868.51 War Credits/695: Telegram
The Minister in Greece (MacVeagh) to the Secretary of State
[Received May 16—2:25 p.m.]
69. Department’s 32, May 14, 6 p.m. The International Financial Commission has taken no action with reference to the payment due the American Government on May 10. The Commission has made formal protest against the violation of its statutes by the Greek Government in stating that it would pay 35% and no more but this violation has apparently been ignored by the representatives of the bondholders and the interested governments as well, all of which have stressed only the unilateral character of the Greek Government’s action. Under the circumstances the Commission is a factor of minor importance in the present situation. The Commission “holds” an amount in drachmas sufficient to pay 100% of the Greek Government’s present obligations, namely 1,800 million drachmas, but of this amount the Greek Government has “borrowed 1,500 million drachmas for its own use. The Commission is of course powerless [Page 509] to effect any payments without the Government’s consent to release foreign exchanges. The Commission understands that while only a few foreign bondholders have accepted the offer of 35%, local bondholders have accepted this offer quite extensively. The Commission also understands unofficially that the London stock exchange has refused to deal in bonds from which coupons have been clipped on the basis of the 35% offer.
The foregoing information has been obtained orally from the British delegate. The Department will, I believe, be interested in noting a letter printed in the London Times of April 18 entitled “The Greek Debt Service.”