Office of the Historian

741.9111/60: Telegram

The Chargé in the United Kingdom (Matthews) to the Secretary of State

London, April 8, 1942—7 p.m.
[Received 8:05 p.m.]

1697. From informal conversations of Casaday29 and Penrose30 with Keynes,31 it is clear that the British are greatly concerned over the attitude of the Iranian Government towards British transactions in Iran. It appears that the Iranians are refusing to accept sterling balances and demanding either that more goods or gold be delivered to her or that sterling shall be depreciated in terms of the local currency. Failing this, they are refusing to give local currency in exchange for sterling at present rates of exchange, thus creating serious obstacles in the way of local British transactions.

The British are prevented by shipping difficulties from sending additional goods and are opposed both to sending gold and to any depreciation of sterling in terms of the local currency, since such depreciation would set a different ratio of exchange between the dollar and sterling in Iran from that in other countries and would set an undesirable precedent for other Middle Eastern countries.

They believe that in any case concessions on these matters would be followed by further Persian demands and that a firm stand must be taken on present issues. Following experiences in the last war they suspect that one motive behind present demands is a desire to create opportunities of postwar enrichment for highly placed persons in the governing group. In view of a recent announcement of American Lease-Lend aid for Persia32 the British would appreciate Anglo-American cooperation in dealing with this matter.

We understand that a cable on this question is being sent to Lord Halifax.33

Please inform Treasury.

Matthews
  1. Laurens W. Casaday, an agent for the Treasury Department in the United Kingdom.↩
  2. E. J. Penrose, Special Assistant at the American Embassy.↩
  3. John Maynard Keynes, member of the Consultation Committee of the Chancellor of the Exchequer.↩
  4. For correspondence on this subject, see pp. 289 ff.↩
  5. British Ambassador in the United States.↩