خارجي ٤١/٥٠٠١ "بلاد فارس - الشؤون الداخلية (إرساليات متنوعة)". [و‎‎٨‎١] (٢٤٨/١٦١)

given to me in your telegram No. . 755, namely, to effect arrests ourselves. On the
2 nd September the Persian Government, in agreement with my Soviet colleague
and myself, issued a communique justifying their attitude in regard to the
arrests. •
Finance.
18. 1 here has been little or no change in the financial situation, which
continues to be critical. Prices continue to rise, and the condition of the poorer
classes and lower-paid Government officials is serious. In spite of pruning of all
estimates by Ur. Millspaugh, Government expenditure continues to rise and there
is a constant excess of expenditure over revenue. Attempts to raise additional
revenue by income tax or other means continue to be stultified by obstruction by
the Majlis o 1 ’other interested parties. Sales of gold and silver, both for British
and ior Persian account, have been carried out. but not on a sufficient scale to
check the rise m commodity prices. Faced with a large deficit on the budget for
C ^ii - elll £* ■ vear ’ ■^ r ' Millspaugh advised the Persian Government to approach
the Allies for a loan, and also to request the Anglo-Iranian Oil Company for an
advance against this year’s royalties.
19 - Income Tax Bill prepared by Dr. Millspaugh was submitted to the
Majlis on the 28th May. It provides for a sharp increase in contributions in the
hig.iei income levels, with the avowed object of recouping from merchants
contractors and landowners some of the extravagant profits made by them during
the past year. It has been bitterly obstructed in the Majlis, where the parties
affected are most strongly entrenched, and its passage in something like its
original form, or its rejection, may well mark the ultimate success or failure of
the Millspaugh Mission.
20 . The budget, which was submitted to the Majlis on the 29th July,
estimated revenue at 1.890,795,096 rials and expenditure at 3,297.718,537. To
the estimated deficit of some 1,406 million rials Dr. Millspaugh expects that it
will be necessary to add a further 500 million rials to provide some compensation
to Government officials for the steep increase in the cost of living. As it will in
any case take some considerable time for the income tax law (if and when passed)
and other proposed measures to raise additional revenue in Persia, Dr. Millspaugh
has advised the Government to request the American and/or British Govern
ments for a loan sufficient to cover the total deficit of 1.900 million rials.
A fuithei ievolving sum of oOO million rials is needed to finance gram collection,
and Dr. Millspaugh has recommended that if possible this sum" should also be
borrowed from the Allied Governments. In addition to this, the Persian Govern
ment have been obliged to approach the Anglo-Iranian Oil Company for advances
on the oil royalties payable in 1943-44. The latter approach was successful; the
former is still under consideration by the Governments concerned. Meanwhile
Dr. Millspaugh is hopefully looking round for financial windfalls. Having asked
His Majesty s Legation to try to obtain advances on account of freights due by
the Allies to the Persian State Railways, he found himself presented 0 with a bill
tor over 200 million rials due to the United Kingdom Commercial Corporation*
tt V r^ lspaU - gh then su g.g este( ? that he . be given a respite by setting off the
U.K.C.C. claim against his claim for railway advances.
21 . In pursuit of price stabilisation Dr. Millspaugh continued to issue
regulations under the authority of the special powers conferred on him by the
Majlis. The I rice Stabilisation Section has been given extensive powers in
respect of foreign trade, rent control, control of motor vehicles and tyres, control
of transportation and sale of cereals, &c. A Government Pharmaceutical
Institute has been established. Dr. Millspaugh recognises that such measures
cannot alone stabilise prices, and that they must be "supplemented by internal
borrowing and emergency taxation. A project for issuing Treasury bonds is
before the Majlis. In his latest monthly report he expresses optimism regarding
the prospects of control of speculation and inflation, but the results of°all his
labours are as yet hard to find and very few share his optimism.
22 . The cost of living index has moved from 910 in June 1943 to 917 in
August 1943. The quantity of notes in circulation has increased from
4,058 millions in June to 4,307 millions in August 1943. The presence of Allied
troops makes further expansion inevitable, but every effort is being made to keep
the expenditure by British forces as low as possible. The acute shortage of
currency notes which was experienced a few months ago has been eased bv fairlv
considerable arrivals from the United Kingdom, and more are en route.
23. With the double object of obtaining rials for His Majesty’s forces and
ot ieducing commodity prices, sales of gold coins for British account were begun
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