Coll 28/3(2) ‘Persia. Financial situation.’ [‎211v] (422/817)

4
by His Majesty’s Government into gold, its gold sales in Persia have, for the
present at least, been discontinued.
Prospective Position. •
14. A few months after Dr. Millspaugh came to Persia as Administrator-
General of the Finances in February 1943, he took over at the request of the
Persian Government certain economic powers in addition. These were mainly
(a) the purchase, transport, distribution and rationing of food-stuffs and certain
other goods, (b) price control, and (c) administration of the Government factories.
When the Government proposed, in the summer of 1944, to take these powers
away from him on the ground that he had not exercised them with sufficient
competence, he resigned; the Government then withdrew from their position
and Dr. Millspaugh withdrew his resignation. Not long afterwards he issued
a letter of dismissal to his sworn enemy in Persia, M. Ibtihaj, governor of the
National Bank, from his post; but the Government considered that he had
exceeded his powers and M. Ihtihaj continued in office. Largely as a result of this
exceedingly ill-judged (even if possibly legal) action on Dr. Millspaugh’s part, the
agitation against him was renewed; and theParliament, after atypical two or three
weeks’ debate punctuated by public holidays, lack of a quorum and interpellations
on other subjects, passed early in January an Act depriving him of his economic
powers as distinguished from his functions in the Ministry of Finance. They
did so, however, without having reached, or attempted, any conclusion as to how
these functions should be discharged; but they have now appointed a committee
(consisting of Persians only) to deliberate on the subject. Some are in favour
of establishing a new Ministry of Economic Affairs for the purpose; but it is
to be hoped that this will not be done since it would be many months before
the Ministry would function with anything approaching efficiency. A better
solution would be to attach these functions to the Ministry of Commerce and
Industry, and to appoint a more energetic Minister than the present aged
M. Hedayat. This new organisation, if it is to be at all effective, will need to be
bolstered by those of Dr. Millspaugh’s American staff who have been concerned
with this work in the past, using executive rather than merely advisory authority;
but the Government’s decision is to be deplored.
15. At this juncture Dr. Millspaugh has stated that unless the Government
uphold his action in dismissing M. Ibtihaj, he will resign; and a number of his
staff have announced a similar intention. These resignations have been deferred
for the present until the issue between the two protagonists has been discussed
and determined by the Parliament; but it is unlikely that they will decide against
a Persian in favour of a foreigner. Nevertheless,^ Persia is a country devoted,
perhaps excessively, to compromise; Dr. Millspaugh does not wish, if he can
avoid it. to leave Persia as the failure which he would be accounted to be if he
went at the present time, and he has not yet made up his mind whether to leave
or to stay. In view of his defects in temperament it is not desirable that he
should remain here much longer; but his presence in the country at a time when
the financial situation is serious and plans for the post-war period are inchoate
would present certain advantages, especially since if he leaves now the more
competent of his American staff may go with him. If he remains for a few
months (as at any rate M. Ardalan, the Minister of Finance, hopes he will do),
he will be able to see the end of the current financial year, to present the budget
for 1945-46; to do something through the American staff to set the new economic
organisation on its feet; and to prepare the way for the successor from abroad
who is required if the financial affairs of this unhappy, incompetent and corrupt
country are to be administered with any degree of success.
E. N. R. TRENTHAM
Tehran, 3(BA January, 1945.