891.24/301
Memorandum of Conversation, by Mr. John D. Jernegan of the Division of Near Eastern Affairs
| Participants: |
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| Mr. Murray—PA/M | |||||
| Mr. Alling—NE | |||||
| Mr. Jernegan—NE | |||||
| Mr. Nielsen—DM71 |
Mr. Hayter and Mr. Thorold called, under instructions from the Foreign Office, to explain the British point of view with regard to the existing critical situation in Iran.
Mr. Jernegan set forth the Department’s understanding of the developments of the past several weeks, explaining that we had agreed to the Foreign Office suggestion that the establishment of a purely Iranian currency commission should be made a condition precedent to the issuance of the Anglo-American-Iranian wheat declaration. We had not agreed to attaching any other conditions. We assumed that the British Minister in Tehran would proceed with the signature of that declaration, in conjunction with our Minister and the Iranian Government, as soon as agreement had been reached on the currency commission question.
Mr. Hayter said that this was substantially his understanding, except that he gathered that the Foreign Office wanted a very definite assurance at this time that a long-term supply of rials would be made available to the Allied forces. He was not clear as to the exact form this assurance would take, and he agreed that if the proposed currency commission were given, by the Majlis, full powers over note issue, this would probably meet the desires of the Foreign Office.
Mr. Hayter emphasized that the supply of rials was vital to the maintenance of the supply route to Russia and that the British Government did not wish again to be faced with the prospect of a complete stoppage of rial sales. In this connection, he said that the British need for Iranian currency was largely caused by the necessity of operating and protecting the Russian supply route and that, therefore, Britain was really acting on behalf of all the United Nations in dealing with this knotty problem.
Mr. Murray, Mr. Alling and Mr. Jernegan stressed very strongly the view of the Department that every other alternative should be employed before resorting to force, or the overthrow of the Iranian Government, to ensure the supply of rials. We agreed that it was [Page 198] vitally essential to obtain currency, and that it was conceivable that a situation might arise in which the Allies would be compelled to use force. However, we did not feel that things had come to such a pass as yet. Even failing Iranian agreement to the proposed currency commission, Great Britain and the United States could still go ahead with the wheat agreement, on the understanding that the Iranian Prime Minister would then, as he had assured our Minister some weeks ago, obtain from the Majlis authority to issue an additional 1,500,000,000 rials in bank notes. This amount would take care of our needs for a few months, at least, and in the meantime Dr. Millspaugh’s financial mission would have arrived and conditions in general might have improved. In our opinion, the Allied policy should be to play for time, carrying on by such expedients as might prove practicable, and avoid forcing the issue to a showdown which might compel us to undertake military occupation of the entire country. In this connection, Mr. Murray recalled the views expressed by Mr. Berle72 at the time of the previous financial crisis last spring, to the effect that more could be obtained from the Persians by kindness than by bludgeoning. Mr. Murray also said that Mr. Welles has been much concerned over the present critical situation in Iran and planned to speak to Lord Halifax about it.
Mr. Hayter said that the Foreign Office entirely agreed that the use of force should be avoided if at all possible, and he pointed out that although the British had been in occupation of Iran for more than a year, they had not yet resorted to force on a single occasion, despite the fact that they had no other means of pressure open to them. However, he appeared to feel that the Iranians should be made to understand that as a last resort force would be used.
With reference to the wheat shortage, Mr. Hayter and Mr. Thorold were informed of the latest report, dated November 14, from Minister Dreyfus, in which he stated that Tehran stocks were sufficient for only half a day and urged that immediate shipments be made from India. Mr. Thorold said the Embassy had received a cable from Tehran dated November 13 reporting that the Soviets had agreed to release 7,500 tons of wheat from Russian-occupied Azerbaijan for the Tehran population. It appeared that 3,500 tons of this was being sent forward at once. The total amount would take care of the city’s consumption for a little less than a month. According to Mr. Thorold the British Minister at Tehran had taken a very strong line with the Russian authorities in order to obtain release of this wheat, as he felt that the city ought to have a reserve good for at least four months. It was agreed that if the 7,500 tons should reach Tehran in the near future it would relieve the situation to [Page 199] some extent, but Mr. Alling and Mr. Nielsen pointed out that this amount would be used up before the 20,000 tons being sent by the British Government could possibly arrive. Accordingly, it was asked that Mr. Thorold consult his Government on the possibility of making immediate shipment from India or from the “wheat pool” of the Middle East Supply Center. Such advances could be replaced later by the contemplated shipments from North America. The suggestion was also made that a total of 25,000 tons, instead of 20,000, should be programmed.
It appeared that the British Government had been thinking of a possible new financial agreement with Iran, and that it would be prepared, if necessary, to convert Iranian sterling holdings into gold up to 60% or even 100%.
In passing, Mr. Thorold mentioned that the Soviet Government was very much interested in maintaining in power the present Iranian Cabinet, headed by Ahmad Qavam.