891.00/1951: Telegram
The Minister in Iran (Dreyfus) to the Secretary of State
[Received 9:31 p.m.]
386. Section 1. My 382, November 19.74 Majlis last night enacted bill quoted in section 3 surrendering its currency powers to the existing [Page 203] currency committee. Prime Minister promises delivery of rials to Allies from Banque Mellie tomorrow and immediate meeting of currency board to consider additional issue. British feel they have now received satisfaction on currency question and we are proceeding at once with wheat declaration.
Majlis was badly frightened by threat of dissolution and promised Shah to cooperate with Government. While I am not hopeful that Majlis intends permanently to alter its obstructive tactics there is no doubt that its action last night has considerably eased the political situation. Much, however, will depend on its reaction to a new bill presented last night in which Government asks for additional powers.
Section 2. Noteworthy in negotiations of last few days was helpful attitude of Russian Ambassador based on new instructions from his Government to take more active part in joint Allied dealings with Iranians.
I must express opinion that internal situation will go into another crisis if British carry out intention of arresting four very prominent Iranians including a deputy and two Generals on grounds of implication in plot (see my 361, November 6). I have pointed out to British Minister bad effect these arrests would have unless the evidence of guilt is conclusive but he seems determined to proceed on grounds of security.
Section 3. Article 1. From the date of the passing of this law authority for the issue of notes is vested in the Note Reserve Control Committee.
Article 2. The Director General of Finances, Doctor Millspaugh, will become a member of the Note Reserve Control Committee after his arrival.
Article 3. The conditions for the issue of notes, authority for which is vested by this law in the Note Reserve Control Committee, will be fixed by a decree of the Council of Ministers acting on proposals put forward by the Note Reserve Control Committee.
Article 4. Notes which are issued by virtue of this law must possess the following backing: (a) As to 60%: Gold at the official rate ruling in the international market at the present date and/or pounds and dollars convertible into gold. (b) As to 40%: Pounds and dollars guaranteed against depreciation in terms of gold at today’s rate.
Article 5. The backing for the notes to the value of three thousand five hundred million rials, authority for the issue of which has been given up till this date, will be on a basis of 60% gold and silver, valued at the international market rate and the jewels which were handed over to the National Bank in accordance with the law of twenty-five Aban. 13.16
- Not printed.↩