891.51/581

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

No. 602

Sir: I have the honor, with reference to my telegram No. 661 of June 25th,39 to enclose a copy of the letter40 which Dr. Millspaugh addressed to the Prime Minister regarding Iran’s critical financial situation.

This letter was written to the Prime Minister so that he could present a translation of it to a secret session of the Majlis in the hopes of convincing the doubting deputies of the seriousness of Iran’s [Page 533]financial position and of obtaining the passage of legislation which has been bogged down for some time before Majlis committees. Dr. Millspaugh’s stratagem was at least partially successful since the Majlis, having considered the letter in a secret session of Sunday, June 27, passed one of the measures, that for the employment of six assistants for the Millspaugh mission, within a few days. The income tax law is still pending and may continue to be for some time since its high rates have made it extremely unpopular among the privileged classes which the deputies represent.41 The law on the issue of treasury bonds is also still pending but should eventually be approved. The difficulty in this matter will be to find buyers for the treasury bonds once they are issued.

Dr. Millspaugh, the Department will probably already have observed, is a power to be reckoned with in Iran. He is gradually assuming control over the entire financial and economic structure of Iran and is laying elaborate and far reaching plans to correct many of the country’s ills. He is perhaps the only man in Iran at present who can obtain passage of legislation by the Majlis when he desires to put on the necessary pressure. Frankly, politicians are afraid of him even though they may obstruct, delay, grumble and criticize. For example, there was bitter opposition in the Majlis on Thursday, in discussing the bill for the employment of six assistants for the Millspaugh mission, to that section which provided for exemption of the American advisers from income tax payments. In spite of this, the full bill was passed quickly and by a comfortable majority.

Dr. Millspaugh’s test of strength, however, is still to come. This will be when he actually puts into effect and enforces such unpopular measures as the income tax law and a contemplated plan for the requisition of certain private motor cars. When he begins to tread on the toes of the entrenched classes, who consider themselves as “untouchables”, the day of his supreme test will have come. He is ready for the fray.

Respectfully yours,

Louis G. Dreyfus, Jr.
  1. Post, p. 580.
  2. Not printed.
  3. This measure had been introduced under the sponsorship of Dr. Millspaugh as Administrator General of Finances.