868.51 War Credits/479⅞
The Greek Legation to the Departments of State
In order that the capacity for payment be fully appreciated, it must be borne in mind that Greece has been at war continuously since September 1912 until April 1923. This war resulted in an internal disturbance which aggravated the economic situation of the country. The war expenditures and refugee needs are estimated by experts at 63,400,000,000 pounds Sterling, from which only 26,000,000 will be covered through external loans, and the balance from Greece’s own resources. As a result of the defeat in Asia Minor, the war material was entirely destroyed and the replacement strictly imposed for the elementary defense of the country has cost more than 3,400,000,000 Drachmas. And despite the compulsory consolidation of the interest bearing notes by the Dictatorial Government, there remains still a floating debt for the payment of the most urgent part of which the League of Nations has considered as indispensable the sum of 3,000,000 pounds.
The deficit of the year 1927–1928 estimated on the basis of the results of the financial exercise of the previous year and the additional obligations, has been figured at 2,600,000,000 Drachmas. Superhuman efforts are being made in order to cover this deficit and create a steady balance, through the realization of economies, mainly in the expenditures in the War and Navy Departments and through the increase of the existing taxes. The taxation burdens, however, have attained such large proportions that they have exceeded the resistance of the people as is evidenced from the decrease noted in the tax revenues. In fact, despite, the heavy new taxation, the revenues of the first semester amounted to 3,645,000,000 Drachmas, against the estimated revenues of 8,829,000,000; that is, a deficit of revenues for the first semester of 770,000,000 and for the whole year of 1,540,000,000. This deficit must be reduced by superhuman efforts in order to improve the revenues of the second semester. However, it is evident that the resistance of the people is exhausted and that any further increase of taxes is excluded since the results are directly the opposite of those anticipated.
Upon the new exercise will be imposed additional expenditures pertaining mainly to the public debt of 634,000,000 Drachmas, of which 258,000,000 will be used for the loan to be contracted for the settlement of refugees and the consolidation of 138,000,000 Drachmas for the public Ottoman Debt; 91,500,000 for the assistance of the State railways; relative to the service of the loans contracted during the Dictatorship; 30,000,000 for the loan relative to the fulfillment of the Greco-Bulgarian agreement on the exchange of populations; 32,000,000 for the loan relative to the indemnities to be paid to those who abandoned their properties in Turkey and 50,000,000 for increasing the amount [Page 14] already used for the payment of the debt to the National Bank of Greece.
The above figures do not include the new burdens which will have to be carried as a result of the debt settlement with the United States and France.
It is quite clear that since any new imposition of taxes is excluded, the only remaining means to increase the revenues is the reinforcement of the national economy, through the full settlement of the refugees and the development and construction of new productive works. For the full settlement of the refugees, it will be required according to the lowest estimate a sum of 5,000,000 pounds (which personally the Minister of Finance considers insufficient), part of which will be met by the loan of $3,000,000 approved by the League of Nations.
It must be pointed out that since the arrival of the refugees despite the compulsory expropriation of all large properties, there is a shortage of tillable land which, to a certain extent, has lessened the desire for work by those refugees already established and furthermore seriously affected the establishment of the rural refugee population still remaining in the cities. Therefore, it is necessary to complete the net of roads and the draining and anti-flood works upon the completion of which Greece will be entitled to expect an improvement of the economical situation.
It can be easily understood that after so many hardships and following the national catastrophe which deprived Greece of Thrace and Asia Minor and caused, in addition to the loss of all war material, the death of 60,000 men and the influx of one and a half million refugees, the economic situation of Greece became precarious and the capacity for payment was reduced to the minimum. It is only due to the great frugality, the industrious character and vitality of the Greek people that the country withstood complete annihilation.