891.00/1928: Telegram

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

340. Refer my telegrams of past week on wheat and finance. Developments in [apparent omission] disturbing effect on public opinion and have brought about a state of political confusion and uncertainty. Majlis is in state of near rebellion criticizing Government and the Allies openly and bitterly. Bill for issue of additional 500 million rials had literally to be jammed through Majlis. Not at all certain if Qavam will be able force through bill for issue of remainder of 2 billion rials even if he obtains promises of wheat shipments from Allies. Deputies fail to understand Iran’s basic monetary questions or to comprehend the urgent and overriding nature of Allied problems in Iran. They are so obsessed with dangers of inflation and starvation they cannot see conditions in realistic or practical light. Qavam on other hand while personally distrustful of British shows every indication of basic comprehension of problems and of desire to cooperate in practical sense. Present situation in Majlis is unsatisfactory and if it continues must inevitably end in one of two alternatives—either Qavam Cabinet will fall or Qavam will be compelled dissolve Majlis on grounds it does not represent will of people because improperly elected during former regime.

Press and public also deeply stirred, taking generally view Allies are pushing Iran into inflation and starvation. While American prestige is still high there is growing tendency group Americans with British and Russians and to hold us to certain extent responsible for present conditions. Prices are soaring and poor classes can hardly afford to buy bread, their only staple food. Profiteering is scandalous [Page 167] and Government has not taken corrective measures such as taxation or price control. Financial situation is so unsatisfactory and chaotic that every effort should be made to hasten departure of Millspaugh.