Memorandum by the Assistant Secretary of State (Sayre)

The Greek Minister called to see me on October 4 in order to discuss the possibilities of a trade agreement between Greece and the United States. I outlined to the Minister the general nature of our [Page 562] trade agreements program and explained to him that we had already undertaken negotiations with eleven countries and that, as a result, our hands were so full now that we could not undertake additional agreements at this time. I suggested, however, that after some of the agreements now in process of negotiation have been completed we hope to undertake negotiations with additional countries, and I expressed the hope that Greece might be one of these. I said that of course we could not tell definitely whether it would be desirable to enter into negotiations for a trade agreement until after a study could be made of the trade between Greece and the United States, but I expressed the hope that such a study would reveal a sound basis for a trade agreement between the two countries.

The Greek Minister then spoke about the economic and financial problems of his country, saying that in order to maintain the integrity of their currency they found it necessary to seek bilateral balancing of trade. I told the Minister that, in the view of the United States, a general effort on the part of all countries to balance trade bilaterally with each country could result only in further economic and financial disaster. A study of the situation seems to indicate that such a program would result in the reduction of the present international trade by about 30%. I told the Minister that our program was away from an effort to obtain a bilateral balancing of trade between each of two countries and lay rather in the direction of such triangular or poly-angular trade as would naturally occur were there no artificial barriers or hindrances. I explained to him that under the normal flow of international trade each nation should seek to buy products abroad in whichever country could produce them most cheaply, and that any artificial hindrances which prevented nations buying abroad in the cheapest markets would necessarily result in a heightening of the price of such commodities and a consequent increased cost of foreign-bought goods, resulting in a lowered standard of living and multiplying financial and economic problems. It therefore was to the decided advantage of countries facing such financial and economic difficulties, as at present exist, to move away from efforts to achieve bilateral balances of trade and, with a full realization of the advantages of triangular trade, to aid the movement in the direction of a lowering of the present artificial trade barriers.

I also suggested that the United States, in following out this program, was not concerned with bilateral petty bargaining, seeking in each case to out-trade a competitive rival, but rather sought to liberalize world trade by a general reduction of trade barriers. In the case of a possible trade agreement between Greece and the United States, this might even result in a greater increase of Greek exports to the United States than the increase in United States exports to [Page 563] Greece. The essential point is to secure increases on both sides and not try to measure the value of the increase on one side against that on the other.

I told the Minister that I hoped later in the winter we might discuss the matter further and that, during the intervening months, it might serve a useful purpose if his Government would study the trade situation between Greece and the United States so that we might be prepared for later discussions.

F[rancis] B. S[ayre]