Iran in the Twentieth Century (2)


by Anonymous4now

The following are excerpts from "Iran: The Illusion of Power" by Robert Graham.  The book was written in 1979 and that is why in many places it talks in present tense about the events of the time >>> Part 1

It was a performance to match the occasion.  On 23 December 1973, while the ministers representing the Gulf members of OPEC were still in formal session, Mohammad Reza Pahlavi, Shah of Iran, called a press conference.  His announcement was a staggering new increase in the price of oil.  The Shah displayed his usual mannered polish but his tone had a new confidence – the confidence of a man who knew that his country’s financial resources had quadrupled in just over two months.  From being a developing country with moderate wealth jostling for recognition in the world arena, Iran had suddenly entered that ranks of the world’s most prosperous nations with the chance to play a corresponding larger role. Unashamedly the Shah turned the occasion into a lecture.  Typical of the message he put across was this answer to a question about the high price of oil: “We are only pricing the minimum it (oil) could be priced in comparison with other sources of energy…. Well, some people are going to say this is going create chaos in the industrialized world; that it is going to be a heavy burden on the poor countries….That is true; but as to the industrialized world they will have to tighten their belts, and they will have to work harder or eventually this help to the other countries of the world will be diminished, and this role taken up – in my opinion – by the wealth of the oil countries.” Some of his statements were more provocative: “Eventually all those children of well-to-do families who have plenty to eat at every meal, who have their own cars, and who act almost as terrorists and throw bombs here and there, will have to rethink all these privileges of the advanced world.” He clearly revelled in the uncomfortable message he was conveying to the outside world.  He was riding the crest of the wave and knew it. 

The most logical industrialisation was to expand the base of the oil industry and diversify into petrochemicals: a sector where Western companies were keen to participate, especially as the world petrochemical market was on an upswing.  About the time of the Soviet agreement, three joint venture petrochemical projects were signed with American companies: a fifty/fifty export-oriented venture with Allied Chemical for ammonia, urea, phosphoric acid and diammonium phosphate; an LPG (Liquid petroleum gas) plant for export on a fifty/fifty basis with Amoco; and a plant to produce PVC and detergents for the domestic market on a 26/74 basis with B.F. Goodrich.  The development of the petrochemical and steel industries through newly formed state enterprises, or foreign joint ventures with state enterprises, accounted for almost 70 per cent of the total industrial investment in the Third Plan (1963-7).

During this period foreign investment, especially American, provided an important stimulus to the private sector in rubber, pharmaceuticals and construction.  The Fourth Plan (1968-72) envisaged greatly expanded industrial development with $1 billion earmarked for public sector projects.  Meanwhile the private sector extended its activities to the automotive field, food processing, and a range of secondary industries protected by high tariff barriers and restrictive import licenses.  Foreign investment in local ventures was often a means of getting round tariff barriers.

The accelerated pace of industrial development was reflected in the number of large units being established in towns throughout the country.  In 1956 Iran possessed a mere 694 such units.  By 1961 the number had increased to 1,191.  This rose to 3,661 in 1966 and took a further leap in 1972 to 5,651.  This represented an annual average increase of 44 per cent between 1956 and 1972.  Half these plants consisted of operations in textiles and foodstuffs, but during this period the percentage of the industrial work-force employed in these sectors dropped from 77 per cent to 57 per cent; while the share of metal industries and machinery rose from 5 per cent to 20 per cent.

Over all between 1959 and 1972 industry’s share in GDP rose from 13.6% to almost 20 per cent.  During the same period agriculture bell back sharply from 30 per cent of GDP to 16 per cent.  

While these figures reflect the growing impact of industry on the economy, they give little idea of the problems involved in getting this far.  Unlike many poorer countries that had been left a colonial infrastructure of communications and utilities, Iran started virtually from scratch.  There was no trained industrial work-force and in most instances facilities such as power, water, approach roads and telecommunications had to be specially installed.  The oil industry, for instance, developed its own separate communications network (as did the military later on).  Building a factory was therefore an infinitely complex process, fraught with unforeseen problems.  As a result the majority of plants were late in their start up and had high cost over-runs.

In fact it would have been difficult for industrialisation to have started earlier.  Before the Second World War the economy was too backward and although the war and the presence of Allied forces occupying Iran helped to generate more income, the occupation was a disruptive influence until 1947.  Third, the loss of income and the disruptions of the abortive nationalisation in 1951 delayed serious industrial development by at least eight years. 

The people who emerged as entrepreneurs during this dynamic growth came from often simple origins.  Traditional wealth from land tended to invest in real estate or services like banking. 

For the most part, the entrepreneurs graduated from trading operations in the bazaar, frequently transferring from traditional commerce via a dealership or agency for one of the international companies. 

Ahmad Khayami, who founded International in 1962, which has become the biggest company in the automotive sector with one of the largest work-forces in the country, is an interesting example.  Born in Meshed in 1928, he came from a traditional bazaar trading background. 

“During the Second World War, I was in the export business selling dried fruits, and by the time the war finished I was bankrupt.  So I established the first car wash service with a capital of Rs. 4,000.  Within four years I became the representative of Mercedes Benz in my native province.  I then left all my business to my brother and came north to Tehran, and 10 years after having this car service, I was able to establish International in Tehran.  In the first stage we used to make buses, mini-buses and trucks by the trade mark of Mercedes Benz.  By the order of the Shah I then started to make cars.  As soon as I started making Peykans [a version of Hillman Hunter using ckd from Chrysler UK], I invited my brother to join me.”

Leaving the general running of International to his brother, Ahmad Khayami moved into chain stores.  He established the Kouroush stores, the first attempt in Iran to Introduce large-scale retailing.  Again this move was made at the request of the Shah.  Then to provide direct supplies to the stores, he set up manufacturing facilities for clothing, branched into furniture production and agribusiness.  Thus within one generation there has been a change from bazaar-type trade right into the heart of the modern sector of an industrial economy and the beginnings of a vertically integrated business.

Just as remarkable is the case of Habib Saabet.  Born in 1903, he went out to work at 14 as an apprentice in a bicycle shop.  With savings he was able to invest in a taxi and from his earnings he bought a second hand army truck which was the basis for Iran’s first road hauling company.  He subsequently was able to obtain the Volkswagen and Pepsi-Cola concessions and develop ventures with General Tire and Rubber, and Squibb.  His business interests now cover almost 50 companies and employ some 10,000 people.  He has also become one of the single richest figures in Iranian business, demonstrating this with an exact replica reconstruction in Tehran of Marie Antoinette’s Petit Trianon at a requested cost of $15 million. 

There are other examples, too.  The Melli Industrial Group of the Iravani family developed from one of the principle cottage industries of the bazaar – shoe-making.  In a generation Melli has become the best grated of all private industrial concerns, owing its own tanneries and dyeing plants, in addition to processing international outlets.  However, the group has expanded so far beyond its origins that the hallmark, its shoes, in no longer part of the holding company’s name.  Melli is now involved in such diversified interests as food processing and international haulage.  The biggest private group also progressed from simple bazaar activity.  The Behshahr Industrial Group was formed by the ladjevardi family in 1944 and was originally involved in the import of consumer goods, raw materials and textiles.  Since then its empire has grown to over 22 wholly owned companies and 26 partnership ventures.

Conditions have been extraordinarily favourable for anyone with a modicum of initiative; nevertheless the adaptation from traditional trading has been remarkable.  Now the new generation taking over from the parents have all had foreign education.

The growth of the Iranian economy has been exceptionally rapid, the majorpart having taken place since the mid-1950s.  Industry in particular has expanded so fast, in such a short time, one forgets just how new it is: very little is more than sixteen years old.  The first agreement to assemble passenger cars, the fiat 1100, was signed in 1960.  The first comprehensive attempt to survey Iran’s mineral resources was initiated in 1962 with the foundation of Geological Institutes.  In that year Iran’s first fertiliser plant at Shiraz began to operate at near capacity.  The first Iranian-assembled tractor left its Romanian-built factory in Tabriz in 1968.  In 1972 the first key engineering units – machine-tool plants at Tabriz and Arak – became operational along with a small aluminium smelter.  The Isfahan steel mill, the Aryamehr Complex, began proper operation in 1973.  The comparative lateness with which Iran reached these industrial milestones underlies the tremendous leap Iran had to make from the poverty and backwardness of the turn of the century. 


Recently by Anonymous4nowCommentsDate
Iran in the Twentieth Century
Jul 29, 2008
more from Anonymous4now


by Nadias on

You are very welcomed and I meant every word of it


I wish you and your family a very happy and blessed life

solh va doosti/paz a vosotros/paix et amitié





by jamshid on

My humble thanks you for your kind comments!



by Nadias on

 Thank for your honest answer.

Actually you are correct that one can only learn so much from the books one reads on Iran.

It is why I asked someone that lived through a lot of it, questions. Jamshid knows of whom I speaketh of. :o)

I must say that he is a very kind and patient man, as I had soooooo many questions. He not once made  me feel like any question was too stupid to ask.

I learned a lot from him. I hope to continue learning more about Iran from him.

solh va doosti/paz a vosotros/paix et amitié




Natalia and Jamshid

by Anonymous4now on

I have not read “Iran between two Revolutions” by Ervand Abrahamian, but it is on my list of books to read.  I feel lucky to be of a generation that grew up in that era and see it all with my own eyes.  An Iranian young enough to have not witnessed any of the progress with his or her own eyes is going to have a hard time deciphering fact from propaganda.  That is not to say that the Shah’s regime or that of Reza Shah’s were perfect, far from it.  If Ervand’s account is objective, which I believe it is from all I have heard about it, he should have talked about those problems, but you have to sum it all up and look at the big picture.  Iran went from being a destitute and insignificant country, in the span of 55 years to being recognized as one of the most progressive and industrial of the developing countries.  Above all it was the quality of life that people were enjoying and they reminisce about, now.  


You are right Jamshid about the nuclear issue.  I had a relative who was married to a German Engineer who was consulting on the Bushehr project.  I also knew a friend who, as a junior officer in the Navy had been hand selected to be on the first team to receive a nuclear submarine, the Shah had purchased from the U.S.  I visited the U.S. Wiesbaden Air Force base with my father in 1978 where senior officers there were congratulating us for entry into NATO (Iran was in the final stages of being considered for membership in the NATO).  How times have changed, and fortunes turned.  Iranians were welcome in all countries and having an Iranian passport was not a liability. 


What do y'all think of.........?

by Nadias on

 Thank you for the other sources of information on Iran. I have already read and own a copy of the book by Nikki R. Keddie

What do y'all think of the book by Ervand Abrahamian Iran between Two Revolutions


solh va doosti/paz a vosotros/paix et amitié





Re: Anonymous4now

by jamshid on

Let's not forget Iran's aquistion of the most modern nuclear technology of the time. And that without any threat of war or sanctions. In fact the Western countries were competing against each other to sell their nuclear technology to Iran.

They were even proud of it:


Contrast that with the events of today. Iran would have had operational nuclear reactors by the early 80s. That's TWENTY FIVE years ago!

Our country was doing relatively fine. Then the likes of Q showed up...


Q, stand by your words.

by jamshid on

Q, stand by your words. Don't change your words for convenience. I read you saying many time that the Saudi kings were/are "puppets" of the US.

You wrote, "and even much of that went to BP and American Oil companies in Iran." 

Where is your proof? You lie for convenience again. Much of "that" went down your throat in the form of taghzieye raayegaan. By the way, whatever happened to taghzieh raayegaan?

The shah was good for Iran, at least better than you guys are.


Thanks for your responses!

by Anonymous4now on

Dariushagha: I did not get your point.  If you are saying that in the last two decades of the Twentieth Century Iran plunged into (and currently is in) the social and cultural norms of 14th century, then I agree with you, but that was not the point of his article.  However if you are saying that under the Pahlavies Iranian society and advancement resembled 14th century norms, then you have a lot of reading to do, if you did not witness the progress and change yourself.  


Q:  If you stop viewing the world through the prism of the Arab Israeli conflict, then you may be able to accept the truth and not some distortion of it.  If you can get off your high horse and actually read what the guy has to say before you feel obligated to opine, he is extremely critical of the Shah and in the limited excerpts I have reproduced, he seems irritated and, as a Westerner, alarmed by the Shah’s statements.  But that was not the point I was driving here.  My intent was to share the experience I went through living in that era with skeptics such as yourself, our esteemed in-house doctor (M.D.) and our in-house najjar (III), through the investigative report of an unbiased reporter with references for all the claims he makes.  In fact the increase in oil revenues due to the Arab oil embargo created havoc for the planned roadmap for progress, created unmanageable inflation and an unordered and unplanned accelerated progress path that caused a lot of traditional small town and village people to migrate to the cities in search of industrial jobs only to find themselves culturally alienated.  Their resistance to assimilate to 20th century norms was one of the underlying causes of the revolution.  The real kicker is the money was not, as had been force fed to us by the left and the religious zealots, plundered (25 billion allegedly stolen by the Shah and 20 billion plundered by buying military hardware), but used for the creation of an infrastructure and an industry base that the IRI still enjoys the benefits of.  


There are many others who have written about Iran’s progress under the Pahlavies. 


Fred Halliday, Iran: Dictatorship and Development

Nikki Keddie, Modern Iran: Roots and Results of Revolution

Jamshid Amoozegar

Fereydoon Hoveida

Ali Dashti


Just to mention a few.


Observer: you have the correct observation.  Many were influenced by propaganda in 1979, and many are still swayed by the clap trap generated by the IRI propaganda machine.  



Real history? Written by IRI, I supose?

by observer (not verified) on

Sorry Q but if you want to be taken seriosuly on this site you must stop reading history according to Khosrow Motazed and his likes. History according to these sources is only good enough for the IRI satellite channels. Why don't you try Foad Rohani for reliability or has declared Najess by the Ministry of Information for being a Bahai?


Sorry, couldn't get past the first paragraph

by Q on

The oil prices only rose as a result of the Arab oil embargo after the War with Israel. This was because of a secret agreement back in August of 1973 between Saudi Arabia, Egypt and several other arab countries. The Shah had nothing to do with it, only went along when everybody else was already committed. If it was up to him, there would be no "extra income", and even much of that went to BP and American Oil companies in Iran.

Naturally when the Americans and Europeans lost out on the oil embargo, they just recouperated the money by pouring "investments" in the middle east getting every last dollar back to Washington and London.

When this writer stopps salivating over the Shah, he could read some real history.



by Dariushagha on

من اول ایرانی هستم.