Coll 28/39(2) ‘Persia. Printed Correspondence, 1937–’ [‎139r] (277/320)

(9)
From British Legation, Tehran, No. 22, dated the 17th February 1940.
Tehran despatch No. 57 of 17th February 1940.
Enclosure to Serial No. (9).
From British Legation, Tehran, to F. 0. London, No. 57, (302|2|40), dated the
17th February 1940.
1 have the honour to report that Mr. J. A. Jameson, a director of the Anglo-
Iranian Oil Company and former general manager in [ran, accompanied by
Mr. Pattinson, the present General Manager, and Mr. Wilson, consultant
architect, arrived in Tehran a few days ago from Abadan. Mr. Jameson, who
left England about three weeks ago, brought a message for the Shah from Lord
Oadman. He was received in audience yesterday and this morning he was good
enough to give me some account of what passed.
2. Mr. Jameson said that he had been given the task of explaining to the
Shah the reasons why the Company were not able to maintain the volume of
sales of their products which had been reached in 1937 and 1938. He had
pointed out that the situation had been fundamentally altered by the outbreak
of hostilities. Before the war many people had assumed that owing to the
requirements of the armed forces the sales of petroleum companies would be
considerably increased. But this view had been shown to be mistaken. Not
only had defence departments laid in large stocks of oil in anticipation but up
to the present the consumption of the armed forces had not come up to general
expectation. Moreover, consumption by other users had fallen very consider
ably owing to the restrictions imposed by His Majesty’s Government on private
owners of motor vehicles. Again, sales w-ere more than ever dependent upon
the factor of shipping facilities, and owing to the longer haul the Anglo-Iranian
Oil Company were at a serious disadvantage as compared with other oil com
panies which supplied European markets. It might be possible to maintain
sales in Far Eastern markets but these were less important than Europe. The
Company had also lost four tankers as a result of enemy action.
3. The Shah, Mr. Jameson said, appeared to be unconvinced by these
arguments. His Majesty said that he w 7 as tired of promises which remained
unfulfilled and he maintained the view that Iranian oil must be in great demand
everywhere. He washed Lord Cadman to know that he looked to the Company
to see that production did not drop below 7 the figures reached in 1937. He also
referred to the connection of His Majesty’s Government with the Company and
he seemed to imply that this fact should benefit Iran. Mr. Jameson thought that
His Majesty meant him to understand that it must surely be to the advantage of
Great Britain to buy oil from Iran rather than from other sources since Iranian
oil could be paid for in sterling and no question of foreign exchange need there
fore arise. He also implied that the money wdiich resulted from sales to Great
Britain would be devoted to Iranian purchases in the United Kingdom and that
it would therefore go back to the United Kingdom.
4. Mr. Jameson thought that the Shah’s refusal to accept the Company’s
explanation w r as not due to his failure to understand the developments wdiich
had taken place since war broke out ; rather w 7 as it due to his unwillingness to
admit to himself that the matter was beyond his control. It wns not in his
nature, once he had set his heart upon a scheme, to admit failure, no matter how
formidable the difficulties might be. In spite of all kinds of obstacles he had
insisted on the completion of the Trans-Iranian Railway and he had had his way.
Similarly, Mr. Jameson thought, he would not admit the possibility that the
royalties from oil could owing to the w 7 ar be seriously reduced. Nevertheless,
the attitude of His Majesty had throughout been friendly and even cordial.
After the main business had been discussed the Shah recalled previous occasions
on which he had met^Mr. Jameson and added that he would be visiting Khuzistan
in about a month’s time. He did not say whether he would include the oil fields
in his tour.
5. Mr. Jameson and his party propose to leave Tehran tomorrow on their
return to the South.
6. I am forwarding copies of this despatch to the Department of Overseas
Trade, the Secretary to the Government of India in the External Affairs Depart
ment, and to the Middle East Intelligence Centre, Cairo.