741.91/21: Telegram

The Minister in Persia ( Caldwell ) to the Secretary of State

160. An agreement was signed 9th instant between the British and Persian Governments in substance as follows: British Government emphatically reiterates its pledges to observe political independence and territorial integrity of Persia; British Government will furnish at the expense of the Persian Government all the expert advisers needed for the Persian administration; Great Britain will provide military officers and all the arms and modern equipment needed to reorganize Persian Army; joint Anglo-Persian military commission to be forthwith appointed to determine Persia’s needs; British Government will provide loans for expenses [of reforms]; for development of Persia British Government will interest British financiers in railroad construction and other means of transport to develop trade in Persia and prevent famine (see Legation’s quarterly report of July 7th1); Great Britain agrees to changes in Persia’s customs duties (see Legation’s despatch 517 of July 16th1 page 10); exact text will be telegraphed as soon as received.

A loan agreement was also concluded on same date in connection with above by which Great Britain agrees to advance £2,000,000 sterling in such installments as financial experts provided for in agreement (see Legation’s telegram of August 4th, 4 p.m.1) shall determine. It will bear interest at 7 per cent per annum payable monthly until March 20th 1921 after which monthly sums sufficient to liquidate principal and interest thereon at 7 per cent per annum within 20 years will be paid. Loan is secured on customs the same as British loan of 1911 and after that loan and subsequent advances by the British it is to have priority. If customs are not sufficient to meet this obligation, the Persian Government must provide other adequate security. Loan may be repaid by future British loans. Full text will be sent later.

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