Telegram from Ambassador Henry Grady to Secretary of State Dean Acheson, Number 761

NLT(PSF-5UB5.). 295 INCOMING TELEGRAM Department of State copy 1002 17-H-X TELEGRAPH BRANCH TOP SECRET A Action Control: 11990 Rec'd: August 23. 1951 NEA FROM: Tehran 8:52 a.m. Into TO: Secretary of State is G EUR NO: 761, August 23, 9 a.m. E DCR PRIORITY SENT DEPT 761, RPTD LONDON 166 EYES ONLY AMBASSADOR FROM HARRIMAN FOR PRESIDENT AND SECRETARY NO DISTRIBUTION EXCEPT AS DIRECTED BY SECRETARY'S OFFICE. Mosadeq called on Stokes and myself last evening (Wednesday) at 7:30. He opened his remarks by saying that he could assure Stokes he would agree to operating arrangements which would satisfy British staff and that he therefore wanted to go on and discuss the other points. Stokes maintained that he must settle operational question first and after agreement on that he would proceed to other points. Mosadeq showed clearly that he did not want to be rinned down on management question but become involved in financial matters and come back to the first question only if other points TRUMAN were settled. When Stokes pressed him on arrangements for British staff, he showed he had no comprehension of the 3 NARA matter. Thereupon Stokes declined to proceed, stated he would leave today (Thursday) but would loave today (Thursday) but would gladly return as soon as government was prepared to deal with question of staff in workable manner. He and Mosadeq agreed negotiations were not broken off but were only suspended and could be reopened at any time on basis so-called Harriman formula. At a few minutes before 9 o'clock he handed Stokes and myself document in Persian explaining that this stated the Iranian Government position on over-all problem. When Stokes asked that it not be published until he had had chance to study it with his government in London, Mosadeq replied that it had already been released. It was quoted on Iran Radio at 9 p.m. Text transmitted in immediately following clear telegram. Ala called on me later with message from Shah that he felt Stokes had been too abrupt in ending negotiations and hoped I could induce him to stay. I took him up to see Stokes who explained that he had worked for almost three weeks without DECLASSIFIED real progress Authority. NLT 1999-040 #4 NARA, Date 7/16/07 REPRODUCTION OF THIS Sy so TOP SECRET MESSAGE IS PROHIBITED