891.51/564: Telegram
The Minister in Iran ( Dreyfus ) to the Secretary of State
[Received May 10—3:17 p.m.]
484. My 429, April 26. Millspaugh requested I reiterate to Department the absolute necessity of obtaining a dollar credit of $30,000,000 if Iranian Government is to be saved from complete financial collapse. He does not disguise fact that the credit would have inflationary effect nor deny possibility of recurrence of similar crisis next year. However, it would buy a year’s time, strengthen Government, make it possible to collect revenues and give the stability necessary to carry in Government the price stabilization and other plans. He finds that the many pressing obligations of the Government will not, as he had hoped, permit reduction of this year’s deficit. In addition he feels that unless Government salaries are increased a general strike and disorder may eventuate.
He states that an important factor in the financial crisis is the unwillingness of Russians to postpone their financial demands or place them on reasonable basis. As example Russians are demanding 32,000,000 rials as part payment for the 25,000 tons wheat (my 382, April 13)91 although wheat has not been delivered and despite fact they themselves owe Iran Government some 60,000,000 rials for grain they purchased in Azerbaijan. British are pressing him for payment of about 554,000 pounds for grain purchased. He believes that alternative to granting of this credit would be financial collapse and eventual withdrawal of his Mission.