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arrangements with the rate at Rials 85 to one pound sterling. The Shah
struck this out and substituted 80.
6 . Indeed when the Shah orders a railway, a harbour or a factory An East India Company trading post. , one
has the feeling that he does so not because the estimates of experts show
that it will be profitable, but simply because he feels that every respected
country has a railway, etc., and because it gives him an inferiority com
plex not to possess one also.
7. I am sending copies of this despatch to the Department of Overseas
Trade unnumbered, to the Foreign Secretary to the Government of India
No. 163, and to His Majesty’s Ambassador at Baghdad No. 53.
Enclo. to S. No. (64).
Economic Report for Iran, January to May 1936.
Economic conditions in Iran during the first five months of the cur
rent year have been dominated by the exchange control regulations intro
duced on March 1 st, and by the new Customs tariff anticipated towards
the end of May as a result of the denunciation of the Tariff Autonomy
Treaty of May 10 th, 1928, and of all other treaties restricting Iran's autho
rity to modify her Customs tariff.
Exchange Control.
Increasing stringency of foreign exchange during 1935 became more
marked in the latter months of the year, when the Banque Mellie practi
cally coased selling exchange. As a result, the rate moved sharply up
wards from about eighty-six rials to the pound in September to one hundred
in the middle of February, and remained at that rate or slightly below until
the end of that month.
By the exchange control law of March 1st the purchase, sale, transfer
and export of foreign exchange was prohibited unless authorized by an
Exchange Commission created by the Government. The Banque Mellie and
the Imperial Bank were authorized to effect exchange transactions in accord
ance with the terms of the Act and with the rules laid down by the Ex
change Commission. The exchange control was not to apply exports to
countries with which Iran had trade agreements providing for balanced
imports and exports, e.g., the Soviet Union and Germany, nor to the exports
of the Anglo-Iranian Oil Company and of the Caspian Fisheries combine;
exports of specinc goods effected against sale of certain goods to Iranian
Government or Municipal authorities were also excepted. Exporters of
goods from Iran were to deposit at one of the authorized banks within three
days of receipt and not less than three months from shipment the foreign
exchange resulting from their operations, V lus ten per cent, estimated as
average profit. Severe penalties were imposed for contraventions of the
•** to a- P“" d H™*
. As was to be expected, the passage of the Act caused the greatest con-
iision in all foreign trade transactions, as well as innumerable difficulties
to individuals needmg exchange for travelling, remittance of part of their
abroad 3 etc^TheC^"* f P Sur f ce or educational charges incurred
abroad, etc The excessively sharp transition from a rate of one hundred to
the pound to one of eighty, together with the necessity of deposftW aH
foreign exchange proceeds of exnorfq h™rio-R+ fE ,y ^ ^ uepositmg ail
still prevailed at the end of May and were ^ ^ A T 11680 cond itions
lication of the new Customs tariff M ~ ^ by - the deIay in P ub '
21 st.
was passed by the Majlis on May