Office of the Historian

868.5151/104: Telegram

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

Athens, August 7, 1932—1 p.m.
[Received August 7—10:05 a.m.]

78. Your 33, August 3, 7 p.m. I presented formal note August 5th. Despatch with text of decree and full background will be mailed August 8th. Decree not yet presented for ratification no doubt awaiting return of Venizelos. Answers to your questions follow:

(1)
Other principal legations are awaiting instructions which I will telegraph when known.
(2)
Government has many contracts in foreign currency with local purveyors of supplies and will profit from provision 1 of decree cited in my 75. Article 5 states: Any differences resulting from the following cases will belong to the state:
(a)
From the conversion into drachmas of the net balance of foreign currency indebtedness of the Bank of Greece from loans or prohibiting sales of exchange.
(b)
From asset items in foreign currency remaining in the hands of the banks which are not subject to conversion into drachmas after deduction of any difference against the bank on account of its short exchange position.
The principal Greek banks are uncovered in foreign exchange owed to their depositors for a sum of several million dollars which is wiped out by forced conversion. Article 5 is not entirely clear but appears to convert all assets and liabilities at 100 and give all differences over to Government which is required by another article to use these differences to enable the mortgage banks to meet interest and maturities on their bonds held abroad, but amount of differences in favor of Government is estimated to exceed very greatly amount required to pay mortgage bonds. Decree is silent as to disposition of any such surplus in favor of Government. Government will also benefit through the Bank of Greece from conversion of $6,000,000 now held abroad by Bank of Greece which will be million drachmas derived from the forced conversion.
(3)
Banks held accounts abroad in foreign banks in currency and foreign securities. Bank of Greece is understood to have at present deposits with Federal Reserve, with Chase National and with National City Bank. I hope to learn amounts and nature of these deposits to telegraph later.
(4)
Government officials say Government will receive drachmas only and no foreign exchange. Director General of Foreign Office has promised me exact information as to intended disposition of sums accruing to Government. Therefore this question cannot be answered definitely at present but forced conversion at 100 is made without any form of direct compensation such as interest-bearing Government bonds.
(5)
National Bank of Greece alone has $20,000,000 deposits belonging to Greek Americans. Figures for other banks not yet obtainable but roughly estimated not to exceed an additional $10,000,000. What portion of this belongs to American citizens could only be ascertained by laborious and long process of checking names of individual depositors and then ascertaining their citizenship status which seems impracticable. Many American citizens are depositors however and complaints are coming in daily.

Morris