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

No. 289

Sir: In further reference to my despatch No. 270 of June 9, 1934, I have the honor to report that at the present time, in spite of the Modus Vivendi existing between the Greek Government and the Government of the United States, signed December 9th, 1924,16 whereby American imports are assured equally favorable treatment with those [Page 554] from other countries, the Greek Government is pressing a policy involving constant discrimination against American products.

This discrimination was summed up and discussed in my letter of May 21st, 1934, to M. Maximos, Hellenic Minister for Foreign Affairs, a copy of which was forwarded to the Department with my despatch No. 260 of May 26th, 1934. M. Maximos has promised me a full discussion of the questions raised by my letter, but so far has not been able to accord it. In my last interview with him, I even felt that he was anxious to avoid such a discussion as long as possible. Meanwhile, following a widely-advertised complaint of the British Minister, who is also worried about the effects of the present Greek commercial policy, the Government has issued a statement in the form of an editorial in its chief journalistic organ, the Proia, a translation of which I enclose. This editorial having also been printed, apparently independently, in the Messager d’Athènes, the unofficial foreign-language organ of the Hellenic Foreign Office, there can be no doubt as to its inspiration and authenticity. It gives the complete theoretic basis of the present policy as outlined to me in part by responsible members of the Government on various occasions, and may be of value to the Department for that reason.

This Legation, as the Department knows, has recently had occasion to protest discrimination against American apples, American water-meters and American drainage machinery. It appears likely that in the near future it will have to intercede for American oil, American iron and steel, and American automobiles. This reiterated necessity for protest and intervention would seem to prove that the Greek Government has no intention of living up to its obligations under the Modus Vivendi of 1924, except when caught in their violation. At such times a settlement is occasionally reached to the satisfaction of the importer, but in view of the efforts expended by the Legation to obtain a successful solution this comes almost in the guise of a favor conferred, while a host of minor cases, too small to come to the attention of our authorities, swell the tide of discrimination against us to the point where even the rumor that a certain class of imports may be subjected to barter requirements causes an observable decrease in orders for our goods.

If the Department will permit me, I shall add here that certain psychological considerations affect the situation and render unlikely any change for the better as long as we remain passive or react only in specific and isolated cases. It is a Greek tendency to forget what is inconvenient, and this tendency is only strengthened when what is inconvenient is the work of political opponents. The present commercial policy of Greece is largely the creation of the existing régime. [Page 555] But our Modus Vivendi was accepted ten years ago by the head of a party now in Opposition, and from the Greek point of view is not only the work of political opponents but a reflection of conditions long since gone by. Furthermore, no Greek Government, as our experience in the recent case of Samuel Insull17 goes to prove, can safely be regarded as anything but Greek first and a government only second. It is highly doubtful whether our Modus Vivendi figures in the consciousness of the present régime at all. It will be noticed that in the enclosed inspired editorial on the commercial policy of Greece, much is said of the necessities of Greece’s situation, but nothing as to any obligations which must be taken into account when meeting those necessities. The Greeks are treating our rights with a sublime indifference while we protest a few violations and let the principle go unquestioned.

It is not my thought that the Government of the United States desires at this time to pursue the project, begun some time ago and dropped, of making a commercial treaty with Greece18 though this might be one way of correcting our present unfavorable situation. But it is respectfully suggested that that situation is sufficiently serious to render admissible and salutary an enquiry as to if and when Greece intends to live up to the terms of her existing arrangement with us. Finally, it is not to be imagined that the Greek Government is unaware of the tariff powers recently vested in the American Executive, and the present moment would therefore seem a favorable one to elicit a statement from Greece as to her considered attitude toward American trade. To bring her to a fully conscious and perhaps anxious realization of what she may be risking by her present policy, or lack of it, toward our imports, would seem likely to do more to correct the evils from which we suffer than any amount of protests against particular instances of discrimination.

Respectfully yours,

Lincoln MacVeagh

Editorial in “Proia”, June 15, 1934

With reference to the commercial conventions about to be concluded and discussions for the eventual conclusion of new conventions we believe it useful to explain the firm Greek policy with regard to this subject. Absolute freedom of trade without any restrictions would be ideal for Greece. For a seafaring people having a very old commercial [Page 556] tradition with Greek firms in the great centers abroad, this liberty is really an element of existence. In normal world economic circumstances, this liberty revived our merchant marine and a large part of the population of the country, and it brought profits to a rather large number of Greeks abroad. But the world crisis came and all countries turned to the policy of protecting their native products.

Importations from abroad were considerably restricted, and a new international trade situation was created. Greece could certainly not remain outside. Owing to this crisis the balance of our payments could no longer be obtained from so-called invisible sources. Greece, a poor country from the point of view of production, depends on other countries for a large part of its necessary supply of wheat and certain other articles of prime necessity. The deficit in our trade balance was covered in three ways in the past: by foreign loans, by income from our merchant marine, and by funds from prosperous Greeks abroad. The general crisis has diminished all these sources. The system of foreign loans should in one way or another be abandoned even if it were still possible, since it reached a point where the service of the loans was destroying us. In any case no one will lend us any more. Our merchant marine which, thanks to the care and economy of the ship chandlers and crews, is not in the tragic situation of the merchant marines of other great maritime countries, nevertheless has a hard struggle to exist and is no longer a source of wealth. The Greeks abroad have also stopped their remittances. These Greeks were not producers but merchants and were among the first to be hit by the consequences of the world crisis and the measures taken to face it. Therefore the possibility of effecting a balance of trade as formerly, no longer exists.

Greece is therefore obliged to look elsewhere to balance its accounts. It is obliged in other words now to remit abroad more funds than it can import by the sale of its products abroad. No other point of view, no other argument can change this necessity as long as the international economic conditions which created it continue to exist. We buy and we import as much as we can pay for with the money we receive from our products. We are therefore obliged to continue the restrictions which this necessity imposes in spite of all their natural consequences.

We could buy more abroad but on one condition: by paying the value in article produced by use to those who wish to accept these articles as a medium of exchange. It is easy to understand how desirable it would be if this system were accepted by the greatest number of countries with which we have commercial relations, since the increase of our importations in return for our exportations would give [Page 557] work to a large number of unemployed and revive several trades which are languishing.

In conclusion, it is not Greece which has no interest in increasing its importations. It is a question of capacity to pay, as long as the present economic situation lasts.

  1. See Foreign Relations, 1924, vol. ii, pp. 279 ff.
  2. See Foreign Relations, 1933, vol. ii, pp. 552 ff.; and post, pp. 566 ff.
  3. For correspondence regarding the proposed treaty of friendship, commerce and consular rights between the United States and Greece, see Foreign Relations, 1928, vol. iii, pp. 18 ff.