 Persian government disputes 58–9, 61, 77 robbery 55, 63, 70, 86, 91 shareholding 57–8, 101–2, 112, 115–17, 139 Baku 12, 14, 31, 40, 116–17, 130 British government British Empire 1–3 consular guard funding opposition 87–8, 144 D’Arcy Concession financial assistance 42, 113, 141 House of Commons 20, 134, 135–8, 139–40 India Office 42, 46, 127, 135, 136, 143 insider trading rumours 133–4, 136 share purchase 113, 135–9, 141, 145, 148–9 share purchase funding opposition 113, 125–6, 130, 134, 135–8, 144–5 Treasury 87–8, 113, 125–6, 136, 137–8, 144 see also Admiralty, British legation in Tehran, excentric theory of empire,

214 Foreign Office, gentlemanly capitalism, government of India, informal empire British legation in Tehran Constitutional Revolution 65 D’Arcy Concession diplomatic support 39–40, 76–7, 88, 113, 115 D’Arcy Concession negotiations 14–15, 19, 22 oil strike 96 Burmah Oil Company 8 and Admiralty 44–7, 107–8, 127 Anglo-Persian creation 50, 70–1, 101–4 D’Arcy Concession abandonment 71, 92–3 D’Arcy Concession investment 45–50, 71, 92, 141–3, 145 D’Arcy Concession renegotiation 70–1, 144 Majlis hearings 69–71 Persian operations 62, 73, 92–3 protectionist demands 45–7, 51, 143 Cassel, Ernest 41, 128 Churchill, George Percy Persian affairs 72, 82, 88, 90–1, 97 privileged information 77, 79, 91, 92 Churchill, Winston Admiralty 43, 125, 145 and Admiral Fisher 43, 125, 131, 135, 145 Anglo-Persian share purchase 134–6 and Lady St Helier 127, 145 Parliament 134, 135–9 royal commission on fuel oil, 125–6, 133–4, 134–6, 145 Concessions Syndicate Limited 48–50, 56, 62, 70, 103, 146–7 Constitutional Revolution 7, 65–66, 81, 85–6, 112, 119 D’Arcy Concession repercussions 69, 71–9, 85–6, 112, 144, 147–9 Cotte, Edouard 11–13, 15, 21, 104 Curzon, George Nathaniel 164 n.18 D’Arcy Concession 29, 41, 64 oil 149 Persia 3–6, 20, 33

Index D’Arcy, William Knox 13, 24 and Admiral Fisher 41, 45, 142 Admiralty loan application 41, 142 Alfred Marriott disputes 36, 104 Anglo-Persian shareholding 50, 103–4 and Antoine Kitabgi 13, 22, 34–7 British government appeals 39, 42, 86–9, 113, 141–2 and Burmah Oil Company 62–3, 69–71, 73, 101 and Charles Greenway 122 financial problems 34–7, 40–1, 47, 55–6, 92–3, 141–3 and Henry Drummond Wolff 13, 35–6, 47, 48, 71–2 and Lady St Helier 48, 127 loan to Persia 32, 69 Marienbad 36, 41, 45 Persian government disputes 58–9, 61, 67 and Preece 56, 60, 62, 68–9, 86, 106–7 royal commission on fuel oil 127–8, 130, 133–4 Sadiq al-Saltanah disputes 67 syndicate 34–7, 41, 47–9, 118, 128, 146 unofficial payments Antoine Kitabgi 35–6, 146 Bakhtiyari 60 G. P. Churchill 77, 79 imperial visit 35–6 Majlis 66–8 Persian government 13, 17–22, 28, 39–41, 63, 72 reluctance 63, 78 sayyids of Shushtar 29, 116 Vincent Kitabgi disputes 48–50, 71–2 Weetman Pearson parallels 132 Winston Churchill links 35, 127–8, 130, 145 D’Arcy Concession 110, 153–7 Anglo-Russian Convention 85–6 Bakhtiyari negotiations 56–60, 63–4, 115–17 Burmah Oil Company investment 44–8, 50, 56, 67, 70–1, 92 cancellation potential 68, 111, 144 concession text disputes 32, 35, 61–2, 67, 100, 118 drafting 17–19

Index existing oil wells 18, 61–2, 67–8, 98–100, 111–12, 147–8 Majlis hearings 66–8, 69–70, 82 negotiation 14–22 oil strike 92–3, 95–6, 110, 144, 147 operations 27–8, 37, 91–3, 110 origins 11–12 Persian government disputes 61–2, 146 royalties or profit percentage 18–19, 100, 102, 139, 146, 148–50 Russian threat 41, 69, 113 shareholding 13, 18–19, 35, 146–7 support system 39, 71, 76–9, 81–83, 86, 89 unofficial payments 13, 17–22, 28–9, 41 violations Bakhtiyari deal 58, 61–2, 68, 118, 139 existing oil wells 61–2, 67–8, 98–100, 111–12, 147–8 foreign labour 30–1, 33, 68–9, 150 Persian government shareholding 48–9, 62, 67–8, 98–103, 111, 118–19, 139–40, 146–8 royalties or profit percentage 100, 102–3, 139, 148–50 syndicate 34–7, 146 see also Anglo-Persian Oil Company, Anglo-Iranian Oil Company, Burmah Oil Company, Concessions Syndicate Limited, First Exploitation Company, William Knox D’Arcy de Morgan, Jacques 11–13, 28, 45, 89 Deterding, Henri 131, 135 excentric theory of empire (Robinson) 2–3, 143 Ferrier, Ronald W. history of British Petroleum Company 8–9 lack of clarity 9, 48 mischaracterisation 30, 36–7, 46, 64, 78–9, 178 n. 111 omission 36–7, 86, 103, 119, 121, 122 Fisher, John Arbuthnot 171 n. 32 naval reforms 43–4, 47, 142 royal commission on fuel oil 125–6, 128–9, 131–2, 133, 134–5

215

Shell 131, 133, 135, 138, 145 and William Knox D’Arcy 41, 45, 47, 142 and Winston Churchill 43, 125, 131, 135, 145 First Exploitation Company dilution 47–8, 50, 63, 101 incorporation 18–19, 40, 67 shareholding 18, 41, 52, 99, 118 structuring 35, 50, 63, 101, 117 Foreign Office Anglo-Russian convention 84, 144 Bakhtiyari 112, 117 D’Arcy Concession assistance 39–40, 63–4, 76, 86–9, 137, 141–4 German threat 69, 84 Paul Kitabgi 73 Persian government sabotage 113–15, 118 Preece 56, 58, 60 Reuter Concession 42 royal commission on fuel oil 127, 130, 135 see also British government, British legation in Tehran, Edward Grey, Arthur Hardinge, Charles Hardinge gentlemanly capitalism (Cain and Hopkins) Anglo-Persian board of directors 105, 126 oil producers 126, 131, 143 Reuter Concession failure 43 Strathcona 50–1 syndicate board 35 theory 2–3, 141, 163 n.10, 165–6 n.15 Weetman Pearson 132 William Knox D’Arcy 12, 22, 47, 142–3 German threat 69, 84–5, 98, 117, 129–31 government of India 41–2, 64, 84, 86–7, 135, 164 n.17 see also British government, Foreign Office grand vizier, see Mirza Ali Asghar Khan Greenway, Charles 107, 121 Bakhtiyari negotiations 115–17 and Foreign Office 119

216

Index

imperial bank of Persia 115, 123 Persian government loan 114–15, 123 personal business dealings 115, 121–3, 144 royal commission on fuel oil 127, 128–30, 134, 136 unofficial payments 122–3 and William Knox D’Arcy 122 Grey, Edward Anglo-Russian Convention 83–6 D’Arcy Concession assistance 63, 86–9, 91, 117, 140 royal commission on fuel oil 129, 130–1, 134–5 see also Anglo-Russian Convention, British government, Foreign Office Gulbenkian, Calouste 13, 165 n. 10 Habl al-Matin 32–3, 40, 57, 85 Haji Ali Quli Khan 29, 56–9, 70, 74–5, 112, 116 Haji Aqa Muhammad Hassan 19–20 Hardinge, Arthur D’Arcy Concession diplomatic support 32, 39, 56, 142–3 D’Arcy Concession lack of confidence 22, 41–2 D’Arcy Concession negotiating support 14–17, 22, 142 see also British government, British legation in Tehran, Foreign Office Hardinge, Charles 76, 86–7, 105–6, 109, 113, 144 see also British government, Foreign Office Hobson, John 1–2 Houtum– Schindler, Albert 33–4 Ilbayg 59–60, 77, 115 see also Shahab al-Saltanah Ilkhan 59–60, 75–6, 77, 115 see also Samsam al-Saltanah and Shahab al-Saltanah Imperial Bank of Persia 6, 16, 33, 114–15, 123 imperial commissioner appointment 20, 22, 39, 83, 89, 97 responsibilities 18, 34–7, 99–100 scrutiny 62, 66–7, 68–9, 97, 139, 144

see also Antoine Kitabgi, Vincent Kitabgi and Sadiq al-Saltanah informal empire (Robinson and Gallagher) 3–4, 41–3, 132, 141–6, 163–4 n.15 intermediation 7, 11–13, 28, 30, 33, 146 Iranian Constitutional Revolution see Constitutional Revolution Jeune, Susan Elizabeth Mary 48, 104, 127, 145, 188 n. 18 Khuzistan Anglo-Russian Convention 84–6 Arnold Wilson 89, 97, 109, 112, 141, 147 oil presence 29, 57 operations 55–6, 60, 112, 115–7, 119, 143 refinery 122 Kitabgi, Antoine 12, 23, 65, 165 n. 4 D’Arcy Concession negotiations 13–22 D’Arcy disputes 34–7 death 39, 47, 141, 145–6 and Henry Drummond Wolff 12–13 Kitabgi family shareholding 13, 35, 48–9 imperial commissioner 18, 22, 34–7, 39, 100, 118, 146 imperial visit 35–6, 38 and Mirza Ali Asghar Khan 12, 14, 20, 25 operations 27–29, 32–34 syndicate 34–7, 146 Tobacco Concession 12, 14, 29, 66, 166 n. 23 unofficial payments 13, 17–21, 35–6, 116 and William Knox D’Arcy 13, 22, 34 see also imperial commissioner Kitabgi, Edouard 48, 49–50, 60–1, 67, 72–3, 96 Kitabgi, Paul company agent activities 28, 75, 76–8, 88, 90, 178 n. 110 company agent appointment 72–3, 86 company agent dismissal 90 oil strike 96, 147 Persian ministry of foreign affairs 97

Index and William Knox D’Arcy 28, 35, 48, 50, 72 Kitabgi, Vincent 34 imperial commissioner 40–1, 48, 100, 105, 146 imperial commissioner appointments 39, 47, 74, 76, 77–8, 146 imperial commissioner first dismissal 48, 62, 66–7, 147 imperial commissioner second dismissal 81–3, 86, 89, 96 Kitabgi family shareholding 47–50, 71–2, 101, 103–5, 147 syndicate 47–8, 146–7 William Knox D’Arcy disputes 48–50 see also imperial commissioner Lansdowne see Petty-Fitzmaurice, Henry Charles Keith Lorimer, David Lockhart Robertson Bakhtiyari 59–60, 63–4, 74, 77–8, 87–9, 91 Persian events 69, 81, 86, 89 Lynch, Henry Finnis Blosse 35, 40, 59, 104 Majlis creation 66 D’Arcy Concession hearings 66–8, 69–70, 72–3, 82, 144, 137 Mirza Ali Asghar Khan 73–4 Persian national bank 69 shelling 96–7, 147 Marriott, Alfred 15–22, 36, 104 Masjid-i Sulayman 28, 57, 64, 92, 95, 110 Mesopotamian oil concession 13, 69, 127, 129, 130–1, 188 n.15 Mexican Eagle Oil Company 131, 132–4, 145 see also Weetman Pearson Milner, Alfred 105–6 Mirza Ali Asghar Khan 25, 38 and Antoine Kitabgi 12, 14, 20, 22, 25, 27 assassination 81–3, 86, 90, 144, 147 and Bakhtiyari 76, 77–8, 88 D’Arcy Concession assistance 39, 76–8, 81, 144 D’Arcy Concession negotiations 14, 15–22, 146

217

resignation 39, 48, 66, 141 return to Persia 73–4, 76–8, 144, 147 and Russia 15–17, 21–2, 31–2 unofficial payments 20–2, 32, 39, 77 Mossadegh, Mohammed 8, 150–1 Mount Morgan Gold Mining Company 13, 28 Muhammad Ali Qajar 73, 75, 82–3, 96–7, 112, 147 Muhandis al-Mamalik D’Arcy Concession assistance 27–8, 48–9, 78 D’Arcy Concession negotiations 14, 17–19, 21–2 Majlis hearings 67–8, 72 Mushir al-Dawlah 17, 19–21, 27–8, 61, 73 Muzaffar al-Din Qajar 4, 18–22, 36, 38, 65, 96 Orford see Walpole, Robert Horace Pahlavi, Shah Reza 149–50 Persian Bank Mining Rights Corporation 16, 28, 33 Persian Constitutional Revolution see Constitutional Revolution Persian government Anglo-Persian shareholding 111, 118, 139–40, 148 and Bakhtiyari 59, 75, 77, 81 Bakhtiyari deal opposition 58–9, 61, 77, 118, 139, 147 concessionaire disputes 61–2, 67–8, 111, 147 D’Arcy Concession rights 18–19, 58–62, 67–8, 98–100, 103, 147 D’Arcy Concession royalties or profit percentage 18–19, 100, 102–3, 139, 146, 148–50 D’Arcy Concession shareholding 7, 34–7, 101–3, 118, 145–8, 149–51 economic system 5–7, 16, 66, 69, 146 First Exploitation Company 18–19, 34–37, 41, 99, 101, 118 imperial visit 35–6, 38 intrigue 5, 17, 20–2, 66, 78, 96 loans 5–7, 12, 15–16, 31–2, 113 political system 4–5, 17, 65–6, 73–4, 132, 146

218 sovereignty 3–7, 14, 15, 30, 55–9, 146 unofficial payments 5, 13–14, 17–22, 28, 32, 41 see also Constitutional Revolution, Majlis, Persian legation in London Persian legation in London 61–2, 74, 81–3, 89, 96–7, 99 Persian minister in London 20 Pearson, Weetman 132–4 see also Mexican Eagle Oil Company Petty-Fitzmaurice, Henry Charles Keith 15, 22, 41–2, 56, 64, 105–6 pipeline 57, 108, 115–16, 150 Preece, John Richard and Bakhtiyari 56–8, 60–3, 74, 88, 143 and British legation in Tehran 63, 89–90, 92 and Burmah Oil Company 71, 73, 83, 98 and Foreign Office 63–4, 73–4, 76, 86–9, 91, 96 Henry Drummond Wolff disputes 71 Majlis hearings 68 Paul Kitabgi appointment 72–3, 178 n. 110 and Persian government 58, 61–2, 75, 97–9, 114, 147 Persian politics 62, 66, 78, 83, 90 political agent appointment 60, 76 Pretyman, Ernest 44–5, 50, 106–8 Qasr-i Shirin drilling 29–30, 40, 61–2, 84, 96 existing oil wells 18, 61–2, 67, 100, 147–8 Redwood, Thomas Boverton 53 Anglo-Persian Oil Company prospectus 108 Burmah Oil Company investment 44–6, 142 D’Arcy Concession support 107, 129–30, 135, 136 royal commission on fuel oil 126, 127, 129–30, 135, 136 technical expertise 29, 44, 103 and William Knox D’Arcy 44, 45, 47 refinery 122, 125, 127, 144, 151

Index see also Shaykh Khazal. See under Anglo-Persian Oil Company Reuter, Paul Julius news business 164 n. 26 Reuter Concession 6, 11–12, 16, 33, 101–2 Reuter Concession failure 16, 19, 42–3 Reynolds, George Bernard 37 Bakhtiyari disputes 59, 70, 74, 86 Bakhtiyari negotiations 56–8, 59–60, 115 dismissal 116 employee disputes 30, 57–8 existing oil wells 62, 98 foreign labour 30, 33, 67–8 Houtum-Schindler 33–4 oil strike 95–6 operations 27–8, 37, 92–3, 110 royal commission on fuel oil 129 Sadiq al-Saltanah disputes 67 Shaykh al-Mulk disputes 30, 57–8, 68 Rosenplaenter, C.B. 55, 96, 129–30 royal commission on fuel oil see under Admiralty Royal Dutch Shell Burmah Oil Company rivalry 45, 51 royal commission on fuel oil 131–2, 135, 137, 145 Shell menace 127, 129–31, 137–8, 190 n. 102 war effort 149 see also Henri Deterding and Marcus Samuel Royal Navy see Admiralty Russia Banque des Prêts or Banque d’Escompte et des Prêts de Perse 6, 32 competing concession 14 D’Arcy Concession opposition 22, 31, 39–40 loans to Persia 15–16, 31–2, 113 military intervention 119, 132, 148 Persian government influence 17, 22, 31, 69, 84 pipeline 14, 31–2 Reuter Concession opposition 42–3 Russian legation in Tehran 17, 21–2 sabotage 32–4, 39–40, 42, 114, 141 threat 41–3, 46–7, 59, 69, 84–5, 117

Index Tobacco Concession opposition 29, 31, 32, 42 trade delegation of 1901 14–16 see also Anglo-Russian convention, Anglo-Russian rivalry Saad al-Dawlah 67–8, 72, 82, 90 Sadiq al-Saltanah oil strike 97–100, 111–12, 147–8 re-appointment 83, 89–90 scrutiny 62, 66–7, 68–9, 139, 144, 147 see also imperial commissioner Samsam al-Saltanah 59, 63, 109 see also Ilkhan Samuel, Marcus 114, 131, 135 Sani al-Dawlah 69, 82 Sardar Asad see Haji Ali Quli Khan Sayyid Ala al-Din 29, 116 Shahab al-Saltanah 59, 75–6, 77, 116 see also Ilbayg and Ilkhan Shaykh Khazal 122 see also refinery Shaykh al-Mulk 29–31, 32, 50, 57–8, 67–8, 72 Shell see Royal Dutch Shell Shuja ul-Sultan 75–6 Shushtar 18, 28–9, 95, 116 Shuster, Morgan 117–19, 148 Smith, Donald Alexander Admiralty hearings 126–7 chairmanship 50, 106 investment 50, 103–5 Spencer-Churchill, Charles Richard John 104, 127–8

219

Spring-Rice, Cecil Arthur 60 D’Arcy Concession 63, 66, 67–9, 72–3 diplomatic support 75, 76–7, 81 Persian affairs 69, 82, 83, 85, 179 n. 32 Standard Oil 41, 45, 51, 114 St. Helier see Jeune, Susan Elizabeth Mary Strathcona see Smith, Donald Alexander syndicate see Concessions Syndicate Limited. See under William Knox D’Arcy Tobacco Concession downfall 6–7, 16, 19, 29–30, 31–3, 56 granting 6, 12, 14, 16 repercussions 6–7, 16, 66 Russian opposition 29, 31, 32, 42 Walpole, Robert Horace 13, 15, 48, 69 Wilson, Arnold Talbot dispatch 87, 89, 129, 141, 144, 147 effect of presence 91–2, 97, 109, 144 oil strike 95–6 withdrawal of Indian guard 109, 112 Wolff, Henry Drummond Charles and Antoine Kitabgi 12–13 D’Arcy Concession negotiations 13, 15, 16 Tobacco Concession 14, 16, 29, 30 succession 104 William Knox D’Arcy disputes 35–7, 47–9, 71–2 Young, Morris 8, 116–17, 119–21