Foreign Relations of the United States: Diplomatic Papers, 1943, The Near East and Africa, Volume IV

891.5018/31½

Memorandum of Conversation by Mr. John D. Jernegan of the Division of Near Eastern Affairs

[Washington,] January 7, 1943.

Participants:	Mr. Richard Casey, British Minister of State in the Middle East
	Mr. Murray9
	Mr. Ailing10
	Mr. Merriam11
	Mr. Allen12
	Mr. Jernegan

Mr. Casey said that he and his staff at Cairo had long ago come to the conclusion that ultimately it would be necessary to ship wheat to Iran in order to tide the country over until the 1943 harvest. However, his economic advisers had strongly urged him to make no announcement to this effect until the last possible moment, since otherwise the Iranians would make no effort to bring out the large stores of hoarded wheat in the country. This policy had, accordingly, been followed until recently. It was, of course, abandoned with the signing of the American-British-Iranian food agreement on December 4.¹³

Mr. Murray said that the Department had felt that there was complete agreement between Washington and London on the subject of policy in Iran, but that there appeared to be a lack of coordination between London and Tehran, as policies laid down in London did not seem to be followed by British officials in Iran. Mr. Casey said that Mr. Welles had raised the same point with him during their conversation earlier in the day.¹⁴ Mr. Welles had also indicated his feeling that the British authorities had been using wheat as a weapon to force Iranian compliance with British wishes. Mr. Casey had assured him that the British in the Middle East had not used wheat in any way as a political weapon and that the sole purpose in withholding an undertaking with regard to wheat had been to induce the Iranians to take steps to bring into the market their own supplies of domestic wheat before recourse was had to imports.

As regards the apparently unfavorable impression which the Department had received of British policy in Iran, Mr. Casey was inclined to attribute it to the fact that the British and American Ministers in Iran¹⁵ “did not see eye-to-eye”. In expressing this opinion, however, he was not attempting to apportion blame or praise, since he was not sufficiently familiar with the local situation to do so.

Mr. Murray said that the Department had been very disturbed at the reported remarks of certain British officials in Iran to the effect that they would not favor supplying wheat to Iran so long as Iranian sentiment remained hostile to Great Britain. He remarked that it seemed hardly possible to win the love of the Iranians by starving them, and he went on to emphasize the fear of starvation engendered in the Iranians by their unhappy experiences at the end of the last war. Mr. Casey did not reply directly, except by saying that anti-British feeling was not, in fact, manifest in Tehran during the recent riots and by saying that the Iranians did have reason to hoard wheat, both because of their fear of starvation and because of its attraction as an investment under present circumstances.

Mr. Casey spoke of the difficulties the Allied Governments had had in connection with obtaining supplies of local currency in Iran.¹⁶ He said that the British Government had been faced with a most difficult situation during the crisis which began in October, 1942. At one point they had only sufficient rials available to continue operations for two or three days, and the Majlis was refusing to issue additional currency. Since the British were engaged in work vital to the transport of supplies to Russia, it was impossible for them to suspend operations; yet it was almost unthinkable to resort to the use of force in order to obtain the necessary currency. His own instructions had been to use force only as the very last resort. He had gone himself to Tehran, had talked to Iranian officials and had asked for suggestions from every possible quarter but no one had seemed to have any constructive ideas on the subject. The Prime Minister, Qavam, had done nothing but wring his hands and express the forlorn hope that some way might be found whereby the Iranian Government could live up to its obligations under the Anglo-Iranian Financial Agreement of May 26, 1942.¹⁷ The American Minister, Mr. Dreyfus, had likewise been unable to suggest anything.

Mr. Murray referred to the previous financial crisis, in the spring of 1942, which had been resolved by conclusion of the agreement of May 26. He pointed out that the British Government had appealed to the Department at that time and had found it necessary to change its previously uncompromising attitude toward the Iranians and to make concessions in connection with the conversion of sterling exchange into gold and the provision of dollar exchange to meet Iranian needs. It was also pointed out that the later crisis in the fall of 1942 had been settled ultimately through a concession with respect to supplies of wheat, in return for which the Iranian Government had transferred control of currency issued to a committee, in accordance with British desires. These developments were cited as evidence that it was, in fact, possible to deal with the Iranian Government on a basis other than the use of force, to which the Department was firmly opposed.

Mr. Casey was asked whether he believed that the Iranian Government had the administrative organization and capacity to enforce anti-hoarding laws and bring out of hiding the wheat known to exist in the country, provided it set itself to the task. He indicated that he thought it possible, if all branches of the Government cooperated whole-heartedly. He mentioned in particular the gendarmerie, saying that the cooperation of Colonel Schwarzkopf¹⁸ would be necessary. In passing, Mr. Casey spoke highly of Colonel Schwarzkopf and also of Mr. Sheridan, the Food and Supply Adviser.

9. Wallace Murray, Adviser on Political Relations.
10. Paul H. Ailing, Chief of the Division of Near Eastern Affairs.
11. Gordon P. Merriam, Assistant Chief of the Division of Near Eastern Affairs
12. George V. Allen of the Division of Near Eastern Affairs.
13. Food Agreement between the United States, the United Kingdom, and Iran signed at Tehran, December 4, 1942; for text, see Department of State Executive Agreement Series No. 292, or 56 Stat. (pt. 2) 1835.
14. For memorandum of this conversation, see p. 319.
15. Sir Reader Bullard and Louis G. Dreyfus, Jr., respectively.
16. For further correspondence on this subject, see pp. 561 ff., passim.
17. For correspondence relating to this agreement, see Foreign Relations, 1942, vol. iv, pp. 300 ff.
18. Col. H. Norman Schwarzkopf, American Adviser to the Iranian Gendarmerie (rural police); for correspondence relating to Colonel Schwarzkopf’s Mission, see pp. 513 ff., passim.