868.51 War Credits/551a: Telegram

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

42. On September 26th the Greek Minister in Washington on personal instruction from Venizelos asked the Secretary of the Treasury to agree to a 2½ years postponement of the payment due to this Government on November 10, 1932, under the debt settlement agreement of May 10, 1929,14 or if this should be impossible requested at least a postponement of the November 10th payment, the exact time to be later determined. The Secretary of the Treasury advised the Minister that the Treasury had no legal authority to waive payment or to agree to a delay in payment, this being a matter solely within the jurisdiction of the United States Congress. In arguing for a postponement the Minister set forth the facts surrounding the decline of the drachma, the difficulty of acquiring foreign exchange and the increased demands for foreign exchange which would be necessary as a result of the express intent of the Greek Government to make a 30 per cent interest payment on Greek external loans. The Secretary of the Treasury protested against any possibility of holders of the Greek Stabilization and Refugee Loan of 1928 receiving more favorable treatment than the United States Government in respect to its loan of 1929. In view of the Minister’s statement you are instructed to advise the Greek Government of the position taken by the Treasury with the Greek Minister and further to call attention to the provisions of the following clauses of the above mentioned agreement:15 [Page 397]

“The new Loan provided for in the Agreement shall rank with and shall share the same securities and all other advantages as the Greek Stabilization and Refugee Loan of 1928 provided for in the International Loan Agreement executed January 30, 1928,” and

“In the event of there occurring in any year a default in the payment of the service of this new loan by the United States, the ratio in which it is to share the same securities as the Greek Stabilization and Refugee Loan of 1928 provided for in the International Loan Agreements dated January 30, 1928, 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 International Loan Agreements of January 30, 1928.”

Not only must the Treasury insist upon the obligation of the Greek Government to make the payment due November 10, 1932, but in view of the public statement recently made in London with reference to a proposed payment by the Greek Government on the Greek Stabilization and Refugee Loan of 1928, the Treasury must also insist that funds under the control of the International Financial Commission shall be handled in such manner as to assure to the United States the security to which it is entitled by the above quoted clauses of the debt settlement agreement dated May 10, 1929.

Stimson
  1. Annual Report of the Secretary of the Treasury … 1929, p. 308.
  2. See ibid., pp. 312, 313.