891.51A/2–1545: Telegram
The Ambassador in Iran (Morris) to the Secretary of State
[Received February 16—1:38 p.m.]
102. The expression of the Department’s views on the financial mission has been very helpful. I am obliged to have received its telegram No. 65 of February 10.
Just prior to the receipt of the Department’s instruction, things took a turn somewhat for the better. I had continued to talk both to the active officials and to those persons of influence not for the moment in the Government. On February 11 the Council of Ministers finally authorized in writing the appointment Mr. Rex Pixley and Dr. Black as administrators of the Ministry of Finance directly responsible [Page 551] to the Minister of Finance. The financial administration has been divided into two sections, one under Dr. Black and the other under Mr. Pixley.25 Pixley is charged principally with accounts and audits, exchange, internal revenue, personnel, bank administration and customs. Dr. Black is charged with monopolies, public domains, industrial supervision, general inspection and some subordinate duties. The respective administrators are charged with the signature of correspondence to directors general, provincial finance directors and to subordinate departments and establishments of the Ministry of Finance. Letters to the court, to the Majlis and to members of the Majlis will be signed by the Minister or Under Minister of Finance. Correspondence pertaining to the foreign relationship of Iran, policy letters and letters to banks dealing with general credits are to be signed by the Minister of Finance or the Under Secretary. All other correspondence is to be signed by one of the administrators on behalf of the Minister of Finance. Provision is made for the two administrators to initial minutes recommending the issuance of correspondence over the signature of the Minister of Finance. The operation of this provision will show very quickly just to what extent the American administrators are going to be given authority. It enables them to make recommendations directly to the Minister of Finance and his action thereon will show how far the administrators are really being consulted in the carrying out of the work with which they have been officially charged.
Black and Pixley have accepted in principle to serve under the appointments offered them. The other members of the mission show a disposition to remain here. I hope to obtain their full recognition and cooperation for Black and Pixley.
I left with the Foreign Minister an aide-mémoire in the sense of the instruction contained in the Department’s No. 65 of February 10. The Foreign Minister expressed his great satisfaction with the general tone of the Department’s communication. He was particularly gratified to be informed that the Department considered the dispute between the Government of Iran and Dr. Millspaugh as a domestic matter within the sole competence of the Iranian authorities and that the Department did not question the reasons which brought the Iranian Government to reject Dr. Millspaugh’s demands submitted to the Cabinet on January 27.
The Foreign Minister admitted readily enough that the assurances given me had not been carried out and that the whole program had fallen into a state of confusion after the Parliament had rescinded the economic powers of Dr. Millspaugh. He asserted that the delay in [Page 552] straightening out matters had been principally due to the legal obstacles involved. It was for such reasons that the Prime Minister found he could not pass on to Dr. Black the economic authorities which he had proposed to give the latter. After legal study it was found that the Council of Ministers did possess the authority to delegate through the Minister of Finance the financial administrative powers to Dr. Black and to Mr. Pixley which have been mentioned above.
I had a lengthy and earnest talk with the Foreign Minister who reiterated once more that it had been the intention of the Prime Minister and his associates to continue an effective adviser program and that at no time had the intention of the Government been otherwise. He admitted that the procedure had been badly bungled but said that they were doing their best within their legal limitations to preserve the entity of the mission as such and hoped for the cooperation of the advisers and the influence of the Embassy to that end. I assured him that the Embassy and the State Department desired wholeheartedly to be of assistance in this respect and I felt reasonably confident that the American members of the Mission would lend their best efforts if they felt confident of support and reasonable elbow room in the carrying out of their duties. He accepted my suggestion that Pixley and Black should be given an oral expression of confidence by the Minister of Finance and by other appropriate members of the Cabinet.
I pointed out to him in as much detail as I possess the deterioration which has set in in the economic aspects of the Iranian Government’s business due to the sudden withdrawal of Dr. Millspaugh’s economic powers and the failure to provide promptly and efficiently for the continuance of these powers in some form or other. The Foreign Minister agreed with my viewpoint that it was impracticable to divorce the financial and economic fields entirely. He pointed out that nevertheless it was quite certain that the Parliament would never again vote to an individual the extensive economic powers granted to Dr. Millspaugh, whether that individual be Iranian or a foreigner. I advanced the suggestion that the economic controls might possibly be maintained administratively by the Minister of Finance. The Foreign Minister said he thought this idea had practical value and he would urge it upon the Council of Ministers. I pointed out that if the Cabinet and the Minister of Finance would allow Pixley and Black to maintain their men on economic controls as hitherto that effective exercise of these controls might be continued to the advantage of the Ministry of Finance and the collection of revenues. The Foreign Minister thought the justification for this administrative control could be found within the general scope of the powers of the Cabinet of Ministers and of specific powers of the Minister of Finance.
[Page 553]If this course is carried out with good will, I believe it offers a chance to keep the Financial Mission going in a manner helpful to the Iranian state. The Foreign Minister shared my view that form and procedure was less of a stumbling block than the spirit in which the work of the advisers was accepted. It is of course too early to say whether anything effective can be accomplished but I am at least hopeful that an adhesion by the Iranian officials to the administrative program outlined above offers some chance of success.
The letter of appointment of Black and Pixley and related documents follow by mail.26