868.51 War Credits/587

Memorandum by the Chief of the Division of Near Eastern Affairs (Murray)

The Greek Minister called this morning and seemed to be concerned over the fact that when Mr. Mills announced yesterday that the Greek Government was in default on the payment due this Government November 10 under the loan contract of May 10, 1929, he did not refer to the fact that the Greek Government had requested a postponement of this payment and that the matter had been the subject of negotiations between the Greek Government and the American Government.

I told the Greek Minister that Mr. Mills was very much exercised over the apparent intention of the Greek Government to discriminate against the 1929 American Government loan to Greece in favor of private bondholders despite the fact that our loan had been placed on a parity in every particular with the 1928 Stabilization and Refugee Loan under the agreement of May 10, 1929. I further told the Minister that our position would have been much easier if the Greek Government, instead of merely requesting a postponement without committing itself as to the November 10 payment, had stated frankly at that time that it had no intention of according us less favorable treatment than would be accorded to all the other bondholders. In reply to a reference by the Minister to transfer difficulties, I said that we could hardly be impressed with such an argument, since the Greek Government was apparently prepared to effect transfer of about one million pounds sterling to meet 60 per cent of the interest payments due private bondholders during the first half of the Greek fiscal year. Continuing, I said that neither the Treasury nor this Department could accept Mr. Veniselos’ contention that the 1929 loan was a war loan and was therefore to be treated in the same manner as the 1918 advances. Such an argument, I added, was completely nullified by the Agreement signed by the Greek Government on May 10, 1929, and that it was too late for Mr. Veniselos or any other Greek authorities to contend the contrary. I said that we had contractual rights to equality of treatment in this matter and that we intended to insist upon their fulfillment.

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The Minister and I later went down to see Mr. Bundy and he made practically the same statements to Mr. Simopoulos. In connection, however, with the Minister’s wish that a more complete statement be given to the press regarding the negotiations which had taken place between him, the Treasury Department and this Department in the matter of the November 10 payment, Mr. Bundy pointed out to the Minister that it would be impossible to make any further statement to the press in this matter without revealing the fact that the Greek Government has obviously intended to discriminate against this Government in favor of private bondholders in respect to the payment due this Government on November 10. Mr. Bundy again emphasized to the Minister that our position would have been greatly facilitated if the Greek Government had taken the position from the outset that it had no intention of discriminating against this Government in the matter of the 1929 loan. The Minister thereupon drafted a telegram which he proposes to send to his Government repeating almost verbatim Mr. Bundy’s statement to him and recommending that favorable consideration be given to the matter of according us equality of treatment with the other bondholders in the payment which fell due this Government on November 10.

Wallace Murray