Ext 5001/41 'PERSIA – INTERNAL (Miscellaneous despatches).' [‎45v] (90/248)

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so late that the salaries due to the unhappy-Government servants have been in
arrear. It is impossible, of course, at the present stage, to make any forecast of
the out-turn for the year as a whole. Revenue is behind-hand because of the delay
in passing the income tax regulations, and it appears quite certain that the
estimate of 885 million rials from this source for the year will not be reached.
At the present time the Government have only been able to tide over their
difficulties by obtaining an advance of £770,000 from the Anglo-Iranian Oil ^
Company in respect of royalties, and the exchequer is in debit nearly up to the
limit of its authorised overdraft of 500 millions with the National Bank.
Similarly, the municipalities are in financial difficulty; the 3 per cent, tax on goods
coming into their areas was abolished as from the end of the last financial year,
and has been replaced by a surtax on the income tax, which they have not yet
received. They have been given short-term loans amounting in all to 36 million
rials from the funds of the National Bank.
53. During the quarter the price index has gone down slightly. The cost
of living figure, which was 1,124 in May, was 1,122 in June, 1,100 in July, 1,121 in
August, and 1,095 in September (1936 = 100). Note circulation, which was
6,261 million rials in June, was 6,235 million in July and 6,125 million in August.
54. Sales of gold for the account of His Majesty’s Government were high
in the first part of the quarter, having amounted to 56 million rials in the four
weeks ending the 27th July, and 92 million in the five weeks ending the
31st August. Since then sales have declined substantially. In the weeks ending
the 7th and 14th September they were 1-2 and 1-6 million rials respectively.
In the week ending the 21st September they were 35,840 rials only. This decline
is clearly the result of the course of the war. The price has been reduced in the
hope of stimulating sales.
55. A delegation, led by A. H. Ebtehaj, the governor of the National Bank,
was sent by the Government to the International Financial and Monetary
Conference at Bretton Woods during July. The contribution of Persia to the
stabilisation fund was fixed at 25 million dollars, and its contribution to the
capital of the bank at 24 million dollars. These contributions, of course, require
ratification by the Majlis.
56. As was expected at the time the last report was written, the United
States Government have declared that they do not wish to be a signatory to the
agreement for the operation of the Persian railway system, which will therefore,
when the time comes, be signed by the British, Russian and Persian Governments
only. The Government of the Union of Soviet Socialist Republics are, however,
still delaying their decisions on two points of detail arising on the draft agree
ment, and it is impossible for the Russian and British Missions in Tehran to
present it to the Persian authorities until these points have been settled. The
continued delay is most unfavourable.
Economic Situation.
57. At the end of the quarter wholesale prices had fallen, in the case of
some commodities quite considerably, so that even a number of bankruptcies were
reported from different parts of the country; but this was almost certainly more
the result of the war news than of measures applied by Dr. Millspaugh or any
other authority. Retail prices showed little signs of following suit and the
shops are plainly determined to extract the last penny from the long-suffering
public. As part of the general effort to oust the Millspaugh Mission, the Sa’ed
Cabinet, before it fell in August, approved a proposal to set up a Supreme
Economic Council to advise the Government on those matters that are at present
the responsibility of the mission. More recently the press reported that the
Government, this time in agreement with Dr. Millspaugh, were preparing a Bill
to modify his powers. In accordance with popular demand, Dr. Millspaugh in
July appointed Dr. Black, Chief Administrator of the Cereals and Bread Depart
ment, his deputy for economic affairs and Mr. Pixley, of the Treasury-General,
his deputy for financial affairs. Mr. Lamb, head of the Price Stabilisation
Section, resigned following a serious difference with Dr. Millspaugh and his
department has been abolisned.
58. An American, Colonel Harold B. Hoskins, has taken over the post of
Chief Representative in Persia of the Middle East Supply Centre and Foreign
Economic Administration (?.£., Lend-Lease), and the latter organisation has at
I last joined forces completely with the Middle. East Supply Centre. Stocks of the
most essential imported commodities, as well indeed of most others, were
adequate for the country’s basic needs, and the shortages that occurred were the