Published online by Cambridge University Press: 01 January 2022
Iran's geography ensures that transport is a major problem for economic activity. Much of the country is sparsely settled; the major cities are hundreds of miles apart, with some roads running through inhospitable deserts. The population centers are separated from the oceans by high mountains. There are no rivers suitable for transportation over any distance. In short, transport is overwhelmingly by land through difficult terrain.
These natural barriers provide an explanation as to why Iran's economy consisted for many centuries of a series of local or regional markets, more than a national market. Producers and merchants did not consider their natural market to be Iran but rather their local region and, beyond that, the areas to which they could easily transport their goods, which could well mean nearby foreign regions rather than other parts of Iran.
1. The route was overland to the Caspian, by boat to Russia, by railroad to the Black Sea, and then by ship through the Turkish Dardanelles, the Egyptian Suez Canal, and the Arabian Sea.
2. Throughout this article, the terms Iran and (for the money) rial are used, though in fact in the early period Persia was the more widely used term and the currency was the qerān. The value of the rial depended in practice upon its silver content and fluctuated around 10 per U.S. dollar from 1921 to 1930 and, with the collapse of the silver price, around 20 per U.S. dollar in the early 1930s, and then around 16 per U.S. dollar from 1934 through 1940.
3. E. R. Lingeman, Report on the Finance and Commerce of Persia, 1926–1927 (London: H. M. Stationery Office, 1928), Appendix IV.
4. Anson, G. F. W. (British Consul for Bushire), Trade Report of Bushire for 1921–22, reprinted in The Persian Gulf Trade Reports, 1905–1940, volume Bushire II (Gerrards Cross: Archives Editions, 1987)Google Scholar.
5. Hadow, R. H., Report on the Trade and Industry of Persia to June 1923 (London: H. M. Stationery Office, 1923)Google Scholar.
6. Weston, H., “Persian Caravan Sketches,” in The National Geographic Magazine XXXIX, no. 4 (April 1921): 425Google Scholar.
7. Powell, E. Alexander, By Camel and Car to the Peacock Throne (New York: The Century Co., 1923), 322, 328Google Scholar.
8. Temple, Major B., Report of a Commercial Survey of the East Persian Trade Route between Quetta and Meshed, FO248/1232, 119–26Google Scholar; the economics of camel transport are analyzed on pp 76—82. A bowdlerized version of this secret report was later published by the Department of Transport.
9. League of Nations Commission of Enquiry into the Production of Opium in Persia, Report of the Council (Geneva: League of Nations, 1926), document no. A.7.1927.XI.[C.580.M.219.1926.XI.l, 27–8.
10. Observations of the Persian Government on the Report of the Commission of Enquiry into the Production of Opium in Persia (Geneva: League of Nations, 1927), document no. A.8.1927.XI., 5. The response is signed by A. C. Millspaugh, the (American) administrator-general of finance, Morteza Bayat, minister of finance, and M. ‘A. Forughi, prime minister. The repeated use of U.S. examples throughout the response suggests that Millspaugh had a strong hand in preparing it.
11. I.e., 600 rials per ton in 1940 compared to 1,500 rials in 1920. The inflation adjustment is approximate. There was no systematic collection of price data in the early 1920s. The Bank Melli published some price data beginning in 1924, from which it can be estimated that Isfahan retail prices rose 30 percent between 1924 and 1935 ,based on a simple average of the rate of increase for seven commodities— wheat, bread, rice, sugar, mutton, butter, and tea—as listed in “L'évolution des prix en Iran,” Bulletin de la Banque Mellie Iran 8 (August 1936): 6. The Bank Melli price index prepared from 1935 onwards shows that Tehran wholesale prices rose 155 percent between 1936/37 and 1940/41 #﹛Bulletin de la Banque Mellie Iran 56 [February- March 1942]: 496–7). These two estimates are not strictly comparable and neither covers the five years 1920–23 and 1935/6. Ignoring these problems, patching the two pieces of information together produces the rough estimate that prices doubled between 1920 and 1940.
12. Jones, G., Banking and Empire in Iran (Cambridge: Cambridge University Press, 1986), 150, 278Google Scholar.
13. Administration generale des douanes, Statislique annuelle du commerce exterieur de I'Iran en 1319 (Téhéran: Imp. Madjlesse, 1941), 483.
14. Jones, Banking and Empire, 254Google Scholar. The Iraqi rail officials were sufficiently alarmed at the decline in trade due to “efforts of the Persian Government to establish an all Persian Trade route via Muammerah” to prompt a complaint to London from the High Commissioner for Iraq, Gilbert Clayton, on 21 August 1929 (FO 371/13785).
15. Ibid., 478.
16. Gray, F. A. G., Report on Economic and Commercial Conditions in Iran During 1937 (London: H. M. Stationery Office, 1938), 26Google Scholar. The January 1936 maximum rates by contrast did “not prove satisfactory.“
17. Administration generale des douanes, Statislique annuelle du commerce exterieur de I'lran en 1315–6 (Teheran: Imp. Madjlesse, 1938), 510Google Scholar.
18. Todd, F. H., Report on Economic and Commercial Conditions in the Persian Gulf—December 1936, repr. in The Persian Gulf Trade Reports, 1905–1940, volume Bushire II (Gerrards Cross: Archives Editions, 1987). 19Google Scholar. Naval Intelligence Division (of the U.K. Admiralty), Geographical Handbook Series: Persia, September 1945 (Gerrards Cross: Archives Edition, 1987 [reprint]), 551Google Scholar, hereafter Handbook. The 1942 figure is from p. 552, the 1943 figure from p. 553.
21. Sayre, J., Persian Gulf Command (New York: Random House, 1945), 110Google Scholar, Khorramshahr figure on p. 125. The Military Railway Service and the Motor Transport Service were parts of the Persian Gulf Command (called the Persian Gulf Service Command in its first year).
22. Sykes, P., A History of Persia (London: Macmillan and Co., 1958Google Scholar [reprint of the 3rd edition of 1930, the text dating from the second edition of 1921]).
23. The notes of the speeches are reprinted in Mahrad, A., Iran unter der Herrschaft Reza Schahs (Frankfurt: Campus Verlag, 1977), 336–42Google Scholar.
24. Ibid., 558 (in the “Final Essay” added in 1930 to the 1921 text).
25. Temple, Report of Commercial Survey, 84, 88. Temple was analyzing how to supply eastern Iran from British India.
27. While there are no GNP data for the period, a rough estimate was made by Afshar, K., “A Monetary Estimate of Iran's GNP, 1900–1975” (Ph.D. dissertation, Florida State University, 1977)Google Scholar. Afshar estimated that the GNP rose quickly after 1933, due primarily to inflation, from 4.1 billion rials to 13.7 billion rials in 1940.
28. Opium Commission, 28–30.
29. Ibid., 29.
31. Economic Intelligence Service, Public Finance, 1928–1937: Iran (Geneva: League of Nations, 1938)Google Scholar. Essentially the same data, with less analysis, are in “Budget,” Bulletin de la Banque Mellie Iran 24 (June 1938)Google Scholar. See also the follow-up publication by the U.N. Department of Economic Affairs, Public Finance Information Papers: Iran (New York: United Nations, March 1951)Google Scholar, ST/ECA/SER.A/4.
32. Furthermore, the data are on the budget; only 1928/29 data cover actual expenditures. However, it appears that actual expenditures were rather close to the budget.
33. Opium Commission, 29, cites the length of the Caspian Sea to Persian Gulf (at Khorramshahr) road as 1,218 kilometers and the cost as 43.7 million rials; the road from Tehran to the Persian Gulf at Bushire is listed as 1,191 kilometers, costing 57.1 million rials.
34. More precisely, 2.5 percent during the first three years, 3.5 percent during the next five years, and 5.5 percent for the next five years.
35. The text of the law, as well as a lengthy objection (from Mr. Monson, on 26 March 1924) is in FO 371/10149.
36. Handbook, 543–4.
37. A spate of such demands for 1924 is contained in FO 371/10142.
38. General Report on Persia for the Year 1907 (prepared primarily by C. Spring- Rice), FO 251/93, 32–3.
39. Sternberg, E., A History of Motor Truck Development (Warrendale, Penn.: Society of Automotive Engineers, 1981), 11–38Google Scholar. Mileage figures for Ford trucks are from Roll, R., American Trucking: A Seventy-Five Year Odyssey (Osceola, Wis.: Motorbooks International, 1979), 162Google Scholar (the earliest data is for 1927). On the capacity of 1935 trucks, see Vanderveen, B. (ed.), American Trucks of the Late Thirties, 1935- 1939 (London: Fredrick Warne and Co., n.d.)Google Scholar.
41. Maclean, H. W. (Special Commissioner of the Commercial Intelligence Committee of the Board of Trade), Report on the Condition and Prospects of British Trade in Persia (London: H. M.'s Stationery Office, 1904), 77–9Google Scholar. The table is reprinted in Issawi, C. (ed.), The Economic History of Iran, 1800–1914 (Chicago: University of Chicago Press, 1971), 196–9Google Scholar. Maclean recommended an average exchange rate of 55 qerāans per pound; I have used 56, which was the market rate for 1903AM (“La Monnaie persane,” Bulletin de la Banque Rationale de Perse 1 [January 1934]: 3). A higher rate—which would produce higher costs in rials—could be justified, given that the silver parity rate (the qerān having its value fixed by its silver content) was 67.3, and indeed the market rate for 1904/05 moved up to 60.6.
42. Ibid., 42. The cotton data are on p. 34.
43. Among the factors was the success with barter agreements with the U.S.S.R. and Germany; cf. Clawson, P. and Floor, W., “Finance and Foreign Exchange for Industrialization in Iran, 1931–40,” in Lawless, R., ed., Essays on Twentieth Century Gulf Economic History (University of Durham Press, 1986)Google Scholar.
44. This line of thought was suggested by M. Borujerdi, president of the Cultural Studies and Research Institute in Tehran.