891.51a/581: Telegram

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

386. Department’s 176, April 10 and my 385, April 14.

Full Powers Bill gives Millspaugh inter alia powers for period up to 6 months after war over the price, purchase, importation, distribution etc. of non-food commodities including raw and finished goods.
Control rents, wages, and charges for other services.
Assume where necessary the powers granted Government and certain Ministries under anti-hoarding and other specified laws.
Inventory stocks, license dealers and manufacturers, seize stocks, issue coupons, maintain Government store, and take other reasonable and necessary action for stabilization of prices and distribution of goods.
Within scope of bill to issue regulations having force of law and
Employ nine American citizen assistants for work in Ministry of Finance, especially in price control.

Millspaugh is facing an important test not only in Full Powers Bill but also in his economy struggle with army. War Ministry is demanding increased appropriation of 500,000,000 rials which Millspaugh cannot conscientiously approve. However, in order not to lose support of army and in spirit of conciliation, he proposed following solution to Prime Minister:

He would grant half the increase if Prime Minister agrees to support Full Powers Bill and certain other necessary measures of economy and internal administration. Prime Minister seemed favorably disposed. [Page 523] However, subsequently when Millspaugh found out that without his knowledge Government introduced into Majlis and enacted a law appropriating 60,000,000 rials for additional units in army, he considered this a breach of faith and conveyed to Prime Minister his disapproval of the appropriation and withdrew his proposal for increase in War Ministry Budget.