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

No. 295

Sir: In reference to my despatch No. 289 of June 26, 1934, I have the honor to call the Department’s attention to paragraph 2, “Compulsory Barter for Government Purchases,” in my letter of May 21, 1934, addressed to the Hellenic Minister of Foreign Affairs, a copy of which was enclosed in my despatch No. 260 of May 26, 1934. As set forth in that paragraph, it has been the recent practice in Greece, in case of calls for tenders to supply imported products to Government Departments, to include a provision that payment should be effected through exports of Greek products. As pointed out, this requirement has served to limit Government purchases very largely to countries with which Greece has clearing agreements, notably Germany. Through a ruling of the Minister of National Economy as set forth in a circular (No. 2144) of May 22, 1934, issued by the Government Supply Service, this requirement has now been made mandatory, but a special exception is made in favor of countries with which Greece has no clearing arrangements but does enjoy a favorable balance of trade. This exception reopens to American firms the possibility of bidding without having to guarantee to accept Greek merchandise in payment.

The Foreign Minister, in a long conversation which I had with him on June 29th, informed me that the Minister of National Economy agreed to make this exception, in favor of a class of countries of which the United States is the chief exemplar, at his own personal insistence, as a result of my letter above referred to. Unfortunately this action on the part of the Greek Government covers only one class of our products, namely those offered for Government purchase, but it is a step in the right direction, and perhaps affords some evidence that the Greek Government is becoming aware of the risks involved in its present policy, or lack of policy, toward American trade. It does not, as I see it, affect the advisability of requesting Greece to define her position toward us while she continues signing barter agreements with other countries, in the operation of which our modus vivendi of 1924 is too often overlooked.

Respectfully yours,

Lincoln MacVeagh