Old Missoula

 

Arthur C. Millspaugh – History Teacher, History Maker and Persian Oil

 

What MCHS history teacher went to work for the Shah of Persia?

 

Arthur Millspaugh did – twice – from 1922 – 1927, and again 1942 – 1945. He went on to write several books; two of them about Persia and its people.

 

Persia was officially renamed Iran in 1935.

 

Millspaugh’s Missoula connection came in 1912 when he taught history at MCHS for two years. Like a lot of other very talented people, Dr. Arthur Millspaugh didn’t stay long in Missoula. He was on a fast track indeed.

 

Born in Kalamazoo County, Michigan, in 1883, he attended public schools and graduated from Albion College in Albion, Michigan, in 1908. He quickly earned his Master of Arts degree in 1909 at the University of Illinois.

 

He then came to Montana, teaching in Kalispell for two years and then Missoula for two years. After his short stint in Missoula he entered Johns Hopkins University where he received his Ph.D. in 1916, specializing in political science and history. His Vita also mentions “political economy” – a discipline that Dr. Millspaugh pursued on a grand scale.

 

Dr. Millspaugh taught political science at Johns Hopkins for two years and then began working for the U. S. State Department in Washington D. C. as an economic advisor in the Office of Foreign Trade.

 

Keep in mind that W.W. 1 was raging during this period, lasting until November of 1918. This devastating war changed the face of the world. One thing it did not change however, was the world’s growing appetite for oil and like some other Middle Eastern countries, Persia had plenty of it.

 

Foreign political meddling was not new to post W.W. 1 Middle East countries. With respect to Persian oil, the show started in 1908 when a British Company struck the first Persian gusher, and by the next year formed the Anglo-Persian Oil Company. This company eventually spawned into B. P. and at one point the British Government held the majority of shares.

 

In Persia, outside influences intensified with this discovery of oil, but British and Russian interests were active in Persia long before that. Colonial imperialism had already split Persia in 1907 when Russia and Great Britain signed their Anglo-Russian Convention dividing Persia into three zones. Russia controlled the north; a neutral zone acted as a buffer in the middle; and the British controlled the Southeast.

 

That same agreement provided that Afghanistan would join the amazingly long list of British Protectorates.

 

Persia also endured the shock of a constitutional revolution (1905 – 1909) during this period. The new constitutional government included a parliament which set about ending corruption, limiting the power of the Royal Family, and preventing foreign dominance.

 

At that time the United States was viewed differently than Russia and Britain in that it did not enter Persia with a long history of regional interference. With the Persian economy in trouble an American policy advisor, Morgan Shuster, was hired in 1911 to install needed economic reform. This was known as the first of three American Financial Missions in Persia.

 

Millspaugh would lead the next two.

 

Shuster had earlier attracted the attention of President Taft with reforms he enacted while serving as collector of customs in the Philippines beginning in 1901.

 

Upon Taft’s recommendation Shuster arrived in Persia in 1911 with a small team of Americans and soon began modernizing government structure and introducing tax reforms. However, as the treasurer-general, he met resistance from both the neighboring Russian and British interests who resented his tactics and they soon persuaded the Persian government to curb his authority.

 

Shuster was dismissed after a few months. He later documented his experiences in his book, The Strangling of Persia (1912). He roundly criticized outside influences:

 

“It was obvious that the people of Persia deserve much better than what they are getting, that they want us to succeed, but it was the British and the Russians who were determined not to let us succeed.”[1]

 

Three years later, W.W. 1 made life very difficult in many important Middle Eastern countries. The collapse of the Ottoman Empire disrupted governments throughout the entire region. Key among these was Persia which the British invaded and occupied in 1918. After installing the puppet government of Reza Shah the British would stay for more than two decades.

 

In neutral Persia thousands of people had died of starvation and disease during and shortly after W.W. 1. While the British and Russians were busy defeating the Central powers, they vied for control in Persia and the Persian people suffered greatly in the process.

 

One study asserts that the British essentially committed genocide trying to control their interests there. Underlying all of this was the British controlled Anglo-Persian Oil Company which garnered exclusive rights to drill oil in much of the Persian Empire.

 

In his book Great Britain and Reza Shah, author Mohammad Gholi Majd examined the role of British forces in Persia shortly after the W. W. 1:

 

“With the revolution in Russia and the collapse of the Ottoman armies in Persia and Mesopotamia, the British had become the unchallenged military power . . . they quickly set about transforming their military supremacy into political domination and economic control.”[2]

 

A coup d’etat in February of 1921 resulted in the seizure of military power by an obscure Cossack soldier, Colonel Reza Khan, who had previous connections to the Anglo – Persian Military Mission. Though now the new Minister of War, he was an acknowledged British agent and a ruthless leader. Reza Khan would become the new Shah of Persia in 1925 and he would last until W. W. 2. His son, Mohammad Reza Shah Pahlavi, succeeded him and remained in power until the Iranian Revolution deposed him in 1979. He is known as the last ‘Shah’ of Iran.

 

In May of 1921 the new Prime Minister, Qavam-es-Saltaneh, took office and again sought the assistance of American advisors. Later known as ‘old fox’, Qavam would serve as the Prime Minister a total of five times and at one point negotiated personally with Stalin.

 

Qavam’s goal in 1921 was to involve Americans financially and politically, while diminishing the influence of the British and the Russians. He instructed the minister in Washington to “pursue the matter of an American financial team and possible loans to Persia . . .”[3]

 

This effort would later be described as “a futile attempt by Qavam and the Majlis [parliament] to save Iran from the looming abyss of Reza Khan’s dictatorship, which was being rapidly cemented with British help . . . With British financial assistance and support of the British occupation forces, and having been given control of the domestic and military police forces by the British, Reza Khan quickly became the de facto dictator of Persia.”[4]

 

In August of 1922 Dr. Millspaugh was officially hired as Administrator General of Finances in Persia. With his small team of advisors he arrived in November and found that internal strife and the complex issues of British interference would be enormously difficult to overcome. He was no longer teaching high school political theory back in rural Montana.

 

One of the goals of improving the Persian economy was enticing foreign loans and investments, especially in the oil fields. The United States was the acknowledged leader in the production of oil. Big American investors had been reluctant to put their money at risk in Persia. Major oil companies had already been offered, and declined, involvement in some areas not secured by previous agreements. Both Standard Oil of New Jersey and Sinclair Oil Company evaluated the Persian prospects and found that the drawbacks of British and Russian interference, along with the instability of the government, meant too much trouble.

 

In his study on U.S. and Iranian relations, Mansour Bonakdarian noted that Millspaugh arrived under difficult circumstances[5]:

 

“Tehran also expressed its desire to engage another team of American financial advisers. The State Department’s endorsement was obtained before the end of 1917, but it was not until 1922 that a second team of American financial advisers arrived in Iran, led by a person less willing than Shuster to take sides in the factional politics of Iran but equally, if not more, determined to have his own way. The new team of American advisers arrived in Iran at a time of momentous political transformations in that country. In February 1921 a military coup was staged by Reza Khan, an ardently patriotic military officer, and Sayyid Zia Tabataba’i, a pro-British journalist and political dilettante, who would eventually be cast aside by his co-conspirator. The coup, enjoying covert British support, was in reaction to the impotence of the central authorities, the rapid regional fragmentation of Iran, and the establishment of the Soviet Socialist Republic of Gilan with the assistance of the Bolshevik forces in the Caspian province. After the coup’s success, Reza Khan would also attempt to end British military presence in Iran and curb London’s imperial influence, the former task proving easier than the latter. Reza Khan’s swift consolidation of political and military power over the next few years resulted in the overthrow of the ruling Qajar dynasty (1796-1925) and inauguration of Reza Khan’s own Pahlavi dynasty (1925-1979). It was in the midst of these political upheavals that the second American financial mission to Iran, led by Arthur C. Millspaugh, a former adviser at the U.S. State Department’s Office of the Foreign Trade, proceeded with its assignment. This mission, which was ostensibly engaged in “a purely private capacity” and acted independently of the State Department, lasted until 1927, when the new Shah (Reza) terminated it on grounds of Millspaugh’s increasingly domineering conduct and his repeated noncompliance with the Shah’s requests for increased military expenditure. Millspaugh managed to implement a number of reforms, including a new taxation law that hit the poor hard but financed Reza Shah’s Trans-Iranian Railway project, which got underway in 1927. The mission’s accomplishments were repeatedly hampered by internal political rivalries in Iran, wide-spread system of patronage and graft among many leading Iranian politicians, and Millspaugh’s abrasive conduct.”

 

An article by Deepak Tripathi in the Foreign Policy Journal, 6/1/13, presents a different view of Millspaugh’s role in modernizing the economy of Persia:

 

“At this stage, Reza Shah appointed an American, Arthur Millspaugh, to the post of treasurer-general.  Educated at the University of Illinois and Johns Hopkins, where he also lectured, Millspaugh had worked at the drafting office at the State Department and then as a trade adviser. Reza Shah’s decision to hand over the responsibility of reorganizing the economy to an American technocrat looked like a master stroke. It reduced British and Soviet interference in Iran’s affairs. Moreover, Millspaugh and Reza Shah worked well together for some time, and the economy improved dramatically.

 

“Using the shah’s personal authority and the coercive power of Iran’s expanding military, Millspaugh started collecting taxes from those who had been avoiding paying. He made the Majlis raise the tax rates every time more revenues were needed for expansion of the military or bureaucracy. He appointed full-time civil servants to run departments. All this strengthened the authority of the central government under Reza Shah—a remarkable turnaround in a country squeezed between two major imperial powers of the day. Millspaugh stayed in Iran for five years, until 1927. Many Iranians saw him as the man who could liberate them from British and Russian domination and the United States as a friend of their country.”

 

From today’s viewpoint the role that Millspaugh played in Persia during this time is the subject of differing interpretations. The fact that he spent five years as Persia’s fiscal manager leads one to believe that he was an effective manager. It is also significant that he was again hired by the Iranians in 1942.

 

World War II also spelled dramatic changes for Iran. The Allies invaded Iran in August of 1941. British, Australian and Indian forces attacked from the Persian Gulf as well as from Iraq, while the Soviets attacked from the north. Securing the seaports and the Trans-Iranian railroad were primary objectives, along with protecting oil wells and refineries. The Iranians offered little resistance before surrendering within weeks. Reza Shah quickly abdicated and the Allies installed his son, Crown Prince Mohammad Reza Pahlave as the new Shah of Iran. In January of 1942 the new Shah signed a Treaty of Alliance with the British and the Soviets which basically split Iran again. American troops arrived in 1943. Huge amounts of supplies for the Soviet Union were now being funneled through Iran and the occupying forces numbered in the tens of thousands.

 

The famous Tehran conference was held at the end of November, 1943. Attended by Joseph Stalin, Winston Churchill, and Franklin Roosevelt this conference cemented plans to attack the Germans from a second front in France. Strategies for dividing post war countries were another important topic.

 

In 1943 Dr. Millspaugh became part of a three pronged program to establish an American presence in Iran. America’s heavy military involvement comprised 30,000 troops whose task was to provide support for the transport of supplies to the Soviets over the ‘Persian Corridor’. American forces also sought to strengthen the Iranian military and police security. A second mission involved diplomatic efforts to stabilize the Iranian government. The Office of Strategic Services (OSS) personnel were at work analyzing and gathering intelligence. Thirdly, Millspaugh’s mission focused on the Iranian economy and finances.

 

These missions, as noted by John Miglietta in his book, American Alliance Policy in the Middle East . . ., proved to have a longer shelf life than originally intended.[6]

 

“While initially these contacts were established in the general context of meeting immediate American needs in fighting World War II, they quickly began to take on an intrinsic importance of their own. The United States began to broaden its aims in the country and the region as a whole. These centered around acquiring control of Iranian oil, as well as maintaining Iran as a strategic bulwark against the Soviet Union during the cold war. Oil was one of the primary reasons why Iran became important to America and this resource had become more significant during the war.”

 

 

A detailed look at Dr. Millspaugh’s W. W. II experience is found in The Middle East Theater: The Persian Corridor and Aid to Russia by T. H. Vail Motter from the Center of Military History – United State Army – 2000:

 

 

“The second category of Iranian requests, those for assistance in the economic field, came later in the year. Dizzy with the problems arising out of the Allied occupation, the new Iranian Government of Shah Mohammed Reza Pahlevi, having returned to constitutionalism, asked the Department of State to recommend Americans for administrative and advisory posts. As a result, Dr. Millspaugh, invited by Iran, returned there as Administrator General of Finances on 29 January 1943. He accepted the invitation only after the Majlis on 12 November 1942 approved a contract embodying his conditions. By a further law of 4 May 1943 the Majlis empowered Millspaugh to establish or work toward rigid governmental regulation of grain collection, prices, transport, and distribution; and to recommend enactment of a high, graduated income tax to spread the tax burden more fairly and to combat inflation and other war-born evils. The Majlis also authorized employment of up to sixty American specialists and gave Millspaugh power to direct the government’s entire financial program, to draw up the budget, to supervise the operations of the Finance Ministry, to control the inspection department, and to supervise the Americans and Iranians who represented the Ministry of Finance in the provincial capitals.

 

“The ramifications of Millspaugh’s second economic mission to Iran extended to collection of the harvests and supplying bread for urban centers; control of the public domains and administration of the estates of the former Shah ceded to the government on his abdication; stabilization of prices; and regulation of the purchase, distribution, and control of goods. In this area, the Road Transport Department controlled movement of all kinds of goods over Iranian highways and was at one time aided by some fifty British and American Army officers lent by their governments. Another office, the Transport Priorities Office, determined priorities for all civilian goods moved by road, rail, or water. All of these controls were necessarily subordinate to the over-all controls over movements and priorities exercised under the Tri-Partite Treaty by the occupying powers.

 

“Besides the members of the Millspaugh mission, who never exceeded thirty-five, other Americans served in various administrative and advisory capacities. One reorganized the police of Tehran and other cities. Another became in 1944 adviser to the Ministry of Public Health and attacked the increasing spread of typhus in the country. Still other experts supervised the importation of pharmaceutical supplies, and advised on soil erosion and irrigation, petroleum problems, and agricultural education. The account of their work lies beyond the limits of this volume. It is understandable that Millspaugh’s mission, in view of its extensive powers and responsibilities, should eventually have run into trouble and, as in the earlier attempts by Shuster and Millspaugh himself, should have come prematurely to the end of its labors. Millspaugh resigned in February 1945, and, with the exception of a few who remained until 1948 under direct personal contract to the Iranian Government, most of his staff were gone by autumn 1945. Their departure was unmourned by many Iranians. It would be difficult to say who learned the least by the experience, the Iranians or the Americans.”

 

In 1946 Dr. Millspaugh published his second book on Iran – Americans In Persia – Washington D. C.: The Brookings Institution.

 

In 1949 Dr. Millspaugh returned to Kalamazoo, Michigan where he became the Chief editorial writer of the Kalamazoo Gazette. He died in Kalamazoo of heart failure in 1955.

 

 

Closer to Missoula, Dr. Millspaugh wrote an interesting article that appeared in The History Teachers Magazine in Feb. 1915, titled Points of Emphasis in Teaching Government in the West. An excerpt appears below:

 

“From my room in a Montana high school building, it was possible for me to see, in the sweep of an everyday glance, an Indian teepee, a homesteader’s cabin, a fence marking the boundary of a Northern Pacific land grant, two trans-continental railroads, a dry farm, an irrigation system, a National forest, a modern city, and a State University. The whole panorama, with its background of snow-clad mountains, was a suggestive living picture, not at all exceptional either, of Western Civilization.”

 

 

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