USM Open Source History Text: The World at War: World History 1914-1945

The Middle East Before 1914: Persia/Iran

Beginning in the 1870s, the British and the Russians began to invest large sums of money in Persia. The British Baron de Reuter became one of the principle beneficiaries of the willingness of the Persian government to cut deals with Western financiers and industrialists. Without Western backing, Persia lacked the type of capital required for European-style industrial expansion. Thus, in 1872, de Reuter gained the right to control all Persian customs revenue for 24 years. He received a monopoly over the construction of railroads, canals, and irrigation projects. British firms established the Imperial Bank of Persia in 1889. A British firm gained a monopoly over Persia’s tobacco industry in 1890. Russia also had a hand in this economic imperialism, founding the Bank of Persia in 1891 and extending huge loans to the Persian shahs throughout the later decades of the 19th century. In 1891, Russia took over the lucrative fisheries on the Caspian Sea.

Persia’s responses to this economic encroachment varied widely. They can be classified into three broad categories. The first category, the beneficiaries, was comprised of the leaders of the Qajar regime, the shah and his functionaries, together with the elites that circled it. These were the people who benefited directly from European investment and loans. They were small in number. The second group was made up of Persians who sought to emulate the West but who wanted to take back control over their economy. These educated members of the middle and professional classes understood quite well that European businesses were using their overwhelming financial superiority to keep the Persian people in a subordinate position. Intellectuals and businessmen from this middle class (and this is a common trait of most early national movements) would lead the charge for more democratic and national control over political institutions and the economy. The third category of response to British and Russian intervention in Iran came from the clerical class, or the Shi’ite ulama. The ulama, or clerics, were deeply skeptical of European interference in all aspects of Persian life. The clerics rejected modern economic life, especially when they saw the state's resources disproportionately favoring the foreigners. They rejected the Western focus on science and technology and, of course, the Western movement towards secularization and the severing of religion from politics.

The Qajar Dynasty was challenging the position of the ulama in many ways. The ulama had traditionally been in charge of judicial life in Persia under an Islamic legal code. In the mid-19th century, the Persian regime sought to establish a western-style court system, a direct challenge to the ulama’s authority. An even greater challenge to ulama authority came with the advent of public education in the country. Modeled on the European primary school system, the Persian regime created secular schools to rival the ulama controlled schools, or madrassas. The clerical elite felt threatened on all sides.

Years of pent up frustrations with the new social and economic system imposed by the British and Russians, and supported by the shah, burst forth in 1905. For this brief moment, anger at Persia’s economic situation, which was universally blamed on the shah, caused disparate groups to unite for reform. Westernizing liberals wanted more control over the domestic economy. Merchants and artisans were being increasingly pushed out by foreign firms. These forces (Western liberals, artisans, and merchants) joined together with reform-minded ulama and called for a national assembly to demand political reforms. The meeting produced Persia’s first constitution and created a parliamentary government. Yet, support for the constitution was not universal. The shah rejected it. The powerful landowning class was against it, as their power was directly linked to the ruling dynasty. More conservative members of the ulama rejected it as a product of nefarious western influence. Finally, and perhaps most significantly, the imperial powers in the neighborhood, Russia and Britain, rejected the constitutional movement because they had invested huge sums of money into direct business dealings with the shah’s regime. In 1911, after six years of ambiguous rule in Persia, Russia sent in troops to put down the constitutional government and to restore the shah to power.

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