Reuter Concession Cancelled: Tensions and Setbacks

  October 10, 2021   Read time 2 min
Reuter Concession Cancelled: Tensions and Setbacks
The cancellation of the Reuter concession in 1873 was not due only to the resolute opposition of Russia. Two other factors were involved. First, the fulfillment of the concession required enormous capital.

The concessionaire could have raised the money with the assistance of the British government, but the government’s reluctance to give him a guarantee or protection for forming a company in England rendered implementation of the concession impossible. Second, the concession aroused Iranian "popular” opposition. This opposition was stirred up and intensified by some members of the elite (i. e., those who get the most of the best) during the Shah’s absence in Europe. These malcontents argued that the concession spelled the surrender of his royal powers to foreigners. In comparison with the opposition of Russia and the indifference of Great Britain, the popular resentment played a minor role in forcing the Shah to abrogate the concession, but the opposition is significant as perhaps the earliest manifestation of the Iranian national awakening.

After the cancellation of the Reuter concession Iran granted a wide variety of concessions to Great Britain and Russia. In 1888 Great Britain obtained a concession for the establishment of regular commercial navigation on the Karun River. Russia feared British penetration and commercial competition in northern Iran. This apprehension was intensified when Great Britain attempted to acquire a concession for the construction of a railway from the upper Karun to Tehran. Russia therefore decided to prevent the construction of this or any other railway in Iran. This marked the beginning of Russia’s obstructive railway policy, which was continuously successful until the First World War. In 1889 Russia was satisfied when Näsir al-Din Shah promised that Iran would not grant railway concessions to any power except Russia. (This promise was renewed in 1899 to last until 1910.)

In that same year Iran granted to Reuter a new concession, for the establishment of the Imperial Bank of Persia.16 This concession was demanded by the British government as compensation for the cancellation of Reuter’s earlier concession. There was, however, more than compensation involved. Iran had retained his caution money because of delay in performance. Upon the establishment of the bank, Reuter recovered that money. The bank began transactions with a capital of £ 1,000,000. It was given the exclusive right to issue bank notes in Iran for a period of sixty years and to exploit the mineral resources of the country, with the exception of precious stones. The latter right was sold to the Persian Bank Mining Rights Corporation.