891.5151/248: Telegram
The Minister in Iran (Dreyfus) to the Secretary of State
Tehran, August 20,
1943—6 p.m.
[Received August 21—12:24 p.m.]
[Received August 21—12:24 p.m.]
864. Department’s 380, July 29. For Morgenthau, Treasury, from Gunter.
- “1. Stabilization agreement will meet needs of Iranian Government by supplying dollars for currency reserve and thus enabling Bank Mellie to extend additional credit to Government.
- 2. As you know, reserve of 40% current assets to assets liabilities is required of banking department of Bank Mellie by law. Current assets include rial notes, gold, silver, free foreign exchange and bills of 15 days or less. Bank considers any liability of 30 days or more as being non-current and thus not subject to reserve requirement. By making the rials deposit provided for in the agreement subject to at least 30 days notice, all dollars may be included in the currency reserve. Ebtehaj, Governor of Bank Mellie, prefers longer period than 30 days. Ninety days or longer would be more satisfactory.
- 3. It will be desirable to include provisions relating to gold similar to those included in the financial agreement submitted to Iran earlier this year. Gold on earmark outside of Iran included in the currency reserve.
- 4. Millspaugh states that stabilization agreement is exact type of arrangement needed. An amount of $30,000,000 is requested. This amount should enable the Government to meet all expenses for 1322, which ends March 20, 1944. In fact there seems to be strong possibility that it will not be necessary to utilize the full amount. The amount that will be needed depends principally on results of operations of various commercial enterprises of Government. Details of budget position will be cabled first of week.
- 5. Current position of Government has been relieved by an advance of royalties of 2,675,000 pounds by Anglo-Persian Oil Company. These royalties are for the balance of 1322. Total annual payment by Anglo-Persian Oil Company is 4,000,000 pounds. Amount still available from Bank Mellie is 80,000,000 rials. Wheat purchases for which 500,000,000 rials have been appropriated are not being handicapped by lack of funds.
- 6. I discussed with Millspaugh the possibility of altering the currency law in order to enable the Bank Mellie to extend more credit to the Government. He feels that such a change should not be undertaken at present time, not only because of political considerations, but also because of the alleged danger of undermining confidence in currency. Both Millspaugh and Ebtehaj agree that the law should be altered eventually, however. I also discussed possibility of liquidating part of metallic reserve as means of obtaining funds. Millspaugh was impressed with this idea and intends to press immediately for authority to sell silver and perhaps gold also from currency reserve. I discussed this idea with Lloyd3 in Cairo and he agrees with me that, if Iranian Government undertakes such a program, the Anglo-American gold sales in Iran should not be allowed to spoil the market.
- 7. Copies of currency laws are being forwarded. I expect to be in Tehran until August 28.”
Dreyfus
- Edward M. H. Lloyd, Economic Adviser to the British Minister of State at Cairo.↩