Telegram from Ambassador Henry Grady to Secretary of State Dean Acheson, Number 404

VLT (PSF-SUBJ.) 337 INCOMING TELEGRAM Department of State COPY 20F2 TELEGRAPH BRANCH 18-B-X TOP SECRET 638 A Action Control: 14573 Rec'd: July 27, 1951 NEA FROM: Tehran 12:55 p.m. Info TO: Secretary of State SS G NO: 404, July 27; 4 p.m. VOVN MARIA EUR DCR E NIACT SENT DEPT 404, LONDON EYES ONLY AMBASSADOR NIACT 82. FROM HARRIMAN FOR THE PRESIDENT AND SECRETARY. NO DISTRIBUTION EXCEPT AS DIRECTED BY THE SECRETARY'S OFFICE. British Ambassador and I have discussed his instructions received this morning along lines of Gifford's telegram (29 to Tehran, 543 to Dept). We both agree that these instructions both in substance and more particularly in form, if presented to Iran Government, would cause breakdown in negotiations. Among other points, for example, Iran Govt would read wording of ending of "interference with company's operations" as requiring prior acceptance of court decision or return to status quo as set up by Ambassador under point (1) of four point message despatched prior to receipt proposal. British Ambassador and I agreed that it was difficult in reasonable time to get his instructions changed through tel communication and that best course was for two of us to leave tonight for London. Middleton, British Counsellor, was also present and he made some suggestions as to ways Commission might possibly meet situation from stand- point of both govts. I am hopeful that in personal talks with British Ministers with Shepherd present a practical solution might be worked out acceptable to Rwitish Govt and at same time possible of° acceptance here. NARA I am sure it is necessary to bring with me either British Ambassador or Counsellor Middleton in order that we can present combined views. I would have preferred Middleton but since Ambassador wants to come himself I have no choice. Incidentally, he is being more realistic than described in my telegram earlier today after frank talk between us this morning. British Ambassador is asking London urgently for permission to return with me. We agreed press statement from here would be to effect that British Govt is considering Iran proposal and has asked for clarification on some matters which can be made more clear by personal discussions than by telegram. I am making TOP BECRET REPRODUCTION OF THIS MESSAGE IS PROHIBITED