391.1164/136: Telegram

The Secretary of State to the Chargé in Iran ( Engert )

63. Your 110, May 17, 8 p.m. and 116, May 29, 4 p.m. If no objection is perceived, you are requested to communicate the following message orally to the Foreign Minister, leaving an aide-mémoire of your remarks. You are also authorized in your discretion to discuss the matter with the Prime Minister, leaving a copy of your aide-mémoire with him. The message, which has been approved by the Presbyterian Board, should also be communicated to its negotiators at Tehran.

The American Government understands that the representatives in Iran of the Presbyterian Board have been officially informed that the Iranian Government has decided not to purchase the Board’s educational [Page 699] properties and that the Board may dispose of them at such time and in such manner as it may desire. It is the American Government’s understanding, however, that by way of exception to the foregoing, the Iranian authorities will purchase the properties at an agreed price in one payment in case the Board desires to dispose of them to the Iranian Government and to accept compensation therefor in rials. Alternatively, the Board may dispose of the properties to private Iranian or foreign nationals. The reason for this announcement is understood to be the lack of dollar exchange available to the Iranian Government.

By its note dated May 14, 1928,1 the Iranian Government authorized American educational work under certain stated conditions with which the Presbyterian Board and its representatives in Iran have carefully anl loyally complied. Notwithstanding its authorization, the Iranian Government adopted the policy of assuming the cost of all educational work for the purpose of unifying the educational system of the country. It has been apparent to the American Government for some time that the task of reaching an equitable and practicable settlement under this policy, which was announced before the outbreak of war, presents considerable difficulty under existing conditions.

If the Iranian Government cannot supply dollar exchange, the Board could utilize certain other foreign exchange in payment for the properties such as sterling or certain sterling-linked currencies. In the absence of such exchange, the Board would of course have but restricted use for such a large sum in rials as would result from payment by the Government in that medium for all of the educational properties in the near future. Under these circumstances, the American Government understands that the Board intends to use some of the properties in question for non-educational purposes or to dispose of them gradually over such period of time as it may require for the orderly and equitable liquidation thereof. Large units such as the school and dormitory buildings could be rented to the Government should the Government so desire and sold when and as the Board requires rials to support its non-educational activities in Iran. The Board may, in addition, wish to divide and to subdivide the properties in any manner that appears to it most suitable for sale or rental to the Government and to private interests.

For the information of the Board’s representatives it is of course understood that they will be free to decline any inequitable offers.

Hull