Close To the Vest

Henderson Assures the Shah of British “Sincerity”

The Mossadegh Project | October 30, 2018                     

U.S. State Department | Iran Documents (1951-1954)
Iran Oil Consortium | Archive of Documents (1953-1954)

888.2553/4–1354: Telegram

No. 456

The Ambassador in Iran (Henderson) to the Department of State [Loy W. Henderson to State Dept.]

TEHRAN, April 13, 1954—5 p.m.


2120. Noforn. [no foreign dissemination] Limited distribution.

Ambassador Loy W. Henderson 1. This morning Hoover and I had [an] informal and friendly audience [with the] Shah lasting one and [a] half hours. [Under Sec. of State Herbert Hoover, Jr.] He [is] primarily interested in various aspects [of the] impending negotiations with [the] consortium but also asked many questions regarding [the] coming compensation negotiations with [the] British. Regarding [the] latter we assured him [that] it [is] our understanding [that the] discussions [are] limited solely to [the] determination [of a] lump sum for loss and damages arising out [of] nationalization, after consideration [of] Iranian counterclaims. Compensation for [the] value [of] assets and for future profits would be included as part [of the] consortium agreement if [a] satisfactory solution to other problems [are] achieved.

2. [The] Shah expressed concern regarding currency negotiations with [the] British, that Iran would not have sufficient dollars if operations [are] conducted in sterling. We explained [that the] matter [is] one of extreme complexity and endeavored [to] assure him we believed [the] British would be sympathetic and fair in working out [a] solution satisfactory [to] both sides. We stated it [was] our understanding [that] Saudi Arabia, Kuwait and Iraq also operate on [a] sterling basis, which he had not appreciated as had believed they still paid in gold. He appeared satisfied [with] our explanation.

3. Hoover told [the] Shah [that] he had not had [the] opportunity [to] discuss currency matters with Ebtehaj in Washington for several months and did not know [the] latter’s latest thinking, for which he had great respect. [Abolhassan Ebtehaj, who developed Iran’s banking system, then Chief of the Plan Organization and a recent International Monetary Fund advisor] I asked directly if Ebtehaj [was] coming [to] Iran soon, but [the] Shah appeared not to know. (We [are] considerably concerned that Iran may not have competent negotiating advice on [the] currency question, and hoped [to] plant [the] idea of getting Ebtehaj here [at the] soonest as [the] British [are] obviously playing [their] cards very close to [the] chest and have refused [to] consult with us regarding their full intentions. We do not feel [it would be] appropriate [if] we attempt [to] advise [the] Iranians regarding these matters under [the] present circumstances.)

4. As on former occasions [the] Shah again asked regarding [the] sincerity and good will of [the] British. Hoover assured him he [was] convinced that His Majesty’s Government sincerely wished [to] arrive at [a] fair settlement [of the] oil problem and [was] cooperating fully [to] bring it about. [The] Shah then stated [that] he had some doubts regarding [the] sincere desire [of the] AIOC [to] see [a] solution effected and asked Hoover’s opinion. [Anglo-Iranian Oil Company] Hoover replied [that] he believed [the] AIOC [is a] fine organization, many of whose personnel [are] friends and admirers [of] Iran. But occasionally there were difficult personalities to contend with in industry just as there were sometimes in governments but that time usually took care [of such] such matters. I stated I [was] sure His Majesty’s Government would not allow such [a] factor [to] interfere with reaching [an] equitable settlement.

5. [The] Shah asked further questions regarding management and refining as well as plans envisaged [to] conduct negotiations. We answered in general terms and repeatedly endeavored [to] assure him of [the] good will and sincerity [of] all concerned.

6. [The] Negotiating group has since [its] arrival been reviewing plans for negotiations with ourselves and [the] British Embassy in anticipation [of the] first formal meeting with [the] Iranians [on] April 14. [The group representing Western oil companies arrived April 11th]


[Annotations by Arash Norouzi]. Bracketed text added and abbreviations removed for better readability.

• Source: Foreign Relations of the United States, 1952–1954, Iran, 1951–1954, Volume X (1989).

• The U.S. State Department Office of the Historian notes that Henderson’s cable was “repeated to London”. That’s rather surprising, considering the parenthetical comment in line 3, and the “no foreign dissemination” directive at the top.


Related links:

Ambassador Loy Henderson on Iran Oil Consortium Details (May 1954 Cable)

Sec. of State John Foster Dulles Advises British on AIOC Legalities (Jan. 26, 1953)

Loy Henderson Discusses Compensating Britain With Premier Mossadegh (Jan. 28, 1953)

MOSSADEGH t-shirts — “If I sit silently, I have sinned”

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