Foreign Relations of the United States, 1952–1954, Iran, 1951–1954, Volume X

888.2553/5–2954: Telegram

No. 472
The Acting Secretary of State to the Embassy in the United Kingdom¹

secret
priority

Washington, May 31, 1954—8:21 p.m.

6477. Noforn. Limited distribution. From Hoover. Ref London’s 5426 to Dept, 42 to Tehran, May 29.²

1. London please advise US company principals on confidential basis:

(a) We urgently require their views re nationality of operating companies soonest possible. Suggest Harden, Page or Long be shown Tehran’s 2432 to Dept (736 to London May 29) with which I concur.³

(b) British Embassy requesting answer soonest from Dept to their inquiry this subject (Dept’s 2330 to Tehran, 6435 to London, May 28⁴).

It believed desirable I remain Washington until reaction of US companies in London received here and this matter resolved.

2. Currency matter involving UK Treasury insistence upon detailed control over Iran Government conversion of sterling into dollars, irrespective of specified ceiling (Tehran’s 2406 to Dept, rptd London unnumbered, May 27⁵), now under advisement by US Treasury at top level. They deeply disturbed by implications of UK Treasury attitude. Will report developments.⁶

Murphy

1. Repeated to Tehran. Drafted and signed by Hoover and cleared in substance by Secretary of the Treasury Humphrey.
2. Not printed. (888.2553/5–2954)
3. Telegram 5441 from London, June 1, reported that Harden stated “categorically” that the U.S. companies opposed Iranian nationality for the operating companies under any circumstances and favored Dutch nationality. (888.2553/6–154)
4. See footnote 2, Document 467.
5. Not printed. (888.2553/5–2754)
6. On June 1 the Embassy in London reported that Embassy officers checked with British Treasury officials about the proposed currency arrangements between the British and Iranian Governments. Treasury officials said that Iranian sterling expenditure in both the transferable account and sterling area would be completely unrestricted and subject to no understanding regarding preference for the sterling area over the transferable account suppliers. Until there was sterling convertibility, Iran would make application to the Bank of England for dollar conversions, but every application would be approved unconditionally until the agreed limit was reached. The agreed limit was 40 percent of the total sterling income from consortium oil operations which would comprise tax, royalty, and local currency purchases by the consortium companies. Moreover, the British would exercise no preaudit or current supervision over Iranian use of foreign exchange. In conclusion, the Embassy in London, in view of the foregoing assurances from the British Treasury, believed there was no basis for the U.S. Treasury to be “disturbed by implications of UK Treasury attitude”. (Telegram 5443; 888.2553/6–154)