Telegram from Ambassador Henry Grady to Secretary of State Dean Acheson, Number 786

JOF NLT(PSP-SUBT) 294 INCOMING TELEGRAM Department of State copy 1002 17-H-X TELEGRAPH BRANCH TOP OECKET A Action Control: 12625 S. THOMAS Rec'd: August 24, 9 1951 NEA FROM: Tehran Info ARCHIVES "NATIONAL SERVICE" RECORDS AN A 7:06 a.m. TO: Secretary of State DECLASSIFIED SS E.O. 11652, Sec. 3(E) and N(D) K 154 G NO: 786, August 24, noon Dept. of State letter, 4-16-74 EUR PROJECT WLY 78.2 E By NLT His NARS 9.24.7f DCR PRIORITY SENT DEPT 786, RPTD LONODN 173 (EYES ONLY AMBASSADOR) FROM HARRIMAN FOR PRESIDENT AND SECRETARY. NO DISTRIBUTION EXCEPT AS DIREC TED BY SECRETARY'S OFFICE. At request of Shah, Ala told me Thursday that Mosadeq had seen Shah and that he believed Mosadeq was now more concerned about future and was prepared to settle the oil business. He asked that I stay over for few days to see if I could reach an understanding. I replied that I was seeing Mosadeq that afternoon and would spend all day Friday which would give ample time if he in fact was ready to face realities. Busheri also told me that Mosadeq wanted to 'speak from his heart to me", that he was now ready to settle basic points of management and price of oil on a practical basis, and that he hoped my call was not (rpt not) to be only PPC . I replied that of course I would listen to and comment on whatever Mosadeg wanted to say and take to London any constructive suggestions that might be evolved. Thus encouraged I repaired to Mosadeg's house with determina tion to see if I could make some further progress. We first discussed management questions. Mosadeq in general terms said he would agree to contract with agency to conduct operations providing British would agree that board of directors of agency would consist, as Stokes once informally proposed, of two Iranians, two British and two Americans and that these directors would select general manager. As he had previously abruptly turned down this idea, I got impression 1t might be possible to settle this question so T pushed on to price of oil and compen sation. On this I go: nowhere. He maintains same position he took on my arrival. He expects to take all the profits after payments for compensation for assets. Price of oil received would be Persian Gulf quoted price less perhaps a small dis- count He said Iran public opinion expected this and he was helpless to accept any other deal. I suggested he and his ignorant TOP SECRET REPRODUCTION OF THIS MESSAGE IS PROHIBITED