868.51/1218: Telegram

The Acting Secretary of State to the Chargé in Greece (Morris)

17. Your May 1, 2 p.m. The explanation offered by the Private Secretary of the Prime Minister as to the imperative necessity for the Greek Government’s action in forbidding the Bank of Greece to transfer the remittance for the May 1st maturities on the 1924 Greek Government 7 per cent loan is not regarded by the Department as adequate. The Department has emphasized to the Greek Minister in Washington its view that, because of the commitments given by the Greek Government to the International Financial Commission, the present action of that Government assumes an unusually serious aspect and if allowed to stand will add to the disappointment and criticism with which Greek credit will be viewed. The Department has also pointed out to him the seriousness with which default in payment will be regarded by American investors who have contributed so much to the development of Greece and aided so greatly in meeting various Greek national emergencies. In view of the foregoing the Department is strongly of the belief that the Greek Government should exert itself to the utmost to meet its obligations to the fullest possible measure.

It is realized that because of the instructions contained in the Department’s No. 16 of April 28, 7 p.m., to the effect that you should be guided by the actions of your colleagues, you may have refrained from bringing clearly to the attention of the appropriate Greek authorities the Department’s views regarding the concern with which this Government views the Greek Government’s interference with the functions of the International Financial Commission. If such is the case, it is desired that you immediately stress to those authorities the full import of the Department’s views, as set forth in the above mentioned telegram and as supplemented by the first paragraph of the present instruction.

Subject to the instruction outlined above, you will continue to maintain contact with your British, French and Italian colleagues and with the members of the International Financial Commission and to cooperate fully in their endeavors to induce the Greek Government to modify its present position in this matter.

As for the signature of the Agreement with the Treasury, the Greek Minister now states that he is willing to proceed to sign at once. This matter, therefore, we expect will be satisfactorily arranged. You may advise the Greek Government informally that the Treasury appreciates [Page 388] that the delay in signing was not due to any fault of the Greek Minister here.