Papers Relating to the Foreign Relations of the United States, 1924, Volume I

868.51 Refugee Loan, 1924/48: Telegram

The Secretary of State to the Minister in Greece (Laughlin)

[Paraphrase]

Washington, December 6, 1924—3 p.m.

88. Department informed by Guaranty Trust Company of New York that it has been approached by certain London banks on matter of participating to extent of $10,000,000 to $15,000,000 in loan of £12,500,000, the flotation of which is projected for the Refugee Settlement Commission.⁷ Banker’s inquiry as to Department’s attitude was pursuant to course usually followed in accordance with Department’s statement of March 3, 1922;⁸ Department replied that in light of information before it no objection was offered to the flotation of this amount of Greek refugee loan in the American market.⁹ Department has not been informed whether Guaranty Trust Company has decided to proceed with the matter and has requested that for time being its possible participation be not divulged.¹⁰

In view of humanitarian interests involved, Department did not condition its prompt and favorable reply to the company’s inquiry upon action to be taken by Greece to regulate any of the outstanding questions between Greece and the United States, including question of Greek financial obligations to this Government. Nor did this Government make its consent to the pledging by Greece of fresh security for an external loan contingent to the performance of any act by Greece herself. Not only in dealing with these questions but in regard to all matters which have in any way been related to the amelioration of the refugee problem, the Government of the United States has acted with marked consideration towards Greece.

Department thinks it would be only proper and right, therefore, that Greece on her part show a spirit of willingness to settte the few questions of importance between the two countries, especially at the present time when it is planned that a Greek loan be floated in the American market. The outstanding questions are:

(1) The exchange of notes in regard to most-favored-nation treatment.¹¹

(2) The loan agreement of 1918.¹²

(3) Funding of the Greek indebtedness to the United States.

The Government of the United States does not think that it is under any further obligation to make advances to the Hellenic Government under the agreement of 1918, and feels that in candor and fairness to that Government it should be informed of this view. If Greece will make satisfactory arrangements for the funding of the Greek debt to this country, the Treasury will be willing to recommend that Greece be relieved of the obligation to obtain consent of the United States to the pledging of any new security for external loans. A helpful effect upon the position of Greek securities in the American market would undoubtedly follow the prompt announcement of Greece’s intention to initiate the negotiations referred to. In view, furthermore, of the Greek–Canadian Agreement¹³ and the interest which Greece is paying to Canada, it seems only just and proper that action should be taken at an early date to regulate Greek indebtedness to this Government.

In the Department’s opinion any attempt by the Hellenic Government to insist upon further advances under the agreement of 1918, in the light of the agreement made with Canada in 1923 as well as for other reasons, would be unjustified, and, in the light of present circumstances, would necessarily be met by the statement that in the agreement between Greece and Canada the former Government appears to have violated the agreement of 1918 and that the Government of the United States is under no obligation to make further advances.

Department desires you to broach this whole matter promptly to the Hellenic Government through informal conversations, unless you feel that the present moment is not favorable, with the object of effecting an early settlement of the three questions listed above. To the extent that you deem wise under the circumstances you may make use of the foregoing in your conversations, refraining, however, from referring to the Guaranty Trust Company by name.

You are to telegraph Department should situation arise in which a written communication to the Hellenic Government appears to be desirable in your opinion, or if further instructions are needed.

Hughes

7. Letter from Guaranty Trust Co. not printed. For other correspondence concerning the Greek Refugee Loan, see vol. ii, pp. 282 ff.
8. Foreign Relations, 1922, vol. i, p. 557.
9. Department’s reply not printed.
10. On Dec. 13 the Department informed Minister Laughlin that the Guaranty Trust Co. had turned the negotiations for the issue in the United States of the proposed loan over to Speyer & Co., New York City (file no. 868.51 Refugee Loan, 1924/53).
11. See vol. ii, p. 273.
12. See Greek Debt Settlement: Hearings before the House Committee on Ways and Means, 70th Cong., 1st sess., on H. R. 10760 (Washington, Government Printing Office, 1928).
13. See ibid., p. 56.