Telegram from Ambassador Henry Grady to Secretary of State Dean Acheson, Number 380

337 INCOMING TELEGRAM Department of State NLT (PSF5UBJ.) 348 TELEGRAPH BRANCH copy / of 2 14-15-X TOP SECRET A Action Control: 13117 Rec'd: July 25, 1951 NEA FROM: Tehran 11:54 a.m. Info TO: Secretary of State DECLASSIFIED SS STATE DEPT. 12-4-fy G NO: 380, July 25, 4 p.m. Authority NLT- 84-16 EUR E DCR By HC NLT Date 12.28.14 PRIORITY SENT DEPT 380, LONDON 73 (EYES ONLY AMBASSADOR) FROM HARRIMAN FOR THE PRESIDENT AND SECRETARY. NO DISTRIBUTION EXCEPT AS DIRECTED BY THE SECRETARY'S OFFICE. I am naturally concerned over two subjects. First, whether E British Government fully understands disastrous consequences of failure to accept in friendly manner gesture of Iranian Government contained in proposal for negotiations through government mission and whether British will not (rpt not) try to spar on conditions which I believe will get them nowhere and will destroy atmosphere essential to successful negotiations. British shld realize extent Iranian Government has retreated from previous rigid positions: (A) Non-insistence on prior acceptance of nine point nationalization law; (B) Readiness to negotiate manner in which first general nationalization law of March 20 is to be carried out; (c) Agreement to negotiate with British Government instead of oil company although insisting that such negotiation be on behalf of company; (D) Readiness to negotiate for foreign-owned company to operate within Iran as agent for National Oil Company; (E) Recognition of Iran's dependence upon goodwill of foreign companies for shipping and foreign outlets, (F) Readiness to negotiate after clear and repeated statement by me that government cannot (rpt not) expect greater income for may than other producing countries under comparable circumstances, and (G) Acceptance of principle that they must deal with 8.3. AIOC in working out above arrangements in spite of widespread hatred and distrust of company. I earnestly hope you and Gifford will continue to use maximum influence to prevent British from trying to settle any substantive question before Minister's arrival Tehran or to discredit Iranian Government before people by demands such as for returning management of oil operations to British before negotiation. Report coming to me from objective American newspaper TOP SECRET REPRODUCTION OF THIS MESSAGE IS PROHIBITED