Memorandum by the Chief of the Division of Near Eastern Affairs, Department of State (Dulles)


Supplementing my memorandum of March 13th1 regarding the North Persian oil concession and the Persian loan matter, I have had recent talks with Mr. Shuster2 (March 20) and Mr. Wellman3 (March 21) …

Mr. Shuster informed me that his negotiations for a loan to be taken by Morgan and Company in case the North Persian oil concession was given to the Standard Oil Company were progressing satisfactorily. He intimated that, while the Morgan firm themselves did not have a particular interest in this as a business proposition, they were willing to oblige their important client, the Standard Oil Company, and would probably take a five million dollar loan to be issued at about 96 bearing 7 per cent, this loan to be secured by the Anglo-Persian Oil Royalties. The Morgan firm desired, however, to place the balance of the ten million dollar loan desired by the Persian Government in London. Mr. Shuster said that Mr. Lamont4 had frankly explained to him the reason for this, namely, that the British Government had a settled and firm policy in Persia and were in a position to give their interests adequate support, whereas the American Government had never had a very definite policy in Persia, had relatively small interests in that country and that any policy which might be adopted would be influenced by changing administrations. Mr. Shuster intimated that he appreciated the force of Mr. Lamont’s views, and I gathered that he did not object to British participation in the loan.

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In this connection, I remarked to Mr. Shuster that he undoubtedly appreciated the Department’s attitude of absolute impartiality between the two competing companies, which applied to the question of the loan as well as to that of the oil concession; adding that I felt there was one point to be thoroughly safeguarded, namely, if the Persian Government desired a loan from Morgan and Company and that loan were partially placed in England, the Persians should be fully informed in this regard and not be led into a deal which they might consider to be wholly American and then find that they had unwillingly [unwittingly?] been facilitating the floating of a Persian loan in England. I added that if the Persians desired to take an English loan they of course had full liberty to do so.

. . . . . . . . . . . . . .

The next day (March 21st) I had a short talk with Mr. Wellrnan. He substantially confirmed Mr. Shuster’s remarks about the satisfactory progress of the loan negotiation with the Morgan Company and also reiterated the desire of the Morgan Group to divide their loan between England and the United States. I remarked to Mr. Wellman that in my personal opinion it was important to deal with the utmost frankness with the Persians in this matter so that in case that Government should decide to ask Morgan and Company for a loan and if British capital were to participate in the loan, the Persian Government should fully understand this and not be led into making an offer in the belief that an American bank and American capital was solely interested.

A[llen] W. D[ulles]
  1. Not printed.
  2. Morgan Shuster, fiscal agent in the United States for the Persian Government.
  3. Guy Wellman, of the Standard Oil Co. of New Jersey.
  4. T. W. Lamont, of J. P. Morgan & Co.