Coll 28/67 ‘Persia. Annual Reports, 1932–’ [‎177v] (354/644)

(6) The Imperial Bank of Iran.
107. The year 1936 was an active year for the Imperial Bank of Iran. The
Minister of Finance, when drawing up his plans at the end of February for a
system of foreign exchange control, kept in close touch with the chief manager
of the bank and accepted his advice on a number of points. Mr. Butters, on his
side, was anxious that the Imperial Bank of Iran should be one of the banks
authorised to deal in foreign exchange under the new system, and was therefore
ready to adopt as helpful an attitude as possible towards the authorities. It was
thus arranged that the bank should open a credit for £300,000 in favour of the
Government, which they could use, if need arose, to support the exchange, and a
further credit for £300,000 to finance the business operations of companies in
which the Government held not less than 51 per cent, of the capital. In return
the bank obtained the right to deal in foreign exchange and other not unimportant
safeguards.
108. In the autumn the bank agreed to increase the second of these credits
to £600,000, and, as the Government began at the same time to use their credit
for the support of the exchange, the position at the end of the year was that the
Government were drawing on the bank to the extent of some three-quarters of a
million sterling.
109. The interests of the bank seemed threatened in December by a decision
of the authorities that banks should not henceforth give advances to foreign
companies engaged in railway construction, &c., unless they were covered by
deposits of foreign currencies, negotiable securities or gold. Hitherto the
Imperial Bank of Iran had financed foreign contractors to a considerable total
sum in return for guarantees from banks in Europe, and it seemed that this
business which was both profitable and without risk might now be lost to them,
since the foreign contractors concerned were nearly all either unable or unwilling
to comply with the stipulations of the authorities. Mr. Butters felt however"
that the authorities were unlikely to make serious difficulties for the bank if the
position was properly represented to them, in view of the considerable credit
facilities which the bank had accorded to the Government. In so far as the
contractors themselves were concerned, it was chiefly foreign firms that were
affected, but it may be noted here that two British firms, Messrs. Costain and
Messrs. Nuttall, both engaged in railway construction, were equally involved.
nu.
in me summer tne bank was granted a supplemental ckarter, enabling
B to increase its capital from £650,000 to £1 million. Its capital had originally
stood at this latter figure, but had been reduced in 1894, and the present
position' 1 * 5 ’ e CCte< ’• V t ie ca P lta lisation of reserves, merely restored the old
(7) Claims.
further ^ r ^K S ^- C ^ m if Iranian Government was
^ -fj-j 0nbl ^ ei€( ^ m •^P I1( ^ on > but no obvious line of advance presented itself
and it did not prove possible for the Foreign Office to send His Majestv’s Leoation
any definite instructions during the course of the year. J y &
19 35*\n whfch^lr'^'Ltebf n’pf 11 AffairS repl ‘ ed in Ju !y t0 the note of Jul y
Government in the United Kingdom 8 1to th^IranV^r r HiS M ^® st y' s
— d breach of its concession, but had been constrained hy'jTrcl majeun
JompanyscTaim'buti^th, 116 Government had rSderXthe
company s claim, but were unable to modify their former views As it was
considered undes^able to leave this note unanswered, the Foreign Office instructed
once again that they should make some suggestion for the settlemen^of ‘theXm"
to put forward to^hf kL^an GOTernnmn^LTpereon'aTn' 1Cti0n i S 1“ Se P tei ?^er
of the Persian Railways Syndicate should bp iV proposal that the claim
syndicate of the actual S incurred fi them on thelr^s? 18 ° f " k efund the
foregoing, in return, all profit and interest of any kind. Mr ffirs a^rd/ngly