The British Ambassador ( Lindsay ) to the Secretary of State

No. 182

Sir: I have the honour to inform you, under instructions from His Majesty’s Principal Secretary of State for Foreign Affairs, that the State of Muscat and Oman, in South Eastern Arabia, with which His Majesty’s Government in the United Kingdom are in special relations, has suffered for a period of several years from a condition of increasing financial stringency, and a critical situation has now arisen which calls for an immediate remedy. After much careful consideration of the problem, the Sultan and his advisers have reached the conclusion that an improvement in the financial position of the State can only be effected by an increase in the rate of the tariff on imported goods, and that it is important, in the interests of the prosperity and good government of the State, that this proposed increase should take effect with the least possible delay.

The right of the Sultan of Muscat to raise the tariff of the State beyond a rate of five per cent, is, however, limited by Article 3 of the [Page 363] Treaty between the United States and Muscat of 1833,26 in accordance with which “vessels of the United States entering any port within the Sultan’s dominions shall pay no more than five per cent, duties on the cargo landed.” Unless therefore the United States Government will consent to waive its rights under this treaty, no general increase in the tariff will be practicable, and it will be impossible to adopt the suggested remedy.

In these circumstances the Sultan desires that the United States Government should be approached with a view to secure at the earliest possible moment such a waiver of its abovementioned rights as will allow of a general increase in the Muscat tariff above the present flat rate of five per cent. Since United States interests in Muscat are in chargé of the Government of India’s Political Agent, His Highness has requested that His Majesty’s Government should take up the matter with the United States Government on his behalf.

Conditions have entirely altered since the conclusion of the Treaty of 1833. During the intervening period the revenues of the Sultans of Muscat have steadily diminished, owing principally to

the loss of their sea-power and overseas dominions;
the introduction of steamers into the Persian Gulf and the abandonment of Muscat as an entrepôt for trade;
the arrest of the prosperity of the country and its gradual impoverishment owing to the persistent drought in the interior.

In the last fifteen years, in particular, the general economic conditions of the country have deteriorated to an alarming extent. The date crop, Oman’s primary source of wealth, has greatly declined in value as a result of the continued failure of the rains. There has in addition been a fall in the value of the country’s produce since the war, and a fall in the value of the Maria Theresa dollar, Oman’s principal currency, in sympathy with the silver market (in 1922 the dollar exchange was reckoned at two hundred rupees as against one hundred and twenty three rupees in 1929). Moreover the depressed conditions of the pearl industry in recent years have reacted un-favourably on the finances of Muscat, since Bahrein and Dibai are one [sic] of her principal markets.

The following figures for the four years 1925–1928 show the progressive decrease in the customs receipts, which are, and must remain, Muscat’s principal source of revenue:—

1925 Rs. 774,410
1926 677,023
1927 651,279
1928 635,583

[Page 364]

The result of this steady diminution in the resources of the government has been that, at a time when, if the State is to be administered in accordance with the changed conditions and improved standards of the present day, considerable increase of government expenditure is required, it has been necessary on the contrary to effect the most drastic economies, and to cut down expenditure to a figure at which it is no longer possible to maintain the administration even at its present level. To such an extent has restriction of outlay been essential that, for some years past, it has been necessary to eliminate from the budget all expenditure upon public works, and the Sultan has been unable to show to the important tribal Sheikhs of the interior the traditional hospitality which plays so important a part in maintaining his authority and prestige.

This financial stringency is leading to an increasing deterioration of the efficiency of the administration and is exercising a marked effect upon the Sultan’s control over the country. Indeed it may be said to be threatening the stability of the State.

The problem of improving the finances of the State has therefore received the most attentive consideration and every possible means of remedying the situation has been examined by the Sultan and his native and European advisers. As a result it has become clear that the only course, which holds out any prospect of success, is to increase the rate of the customs duty, and moreover that such a step should be taken with the minimum of delay. It is understood that an increase of the flat rate of five per cent, ad valorem to one of seven and a half per cent (except upon alcohol and cigarettes, on which a tax of fifteen per cent would be levied) is at present contemplated. It is scarcely necessary to point out that the rate of five per cent, fixed over three-quarters of a century ago is, in the light of modern tariffs, a very low one and that the new rates proposed are moderate.

His Majesty’s Government feel little doubt that, having in view the complete change of conditions, both in regard to the revenues and economic resources of Muscat and Oman, and in regard to the necessities imposed by the improved standards and increased costs of modern administration, the United States Government will consider the Sultan’s request as reasonable, and will agree to release him from the limitation upon the rate of the Muscat tariff imposed by the Treaty of 1833. Should the United States Government, as His Majesty’s Government earnestly hope, be prepared in principle to consent to this modification of their treaty rights, the question of the best method of giving legal effect to the modification of the relevant position can be subsequently considered. The matter, I would again mention, is regarded as one of considerable urgency.

I have [etc.]

R. C. Lindsay
  1. Miller, Treaties, vol. 3, p. 789.