Foreign Relations of the United States: Diplomatic Papers, 1945, The Near East and Africa, Volume VIII

891.51A/2–345: Telegram

The Ambassador in Iran (Morris) to the Secretary of State

Tehran, February 3, 1945—9 a.m.
[Received 9:14 p.m.]

70. On January 27 Millspaugh made oral statement to Council of Ministers that he would leave Iran unless 1) Ebtehaj were dismissed from National Bank 2) All economic organizations created under law of 13 Ordibehesht and now under control of Cabinet were placed unchanged under Minister of Finance 3) Cabinet would give firm assurances of cooperation in a long list of matters including improvement of efficiency in Ministries of Justice, Commerce and Agriculture. Millspaugh expects Cabinet make decision on this within week as time allotted by Majlis for reorganization of economic affairs expires February 8.

In a letter to me dated January 29, Millspaugh makes following assertions.

1. Recent policy of Iranian Government has virtually halted all emergency economic operations and has seriously affected financial work of American Mission.

2. Efforts of various elements to eliminate Millspaugh and disrupt mission have been partially successful and threaten to be wholly so. These efforts are not motivated by dissatisfaction with Millspaugh personally but by selfish desire to profit through removal of mission’s power to enforce honest, sound and impartial administration.

3. If Millspaugh himself is forced out rest of mission will lose its authority and unity and will be helpless.

Even if an American successor is appointed with same financial powers he will be in weaker position.

4. In view of Iranian mentality the deterioration in the position of the mission cannot be remedied by yielding, by compromise nor by an exchange of general assurances. Therefore it is desirable that American Government make strong representations to Iranian Government to have Millspaugh’s conditions accepted or at least to block action which might prevent ultimate acceptance of those conditions pending; study of question by Embassy.

5. Millspaugh complains that he has not had adequate indications in recent months regarding Department’s purposes with respect to mission. He considers attempt to distinguish between himself and mission as a whole is harmful and lends encouragement to mission’s opponents. He likewise deplores and considers harmful our position that his differences with Iranians are an internal affair and not proper subject for American intervention. End summary.

Text of letter follows by dispatch.¹⁵

I believe this letter provides both an opportunity and a reason for Department to take a positive stand one way or the other with regard to continuance of American Financial Mission. Department’s 623, October 17,¹⁶ envisaged possible notification to Millspaugh of withdrawal of our support but left matter open pending anticipated action by Iranians. I have withheld action because it appeared Iranian Government would itself resolve difficulty on reasonably satisfactory basis. However, trend of recent events strongly indicates that whatever steps Iranians may take will neither satisfy Millspaugh nor enable mission to carry on effectively without him. My conversation with Entezam reported my 50, January 24, has proven as barren of results as previous and subsequent talks with other leaders. I have little hope that Cabinet will take any decision acceptable to advisers.

It seems most probable that Cabinet will reject Millspaugh demands summarized in first paragraph this telegram. If he carries out his threat to depart, which is doubtful, that will settle his personal problem but will leave rest of mission in air. Prime Minister’s recent actions contrary to his earlier assurances give no grounds to think that he would make satisfactory offer to Pixley or any one else who might be available to replace Millspaugh and I would expect a more or less rapid distintegration of the group.

(As Department is aware such disintegration has already begun. Pixley himself has given notice of resignation effective in 4 months.) If Millspaugh stays without gaining his demands present impossible situation will merely be prolonged. State of tension between Millspaugh and Government is such that little or nothing is being accomplished and prospects for improvement are dim. I do not think Millspaugh can reestablish situation in face of repeated rebuffs, the violent opposition which has manifested itself and his own shortcomings. Continuation of present controversy would be harmful to everyone concerned and United States would suffer loss in reputation without even satisfaction of accomplishing anything for the good of Iran.

As I see it we have two alternatives as follows:

1. We can take a strong line with Iranian Government and insist upon retention of an American mission with adequate powers and full Iranian cooperation making it clear that disregard of our wishes would result in loss of interest on our part in Iran affairs. If this course were adopted we should offer to provide a top flight replacement for Millspaugh if the Iranians wished.

2. We can advise Millspaugh and other members of mission we are not prepared to support his demands and furthermore we feel no useful purpose will be served by continuance of mission as a unit in view of attitude of Iranian Government. Simultaneously we can advise Iranian Government that its actions as distinguished from its words indicate that it no longer desires an effective American mission and we think it best that the mission as such be dissolved. Therefore we will no longer lend assistance in connection with recruiting transportation or other matters affecting it (this need not exclude continued employment by Iranian Government of such individuals as might be willing to stay on under whatever arrangements they could make personally). I am inclined to favor second alternative. To adopt the first would mean a reversal of our consistent policy of refusing to force advisers upon Iran and would unquestionably be seized upon by press and public as evidence of American imperialism at its worst. I am convinced that no influential group in Iran at present sincerely desires foreign financial or economic advisors. Those who still give half-hearted support to the mission such as Seyid Zia ed-Din¹⁷ do so because they want American political support for Iran not because they want Americans to help with internal difficulties. If there exists any inarticulate mass which really wants advisers it is so deeply buried that it cannot be counted as a factor in practical politics.

Unless situation clarifies itself which I think unlikely I feel we should be prepared to act within 2 weeks. May I ask therefore that Department give this urgent consideration. If an affirmative decision is taken either way I hope Department will instruct me to communicate it to Millspaugh as coming from Department.

Morris

15. Text of letter and of memorandum of statement made by Dr. Millspaugh to the Iranian Council of Ministers on January 27 transmitted to the Department by the Ambassador in Iran in despatch 192, February 3, 1945; none printed.
16. Not printed; but see Foreign Relations, 1944, vol. v, p. 430, footnote 36.
17. Seyid Zia ed-Din Tabatabai, prominent Iranian politician and member of the Majlis.