'File 60/20 I (C 93) Imperial Bank of Iran: Bahrain, etc' [‎45r] (91/409)

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Enclosure in Foreign Office covering letter dated 21st December 1927
No. E.-5442/3100/34.
{Received on 7th January 1928 with Political Secretary's letter No. 51,
dated the 22nd December 1927).
Letter from His Majesty's Minister, Tehran, to the Foreign Office,
London, No, 585, dated the 1st December 1927.
. - ^ . . . . . . . , . /.I . ■ .• i . . ■ -
With reference to my despatch No. 554-Confidential of November 10th
{S. No. 47), I have the honour to inform you that the Imperial Bank
of Persia came to a settlement yesterday with the Minister of Finance
on a number of outstanding questions. 'Mr. Wilkinson, Chief Manager of
the Bank, explained to me in general terms the nature of the settlement
which has been made for a period of six months.
2. The chief points are :—
{a) The Imperial Bank will continue to transfer Government funds
from one part of the country to another at par without com
mission.
(b) The Bank will continue to accept depreciated coins on the terms
previously arranged at all their branches.
{c) The Persian Government will confide all Government funds to
the Imperial Bank.
{d) The Persian Government, will leave the amount of the
A. P. 0. C. royalty, about £1,400,000, in London, the bank
paying interest at the rate previously offered. As a conces
sion to the Persian Government the Bank will allow interest
on this sum at a reduced rate for the period November 2nd—
30th.
{e) The Persian Government grant to the Imperial Bank an option
for an indefinite period to import £500,000 worth of silver
bullion free of duty.
3. >Mr. Wilkinson tell^ me he found it necessary to adopt a very
firm attitude and to make Prince Firuz realise that he had no intention of
giving way and if the Persian Government wished to obtain the concessions
he was prepared to offer they must meet him in the same spirit. He held
two trump cards of great value. Firstly the engagement to transfer Gov
ernment funds at par was of inestimable benefit to the army and pressure
was put on him and subsequently on Prince Firuz by the Shah himself to
obtain a continuance of this arrangement. The Imperial Bank alone could do
this. If the army had to rely on Bazaar merchants to effect these transfers
or even if they were to be made through the local financial agents of the
Ministry of Finance, long delays were inevitable, big commissions would
be demanded by the Bazaar merchants, corruption was certain on the part
of the financial agents.
4. Again there was the question of the depreciated coin. Unless the
Persian Government were going to be reasonable he flatly declined to allow
his branches to continue accepting it. He had warned Prince Firuz of
this long ago. The Prince had ignored his warning and continued to,
obstruct the Bank. Now His Highness was reaping the whirlwind of pro
tests from all the bazaars in Persia and was trying to induce the Bank as
an act of grace to help him.
5. I understand from Mr. Wilkinson that he was very satisfied with
the arrangement concluded especially with the option to import silver free
of duty. He knew that Teymourtache and Prince Firuz hoped to come to
terms with the Russian bank whereby the latter would receive a portion of
Government funds. The Russian Bank however are not in the position to