868.51/1272: Telegram

The Chargé in France (Marriner) to the Secretary of State

608. Embassy’s telegram 575, October 5, 10 a.m. I have learned informally from the Ministry of Finance that in its instructions to [Page 408] its representative on the International Finance Commission at Athens the French Government intends to give effective expression to the principle of nondiscrimination “equality of treatment for all bondholders” which Ministry claims is embodied in the agreements reached between the French and British holders with the Greek Government. However, the desired formula has not yet been found and I am told that insofar as it must refer to the restoration to the Greek Government by the committee of the balance of the sum in drachmas remaining after the application of the recent agreements the legal adviser of the Foreign Office is finding some difficulty in drafting a text that would appropriately safeguard American interests and at the same time avoid instructing the committee to retain any specific amount. In other words, in the absence of any agreements between the American and Greek Governments the French Government feels as concerns the obligations of Greece to the United States that it can hardly on its own responsibility suggest the retention by International Financial Committee of an amount calculated on the same basis as that recently accepted by the French and British holders nor on the other hand in view of the principle of equality accepted by the interested parties ordain the withholding by committee of 100 percent of the amount required for the service of the American bonds.

As of possible interest as concerns the principle of equality of treatment which both Finance Ministry and General Secretary of French Association of bondholders claim is written into the French and British agreements attention has been invited to the following provisions:

“Paragraph 4. During the moratorium the Greek Government agrees that so far as lies in its power the holders of Greek loans shall receive a treatment as favorable as the holders of any other long-term Greek loan whether public or private.[”]

and further,

[“] Paragraph 7. In the event the Greek Government accords a more favorable regime to other holders the benefits of this regime will be immediately extended to the French as well as to the British holders.”

The competent official of Ministry of Finance states that British Government is daily urging that France hasten her instructions to French representative on financial commission at Athens in order that the latter may release funds to the Greek Government. The same official states that according to the British the American Government [Page 409] has advised Greece that for the time being it does not contemplate calling on Greece to make any payment on account of the Greek obligation to the United States.