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

The Greek Minister came in today to say that he had informed the Secretary of the Treasury that the Greek Government had set aside in a blocked account exchange on New York to the value of 30% of the payment due the United States Government on November 10th, pending a solution of the question as to whether the 1929 [Page 427] loan was a war debt. Mr. Murray inquired as to what had been the reaction of the Secretary of the Treasury, and the Minister replied that he had been very “angry”.

The Minister said that he had received another telegram from his Government which he proceeded to read. This telegram was to the general effect that the Greek Government did not intend, by its action in connection with the November 10th payment, to attempt to force this Government to accept the Greek viewpoint regarding the nature of the 1929 loan. The telegram continued that the Greek Government, in view of the serious situation with which it was faced, expressed the fervent hope that the United States Government would accord Greece sympathetic consideration in this matter.

Mr. Murray stated that it seemed to him that the Greek situation was somewhat similar to that which had developed with respect to Great Britain just before the latter made its payment on December 15th. Mr. Murray said that the Greek Minister would recall that the British Government had stated that it would make the December 15th payment on the understanding that this sum was to be applied as a partial payment on any settlement which might later be reached. The American Government had replied that it could not accept such conditions and eventually both parties had adhered to their position, but the payment had nevertheless been made. It would seem in order for the Greek Government to take somewhat similar action; that is, it would seem to be proper for it to transfer the 30% now retained in a blocked account and if it so desired to make the statement that it considered the 1929 loan to be a war loan. This action, presumably, would open the way for a consideration of the Greek contention by any commission or other body which might later be appointed by the President to discuss the general subject of intergovernmental debts.

Mr. Murray pointed out furthermore that he could not understand the reason for the Greek contention that the 1929 loan was a war debt. Did it really make any difference whether the loan in question was or was not a war debt? There certainly had been no general agreement that interest on war debts was not to be paid, so that even if the Greek Government should be successful in its contention it would not be relieved from the payment in question. In reply to a further question as to whether, if the United States agreed that the 1929 loan was a war debt, the Greek Government would then transfer 30% of the payment, the Minister stated that he was unable to reply. He added that he would like to give some further consideration to some of the ideas developed during the discussion and that he would like to return at 3:30 this afternoon and talk [Page 428] the matter over further with Mr. Murray and possibly with Mr. Bundy.

In reply to the question as to whether the Secretary of the Treasury had acceded to the Greek request for a postponement of the January 1st payment, the Minister stated that the Secretary had expressed the opinion that there was some doubt whether he could consent to the postponement in question in view of the attitude of the Greek Government with respect to the November 10th payment.

Wallace Murray