Memorandum of Telephone Conversation, by Mr. Harold B. Minor of the Division of Middle Eastern Affairs

I telephoned Major Patton of the Foreign Fiscal Affairs Branch of the War Department concerning the approach made to the Department by the British Embassy on the subject of American participation in the Allied-Iranian Railway Agreement and the desire of the British Government to have the United States assume responsibility for freight bills for movement of lend-lease goods on the Iranian railways.

Major Patton said that the United States formally took over operation of the southern section of the Iranian railways in April 1943, at British request. Negotiations were conducted in Tehran between the Persian Gulf Command, represented by Colonel Stetson, and the British. Colonel Stetson visited the United States during the discussions to consult with the War Department. The British did not approach the War Department direct but only through the Persian Gulf Command. The War Department decided, after considering the matter for some time, not to agree to the British request to assume financial responsibility for the Iranian Railway. This decision was communicated to the Persian Gulf Command, which informed the British. The matter never reached the Combined Chiefs of Staff and the directive63 under which our forces operate the railways contains no provision as to payment of the bills.

Major Patton declared that the financial arrangements now in force in Iran are muddled. The War Department is willing to pay for movement of supplies used by our forces but has not been doing so since its claims to the railways for maintenance goods furnished have not been met. The British are responsible for payment of all freight bills other than those for the use of our forces. They have not met these in full but have made payments on account in order to keep the railways operating. The railway is unable to pay the Americans for [Page 384] maintenance equipment because of lack of funds. The British have had also to assume responsibility for payment of freight bills for the Russian section of the railway.

Major Patton was of the opinion that any change in the present arrangement must be taken up with the Combined Chiefs of Staff, since the Iranian Railways are operated under the directive of that group. He thought that the British approach should therefore be to the Combined Chiefs of Staff. He said he would like to discuss the question with other officers in the War Department after which he would telephone me.64

  1. No. 109/1 of September 22, 1942, of the Combined Chiefs of Staff, issued simultaneously to the Persian Gulf Service Command and the Persia and Iraq Force (Paiforce).
  2. Mr. Minor and Major Patton had a second telephone conversation regarding this subject on August 9.