Coll 28/67 ‘Persia. Annual Reports, 1932–’ [‎314r] (629/644)

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of oil. This is important, as a break-down in distribution would have, however
unjustly, been blamed on the Anglo-lranian Oil Company. An offer for the sale
of a limited number *of rolling-stock was also made by the British military
authorities. This offer had been accepted by the Ministry of Communications by
the end of 1945, but still awaited ratification by the Government.
79. The Russians returned the lines from Tehran to Mianeh, Shahrud and
/•v Firuzkuh at the end of November, but kept the line from Firuzkuh to the Caspian.
Whilst a great deal of consideration was given by the Persian Government to
the completion of the line from Tehran to Tabriz and from Tehran to Meshed,
a combination of the Russian occupation, political crises, the instability of
successive Cabinets, and the difficulty of supply of material from abroad all
combined to prevent any progress in this direction.
Disposal of British and American Military Assets.
80. (a) Telecommunication System. —The telecommunication system
installed by the British military authorities is now being administered, or rather
maladministered, by the Persian Department of Posts and Telegraphs, who
have incidentally failed to make either of the first two payments specified in the
Act of Sale. A quantity of maintenance material was also handed over to them.
(b) Fixed Assets — General .—All fixed assets, with the exception of
transportation assets and the sawmill in Tehran, have now been disposed of,
either by direct sale to contractors or by inclusion in the overall offer made by the
American military authorities.
(c) Transportation Assets .—An offer was made to the Ministry of Com
munications for the sale of all fixed transportation assets on the basis of 33-J per
cent, of their original construction cost, estimated to be 336 million rials.
(Details are given in the section headed “ Transport.”)
(id) United States Fixed Assets. —The United States military authorities
made an overall offer to the Persian Government for the sale of all American
fixed assets, on the basis of 7-| per cent, of their original construction cost. This
offer, made without prior consultation with us, included certain British military
installations in areas in which we had a minority interest. The purchase price
is payable in dollars, to be covered by Persian Government bills at 3, 5 and
7 years’ sight.
(e) United States Military Stores. —All surplus United States military stores
at Khorramshahr were sold to a group of Persian financiers against a cash
payment of 6 million dollars. The payment of dollars was found from private
Persian dollar holdings in the United States.
Prospects of British Trade.
81. At the present time the sterling area holds all the aces, as the Persian
Government has no dollar resources and can only obtain them by selling part of
its gold reserves. It is true that there are considerable private holdings of dollar
exchange, and this could be sold, but as the open market rate for free dollars is
considerably above the official rate, United States trade would be considerably
handicapped if financed by this means. The sterling position is, on the other
hand, satisfactory, and no restrictions have so far been placed by the Persian
Exchange Control Commission on the sale of sterling or the opening of
documentary credits for the importation of goods from the sterling area. There
is a widespread demand for goods, but the limiting factors are shipping and
supply position in the United Kingdom. It is somewhat unfortunate that the
supply position of textiles (cotton, woollen and rayon piece-goods) which are in
great demand, is still unsatisfactory, and that the United Kingdom can allocate
only a small quota to this market.
82. Merchants in this country are obviously anxious to establish direct
relations with United Kingdom suppliers and the Commercial Secretariat has a
formidable waiting list of merchants, anxious to go to the United Kingdom in
order to re-establish their commercial relationships or to develop new ones. With
the present problems of shipping and air transport, the greater part of these
applications has had to be held in suspense.
83. Whilst there is a demand for practically every branch of United
Kingdom manufactures, it should be borne in mind that this market easily reaches
saturation point, and with the low standard of commercial integrity in this
country there is always the risk that merchants will repudiate their contracts
when the supply position becomes easier, and prices fall in consequence. For this
reason it is recommended that as a general rule business with this country should
be transacted on the basis of irrevocable credits.
[77—51] d