662.6831/38
The Minister in Greece (MacVeagh) to the Secretary of State
[Received July 7.]
Sir: In compliance with the Department’s circular telegram of June 14 [17], 4 p.m., relayed by the Legation at Vienna, and in [Page 490] reference to my telegram No. 67 of June 19, 4 p.m.4 I have the honor to report that Dr. Hjalmar Schacht, President of the Reichsbank of Germany, arrived in Athens from Belgrade by air on June 13th and was received at the Tatoi air-port by the Vice Governor of the Bank of Greece. Speaking to reporters shortly after his arrival, Dr. Schacht stated that he was paying an unofficial visit to his colleagues at the Bank of Greece. He added that although his was not an official mission, he would have an opportunity to discuss various questions affecting Greece and Germany.
Dr. Schacht had an audience with the King and long interviews with the Prime Minister, the Minister of Finance and the Governor and Vice Governor of the Bank of Greece. Virtually nothing was given out officially as to what was discussed at these meetings. On June 14 Dr. Schacht again received representatives of the Greek and foreign press, adding that his trip had no political significance and that he had no intention of engaging in financial arguments.…
. . . . . . . . . . . . . .
… So far as Greece is concerned, his Balkan tour appears to have been undertaken to promote the German scheme of economic penetration which is working like a steam-roller along all the roads nach Osten, and to remove such difficulties as may have arisen to impede it. Accordingly he listened non-committally to Greek complaints, and, while flattering the authorities with his august presence (like Goering5 before him) and pleasing the public with his admiration for the Acropolis and Pericles (whom he did not fail to mention in his parting words), left the impression behind that Germany stands firm on her advantage and that Greece’s only hope is to put herself more and more in German hands. His denials that his trip has any political significance may be correct in a strictly limited sense. But the Department will take such statements with a grain of salt. German economic penetration in this part of the world is certainly a fact of international political significance.
Informal conversations between this Legation and friends at the Bank of Greece and the Foreign Office have abundantly confirmed the report above quoted, in spite of official reticence. From these sources the Legation has been informed, however, that in regard to the Greek demand for international prices for German products, an arrangement was definitely arrived at. According to this arrangement prices of imports from Germany are to be fixed by direct negotiation between officials of the two countries. This would appear to be consonant with Dr. Schacht’s entire attitude on this visit, in that it seems to consider Greek complaints but to leave the answer pending and in a position to be controlled in Berlin. In addition, our [Page 491] official friends report that it was Dr. Schacht and not the Greeks who proposed the purchase of raw materials and foodstuffs, naming several products which would obviously not derive from Germany but from countries with which Germany carries on barter trade.
In conclusion, I may say that opinion in financial and business circles in Athens appears to substantiate the Legation’s understanding that Dr. Schacht’s visit represents a further step in Germany’s economic penetration of the Near East. The “buy more from Germany” program to which clearing operations have converted the Greek Government, however unwillingly in certain quarters, is therefore expected to take on a new impetus. The secrecy drawn officially around the Schacht conversations is generally taken in these quarters to mean that Greece gained nothing and that many essential points were disregarded entirely. If Vice Governor Varvaressos does indeed go to Berlin as rumored “to renew negotiations,” it is hinted that “to receive instructions” would be the more correct interpretation.
In regard to the difficulties caused to American trade by the Greco-German clearing, the Department is already aware of the efforts of this Legation. In this connection it is probably sufficient to refer to my despatch No. 1092 of March 12, 1936,6 and the exchange of letters between the Chief of the Division of Near Eastern Affairs and me relating thereto.6 It is quite possible that increased difficulties will be encountered in the near future, which will be handled as heretofore. Meanwhile I wish to assure the Department, in regard to the instructions contained in its circular telegram under reference, that I have lost no opportunity in the past to inform the competent authorities of our trade policy as outlined in instructions and radio bulletins, and will lose no time in availing myself of such new opportunities as may arise, particularly with reference to the Department’s confidential instruction of March 11, 1936,7 and to the Secretary’s speech of May 22nd in New York.
Respectfully yours,