Persian Empire 1845

Chapter 32 Light Industry

Naser al-Din returned to Tabriz after several months of inspections, having achieved considerable success. He executed a number of corrupt officials and obtained a sum of development funds. While confiscating property was a way to increase revenue, it couldn't be overused; the real focus should remain on the fundamental issue of economic development.

"Your Highness, the railway work has begun, and the trains we ordered from England will be arriving soon."

"Well, this railway, which we worked so hard to build, can't let me down, or it will be dismantled as agreed before."

Whether it's railways, the military, or other reforms, all require funding. As a crucial source of revenue, tariffs became one of the first areas to be reformed.

Azerbaijan's customs service was the first to undergo reform. Following Lawrence's advice, Naserdin offered customs officials extremely high salaries, with top-paid staff earning up to 3000 riyals annually. After a certain number of years of service, they received an additional bonus equivalent to their annual salary. Furthermore, they were provided with pensions, travel expenses to return home, and paid annual leave. There were even benefits for unmarried personnel, disability compensation for those injured in service, funeral expenses, and medical expenses. With such high salaries, they naturally felt obligated to repay the governor's kindness with their lives, thus increasing efficiency.

Although import and export tariffs can only hover below 5%, as long as they export more, they can still make money. This is typical mercantilism, but it is exactly what Iran needs.

What's selling best right now?

"Your Highness, raw silk, leather, and carpets are still the three most abundant items. The Russians have been eager to buy them in large quantities, as have British, French, and Ottoman merchants. In addition, the amount of cotton imported from the Ottomans has increased, and Ottoman merchants have also increased their purchases of cotton cloth and yarn from Tabriz."

We're still mostly producing raw materials; there aren't many actual industrial products yet. But exports are much better than in previous years, and the proportion of carpets and textiles produced by factories has increased, so it's fair to say that the economy has improved somewhat in the last two years.

The textile industry is one of the industries most closely related to people's lives. Before the Industrial Revolution, the textile industry mainly relied on manual labor, resulting in low production efficiency and high prices for some exquisite silk products. However, with the end of the First Industrial Revolution, the major powers, led by Britain, greatly improved production efficiency and scale by using new production technologies. In London, factories were filled with textiles that were then loaded onto steam freighters and transported to all parts of the world.

The textile industry is a low-tech sector, yet it is also a vital industry related to people's livelihoods and national stability. Meiji Restoration Japan used profits from textile exports to accumulate its first capital for industrialization, laying the foundation for its future economic rise.

Undeniably, the Meiji Restoration had a progressive aspect, enabling Japan to shed its status as a backward agricultural country and develop from a small nation into a major East Asian power standing alongside Western powers.

Correspondingly, the Qing Dynasty's Self-Strengthening Movement primarily developed the textile industry. Before the First Sino-Japanese War, textiles accounted for 80% of new industries, and this remained true even before World War II.

To rapidly enhance the strength of the textile industry, Naser al-Din adopted a more aggressive approach. Machine-operated textile factories could obtain loans of 15 riyals at a 2% interest rate, while the tax exemption period was extended to seven years. This greatly stimulated the enthusiasm of businessmen for investment, who poured money into this booming industry. "Currently, Tabriz has the most new factories in the country, coal mines will also begin operation this year, and steel mills are under construction."

Heavy industry is the foundation of the industrial system. Because it requires a lot of capital and has a slow profit turnover, it can only be built by the government or large capitalists. In Iran's case, only Nasser al-Din could undertake this task.

"Most of the goods imported into Tabriz have to go through the Ottomans or take a roundabout route to get here. It would be great if we could get a port to the east."

Naserdin's words stunned Amir. Did His Highness also harbor ambitions like Peter the Great of Russia to find a seaport? But only Russia and the Ottomans had ports to the east. Did they intend to attack?
An attack wouldn't warrant such a reaction, as it would trigger a series of international disputes. Britain and France would likely intervene, but now is not the time.

Despite promising results in industry, agricultural development was somewhat slow. Landlords, seeing the profits from exporting cash crops, purchased large amounts of land to produce tobacco, cotton, and other crops, further intensifying land concentration and turning more and more farmers into tenant farmers. In addition, the direct introduction of advanced Western technology and equipment resulted in a high organic composition of capital, limiting the number of bankrupt farmers who could become wage laborers. This meant that landless farmers remained in rural areas, and the number of tenant farmers and their land holdings continued to grow.

The growth of tenant farmers intensified competition for farmland, making it possible for landlords to continuously raise rents. Heavy rents forced tenant farmers to work outside the farm during the off-season to make a living. Due to limitations in productivity and the aforementioned reasons, the vast majority of landlords adopted a system of leasing small plots of land to farmers. Landlords levied rents in kind, amounting to up to 60% of the harvest, of which only a small portion was used for their own consumption, with the remainder being converted into currency in the market. After paying taxes, landlords still had a large amount of cash remaining.

The relaxation of policies towards industry and commerce was one of the reasons that prompted landlords' funds to flow into non-agricultural sectors; another reason was the support and protection of emerging industries, which enabled these new enterprises to obtain stable and high profits, attracting the investment of landlords' funds. Moreover, high tenancy rents meant that landlords mostly did not personally manage the land, except for purchasing it. Therefore, landlords often had a considerable amount of capital in their hands.

How did the landlords use this huge sum of money? In addition to their own consumption and using a portion to continue purchasing land and expanding their land holdings, they also invested a considerable portion in industry and commerce, converting it into capital.

Seeing how profitable the textile industry was, some landlords also invested their own funds or directly purchased machinery for production. In addition, there were investments in other industries such as machine-made flour milling.

Originally, these landowners invested heavily in usury, but their business became less profitable after the establishment of the Tabriz Bank. Furthermore, unified local taxation reduced obstacles to industrial development, leading to higher profits in industry and commerce. Their funds were then invested in these emerging sectors.

The ideas spread by the governor's inspection tour also had a significant impact on the other three provinces. Local taxes were now paid directly in cash, and tax officials were required to report regularly. Otherwise, the fate of those who died would be their fate as well.

(End of this chapter)