Office of the Historian

891.51/7–2948: Telegram

The Secretary of State to the Embassy in Iran

confidential
Washington, August 6, 1948—7 p. m.

753. Reurtel 899 July 29. Approve your suggested reply Minister of Agriculture informal loan request. Agree your general position individual requests for assistance not coordinated with development program should be discouraged.

Concur with your observations on impracticality of Prime Minister’s plan for importing goods as method of reducing living costs (urtel 722 June 24 [25]1). Actions suggested your paragraph one2 would probably be effective in reducing living costs. Urtels 703, 722, 777, 842, 843, 844, 887, 889,3 also noted.

Further, Export-Import Bank is only US agency with loan funds available for such program. Bank policy is not to grant loans for consumer goods except unusual circumstances. Chances of granting this non-self-liquidating type loan considered especially poor. Iran may apply but suggest you discourage.

This read by Somerville who, during past week, has had conversations on subject 7 yr plan with Morrison-Knudson, and World Bank [Page 172] officials. He will also participate in discussions which Thornburg4 will shortly have with US Govt and World Bank.5

Marshall
  1. Not printed.↩
  2. The first paragraph of telegram 722 read in part as follows: “Supply of grain, principal living cost component, is adequate and local prices are reasonably well in line with world prices. Such prices could be brought down without loan if government were prepared to take lower profit on imported supplies and subsidize high cost domestic beet production. Tea prices would decline if government abandoned its artificial support program. Piece goods are high largely because of high duties and monopoly taxes which provide protection for local high cost industry. Rice prices would decline if less were exported to Soviet Union.” (891.6363 AIOC/6–2548)↩
  3. Nos. 703 and 777 are printed on pp. 151, 156; the remaining telegrams are not printed.↩
  4. Presumably Max W. Thornburg, industrial consultant.↩
  5. The Iranian Prime Minister raised the question of foreign credits with Ambassador Wiley on August 11. The Ambassador “was careful not to discourage him and as suggested in Deptel 753 I gave him warm assurance of our moral support in a way that could aid social and economic reforms in Iran. I also told him that he could count on us for technical assistance.” (telegram 945, August 12, 3 p. m., from Tehran, 891.00/8–1248)↩