Telegram from Ambassador Henry Grady to Secretary of State Dean Acheson, Number 781

NLT (PSF-SUBJ.)296 COPY / OF2 de INCOMING TELEGRAM Department of State TELEGRAPH BRANCH 18-H-X TOF SECRET '538 Action Control: 12027 NEA Rec'd: August 23, 1951 FROM: Tehran 10:01 a.m. Info SS TO: Secretary of State G E NO: 781, August 23, 3 p.m. EUR DCR PRIORITY SENT DEPT 781; RPTD LONDON 171 (EYES ONLY AMBASSADOR) FROM HARRIMAN FOR PRESIDENT AND SECRETARY, NO DISTRIBUTION EXCEPT AS DIRECTED BY SECRETARY'S OFFICE. Stokes farewell talks this morning were highly satisfactory, He told Mosadeg that a firm bridge had been built both by the so-called Harriman formula which permitted negotiations to commence and by exchange of information and views during his stay here. It was agreed that negotiations were sus pended, not broken off and Stokes said he hoped return just as soon as way was found to move present block on bridge. This he described was way to carry out mutually agreed upon objective namely manner in which British staff could be employed to serve Iran oil industry. They both agreed to make friendly and optimistic statements to press and I listened to Stokes remarks to reporters at airfield which were substantially along above lines. He removed from his previously prepared press release sharp language which did not (rpt not) conform to spirit of their understanding. When he saw Ala he apologized humbly for his comments last night and later asked me to make sure that Ala fully realized his chagrin. In his talk with Shah he told him that he did not (rpt not) see how he could possibly arrive at agreement with Mosadeq particularly because of Mosadeg's advisers and because Mosadeq himself really had no (rpt no) conception of problems of production and sale of oil. His other farewell talks were equally cordial. I now plan to try to leave Friday night or Saturday at latest. depending on whether I can have all necessary talks. I hope to see Mosadeq this afternoon and I am invited to lunch with Shah tomorrow. I will go direct to Belgrade for perhaps two days and then to London, as Stokes has urged me to talk DECLASSIFIED E.O. 12065, Sec. 3-402 State Dept Guideline, June 12, 1079 with his PROJECT NL fi-22 By NLT He NARS, Date 4-5-f2 GEORED REPRODUCTION OF THIS .