891.6363 Amiranian/34
The Chargé in Iran (Merriam) to the Secretary of State
[Received May 13.]
Sir: I have the honor to enclose herewith a memorandum of a conversation with M. Kartachov, the Counselor of the Soviet Russian Embassy on March 14, 1937. As a consequence thereof, he and Mr. Charles C. Hart met at the Legation on March 17. The latter furnished information and explanations concerning the concessions which he thought would be of interest to the Russian Embassy and M. Kartachov was afforded an opportunity to ask questions. I acted solely as interpreter.
From his questions, it was evident that the Russians are greatly interested in discovering what if any non-American participation in the companies exist at present or may possibly exist in the future.
Mr. Hart explained that there was no present non-American participation of any kind. Neither he nor any other person connected with his companies had had any contact with the Anglo-Iranian Oil Company, nor with the Germans. In fact, Mr. Hart had avoided calling on any of the foreign Legations at Teheran. Only two Ministers were left at Teheran whom he had previously known: the Polish and the Dutch, and he had not even called on them. At the present time all of the stock of the companies was held by a group of from ten to fifteen persons, all of them Americans who were well-known. Mr. Hart wrote down for M. Kartachov the names of the American groups who are interested.
He continued by saying that the stock would continue to be so held for two or three years, after which it would be offered to the general public and listed on the New York Stock Exchange. It was true that foreigners would be able to purchase shares on the Exchange. That could not be prevented, for it was necessary to place the shares on the open market in order to give them a value. However, only a small minority of shares would be available there for sale. The Afghans had wished a notation to be placed on the reverse of each certificate to the effect that if it was found in the possession of any person not an Afghan or an American it would be confiscated. Mr. Hart, however, had pointed out to the Afghans that it would be impossible to enforce such a provision in any country other than the United States or Afghanistan and that the rules of the Exchange would prevent the shares from being listed if they carried such a provision. As a consequence, the Afghan Government did not insist on the point. He added that, of course, the name of every stockholder was listed in the books of the companies and that the books were [Page 739] always open to the inspection of the Iranian and Afghan Governments, as the case might be. It was provided in the concessions that a majority of the shares must be held by either Americans or Iranians/Afghans, consequently if this provision should not be met the concession could be cancelled.
Mr. Hart described the German attitude towards the concessions and German propaganda in Teheran against them at some length.
He said that an Iranian official, whom he did not name, had told him that at an official function a short time ago one member of the German Legation had approached him and said that the British participated in the Iranian concession to the extent of 50 per cent. A little later on the same occasion another German had said to him that the Russians participated to the extent of 60 per cent. That made 110 per cent, and Mr. Hart felt that the Germans would do well to coordinate their propaganda a little better.
He added that when the Afghan concession was in its final stages in Berlin; a certain counselor to the Afghans, an Afghan subject who had been educated in Germany, had done everything possible to prevent it from being signed. This man was shown marked consideration by the Germans, was wined and dined by the Foreign Minister, given opera tickets, and so on, but made the mistake of being thoroughly ostentatious about his connection with German officials. In the end, after these tactics had delayed signature for two weeks, the Afghan Prime Minister took cognizance of the situation, dismissed the counselor, and the agreement was signed.
Mr. Hart thought that the disappointment of the Germans was due in part to the fact that they believed Dr. Schacht had made arrangements when he visited Teheran in recent months for the Germans to develop Iranian petroleum resources. Dr. Schacht had evidently made it possible for the German Legation to believe that definite commitments in this sense had been given by the Iranian Minister of Finance. Mr. Hart considered, however, that M. Davar had done nothing of the kind, but that he had merely been hospitable and made polite remarks which were misinterpreted by Dr. Schacht.
Mr. Hart went on to say that there was no reason to believe that the Germans were in a position to participate even if they wanted to, for they lacked the capital and their laws prevented them from exporting what they had. The American company would spend $200,000,000 before they began to get any return. Capital of this magnitude could be found only in the United States and in England.
M. Kartachov asked when operations would commence and from where the engineers would come. Mr. Hart replied that they would begin to arrive in from six weeks to two months and that they would all come from New York.
[Page 740]M. Kartachov asked whether it had not been necessary to reach some kind of an arrangement with the Anglo-Iranian Oil Company whereby the petroleum would be permitted to come out by the Persian Gulf. Mr. Hart replied that no such arrangement had been made and none was necessary. The Iranian Government took the position that it was entirely free to grant the company an outlet, and the Shah would in fact have been incensed had the company shown any doubt about it by discussing any arrangement of the sort with the Anglo-Iranian. Mr. Hart added that in point of fact the petroleum would not be brought out through the Persian Gulf but through the port of Shahbar [Chahbar], on the Indian Ocean.
Respectfully yours,