861.24/1352

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

Participants: The Minister of Iran48
Mr. Murray49
Mr. Jernegan

The Minister read a telegram which he had received from his Government to the effect that the Soviet authorities were anxious to obtain the use of various Iranian arms factories, as well as a can factory. The Iranian Government was willing to agree to this, but it would require a large sum of money, (the Minister mentioned figures that seemed to total more than 500,000,000 rials) to put the factories into producing condition. Accordingly, the Minister was directed to ask whether the United States Government, through the Lend-Lease Administration, would set up a credit of some $30,000,000 in favor of the Iranian Government. This credit, it appeared, would be repaid out of payments made by the Russians for the products of the factories in question.

It was pointed out to the Minister that, so far as we were aware, Lend-Lease assistance always took the form of goods or services, rather than financial credit. In any case, it was not our understanding that the Iranian Government stood in any particular need of dollars, but rather had a surplus of foreign exchange. It was, therefore, difficult to understand this request for a credit. The Minister agreed that it was goods, not money, of which his country had need, and he said that he himself did not entirely understand the thought behind his instructions. He said, however, that the question had been taken up with our Minister at Tehran and with the Lend-Lease representative there, and that we would undoubtedly hear from Mr. Dreyfus within a day or two. Consequently, he did not ask that we take any immediate action.

The Minister was told that a cable touching on the general subject of arms production in Iran for Soviet use had been received some two weeks or more ago but that it had contained no specific recommendations and did not mention the opening of a credit on behalf of the Iranian Government. Mr. Murray promised to take under consideration any further word which might be received from Tehran and to advise the Minister.

  1. Mohammed Shayesteh.
  2. The Adviser on Political Relations.