Financing the Beirut-Damascus railway

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Since the 1860s, the Ottoman Empire has lost a large part of its European territories. In order to ensure its cohesion, develop its economy and resist the pressure of the European powers, it is trying to modernize. At the same time, Germany, Great Britain and France developed there areas of influence by deploying and modernizing communication and transport routes in order to facilitate and accelerate trade exchanges. The aim is to link the regions bordering the Persian Gulf with Europe and the Mediterranean basin.

The modernization of the Ottoman Empire against a backdrop of European competition

Ottoman Empire map. French Chamber of Commerce of Constantinople. 1895. National Library of France
Ottoman Empire map. French Chamber of Commerce of Constantinople. 1895. National Library of France
German Baghdad Railway, between 1900 and 1910. Alexandretta to the main Baghdad line; 2 locomotives pulling open cars. Library of Congres
German Baghdad Railway, between 1900 and 1910. Alexandretta to the main Baghdad line; 2 locomotives pulling open cars. Library of Congres

Thus, the Germans build the Berlin-Baghdad railway between 1903 and 1940, a concession of the Baghdad Railway (the Baghdadbahn), intended to link Konya (present-day Turkey) and Baghdad (present-day Iraq). Great Britain, for its part, present in the Empire throughout the 19th century and one of its main investors, was a strategic trading partner, since the two countries has signed in 1838 a free trade treaty. France, on its side, participates under the impetus of the Ottoman Imperial Bank, of which it is one of the main shareholders with the support of the national banking institutions, in the first initiatives for the modernization and development of transport in Lebanon and Syria, financing and controlling roads, ports and railway lines. The Beirut-Damascus railway is one of the flagship projects.

A mule track

Beyrouth city. Beirut to Damascus Railway : executed by the Société de construction des Batignolles (Paris), formerly Ernest Gouin et Cie / Bonfils phot. Album of photographs, 1895. National Library of France
Beyrouth city. Beirut to Damascus Railway : executed by the Société de construction des Batignolles (Paris), formerly Ernest Gouin et Cie / Bonfils phot. Album of photographs, 1895. National Library of France

In the Middle East, the road from Beirut to Damascus is well known: a mule track impracticable for caravans, it connects the two largest centers of the province of Syria. On the one hand, Beirut, a large port and the only commercial center in the region, had a population of 140,000 inhabitants at the beginning of the 1860s, and on the other hand Damascus, the capital of Syria’s vilayet, a warehouse for all production in the interior of the country, with nearly 200,000 inhabitants. It took about four days to travel the 108 kilometers between the two cities. This road has been in operation since 1857 for a period of 50 years by the Ottoman Road Company from Beirut to Damascus. This company, Ottoman in name, is actually French, headed by a former French naval officer, Count Edmond de Perthuis.

City of Damascus. Beirut to Damascus Railway : executed by the Société de construction des Batignolles (Paris), formerly Ernest Gouin et Cie / Bonfils phot. Album of photographs, 1895. National Library of France
City of Damascus. Beirut to Damascus Railway : executed by the Société de construction des Batignolles (Paris), formerly Ernest Gouin et Cie / Bonfils phot. Album of photographs, 1895. National Library of France

A railway line financed mainly by French capital

The first Beirut-Damascus railway line, 147 km long, is built in 1895, linking the port of Beirut to Damascus via Rayak, in order to optimize trade between the two capitals, making the port of Beirut one of the most important in the Mediterranean. The work was carried out by the Société de construction des Batignolles, formerly Ernest Gouin et Cie, under a concession obtained in 1891, in which the Comptoir national d’escompte de Paris (CNEP) took part.

Whole train station of Beirut. Beirut to Damascus Railway : executed by the Société de construction des Batignolles (Paris), formerly Ernest Gouin et Cie / Bonfils phot. Album of photographs, 1895. National Library of France
Whole train station of Beirut. Beirut to Damascus Railway : executed by the Société de construction des Batignolles (Paris), formerly Ernest Gouin et Cie / Bonfils phot. Album of photographs, 1895. National Library of France

The company subsequently underwent several transformations of its statutes: first it was the Beirut-Damascus-Hauran Economic Ottoman Railway Company that built the Hauran railway to the east; in 1901, at the request of the Turkish government, it became the Ottoman Damascus-Hamah Railway Company and Extensions, and its headquarters was transferred to Constantinople. Although incorporated as an Ottoman company, the head office of this company was in Paris, its capital was French (CNEP became part of the financial group that guaranteed the financial viability of the project and took part in the bond syndicate; the Bank de Paris et des Pays-Bas took stakes in 1905 and 1909) and its management was entirely French.

Railway network map of the Damascus-Hama and Extensions. CGP editions. BNP Paribas Historical Archives
Railway network map of the Damascus-Hama and Extensions. CGP editions. BNP Paribas Historical Archives

The same consortium builds the Damascus-Hamah and Extensions (DHP) railway and extends to Aleppo where it connects to the Berlin-Baghdad railway, the Baghdadbahn, financed predominantly by a German group. The planned railway line to Aleppo is rather small (145 kilometers), but its economic importance is great, given the wealth of the region and the size of the city’s commercial market. The new network offers considerable opportunities for agriculture and manufactured goods, connecting the city with the Syrian coast. The ultimate aim is to link Beirut to Damascus in order to facilitate direct access from Syria to the sea via Beirut.

Laying the last rail in Damascus in 1895. Beirut to Damascus Railway : executed by the Société de construction des Batignolles (Paris), formerly Ernest Gouin et Cie / Bonfils phot. Album of photographs, 1895. National Library of France
Laying the last rail in Damascus in 1895. Beirut to Damascus Railway : executed by the Société de construction des Batignolles (Paris), formerly Ernest Gouin et Cie / Bonfils phot. Album of photographs, 1895. National Library of France

The DHP becomes French

In 1920, the Banque de Paris et des Pays-Bas enters the capital of the Ottoman Imperial Bank. In July 1929, the company becomes French, and the headquarters is transferred to Paris.

In 1939, the operation of the railways is entrusted to the French State, within the framework of its mandate, and it is now the High Commission of the French Republic in Syria and Lebanon, whose residence is in Beirut, which manages the DHP. During the Second World War, the company’s activities were severely disrupted and the treaties governing the operation of the railways were suspended, which later led to disputes.

Bearer certificate for a 500 franc share. Banque de Syrie et du Liban. Paribas bank emission in 1948. BNP Paribas Historical Archives
Bearer certificate for a 500 franc share. Banque de Syrie et du Liban. Paribas bank emission in 1948. BNP Paribas Historical Archives

In December 1955, the Syrian state bought out the company, thus ending the concession of railways on its territory and the renunciation of all concessionary rights belonging to it on Syrian territory.

This vast railway construction program, implemented with the help of the Ottoman Imperial Bank and its shareholders, then with that of the Bank of Syria and Lebanon, its subsidiary, paved the way for the economic development of new territories in the Levant. It responds to the problem of weak land transport and the economic backwardness of the region in general.

To find out more : the Banque de Syrie et du Liban, the financial arm of Paribas in the Levant

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