The Minister in Persia (Hart) to the Secretary of State

No. 936

Sir: Continuing my current series of despatches on the Perso-Soviet convention, now known to be entitled “Convention of Establishment, Commerce and Navigation”, signed at Teheran on October 27, 1931,1 I have the honor to report that, with the exception of one important development which will be recorded below, the last fortnight may be characterized, insofar as concerns the action of my diplomatic colleagues, as a period of marking time.

During this period, however, there has become available a considerably larger amount of detailed knowledge regarding the provisions of the convention. This information has been gleaned from various sources, both among my colleagues and in local commercial circles, but by far the most complete details have been obtained by the British Legation. I shall return to this point later.

The important development in the situation to which I referred above was the action taken on October 29, 1931, by the newly arrived British Minister, Mr. Hoare, in discussing with the Persian Minister for Foreign Affairs the British Government’s understanding of the discriminatory features of the situation which will be created by the entry into force of the convention and, in particular, the effect of those discriminatory features on British trade with Persia.

I am informed that Mr. Hoare limited his remarks almost entirely to a reiteration of the carefully drafted points made in an aide-mémoire which he left with the Minister for Foreign Affairs. A copy of that aide-mémoire in the original French has most kindly been given me by its author, the Commercial Attaché of the British Legation, Mr. Lingeman. Copies are enclosed.2

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The greater part of Mr. Lingeman’s early schooling, I may interpolate, was had in France. He is, practically bilingual in French and English. He tells me that no English translation of the aide-mémoire has been made but that, if made, he will be pleased to supply me with a copy. I have not, therefore, had a translation prepared in the Chancery.

The argument of the British Government as set forth in this aide-mémoire is based on two principal points, i.e., that the new Perso-Soviet Convention “accords to Soviet commerce two considerable advantages, not envisaged in the (Persian Trade) Monopoly Law and supplementary regulations; the guarantee of a fixed proportion of certain import quotas, and the exemption from the requirement of applying for an export certificate before effecting the desired importation”.

With respect to the first of these two advantages, the British aide-mémoire, after pointing out the results, harmful to Persia, which would follow the extension to other countries of the system of guaranteeing definite percentages of imports permitted under the quota system, says: “that His Majesty’s Government has not, therefore, for the moment, the intention of requesting the Imperial Government to reserve for its commerce a determined proportion of the Persian import quotas which interest it particularly”.

On the second point, it is said that “it is only too evident that British trade will be placed in an extremely disadvantageous situation if the exemption which the Imperial Government proposes to concede to Soviet trade is not also conceded to it”. With a view to avoiding the discrimination which would thus result the British Government requests the Persian Government “to give its very special attention” to three specified suggestions.

These three suggestions, considered as a whole, are but a careful restatement, revised to meet the changed situation resulting from the signature of the new convention, of the suggestion made some months ago and since frequently reiterated by Mr. Lingeman.

This latter was reported in my despatch No. 799 of August 19, 1931.3 Expressed briefly it would, if adopted, permit the Persian importer of foreign merchandise to apply for and receive an import permit without first exporting Persian merchandise or purchasing an export certificate to attach to his application for import permit; this, however, to be contingent upon the prospective importer’s undertaking either to export Persian products or to produce an export certificate at the time of or prior to the clearance through the Persian customs of the merchandise ordered abroad.

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In its present revised form this suggestion takes into practical consideration, as I have already implied, the treatment to be accorded Soviet trade under the new convention. In this connection the following points may be specially noted:

As the convention requires a balancing of Soviet imports and exports every six months, the British suggestion is that the Persian importer be required to export or produce an export certificate within six months of the date on which an import permit is granted him; this, generally speaking, to be irrespective of whether the foreign goods ordered under that import permit have arrived in and have been cleared through the Persian customs.
As the trade monopoly laws permit, upon the export of Persian goods, a delay of eight months within which the exporter may either import an equivalent amount of permitted foreign merchandise or, alternatively, sell to the Government an equivalent amount of foreign exchange, the British suggestion is that the exporter be granted a delay of “eight months from the date of loading to sell the foreign exchange”,
Envisaging the possibility that a similar concession might not be extended to local importers of merchandise originating in countries other than the British Empire, the British suggestion proposes the further condition that no priority or preference shall be granted to applications for permits to import such non-British goods as against applications to import British goods.

The concluding paragraph of the aide-mémoire reads, in translation, as follows: “His Majesty’s Government is pleased to hope that the Imperial Government will recognize the essentially reasonable character of these suggestions which it would like to see incorporated into a provisional accord. Applied to import trade in general—exception being made of Soviet imports—they would without any doubt alleviate the situation of the merchant, and this for the greatest good of the national economy, while respecting the principle of a balanced trade which is the basis of the Monopoly Law” (Legation’s underlining).

I had thought of reporting by telegraph the substance of this British aide-mémoire, with a view to soliciting instructions as to whether the Department might wish me to make similar representations to the Persian Government on behalf of American trade. Upon reflection, however, I deemed such action both unnecessary and undesirable. If the British suggestions are accepted, we should, I believe, have no difficulty in obtaining their application to American trade, which, under the American-Persian exchange of notes of May 14, 1928,4 enjoys most-favored-nation treatment.

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Further, were we to make representations similar to those of the British Government, such representations would not in my opinion materially affect the situation. British influence in Persia, while not what it has been in the past, is still strong. The British suggestions are reasonable, this without a shadow of a doubt. Therefore, both because British influence is strong and because the British position is sound, I consider it highly probable that the suggested procedure will be adopted, if and when ratifications of the Soviet convention are exchanged.

Consequently, I should, in the circumstances as they now appear, prefer to reserve my own representations in the matter for the time when the situation has become somewhat more clarified than is today the case. I shall not, however, fail to mention the subject to the Minister for Foreign Affairs as soon as an appropriate informal occasion presents itself. In any such informal conversation, it is my present intention to inform the Minister that I am advised regarding the British suggestions, that I have reported them to my Government, and that to me personally they appeared to be of a nature so reasonable and so calculated to remove certain of the difficulties incurred by local importers of foreign goods trading under the Monopoly Law that I cannot but feel he will give them full and sympathetic consideration.

I may add that I was yesterday informed by First Secretary Dodd of the British Legation that the full text of the British aide-mémoire had been telegraphed to Teymourtache, Minister of the Court, now in Europe, as reported in recent despatches. I need not elaborate my reasons for saying that, without the latter’s approval, no definite action can be taken by the Persian Government on the British suggestions.

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

Respectfully yours,

Charles C. Hart
  1. British and Foreign State Papers, vol. civ, p. 1026.
  2. Not printed.
  3. Not printed.
  4. Foreign Relations, 1928, vol.iii, pp. 724728.