The Minister in Greece ( MacVeagh ) to the Secretary of State

No. 260

Sir: In reference to my despatch No. 209 of April 4 and the Department’s instruction No. 82 of May 1, 1934, I have the honor to enclose, as of possible interest’ a copy of a letter I have handed to the Foreign Minister setting forth the effects of the present Barter Policy of the Greek Government on American trade.

Respectfully yours,

Lincoln MacVeagh

The American Minister ( MacVeagh ) to the Greek Minister for Foreign Affairs ( Maximos )

Dear Mr. Maximos: Following our various conversations on the subject, I have made some further study of the clearing situation in Greece as it is affecting American trade, and summarize this here on account of the interest which you have expressed.

The chief difficulties which American products are encountering as a result of Greece’s development of barter trade may be summarized as follows: [Page 552]

1. Compulsory Barter for Specific Commodities.

By various decrees the Greek Government has specified that imports of certain commodities, from whatever source, will be permitted only if payment is effected by exports of Greek products. This presents no difficulties in the case of countries having clearing agreements with Greece, but it amounts to a virtual embargo upon imports of those commodities from the United States. The results are shown in official Greek import statistics for several items where American products have been practically driven from the market because of the difficulty of arranging barter payment for individual shipments of specialized types of merchandise.

2. Compulsory Barter for Government Purchases.

In calling for bids on government contracts, Greece now requires in most cases that payment be effected by exports of Greek products. This is no handicap to countries having clearing agreements with Greece, as is specifically stated in a recent call for bids on tractors issued by the Ministries of War and Agriculture. Barter requirements will probably limit the competition in this case to firms of one country only, regardless of price and quality, in which American products may be equal if not superior.

3. Application of the Import License System.

Certain Greek imports, notably of machinery, require a special permit from the Ministry of National Economy in each individual case. In numerous instances importers state that these permits are refused unless the machinery is obtained from a country having a clearing agreement with Greece.

4. Quotas Relaxed for Certain Countries.

By several decrees, imports of certain commodities in excess of existing quotas have been permitted where Greece enjoys a favorable balance under clearing agreements with foreign countries. Greece also has a favorable balance with the United States, but importers of American merchandise are unable to obtain the advantages of these decrees, which serve to increase purchases from other countries.

As I understand it, the basic purpose of all the foregoing measures is to encourage importation from countries with which Greece enjoys a favorable balance of trade. Yet, in 1933, in commodity trade alone, Greek exports to the United States were 150 million drachmas in excess of imports, while if immigrant remittances, tourist, expenditures, and other invisible items are added, the final balance in Greece’s favor probably totals well in excess of two billion drachmas for the year.

Would it not be wise to encourage imports from America rather than discourage them, as Greece is doing under the barter system? I need not stress the advantages inherent in our depreciated currency, but I can truthfully say that if Greece would only take a helpful attitude toward our trade with her, there is practically no limit to the expansion of her possible trade with us, for the United States is the largest potential market for Greek products in the world.

Very sincerely yours,

Lincoln MacVeagh