File 200/1928 Pt 6 'Anglo-Persian Treaty Negotiations' [‎18v] (30/642)

whatever had been made by himself or the Minister for Foreign Affairs to the
question of our treaty negotiations. My letter to him of last February still
remained unanswered, and in these circumstances it would be difficult for me,
even if I should attempt to do so, to convince my Government that the feeling in
the highest circles in Tehran was not definitely anti-British. This did not apply
to the provinces or even to other circles in Tehran, where I had found no feeling
against my country, but as I was leaving in a few days, after nearly five years in
Persia, I could not but feel that the present state of affairs was extremely dis
couraging. His Highness, in reply, began by a long defence of the Trade
Monopoly Law. He said that Persia was not free to increase her tariff until
1936. Otherwise, largely increased duties would have been placed on articles of
luxury. To get over this difficulty, therefore, he found no alternative but the
Trade Monopoly Law, which was not inconsistent with any treaty. To this I
most strongly demurred and quoted article 4, paragraphs 2 and 3, of the Tariff
Autonomy Treaty, whereby either country was entitled to limit imports to protect
their vital interests, but such prohibition must be of a limited duration, unless
the extraordinary circumstances which justified such prohibition in the first
place continued more or less indefinitely. In fact, I said, if the Persian Govern
ment were going to make a habit of getting round their treaty obligations in this
way I could not help feeling that other countries would be very chary of making
any further treaties with them at all. His Highness became excited at this
remark and said that my insinuations were quite unjustified; I declined to admit
this and asked him whether on mature consideration he did not believe that Persia
would have been better advised to have left the exchange free and put no
restrictions on commerce at all; as it was, in his fictitious trade balance he had
entirely omitted the Anglo-Persian Oil Company's oil royalty, which was really
payment in another form for the oil exported. Moreover, with a free exchange,
so the bankers told me, the kran could probably have been maintained at some
where round 90 to the £1, instead of the bazaar rate of to-day of 110. Again, with
the kran at a discount of 75 per cent., imports of luxuries would automatically
have been checked. The man who last year paid 30 tomans 10,000 Persian dinars, or a gold coin of that value. for a gramophone
would not be prepared to-day to pay 50*! Similarly, the low value of the kran
must automatically stimulate exports. I could tell him that I had met nobody
with whom I had come in contact who did not consider that Persia would have
been far better off with no restrictive legislation such as that for vchich his
Highness was responsible. His Highness replied that I had entirely overlooked
one factor, namely, Soviet Russia; with a free exchange, the Russian Bank would
have bought up all the exchange available at any price and this would still further
have depreciated the kran. I said this surely was an assumption on his Highness's
part, and I doubted whether the Russian Bank were in possession of such a large
amount of krans as to enable them to buy up all the exchange available. In any
case, otner measures, it seemed to me, might very well have been adopted to meet
this potential danger.
4. His Highness, after repudiating my suggestion that he had inspired the
articles against the oil company, then referred to the treaty, and argued that it
was just as much in British as in Persian interests to make it, but that unless we
w ei e prepared to make very considerable concessions it would not be worth while
for Persia even to consider it. I expressed great surprise at this remark, which
I ^id appeared hardly consonant with the facts. His Majestv’s Government
had gpne a very long way to meet Persia's wishes, but the more we offered the
more insatiable became the Persian Government's demands. In any case, a great
many points had been provisionally settled, and His Majesty’s Government held
that if there were any genuine wish on the Persian side to conclude the treaty
the whole thing could be settled in a month or two. In any case, I said,
negotiations were now m abeyance, and it would be for the Persians to make the
next move if they wished them to be resumed.
5 The conversation ended on a less contentious tone, and the usual polite
remar s were exchanged before I took my leave. I regret, however, to say that
the impression left on me by this conversation was one of complete insincerity
and bad faith on the part of the Minister of Court.
Governmmit^/Tndi? a ^ ° f thiS despatch to the Forei g n Secretary to the
I have, &c.