During the opening years of the twentieth century, however, the situation was materially changed. Although there was a continuance of the cordial relations between the British and German Governments, there was an undercurrent of hostility to Germany in England (as well as to England in Germany) which was to be disastrous to the hopes for an Anglo-German agreement on the Near East. By 1903, the year of the definitive Bagdad concession, German diplomacy and German business were under a cloud of suspicion and unpopularity in Great Britain.
The underlying reason for the increasing estrangement between England and Germany was, as far as the British were concerned, the phenomenal rise of Germany as a world power. The commercial advance of the German Empire disturbed the complacent security and the stereotyped methods of British business. The colonial aspirations of German imperialists rudely interfered with British plans in Africa and appeared to be threatening British domination of the East. The German navy bills of 1898 and 1900 constituted a challenge to Britannia's rule of the waves. German criticism of English procedure in South Africa had aroused widespread animosity, in large part because the British themselves realized that their conduct toward the Boers had not been above reproach. This animosity was revealed in an aggravated and unreasoning form in the vigorous denunciation which greeted the Government's joint intervention with Germany in the Venezuela affair of 1902. Joseph Chamberlain, who in 1899 had advocated an Anglo-German alliance, in 1903 was preaching "tariff reform," directed, among other objectives, against the menace to the British Empire of the rising industrial prosperity of Germany. The proposal that British capital should participate in the Bagdad Railway project was introduced to the British public at a distinctly inopportune time from the point of
