The Secretary of State to the Minister in Iran (Dreyfus)

No. 20

Sir: Reference is made to the Legation’s despatch No. 21 of January 23, 1941, suggesting the advisability of considering a plan whereby dollars to be converted into rials for the official use of the United States Government could be utilized for the payment of old accounts owing to American firms for goods delivered prior to the enactment of the Iranian Foreign Exchange Law of March 1, 1936.

While the Legation’s suggestion is appreciated, the Department considers it advisable as a matter of general policy to confine the financial transactions of its offices abroad to the usual banking and commercial channels. Although the plan suggested by the Legation technically might not be in violation of Iranian exchange regulations, it would be likely to be regarded by the Iranian Government as an evasion of such regulations. It is desired, therefore, that the Legation continue its policy of pressing for the release of blocked funds of American firms by following up, where practicable and advisable, individual cases and pointing out to the appropriate authorities specific difficulties encountered by American firms endeavoring to effect the release of such funds.

Very truly yours,

For the Secretary of State:
A. A. Berle, Jr.