868.51 Refugee Settlement Commission/69: Telegram

The Special Mission at Lausanne to the Secretary of State

453. From Dolbeare:

Department’s 182, June 13, 11 p.m. Two meetings of Finance Committee were held June 22nd and one this morning. At first meeting I made at outset a statement in sense of Department’s instructions. After hearing Parmentier’s report, and examining various aspects of the problem, subcommittees were named to report on:

Whether the assets and revenues offered by Greece constitute effective securities.
For how large a sum would they constitute suitable security.
How shall the revenues be controlled. This morning the three committees reported.

First committee stated that satisfactory assurances must be obtained on the following:

That engagements now entered into be considered binding.
That the Lausanne treaty definitely assign the new territories to Greece without encumbrances which eat up all the revenues therefrom.
That balance of budget be established in near future; that there be no inflation; reduction of expense, particularly of military character.
That release of veto power provided in 1918 loan agreement23 be obtained from United States, Great Britain, and France.

In first meeting president of committee asked all three representatives regarding 1918 agreement. French representative stated agreement had virtually lapsed although not formally terminated. British stated they would not use veto if other Governments did not. I stated: “I regret I have neither information nor authority to reply to your question relating to the 1918 agreement.” In reply to inquiry whether I could transmit question to my Government, I answered: “I will report that question. I doubt whether the short period during which committee holds meetings will permit of a definite reply.” Private conversation with French and British members is reported in separate telegram.24

The second committee reported that financial situation would require Greece either to restrict list of pledges, devoting others to a [Page 344] general loan, or adopt inflation thus depreciating value of securities. They concluded a small loan for refugees was all that could be done now. When pressed they estimated that four or five millions sterling would be limit.

The third committee accepted suggestion of Procter that control be in a commission to consist of two members named by League, two others named by Greece and a president named by League. They could elect a technical director. The third committee, however, devoted most of its report to a new scheme, which originated with Ter Meulen, the Dutch member. He states emphatically (and his views seem to carry weight) that bankers will not now accept any sort of a loan to Greek Government. He proposes, therefore, that:

A private company be formed similar to Crédit National de France.
Its capital shall be £500,000 sterling subscribed by Greek banks (one-tenth to be immediately available) and also agricultural lands to be ceded by Greece.
This company will be authorized to loan shares on these holdings to amount of £5,000,000 sterling. Subscribers to be guaranteed by banks, and these in turn credited to Greek Government which would guarantee service and authorization. To this end Greek Government would assign revenues to be controlled by international finance commission.

This plan found favor and is now being considered. Its advantage is that it includes the Greek bankers, who would later be useful influence if Greek Parliament not inclined to ratify acts of present Government. The disadvantage is that it is difficult to ensure that the funds be applied strictly to work envisaged. League seems reluctant to take any active part in administration of private companies. Solution is perhaps to be found in suitable statutes and right of a League representative to veto any departure from them.

It is estimated that this plan might provide for 100,000 families or about half of the refugees. Committee admits this does not solve whole problem, but states their particular task was to find money. They said they hoped the American organizations would do what they could during the intervening period. I said I could make no promises: The Red Cross would leave some supplies, but was withdrawing personnel and would hand over on June 30th as stated. I added that Near East would continue to take care of its orphans but for this very reason could not make other engagements.

Department will understand that financial committee does not deal with the whole problem which will be considered by special subcommittee of Council to which the financial group reports.

  1. Not printed; see Greek Debt Settlement: Hearings before the Committee on Ways and Means, House of Representatives, 70th Cong., 1st sess., on H. R. 10760 (Washington, Government Printing Office, 1928), p. 51.
  2. Not printed.