868.51 War Credits/586: Telegram

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

135. Your 63, November 13, 3 p.m., and my replies, numbers 131 and 134.

Having heard nothing from Tsaldaris. I visited him this morning and discussed debt question. At first he stated his agreement with [Page 424] Venizelos that debt to us is a war debt; he then receded and tried to bargain promising to consider our loan on the same footing as stabilization loan if we would agree in advance to remit service for two and a half years. I of course rejected this proposal. He then repeated offer of 100 percent blocked drachma payment already disapproved by Treasury Department. My request that he put in writing his ideas met no agreement on his part. Interview of one and a half hours was totally unsatisfactory and indecisive except to deepen my previous belief that our demand for equal treatment will be used by Tsaldaris as a pretext to repudiate London agreement. In the end the most I expect is an offer to all creditors concerned to block 100 percent drachma equivalents because Government has found way to utilize these blocked deposits by borrowing from Bank of Greece beyond legal limits. My despatch No. 2294 of November 1441 explains details of this illegal operation.

  1. Not printed.