868.51 War Credits/492

The Greek Minister (Simopoulos) to the Acting Secretary of State

Excellency: As a result of informal conversations which I have had with representatives of the Departments of State and of the Treasury, I have the honor to set forth my understanding of the terms of the proposed plan for the settlement of the debt owed by Greece to the United States and of the differences existing between the two Governments arising out of the Tripartite Loan Agreement entered into at Paris under date of February 10, 1918.5

Under the above mentioned agreement there were set up on the books of the United States Treasury credits in the amount of $48,236,629.05, against which the National Bank of Greece issued its notes for an equivalent amount and these were used by my Government for the payment of the costs it incurred in the prosecution of the war against the Central Powers.

During 1919 and 1920, cash advances in the aggregate amount of $15,000,000 were made by the United States against the credits so established, leaving a balance of established credits on the books of the Treasury in favor of my Government amounting to $33,236,629.05. The Treasury of the United States has refused to make further advances against this credit balance. As you are aware my Government has consistently claimed that it is entitled to receive from the United States the full amount of the credit for $48,236,629.05, for which Greek obligations are at present in the possession of the United States Treasury. So convinced indeed has my Government been of the justice of its claim that it would have been willing at any time to propose and accept arbitration. Nevertheless, because of the pressing need to secure immediately the funds necessary to complete the refugee settlement work, my Government is willing to forego these claims. The refugee problem is vital to Greece; her future is closely bound up with [Page 4]her ability to care for the one and a half million men, women and children who sought refuge within her territories in 1922 and 1923. Much has been accomplished, but much remains to be done. Without additional financial assistance the work of the Refugee Settlement Commission6 must come to an end in the immediate future. The work of that Commission has been carried on under the chairmanship, successively, of three distinguished Americans—Mr. Henry Morgenthau, Mr. Charles P. Howland and Mr. Charles B. Eddy. To their devoted services Greece in general and the Greek refugees in particular owe more than can well be expressed in words. It is with these thoughts in mind that the Greek Government has authorized me to state that the proposed terms set forth below are acceptable to it:

1. The $15,000,000 of principal owed by my Government to the United States with interest at 4¼% up to December 15, 1922, and on the amount then due with interest at 3% to January 1, 1928, amounting in all to $18,127,922.67, less the sum of $2,922.67 to be paid in cash upon execution of the agreement, is to be funded over a period of 62 years. There are listed below the payments to be made by the Greek Government to the United States under this settlement:

July 1, 1928 $ 20,000
January 1, 1929 20,000
July 1, 1929 25,000
January 1, 1930 25,000
July 1. 1930 30,000
January 1, 1931 30,000
July 1, 1931 110,000
January 1, 1932 110,000
July 1, 1932 130,000
July 1, 1933 130,000
July 1, 1933, and semi-annually thereafter to January 1, 1938, 10 payments each of 150,000
July 1, 1938, and semi-annually thereafter to January 1, 1990, 104 payments each of 175,000

2. The Greek Government is to forego all claims for further advances under the Tripartite Loan Agreement dated February 10, 1918, which agreement, so far as the United States and Greece are concerned, is to be regarded as terminated.

3. The United States will advance to the Greek Government $12,167,000 at 4% per annum, payable semi-annually, with provisions for a sinking fund to retire the loan in 20 years.

4. The Greek Government undertakes to limit the amount to be borrowed under the terms of the Greek Loan Protocol signed at [Page 5]Geneva, September 15, 1927,7 to an amount which when added to the proposed loan from the United States of $12,167,000 will yield an effective sum equivalent to not more than nine million pounds sterling.

5. The Greek Government will furnish as securities for the new loan described in paragraph 3 above, the revenues at present under the control of the International Financial Commission established by the Law of February 26, 1898, insofar as the yield of these revenues is not required for the service of the loans having a prior charge upon the said revenues, as enumerated in Annex II to the Greek Loan Protocol signed at Geneva, September 15, 1927.8 The loan described in paragraph 3 above, is to rank with and is to share the same securities as the loan approved by the Council of the League of Nations on September 15, 1927, and as set forth in the Greek Loan Protocol signed at Geneva, September 15, 1927. In the event of there occurring in any year a default in the payment of the service of the new loan described in paragraph 3 above, the ratio in which that loan is to share the same securities as the loan set forth in the Greek Loan Protocol signed at Geneva, September 15, 1927, shall be the same as that which the amount of the annual service charge due the United States bears to the amount of the annual service charge due the holders of the bonds issued in accordance with the above mentioned Greek Loan Protocol as modified in amount by paragraph 4 above. The amounts required for the service of the loan described in paragraph 3 above, shall be and remain a charge on the revenues above mentioned, ranking immediately after such prior charges upon the said revenues as were in existence on September 14, 1927, and as enumerated in Annex II of the Greek Loan Protocol, signed at Geneva, September 15, 1927, and the Greek Government acknowledges that such revenues shall stand charged accordingly. The Greek Government undertakes to have the service of the loan assured by the International Financial Commission. Subject to the obligations resulting from prior charges thereon, the revenues above mentioned shall be held and applied by the International Financial Commission for the purpose of meeting the periodical service of the loan and of making up any past defaults should they have occurred. The United States is to be under no obligation with respect to the proposed loan of $12,167,000 until the Greek Government secures the above mentioned assurance of the service of the loan by the International Financial Commission.

6. The $12,167,000 proposed to be loaned by the United States to Greece, shall be turned over in its entirety by the latter country to the Refugee Settlement Commission, to be expended by the said Commission in the carrying out of its refugee settlement work.

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I am authorized to state that the Greek Government undertakes to submit the above terms immediately to the Chamber of Deputies with a view to securing its approval.

I shall be glad to receive your confirmation of the accuracy of my understanding of these terms.

Accept [etc.]

Ch. Simopoulos
  1. Greek Debt Settlement, p. 51.
  2. For previous correspondence regarding American aid for Greek refugee work, see Foreign Relations, 1924, vol. ii, pp. 282 ff.
  3. League of Nations Treaty Series, vol. lxx, p. 9.
  4. ibid., p. 20.