891.51/344
The Minister in Persia (Kornfeld) to the Secretary of State
[Received June 4.]
Sir: I have the honor to enclose herewith memorandum submitted to me by Mr. L. E. Bennett,20 representing the Ulen & Company of [Page 560] New York City, relating to the loan his company would have to negotiate should it be awarded the contract for the construction of railways or motor roads in Persia.
To my mind, Mr. Bennett’s suggestion to combine the Ulen loan with that of the Sinclair Exploration Company has much in its favor. Mr. Lambert Molitor, the Director General of Customs, advises me that normally the Persian customs amount to Tomans 6,000,000 per annum. Of this, 2,500,000 are pledged for the yearly interest and amortization of the funded British loan. The remaining 3,500,000 ought to be sufficient for the payment of the interest and amortization of a loan of $20,000,000, provided, of course, that the Persian Government would obligate itself not to divert any of these customs for any other purpose. The best assurance for this would be the continuance of the American Financial Mission. Unless the Ulen company succeeds in combining its loan with that of the Sinclair company, there is no doubt that the latter would endeavor to obtain a lien on all these customs. The only collateral that would then be available would be the Anglo-Persian oil royalties, which, though the property of the Persian Government, the British might oppose being given as security for an American loan for the construction of railways for which they claim to have an option.
In view of the statement made to me by the Prime Minister in regard to the manner in which Persia intends to draw the funds placed to her credit by an American loan, (see Legation’s despatch No. 467 of April 23),21 it would appear that there is a far greater sense of responsibility and economy in the present government than in those that preceded it. There is every indication that this government will maintain itself for some time; but even if it should fall sooner than expected, it will have set a wholesome example to its successors. This therefore would seem to be an opportune time for American enterprise to gain a foothold in Persia. If the Ulen company’s project could be launched it might be the beginning of a great industrial movement in Persia.
I should be very pleased if the Department would communicate to me its impression of the views expressed in the enclosed memorandum.
I have [etc.]