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believe that anv effort at bringing cargo direct from
India to a mainland port will not prove successful in
the long run: and T would here renakk that the recent
decision of the ^nglo Persian Oil Co. at Abadan to
send their small steamer 'Khuzistan* to the mainland
norts to sell oil etc.,- is an error; since the Company
will not sell any mare oil than it does at present by
transhipment in Bahrain, but, on the other hand will
exrose Its steamer to extra working expense, and take
away some employment from some mainland and local
native craft.

In my report for 1350, I alluded to the difficult
position existing here arising from the Question of the
direct transhipment of cargo m this port. The position
remained of minor importance for several years until
several factors; mainly the crowing self-consciousness
of the Meidy merchants, the nigh freight rates charged
by the B.I.S.N.Co. Ltd., (which comnany has practically
the monopoly of the India-Persian Ciilf cargo* traffic)
and the .allins; prices of Indian commodities notably
cereals, made the Nejdy merchants closely consider the
amount of the expenses they were raying, in view of the
general business degression, on the cereals taken hence
to the mainland ports. These expenses included the
shipping expenses from India and the Bahrain expenses
on re-export.

In Bahrain the rate of Khanchia per bag had been
fixed at three annas; but after carefully considering
the positipn the Bahrain government decided to reduce
this rate in regard to re-exported bag cargo to Ks 6/-
per hundred bags.
An attempt to force down the 3.1. rates had pre­
viously been made by a local Hindu merchant, who had
brought here a ship-load of rice and sugar from Cal­
cutta in a Norwegian craft: but this action did not
lead to a general permanent reduction of freight rates
by the Company.

Probably with this fact in.mind, a Karachi shipper
of rice (whose shipments are sold on the mainland on a
commission basis only) demanded special rates from the
B.I.S.N.Co. Ltd., under the threat that he would des­
patch all future shipments by native craft direct to
the mainland, or possibly charter a special steamer
for his own purchases. After considerable discussion
and correspondence it was decided to affirm the ri-.dit
of the Bahrain government to collect two per cent ad
valorem upon all cargo transhipped within the port
limits;e and the B.I.S.N.Co. made a gesture-by’r educing
its freight rate temporarily in order to compete with
a second special shipment of cargo from Calcutta to
Bahrain arrcngalby above Hindu merchant. This ship­
ment came forward on s.s.,,Fogervick,f a Norwegian vessel
which arrived here on 1st. Raba al Thany 1351 (3rd Aug.
1932) with 24,176 packages of rice tea and coffee.

In the meanwhile the Karachi shipper, Hajy Hassen
bin Eurzook. had promised K. B. Mfs Political Agent •
that he would make no direct shipments thence to the
mainland of Arabia in consideration of a reduction in
the freight rate, and also if the Bahrain government