I

British involvement in the banking sector in the Balkans was justifiable for several reasons: most banks in the Balkans were launched with foreign capital, London was the world's financial centre, Bulgarian and Serbian economies were growing and relatively stable, and after the departure of the Anglo-French Imperial Ottoman Bank from Bulgaria in 1899 there was an absence of British financial institutions in the area.Footnote ¹¹ Moreover, British observers had for some time portrayed many parts of the Balkan Peninsula as areas of considerable commercial potential for British exporters and investors. Initially, British commercial analysts were mostly impressed by the existence of unexploited minerals. Later, they also began to note the increased demand for manufactured goods which resulted from increased prosperity in the Balkans.Footnote ¹²

During the period, at least three Anglo-Bulgarian banking schemes were launched, one in 1906 and two in 1913. These prospective banks were promoted by Baron Max Mendelssohn and his associates Benito Weiser, Fred Puzey, and John Rodger; Otto Fulton and his associate Leone Delphin; and Mamo Calmi & Fils. The nominal capital of these banks ranged from £1 million to little over £3 million and they sought to provide regular banking services, act as agents for British companies, and facilitate UK–Bulgarian trade.Footnote ¹³ Their aims corresponded roughly to the ways in which British international banks (whether overseas banks or merchant banks) operated elsewhere in the world.Footnote ¹⁴ British promoters in Serbia came up with comparable schemes. For example, in 1906, Alfred Stead, the son of the newspaperman W. T. Stead (1849–1912), planned to establish an Anglo-Serbian bank to aid British companies’ operations in the country. In Alfred Stead's view, this goal was achievable, for example, if the well-established Belgrade Export Bank and the British Parr's Bank were brought together.Footnote ¹⁵

Throughout the period, British officials endorsed all suggestions which they regarded as potentially beneficial to British commerce. In particular, bank promotion in Bulgaria generated positive comment. George Buchanan (1854–1924), agent and consul-general from 1903 to 1909, maintained that he had ‘always advocated’ the idea of establishing a British bank in Bulgaria. Diplomatic envoy M. de C. Findlay stated that ‘there is at present a deficiency of banking facilities in Bulgaria and … it would seem that the establishment of a British Bank would be attended with a reasonable prospect of success’. In consul W. O'Reilly's opinion, an Anglo-Bulgarian bank ‘would be invaluable to British commerce’. Henry Bax-Ironside (1859–1929), British minister in Sofia from 1911 to 1915, also believed that a British bank in Bulgaria would be important in increasing UK–Bulgarian trade and he had ‘little doubt that it would prove a profitable enterprise’. A Foreign Office report from 1906 also envisaged the formation of a British commercial bank in Belgrade. Its functions were outlined as follows: to arrange all business between manufacturers and customers in both countries, to import goods only on direct orders, to deal only with reliable companies and to keep free from speculation.Footnote ¹⁶

Several foreign-financed (mainly German) banks were founded in this period, namely in Bulgaria. Significantly, Germany and Bulgaria signed a commercial treaty in 1905, which triggered a flurry of German investment into banking operations there. During the same year, Bulgarian and German banks combined forces and founded the Kreditna Bank with 9 million francs. In 1906, Deutsche Bank's affiliate Wiener Bank-Verein established the Balkanska Bank with 4 million francs. After Bulgaria declared independence in 1908, German firms acquired the majority of government contracts in Bulgaria. Eventually, therefore, these developments also manifested themselves as an increase in German–Bulgarian trade. As a response to the intensification of German commercial diplomacy, Britain too concluded a series of commercial treaties with Bulgaria and Romania (1905), Serbia (1907), and Montenegro (1910). The volume of British exports to Bulgaria also increased during 1905–9, but the rise was more modest than that of Germany. The treaty with Serbia did not have any effects on British exports there, which remained constant.Footnote ¹⁷ Thus, there certainly seemed to have been a case for establishing British banking facilities in Bulgaria (and to a lesser extent in Serbia): economically to strengthen Anglo-Balkan business contacts and politically to balance increased German activity. These motives certainly led to the founding of British banks elsewhere in the world, including in Turkey in 1908. However, bank promoters in Bulgaria were often unable to obtain backing from the Foreign Office and the Board of Trade. The following examines why this was the case.

Buchanan gave several reasons for his reluctance to support Baron Mendelssohn's banking scheme in 1906. He referred to the uncertain political and financial situation in the country, complained about his lack of knowledge about Mendelssohn and his business partners’ financial standing, had doubts about Mendelssohn's connection to the Dresdner Bank, and argued that it was ‘not the custom of His Majesty's Government to influence the financial operations of British Bankers in foreign countries’. The Board of Trade had earlier stated that only Benito Weiser was ‘good for his engagements’, argued that Mendelssohn, Puzey, and Rodger could not handle large credit transactions, and declared that Buchanan therefore should not ‘take any action in support of Mr Mendelssohn's scheme’.Footnote ¹⁸ British officialdom refused to support Mamo Calmi & Fils's similar proposal mainly because the firm had ‘no experience’ in commercial banking.Footnote ¹⁹

Otto Fulton did not receive diplomatic backing either. Consul O'Reilly described Fulton as a ‘gentleman, who speaks with a slight foreign accent and whose appearance and manner are suggestive of Hebraic extraction’. O'Reilly regarded Fulton's scheme as promising because renowned British businessmen Sir Joseph Beecham (1848–1916) and Lord Furness (1883–1940) supported it. But, as Fulton had been ‘disinclined to say who the capitalists were who were to put up the money’ his proposal remained unfounded. Later on, O'Reilly became more suspicious about the seriousness of Fulton's idea. He worried that another British banking project – which the British vice-consul Mayer had initiated in April 1910 and on which he had written two further reports in February 1912 and May 1913 – might suffer ‘if the field [was] already occupied by a concern promoted by parties less likely to inspire confidence’ in Britain. O'Reilly's distrust increased even further soon after. He wrote to Grey that ‘I overheard Fulton at the Hotel lately talking fluent Austrian German. The German Military Attaché, who lives in the same hotel says that an Englishman of business named Caspar telegraphed to friends of his in London to ask about Fulton and received a reply:- “Twice bankrupt. No good.”’Footnote ²⁰ This intelligence satisfied the Foreign Office as there were no further references to Fulton in the correspondence. Alfred Stead's bank proposal in Serbia did not generate much discussion. In principle, the Foreign Office's attitude was positive because Stead appeared ‘to be well acquainted with all the leading men in Belgrade’.Footnote ²¹

Thus, British officials refrained from backing bank promotion in Bulgaria. The approach was very different in Turkey, Iran, and China. Founded in 1908 with strong Foreign Office support, the National Bank of Turkey was the most important instrument of British diplomacy in Turkey until 1913. The bank's aims were to reintroduce British capital into the Ottoman Empire and, as part of the larger framework of Anglo-French entente cordiale, to work towards achieving an alliance with France in financing the Turkish central government. However, when the National Bank of Turkey failed in 1913, it had not achieved these goals. The Imperial Bank of Persia was another similar case, as it too acted as the Foreign Office's ‘financial agent’ in Iran from 1890 to 1914. Its main role was political and thus the bank received strong support from the British government. The Hong Kong and Shanghai Banking Corporation performed similar political functions in China from the mid-1890s to 1914 and was significantly supported by the Foreign Office.Footnote ²² Britain and France also exercised financial control in Turkey through Ottoman Public Debt Administration (1881–1911) and the Imperial Ottoman Bank.Footnote ²³

In the Balkan case, diplomats cited the fear of financial speculation as the most significant reason for their reluctance to offer official support. This was indeed a reasonable suspicion as the fear of speculation (and distrust of company promotion, discussed in further detail below) were among the most potent worries during the late Victorian and Edwardian periods. Between 1856 and 1883, 17 per cent of all promotions were fraudulent and the case was the same or even worse in Edwardian Britain. In addition, notable writers and novelists, including Thomas Carlyle, Charles Dickens, and Walter Bagehot considered company promotion and commercial morality in their works.Footnote ²⁴ There was thus a real need for caution, which was further strengthened by a considerable cultural concern about company promotion which was represented as an unproductive economic activity that attracted ‘vampires and vultures’.

Political factors also determined diplomatic decision-making. Buchanan referred to the unstable political situation in Bulgaria in 1906, when the country was experiencing large-scale domestic political violence.Footnote ²⁵ His suspicion about Mendelssohn's association with the Dresdner Bank was also understandable from the British perspective because this bank, alongside the Deutsche Bank and Diskonto-Gesellschaft, often acted as an agent of German foreign policy interests. In Turkey, Iran, and China, the British government wanted to gain political influence and to control the local regimes and was prepared to use commercial power to achieve this ‘informally’.Footnote ²⁶ In Bulgaria, and elsewhere in the Balkans, this motive was missing. The British government did not see a British bank serving a political purpose, and thus, although the idea was supported in principle and seemed justifiable enough on economic grounds, the little-known bank promoters did not receive practical diplomatic support. (Only Mendelssohn was fairly widely known in financial circles.Footnote ²⁷) Moreover, at the time, Germany was making a very powerful push towards the Balkans, and as the region was not central to British interests, there was not a strong imperative to try and counterbalance German advances.

British officialdom was also concerned about relations with Turkey. Findlay argued in 1910 that if a British bank was founded in Bulgaria, ‘the English portion of the management would have to exercise the greatest care in order to prevent their Bulgarian colleagues from using the bank for political purposes’. Findlay worried that Bulgarian bankers might be tempted to use the bank's prospective branches in Macedonia for anti-Turkish activities.Footnote ²⁸ Thus, British officials’ reluctance certainly in part resulted from the fact that there could not have been any guarantees that such a bank was not going to jeopardize British relations with Turkey. There was no need to use foreign policy to further British interest in a region of comparatively marginal market potential and political importance. The case was the same with the trans-Balkan railway question. British officials did not support this project because Balkan affairs were not central to overall policy and because the line's commercial prospects were minimal from the British perspective. Moreover, they did not want to put pressure on the Turkish government as it might have put a reform programme in Macedonia at risk. As a consequence of the Young Turk Revolution, however, which toppled Abdul Hamid II's (1842–1918) regime, British official attitudes to the Adriatic line became more positive, especially as the new Young Turk government promised reforms in Macedonia, including the fair treatment of minorities.Footnote ²⁹ British officials abstained from supporting British bank promotion in Bulgaria as a result of fears about speculation and local instability and because it did not want to put further strain on relations with Germany and Turkey.

Rather surprisingly, however, British diplomats did not refer to the Balkan Wars when declining to support Fulton and Mamo Calmi's proposals in 1913. In fact, some quarters of the British diplomatic community regarded the Balkan Wars as a turning point after which British commercial opportunities in Bulgaria could improve. Consuls Heard and Mayer maintained that territorial gains, acquisition of ports in the Aegean Sea, conclusion of wars with Turkey, and prospective real estate transactions of properties which were being vacated by Bulgaria's Turkish population boosted its standing as a potentially lucrative field for British investment and exports.Footnote ³⁰

II

Some British underwriting agencies including the National Investment Trust Corporation of England (the Trust) and Ethelburga Syndicate entered into competitions for the supply of loans to Balkan governments. Usually, a combination of investment banking houses formed underwriting syndicates to spread the risks and to obtain greater financial and marketing resources for large loan issues. The Trust was contracted in January 1911 to provide the Bulgarian government with a loan of close to 9 million French francs for the construction of the Dubnitza–Radomir railway line. However, it emerged in April that the British syndicate had not advanced the money at the end of March as had been agreed, and the firm was negotiating with the Bulgarian government for a new issue date. According to the Trust's solicitors, the loan issue was delayed as a consequence of the confusion with dates and personnel changes in the Bulgarian government who in contrast argued that the Trust had not had the funds ready on the due date. This case caught the attention of continental newspapers. The Hamburg financial daily Der Wächter auf dem Kapitalmarkt termed the case ‘the Bulgarian financial scandal’ and argued that Hugo Loewy was actually behind the Trust. Loewy was a notorious criminal who had been involved in all types of financial frauds from Australia to Germany and imprisoned for fraudulent bankruptcy and embezzlement on many occasions. However, Loewy was not mentioned in the correspondence between the Trust and the Foreign Office. The Trust's solicitors were concerned about the negative publicity that this incident had attracted and argued that the firm had ‘suffered a great loss of prestige’ and that their reputation had been ‘practically ruined’ both in Britain and on the continent. The Trust requested the British government's assistance and considered suing the Bulgarian government.Footnote ³¹

This case received mixed reactions in the Foreign Office and the Board of Trade. First Secretary Francis Lindley's (1872–1950) initial response was positive as in his view ‘the English syndicate would appear to have made a good bargain over the loan’. Although not denying the line's ‘strategic importance as a possible link between [the] Bulgarian system and a Turkish line up to the Struma valley’, Lindley seemed upbeat about the fact that the line would be built initially for ‘purely commercial purposes’. When difficulties emerged, Bax-Ironside was very sceptical about the Trust's actions, particularly because the syndicate had ‘avoided all contact’ with the British legation in Sofia. In his view, the ‘responsibility for the failure of the loan negotiations [lay] entirely with the British syndicate’. The Board of Trade took a completely different view of the case. George Stanley argued that the Trust's chairman Samuel Barber was ‘perfectly respectable’ because he was the director of the Anglo-American Telegraph Co. Stanley questioned Bax-Ironside's observations because they were based on the official Bulgarian version and argued that ‘the Board see no reason why the account given by the Bulgarian Government should be necessarily accepted as correct’. He concluded that ‘Mr Bax-Ironside should be warned that it would be undesirable … to take any action which might prejudice the position of the National Investment Trust Corporation.’ In July 1912, the Foreign Office was prepared to ‘support the Corporation in their claims’, including possible court cases. However, as a consequence of the outbreak of the first Balkan War in October, the Bulgarian government declared martial law and all civil matters were postponed.Footnote ³²

Ethelburga's bid to provide the Belgrade municipal loan of 40 million francs in 1911 was unsuccessful due to corruption. This syndicate had handled many large loans in Central and South America and had Lord Howard de Walden (1880–1946), one of London's wealthiest landowners, as one of its principal shareholders. However, the syndicate's fortunes changed during the war and it was wound up in 1915. The British syndicate had progressed to the second round in the competition alongside Uprava Fondova of Belgrade and Maison Dreyfus of Paris. Ralph Paget, British minister in Belgrade from 1910 to 1913, stated that Ethelburga's offer ‘was undoubtedly the most favourable’ as their price was the lowest and included all expenses of the issue. However, the Belgrade bank had come up with a new lower price at the last minute, compelling the British and French syndicates to ‘tender afresh’. Ethelburga's new offer was again the best financially, but was not given the contract. At this point, their representative requested British legation's support and official representations were made. The Belgrade officials remained ‘non-committal’. Paget was not surprised about this as one of them was also ‘one of the promoters of the Uprava Fondova’. Paget concluded that ‘the conditions in Servia are scarcely favourable to financial and commercial enterprise by foreign Syndicates and Companies, the Government and Municipal officials are too corrupt to permit of any hope of fair dealing’.Footnote ³³ These underwriters received moral and practical support, but diplomatic intervention did not have any concrete effects and both the Trust and Ethelburga were forced to withdraw from their operations. British legation's approach was in line with general policy guidelines; support was offered to British companies which presented legitimate complaints.

III

The vast majority of Anglo-Balkan companies were promoting syndicates. These types of agencies usually undertook all flotation-related costs, including the printing of company prospectuses, paying the stamp duties, and providing for legal costs.Footnote ³⁴ They did not function in the same way as standard companies, and thus, the nominal capital of Anglo-Balkan promoting agencies, for example, ranged only from £12,000 to £20,000. Company promotion began to flourish in Britain during the 1850s and 1860s as a result of lenient British company law which enabled the establishment of joint-stock companies.Footnote ³⁵ Between the 1880s and 1914, about forty Anglo-Balkan promoting agencies were registered in Britain. This was, in fact, a fairly substantial number. During the same period, around sixty similar British firms were established to operate in Latin America, the most important area of Britain's ‘informal empire’.Footnote ³⁶

In 1906, two promoting syndicates were formed. The Anglo-Balkan Syndicate's purpose was to promote British mining and steam navigation companies in Serbia while the Anglo-Servian Syndicate aimed at encouraging British financiers to invest in industrial and mining projects. In 1907, E. A. Gillingham founded the Anglo-Servian and Balkan States Engineering Syndicate for the purpose of establishing and operating engineering companies in Serbia. Gillingham had managed to find noteworthy investors, including La Banque Intermediare of London and the accounting firm Bourner, Bullock, Andrew & Co., whose potential investments totalled £550,000. During the same year, the Anglo-Servian Trading Co. obtained a concession to operate meat-packing business in Serbia, while in 1908, Francis Hyndman founded the British Commercial Agency in Serbia which intended to advertise British goods, take orders on behalf of British exporters, and find trustworthy Serbian banks through which payments could be channelled. Established in 1911 in Sofia and managed by two Bulgarians, Veleff and Sheomkoff, the Anglo-American Commercial Museum sought to sell British goods on credit to Bulgarian customers, to market British goods and to act as agents for British firms in Bulgaria. In 1914, the Balkan Agency was formed to develop trade relations between Serbia and Britain.Footnote ³⁷

British company promotion in the Balkans did not differ in any way from that in other overseas locations or Britain itself. For example, in all cases, company promoters regularly used so-called ‘guinea-pig directors’ to communicate an image of respectability. Such directors did not have much to do with the operations of the companies themselves, but they were ‘invaluable publicity tools’. Ideal guinea-pig directors included peers, country gentlemen, bankers, members of parliament, and retired army officers.Footnote ³⁸ For example, Alexander Tucker, the former Serbian minister to London, was one of the founding members of the Anglo-Servian Syndicate while the Anglo-Servian and Balkan States Engineering Syndicate was supported by H. B. Vogel, the eldest son of the former (and by this date the late) New Zealand Prime minister Sir Julius Vogel (1835–99). Moreover, Chedomil Mijatovic, the one-time Serbian Minister to London, sat at the Balkan Agency's directors’ table. Other directors of this firm included: Colonel Herbert C. Surtees, who had served as the British military attaché in Constantinople between 1905 and 1909 and in the British army during the South African War (1899–1902); Geoffrey Crawshay, director of the Catholic and General Insurance Co.; William Heathcote Morphett, director of Foster & Morphett; Richard Sewell, the former manager of the Sun Insurance Office Ltd.; and T. O. Roberts, the manager of the influential London County & Westminster Bank.Footnote ³⁹ These promoting agencies requested the Foreign Office's support as they ran into difficulties with their concessions or sought letters of introduction.

In most cases, British officials refused to support them. When the Anglo-Servian Syndicate requested backing in convincing the Serbian government that they had been treated unfairly in a dispute over a mining concession, James Whitehead (1858–1928), British minister in Belgrade from 1906 to 1910, replied that the British firm had only interpreted the situation inaccurately. The British syndicate was not, in fact, a victim of a smear campaign by another British company (as it claimed), but the difficulty had emerged because a French company that had formerly owned the concession was now interested in re-obtaining it. The British syndicate had also argued that they had forwarded a deposit of 30,000 francs to the Serbian government, but this assertion too turned out to be an incorrect one as the deposit had not been accepted by the Serbian government, but was still ‘lying at [the British syndicate's] disposal’. Therefore, Whitehead was unable to take ‘official action’ on behalf of the British syndicate.Footnote ⁴⁰

The Anglo-Servian and Balkan States Engineering Syndicate was also unable to obtain support from British officials. Whitehead doubted whether an engineering business in Serbia ‘can prove remunerative’ because of ‘the absence of skilled labour’ in the country and added ‘confidentially’, but without further elaboration, that ‘Mr Gillingham hardly appears to me a suitable person to be entrusted with so important a scheme’. The Board of Trade's Arthur Fox believed that H. B. Vogel was a ‘very respectable man … though his financial position is not ascertainable’. He stated later that the Banque Intermediare of London was a private concern, and thus, he was not able ‘to answer for its reliability in unsecured credit transactions’. According to Fox, Bourner, Bullock, Andrew & Co. were an ‘old and respectable firm … possessing large business’, but they were not ‘known to have had any previous experience in connection with company promotion’. Thus, support was rebuffed because the Anglo-Servian and Balkan States Engineering Syndicate were not ‘in a position to command that measure of financial support and confidence in [Britain] which would be necessary to ensure the success of the enterprise’. Hyndman's proposal did not generate much comment in the Foreign Office, other than that it was regarded as a potentially important scheme for furthering Anglo-Serbian commercial contacts.Footnote ⁴¹

The Anglo-American Commercial Museum received a positive response from the Foreign Office. Lindley argued that ‘the “Museum” can be of considerable assistance to British firms tendering for Government or Municipal contracts’ and it ‘should also prove of assistance in popularising British goods’. Consul Heard also discussed the credentials of the firm's Bulgarian managers, stating that Veleff was a very respectable banker and ‘unlikely to be rash in giving credit’. In Heard's view, Sheomkoff was less trustworthy because he had spent many years in the United States where he had ‘assimilated a certain amount of American “Hustle”’ which was ‘lacking in the ordinary Bulgarian businessman’. Moreover, Heard argued that Sheomkoff did not have much hands-on business experience. The British government did not refuse to back this scheme outright. But, like all businesses with foreign connections, the Bulgarian government suspended its operations as a consequence of the continuation of the Balkan Wars in 1913.Footnote ⁴²

The Anglo-Servian Trading Co. was also unable to obtain backing from the Foreign Office when it complained about corruption in Serbia. Paget stated that the company had ‘difficulties in finding capital’ and that its actions had been ‘so unbusinesslike’ that the Serbian government had considered cancelling its concession. Paget's personal dislike of the firm's manager, Edward Liebmann, was also visible: ‘Mr Liebmann … is a German-American Jew by birth with a most objectionable personality.’ He was also very sceptical about the firm's directors and argued that ‘I scarcely think they can be men of any standing in the City.’ The company's directors on their part had much to criticize about Liebmann's actions. James Fairbairn, for example, had complained earlier that Liebmann must have bribed the court in Serbia when it ruled that James Morton, who had been appointed as the new manager, could not, in fact, replace Liebmann because the concession had been granted to him. Paget suggested that the matter might be decided in British courts, but the case remained open.Footnote ⁴³

In 1914, when the Balkan Agency requested a letter of introduction to be sent to the Serbian government, the Foreign Office administrator, Lancelot Oliphant (1881–1965), argued that ‘certainly the F. O. could not intervene’ unless they were ‘a British registered Company’. Generally, Oliphant was not dismissive of this syndicate because he had ‘been in posts at Constantinople’ with Colonel Surtees, one of the firm's chief promoters.Footnote ⁴⁴ Dayrell Crackanthorpe (1871–1950), the British minister in Belgrade, questioned the size of the Balkan Agency's planned operations, including the brokering of a London County & Westminster Bank's proposed loan of £50,000,000 to the Serbian government. This indeed was a substantial figure, as it equalled the entire Serbian public debt at the time. Crackanthorpe also doubted how the British government ‘would view the prospect of [an] inflow of British capital into this part of the world at this present moment’. The Board of Trade questioned the Balkan Agency's financial strength and had reservations about the fact that their object was ‘to obtain concessions and to float loans rather than to undertake the sale of British goods’.Footnote ⁴⁵ The fact that Surtees was unable to obtain a letter of introduction was predictable because the British government introduced British businessmen to foreign governments extremely rarely.Footnote ⁴⁶

Thus, British officials refused to back promoting agencies mainly out of the fear of financial speculation. Again, this was to be expected. In many instances, the promoters’ dubious financial record, their unpredictability, lack of experience, and unrealistic operational planning created suspicion. On the other hand, a successful career at the London Stock Exchange, sensible approach to credit, respectability, and close connections to host-country elites were seen as positive attributes. There was, however, nothing particularly ‘Balkan’ about this as these characterizations were also visible in connection to company promotion in other overseas locations and inside Britain.Footnote ⁴⁷ There was nothing specifically ‘Balkan’ about O'Reilly and Paget's anti-Semitic remarks either. Mark Levene has argued that, before 1914, the British Foreign Office was fearful of Jewry: they were regarded as a powerful, pro-German collective entity which ‘invariably put Jewish interests first’. Moreover, British diplomats in the Ottoman Empire had for some time complained that Jews there were pro-German and anti-British. This view strengthened even further during the First World War. On the other hand, Christian Zionism, an ideology through which non-Jews articulated ideas about the restoration of the Jews to Palestine, had influential followers within the Foreign Office, including Arthur Balfour and David Lloyd George. For wider imperial reasons, Christian Zionism also attained practical political currency in 1917 when the control of Palestine became one of the most important objectives of British foreign policy.Footnote ⁴⁸

In the Balkan case, diplomatic anti-Semitism emerged in connection to companies that were promoted and managed by the Vienna-born Otto Fulton and the German-American Edward Liebmann. These businessmen exhibited all stereotypical features of rogue company promoters,Footnote ⁴⁹ which aroused a great deal of suspicion in Britain. On the other hand, their schemes’ financial failings, as well as the fact that there were no political imperatives for backing them, more conceivably explain the Foreign Office's negative approach. British diplomats often reluctantly supported proposals which were not straightforwardly British, a factor which might to some degree also explain diplomatic reactions to bank promotion in the Balkans. Sir Ernest Satow (1843–1929), British minister in Beijing, argued in 1904 in connection to a financial scandal involving the Chinese Engineering and Mining Company (partly financed by British businessmen) that the British government should not necessarily back this firm because ‘only Jews like Edmund Davis and a lot of Belgians’, rather than ‘respectable English capitalists’, were ‘concerned in the affair’.Footnote ⁵⁰ The Foreign Office, however, ended up supporting the company on legal grounds despite their dubious dealings. According to Ian Phimister, British officials’ anti-Semitism illustrated that the Foreign Office did not fully understand the cosmopolitan nature of the financial interests which were ‘increasingly mobilised under the City's auspices’. There had been a growing social gulf between the government and the City from the 1890s onwards, and British officials were often confused and misinformed about the businessmen they dealt with.Footnote ⁵¹

IV

Balkan markets had also appealed to a significant number of well-known British commodity traders, such as the Birmingham Small Arms Co., Carr & Co., and Lever Brothers. However, operations were at times difficult. From 1912 onwards, British exporters in the southern Balkans faced political risks, legal problems, credit restrictions, double duties, arbitrary tariff increases, and strikes.Footnote ⁵² The case had been similar elsewhere in the region already from about 1906 onwards. British companies were most persistently concerned about increases in customs duties in Bulgarian ports, which were inflicted on them mostly as a result of differing interpretations of commercial treaties and as a consequence of erroneous measurement of consignments. British companies saw duty increases as protectionist measures which, as Ehrenbach, Brumm & Co. argued in 1908, had ‘the effect of almost prohibiting entirely the importation of British goods into Bulgaria’.Footnote ⁵³

British diplomats sometimes resorted to national stereotyping when attempting to understand the widespread and frequent difficulties which had arisen with Bulgarian customs officials. Buchanan argued in 1907 that ‘a profound jealousy of anything in the shape of foreign interference, has always been the marked features of the national character’ of the Bulgarians. In 1912, Bax-Ironside wrote that the ‘general attitude of the [Bulgarian] Government in matters relating to the customs is characteristic of the national reputation for “hard bargaining”’.Footnote ⁵⁴ However, these types of reductionist and oversimplifying remarks were clearly in the minority. Without exception, stereotypical views surfaced in annual reports, that is, when diplomats reflected on issues and looked at them with the benefit of hindsight. There is a growing body of historical writing, which emphasizes the importance of cultural stereotypes in policy-making processes.Footnote ⁵⁵ It is clear, however, that stereotypes had very little bearing on British commercial diplomacy in the Balkans during this particular period.

When tendering for public contracts, British companies also often complained that their offers were being used by Balkan governments to bring down the prices of applicants from other countries. In 1910, the armaments manufacturer Kynoch Ltd argued that the Serbian government had urged them to quote for the supply of ammunition in order to obtain them at a cheaper rate from the French company Société Française Munition.Footnote ⁵⁶ British companies were also concerned about the fact that public contracts, tenders, and concessions were not advertised early enough for British firms to submit adequate offers. In 1911, Walton, Gooddy & Cripps tendered for a contract to repair the St Alexander Nevski Cathedral in Sofia. Meeting the terms of the tender and preparing the quotation in twenty-seven days, Walton had provided un-worked samples of the marbles which they intended to use while one of their competitors ‘presented full sized drawings and models … accurately finished in the Byzantine style’, a work which, according to Walton, could not have been ‘executed in less than 4 months’. When Walton's representative protested about this he was informed that ‘the Drawings and particulars had been sent to all competitors contemporaneously!!’ In the end, half of the work was given to the Italian company Triscornia (the impressive presenters) and the rest was divided between all other bidders.Footnote ⁵⁷

In the Balkans, the Foreign Office followed a non-interventionist strategy in commercial disputes mainly if there was no clear legal case for diplomatic intervention or if previous interventions had been unsuccessful.Footnote ⁵⁸ But, if a complaint was justifiable by law or if the Foreign Office felt that a British company had clearly been treated unjustly, support was offered. For example, Buchanan backed Lever Brothers in 1906 in their claim because the customs house in Sistova on the Danube had clearly made a mistake. This official assistance resulted in the payment of a full refund of the excess duties. Similarly, Bax-Ironside appealed officially to the Bulgarian government in support of Walton's claim, but was unable to persuade the Bulgarians to overturn their decision in the matter.Footnote ⁵⁹

British exporters and promoting syndicates also criticized British banks for their unwillingness to provide the Balkan governments with state loans. The Balkan Agency argued in 1914 that the ‘Bonds issued by the Serbian Government do not find favour here with [British] Joint Stock Banks’, and as a consequence, ‘the British Manufacturer cannot compete for even a fair proportion of the Serbian trade’. Middlemore & Lamplugh had also been very ‘anxious to do business’ in Serbia, but ‘eventually found that there had been no prospect from the very beginning of the order being placed with an English firm, owing to the conditions upon which the loan had been negotiated’.Footnote ⁶⁰ To be sure, the Balkan Wars and the outbreak of the First World War had weakened the position of these British companies.Footnote ⁶¹ But this difficulty was not new. British industry had been negatively affected by it already from 1900 onwards, when the majority of foreign capital had begun to enter the Balkans in the form of state loans. Although Balkan governments had not been able to form their own commercial polices before the late nineteenth century, they were accustomed to this system because state borrowing had been used to finance the import of goods ever since the 1840s when Western European capital first began to flow into the Ottoman Empire. On the other hand, although British loans bore all kinds of political baggage, they nevertheless were often popular with foreign governments because they very rarely carried an obligation to buy British products.Footnote ⁶² This situation in the Balkans resembled that in Turkey, Iran, and China because British financiers were hesitant to invest there too, making life difficult for British concessionaires and exporters.Footnote ⁶³

V

Although the bulk of Anglo-Balkan companies operated in the banking, financial, and company promotion sectors, manufacturing had also attracted some interest. In 1897, the National Cotton Spinning Company of Bulgaria (the National Co.) was formed in London with the nominal capital of £50,000, which was later increased to £60,000. The company also built a mill in Varna with £65,000. This mill produced cotton continuously from 1899 to 1933 when its funds were liquidated by the Bulgarian government. This firm was the longest-running and the most significant British company that operated in Bulgaria. They managed to pay out the first 5 per cent dividends in 1901–2, a figure which in 1905 increased to 10 per cent.Footnote ⁶⁴ The National Co. had managed to attract influential local businessmen to its board of directors, namely Konstantine Bebis and Stefan Simeonov. Both were involved in the most important Bulgarian banks and insurance companies, had extensive international contact networks, and close connections to the Bulgarian political elite.Footnote ⁶⁵ In 1908, the Bulgarian Industrial Co. (the Bulgarian Co.) was founded in London to operate a very similar thirty-year concession in Burgas, Stara Zagora, and Plovdiv districts.Footnote ⁶⁶

These two British cotton mills encountered serious problems in 1909–11, which were at least in part connected to the fact that the Bulgarian government was introducing changes to the concessions law in the spring of 1909 as a part of the new legislation encouraging home production. From that year on, state support was given to over 200 Bulgarian factories, which mainly operated in the textile industry.Footnote ⁶⁷ This affected British firms because the Bulgarian government sought to alter the terms of the concessions granted to them. The Manchester solicitors, Farrar & Co., represented these British companies and argued that if their concession's terms were altered, the Bulgarian Co. would have to ‘abandon their business’. Farrar & Co. also stated that the new law in Bulgaria was harmful not only to the National Co. and the Bulgarian Co., but ‘to English capital and interests’ in general, and asked the Foreign Office to take up the matter officially with the Bulgarian government. This affair became a very messy one when the Bulgarian government began to argue that the Bulgarian Co. had not obtained the concession legally, and thus wanted to cancel it altogether. The Foreign Office strongly backed them throughout the affair, even when these firms were blamed for attempting to monopolize cotton manufacturing in Bulgaria, when their British manager was accused of raping a local girl, when some of the companies’ actions seemed dubious, and when the presence of two British cotton mills in Bulgaria was perceived as harmful to cotton exports from Manchester. Support was given because the British firms’ concessions had been ‘obtained and transferred in a regular way’ and the companies had ‘expended a considerable amount of money on the enterprise’. Eventually, the Bulgarian Co.'s concession was deemed ‘perfectly valid’ and it emerged that the Bulgarian government's attempt ‘to cancel the concession was entirely dictated by Political motives’.Footnote ⁶⁸

British commercial diplomacy in the Balkans followed the general line of limited intervention. The British government backed underwriters, commodity traders, and manufacturers if they presented sound legal cases or if Balkan authorities had clearly mistreated them. On the other hand, if diplomatic intervention was potentially in conflict with international agreements (or local laws), support was not offered. Like elsewhere in the world, regional political disturbances and great power politics played a role, particularly, in connection to bank promotion, which, alongside concession allocation and railway construction, was the most politicized commercial activity in this period. As in other regions, negative cultural perceptions, namely anti-Semitism, had some significance, although their real impact on policy was small. Usually, the British government refrained from supporting British business enterprise in the Balkans on account of fears about financial speculation, which were raised by dubious promoters. British officials perceived promoters who intended to sell British goods more positively than those who sought to float loans or acquire concessions. The Foreign Office sometimes backed ‘rogue’ promoters, but only in regions with political, strategic, or imperial significance, including southern Iran and the Yangtze Valley. Before 1914, the Balkans was not among these regions.