Coll 28/67 ‘Persia. Annual Reports, 1932–’ [‎262v] (524/644)

the attitude to be adopted towards foreign Powers, to maintain diplomatic
relations with any State which was in diplomatic relations with neither of the
Allied Powers. This wording was adopted so as to prevent the closing of,
e.g., the Netherlands Legation, whose Government was not in diplomatic relations
with the Soviet Government, but it was defective in one important respect: it
secured the closing of the Vichy Legation, but not the closing of the Japanese'
Legation, which had to be secured later by other means. The treaty provided for
the conclusion of subsidiary agreements of an economic and financial nature. The
Persian Government wished to embody in the treaty some of the favours they had
in mind, but the Allied Governments would not commit themselves in advance.
24a. While the treaty negotiations were in progress the Prime Minister
effected minor changes in the Government, which had been accused by the people,
not without reason, of representing the old regime of oppression, corruption
and subservience to the will of a despot. Popular clamour was directed even more
loudly against the Majlis, on the same grounds and with even greater justification.
The Prime Minister, however, hesitated to dissolve the Majlis, not only because
this could not have been effected without a technical breach of the Constitution,
but also because he feared that the areas in Soviet occupation might return
Communist Deputies.
25. The Government that found itself responsible for the conduct of affairs
after the abdication of Reza Shah had no lack of problems on its hands. It had
to regularise its relations with the Allies and to struggle with the criticism
released by the fall of the despot; while the problems of the food supply, the
financial situation and the growing insecurity in various parts of the country
gave them no respite.
26. The late Shah’s short-sighted economic policy, whereby the staple
occupation of the country, viz., agriculture, was neglected and an ill-conceived
and over-rapid programme of industralisation was pursued without regard to
its effect upon the population, had been leading up to a crisis for some years.
There was already a warning sign in the winter of 194CMJ, when the huge silos
erected at so great expense stood empty and wheat had to be imported from
India. Local wheat production had fallen off, partly because the Shah encouraged
the growing of cotton and sugar-beet without increasing the supply of water,
but mainly because, in order to keep down the price of bread in the towns, he
fixed so low a price for the compulsory purchase of surplus stocks that the wheat-
grower tended to limit sowings to his own needs. In normal times it would have
been easy to make up the shortage by imports from outside, but not only was
shipping short throughout the year, but there was the serious interruption
resulting from the occupation by foreign troops, and by local disturbances in
which grain was often stolen or hidden. Sugar, of which Persia normally used
to import some 80,000 tons, was also short, because of the shipping shortage
and the long distance between Persia and the normal source of supply, Java;
and this shortage was accentuated by the lack of security and of internal transport
after the occupation, which resulted in a reduction of the quantity of sugar beet
carried to the factories. Great efforts were made by His Majesty’s Govern
ment, on grounds both of humanity and of policy, to send supplies of wheat and
sugar to Persia as soon as possible after the occupation, and by the end of the
year they had despatched about 45,000 tons of wheat and 36,000 tons of sugar,
of which about 38,000 and 15,000 tons respectively had been already landed at
Persian ports. This creditable result did not prevent the Persian broadcasters
from Berlin from alleging that the Allies, and especially the British, were
removing food supplies from Persia, and these allegations easily secured acceptance
in the suspicious minds of many Persians; and on one occasion the mistaken belief
that it was the British military authorities who were removing from Hamadan
wheat, which was, in fact, taken away by the Persian Government for the civil
population elsewhere, led to a hostile demonstration, in which stones were flung
by Persians at British troops, who eventually had to fire, and thereby caused the
death of several of the demonstrators. Publication of the facts, and ocular
evidence eventually weakened, if it did not eradicate, the belief that His
Majesty’s Government were taking the Persian’s food away.
27. The financial situation was already bad at the time of the occupation.
The budget for the current year was largely imaginary, and the new Minister
of Finance estimated that income had been over-estimated by some 500 million
rials and expenditure underestimated by a like amount. The falling-off of