The Secretary of State to the Chargé in Iran (Ford)
264. Your despatch 869, March 7.48 War Department expresses view that it is inadvisable, unless there are urgent diplomatic considerations of which it is not aware, to enter into the proposed agreement covering financial responsibility for Iranian railways. Letter to Department from War Department49 states that existing arrangement has proved satisfactory and there is no reason to believe the agreement would have effect of speeding flow of war supplies to Soviet Union; that agreement might cause confusion at a time when operation of railways at full capacity is essential; and that under existing arrangement British pay freight charges on all goods moved over railway on behalf of Russians including lend-lease goods, whereas under the proposed agreement new and complicated financial arrangements would have to be worked out.
Department understands that instructions were issued to General Connolly last October authorizing him, jointly with Russians and British, to work out such an agreement with Iranian railways provided the United States Government was not obligated to incur any expenditures in connection therewith. This latter type of agreement, if one is needed, would be preferable from point of view that any agreement entered into on a political level which included a minimum financial guarantee to Iran would require concurrence of the fiscal agencies of this Government and perhaps Senate approval.
Please inform Department, after full consultation with General Connolly, Colonel Stetson,50 and your British colleague, of your views and recommendations on subject. Please indicate extent to which Iranians have pressed for conclusion of this agreement and what their reaction might be to refusal of United States Government to participate. An indication of the attitude of the Russians would also be helpful.
You will have in mind, of course, that the question involved is not whether a general railway agreement should be concluded with Iran as one of the series of agreements contemplated by the Tripartite Pact51 but merely whether the United States should be a party thereto.