IOR/L/PS/18/C199

This file consists of a report from the Political Department, India Office. The report relates to the Anglo-Persian Agreement of August 1919, to which was attached an agreement for the British Government to grant Persia a loan of 2,000,000l sterling, at an interest rate of 7 per cent. The report provides extracts from these agreements before addressing the question of whether existing subsidies to the Persian Government (including a subsidy for general administrative expenditure, a subsidy for the maintenance of the Persian Cossack Division, a personal payment to the Shah, and a subsidy for the maintenance of a force in Khorassan 'to guard against a possible Bolshevik invasion') should be regarded as advances out of the aforementioned loan. The report advises that the loan should not be diverted to 'improper uses' and that any such allocations should be cancelled. It concludes by stating that if the British Government intends to endeavour to promote the progress and prosperity of Persia, then it must face the necessity of continuing to finance the country while the process of reform is taking place, in addition to financing the reforms themselves.