891.51A/205

The Chargé in Persia (Murray) to the Secretary of State

No. 669

Sir: In confirmation of the Legation’s telegram No. 127 of September 26, 8 p.m.18 with regard to the settlement which has been reached between the Persian Government and the American financial advisers, I have the honor to inform the Department that the Prime Minister, Sardar Sepah, would appear to have changed his attitude with regard to the advisers immediately after the interview on September 17 which I had with him, the substance of which was duly transmitted to the Department in the Legation’s despatch No. 648 of September 21, 1924.18

I have been informed by Mirza Reza Khan Afshar, formerly private secretary to Dr. Millspaugh, at present a deputy in the Medjliss, and an intimate friend of the Prime Minister, that as soon as I had left the Prime Minister’s house on that day, he was summoned by Sardar Sepah and instructed to make an immediate appointment for a conference with Dr. Millspaugh in order to arrive at some solution of the latter’s difficulties.

Three conferences between the two parties were held on September 18, 22 and 25, respectively on the latter of which occasions Sardar Sepah came personally to call for the first time upon Dr. and Mrs. Millspaugh at their home. The intermediary on all these occasions was Reza Khan Afshar who always expressed great friendliness to [Page 539]the American advisers and a sincere desire to see their differences with the Persian Government settled.

In the last conference, namely on September 24 [25?], at which Dr. Millspaugh persistently stood out for a reduction of the budgets of all Ministries as the only way out of the present financial impasse, the Prime Minister unexpectedly offered to reduce his own budget 200,000 tomans a year which, together with the proportional cut on all other Ministries, will enable Dr. Millspaugh to balance the budget for the present fiscal year.

It may be noted that certain concessions on both sides were made in the question of budget reductions inasmuch as the Administrator General desired to cover the entire million toman deficit, as estimated for the present year, by deducting it in toto from the War Minister’s budget.

After coming to this agreement, the Administrator General impressed upon the Prime Minister the necessity that the latter sponsor personally the agreement arrived at with regard to ministerial reductions in order to avoid obstructions and delays on the part of these Ministries. This the Prime Minister promised to do and on the next day in a meeting of the Council of Ministers announced the reductions to the various Ministers as a fait accompli.

A further important obligation assumed by the Prime Minister at this conference was the guarantee of unlimited support of the Persian army to be afforded the American financial advisers in the collection of taxes. The withdrawal of this support has at various times been used by the Prime Minister in order to bring pressure upon the Administrator General to accede to certain demands of the Government.

The solution of a third important and difficult question was that of the control of the Ministry of Posts and Telegraphs. Inasmuch as this Ministry has, in the last years, had a surplus of 508,000 tomans over its expenses, it has been a hotbed of corruption and intrigue in order to prevent, at all costs, this surplus from reaching the hands of the American advisers. There has been constant friction and disputes between the Administrator General and all Ministers of Posts and Telegraphs appointed since his arrival over the control of that Ministry’s finances.

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

In the latter mentioned conference between Dr. Millspaugh and the Prime Minister this question was frankly discussed, and Dr. Millspaugh stated frankly that he could no longer tolerate the insubordination of the Ministry in question and, in order to alter the situation prevailing therein, the permanent Under-Secretary, Mokber-ed-Dowleh, must be dismissed. He presented a demand at the same [Page 540]time that the Belgian Acting Director of Posts, Mr. Emil Pire, who has always been in close league with Mokber-ed-Dowleh in opposing the American advisers, should not be permitted to return to Persia from Stockholm where he has been attending the conference of the International Postal Union. The Prime Minister concurred in this demand and promised to take action.

With regard to the settlement of the questions raised by the Financial Mission as to the violation of their contracts, Dr. Millspaugh requested the dismissal of the unwieldly commission of fourteen which has been considering the matter but has accomplished nothing, and the appointment of a Commission of three, composed of the present Minister of Finance, Zoka-ol-Molk, the President of the Medjliss, Motamen-ol-Molk, and one deputy.

As the Department was informed in the above-mentioned telegram, Dr. Millspaugh made a substantial concession at this time with regard to the contracts of the advisers, namely, that they would not insist upon an immediate cancellation and settlement before they consented to consider the continuation of their services. This concession on his part was unquestionably a wise one.

It is obvious that the above solution of the advisers’ difficulties represents a signal victory for Dr. Millspaugh, and one which will no doubt add much to his prestige in the future. …

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I have [etc.]

W[allace] Smith Murray
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