Office of the Historian

391.1164/143: Telegram

The Chargé in Iran (Engert) to the Secretary of State

Tehran, July 16, 1940—9 a.m.
[Received July 17—3:25 p.m.]

164. Just prior to receipt of the Department’s telegram No. 63, June 13, I had prevailed upon the then Prime Minister to reconsider tentatively the Government’s decision reported in my 110, May 17 and to resume negotiations on the basis of outright purchase by the Government. Conversations between the representatives of the Board and the Foreign Office were in progress when the Department’s 603 [63] arrived. After several consultations with the American representatives and their local committee it was considered advisable to postpone further representations by the Legation pending the outcome of the conversations. These were unfortunately interrupted by the fall of the Cabinet June 25. As soon as practicable I called on the new Prime Minister1a and acquainted him briefly with all that had gone before. He said he was entirely unfamiliar with the case, but promised to study it. I then told him that the American representatives had already wasted much valuable time in fruitless negotiations in the course of which the authorities had not made any constructive suggestions and I felt it was decidedly up to them to contribute something toward a solution.

Speaking personally and informally I thought two alternatives presented themselves to the Government, one was to prolong the delay for another scholastic year and the other to offer immediate and adequate compensation. Prime Minister feared that to postpone the closing of the schools was out of the question. I then urged him to give careful thought to the following considerations before declining the second alternative.

1.
I considered it nothing short of a miracle that the closing of the schools has not been referred to in the American press, but I felt quite sure that once the representatives had returned emptyhanded and the American personnel was scattered that the news would get into the papers and it was impossible to predict what they might say.
2.
To leave the properties in the hands of the Board to be disposed of as best they could was hardly an equitable solution because the building laboratories and playgrounds, et cetera, had all been created for educational institutions and could only with difficulty and probably at a loss be sold for other purposes.
3.
Even if properties could be sold to private purchasers the question of time limit and exchange restrictions would, continue to plague us and would prevent a speedy termination of the cases.
4.
It would be very difficult to convince the American public that a government which apparently had means of obtaining either dollar or sterling exchange for armaments, airplanes, and other expensive [Page 701] equipment from abroad could not afford a relatively small sum to acquire admittedly very desirable school buildings.
5.
It would be equally difficult to convince the American people that the Iranian Government was genuinely desirous of interesting American commercial and financial institutions in a large-scale exchange of products and was anxious to sign a trade agreement with the United States2 when at the same time it was not only snuffing out practically (the only information American stake?) [sic] in Iran but was seemingly unwilling to make an equitable settlement. I then referred further to the note of May 14, 1928,3 in which Amercian educational work had been specifically authorized.

In view of all these circumstances and the fact that the representatives could not possibly prolong their stay, I urged that he authorize the Secretary for Foreign Affairs to offer the maximum sum which the Iranian Government would be prepared to pay in dollar exchange for the properties and I promised to use my good offices in discussing with the negotiators any proposal which seemed fair and just.

The Prime Minister thanked me for the frankness with which I had spoken and assured me that he would do his best to bring about a mutually satisfactory settlement.

I am now glad to be able to report that on July 14 the Under Secretary for Foreign Affairs stated that he had been empowered to offer $1,200,000 and that the negotiators have accepted in principle. But as the Government proposes to spread payment over 6 years and to pay the first installment only in May 1941, I have with the consent of the representatives suggested to the Prime Minister this morning that payment be completed in 3 years and the first installment be paid this year. He promised to see what he could do.

Please inform the Board of the substance of the above.

Engert
  1. Ali Mansur.↩
  2. See pp. 663 ff.↩
  3. Foreign Relations, 1928, vol. iii, p. 732.↩