Ext 5001/41 'PERSIA – INTERNAL (Miscellaneous despatches).' [‎114r] (227/248)

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its “ cover.” This commission had not concluded its deliberations (in fact, it is
still studying the question) by the time that the currency situation had become
so acute that immediate action by the Government and the Majlis was necessary
if a crisis was to be averted.
10. Finally, as I reported i n my telegram No. 1168 , the Majlis passed a Bill
on the 12th September, 1942, authorising an increase in the note-issue of a further
*V 300 million rials, thus bringing the total authorised issue to a new maximum
of 3,000 million rials. The additional issue is statutorily “backed” by the
existing “ coin.”
11. This measure is in the nature of a stop-gap until the Government has
decided its long-term policy. The additional issue should suffice for probable
needs during seven or eight weeks at current rate of British expenditure.
12. Under pressure from the Prime Minister the Bill passed through the
Majlis without much difficulty by 75 votes to 1, with 11 abstentions. In the
course of the debate, however, there was much uninformed and a certain amount
of hostile criticism. Fears were expressed lest the increase in the supply of
money might raise the already high cost of living, and the general tone of the
debate as published in the local press ascribed the whole responsibility for the
increased cost of living to Persia’s obligation to supply His Majesty’s Govern
ment with their large requirements of local currency. The Government spokesman
did little to dispel this.
13. I have pointed out to the Persian Government that efficacious remedies
against inflation are at the disposal of the Government itself, and that only by
introducing and, above all, enforcing additional taxation, legislation to prevent
hoarding and cornering, price control, and the various other appropriate measures
of the kind can the cost of living in present circumstances be kept within
reasonable bounds. The Prime Minister has assured me that all these questions
are now engaging the active attention of his colleagues and himself.
14. In view of the bias given to the subject by the press report of the
debate, I am making arrangements for press articles and a radio broadcast on
the subject, to place before the public the degree of responsibility for the present
situation that rests on the shoulders of the Persian Government itself, and the
extent to which the remedies to improve it lie in the Government’s own hands.
And I am also suggesting to the Prime Minister that even if anti-Allied speeches
are made in the Majlis, that is no reason why they should be published and create
unnecessary difficulties for the Government and for ourselves.
The Food Supply.
15.. The proposal for a Food Board mentioned in paragraph 19 of my
^V> despatch No. 248 of the 28th July did not materialise, but in accordance with
our views the Prime Minister has established a separate Directorate of Food
and the Minister, M. Ardalan, has worked in close co-operation with Mr. Squire,
counsellor at this legation. The Prime Minister has sent telegraphic instructions
to all governors in the provinces that the collection of wheat is their most
important duty and that the severest measures, including the death penalty, are
to be taken against hoarders.
16. One of the principal difficulties in dealing with the food problem in
Persia is that local authorities are afraid to take action against powerful
landowners. The consular liaison officer scheme has, for this reason, not altogether
fulfilled our original hopes that it would frighten the landowners into ready
delivery of their surplus grain, but it has given us a means of checking on the
spot whether or not the orders of the Central Government are being carried out
and has brought an increase of strength to our hard-worked consulates in coping
with this most difficult problem. Landowners’ declarations of their wheat surplus
available for purchase at the official price were due to be in the hands of the
authorities by the 22nd September, but it is already clear that provincial officials
will make little effort to obtain more than local requirements and will leave
Tehran and the deficit areas of the south to fend for themselves, although the
harvest has, generally speaking and with the exception of some localities, been
good. Disappointed in their request made in London for 120,000 tons of wheat,
the Persian Government are now starting to take measures to buy wheat from
the peasants at the free price in a number of areas and to pay the peasants for
their surplus grain partly in cash and partly in much-needed piece-goods,
sugar, &c. The areas at present affected are along the Iraqi frontier, and it was
hoped that this procedure might stop smuggling which, owing to the great
disparity between the official Persian price and the price of grain in Iraq, was
denuding those districts of grain.
[35—6] b 2