868.51 War Credits/706
The Under Secretary of State (Phillips) to the Secretary of the Treasury (Morgenthau)
My Dear Mr. Secretary: I enclose a copy of a note dated January 30, 1936,10 from the Greek Minister at Washington, who, on instructions [Page 309] from his Government, states that the Ministry of Finance of Greece is ready to effect a payment to the Treasury of the United States of 35 percent of the interest due May 10, 1935, and November 10, 1935, under the Debt Agreement of May 10, 1929. I also enclose for your consideration a draft of a reply11 which, if it meets with your approval, I might make to the Greek Minister.
You will recall that the League Loans Committee and the (British) Council of Foreign Bondholders in public announcements of February 19, April 11, May 11, and May 31, 1935, have expressed the opinion that it would be well within the capacity of Greece to make larger payments than 35 percent of interest on external loans which has fallen due on and after April 1, 1935, and have stated that they are unable to recommend this offer to the acceptance of bondholders or to recommend bondholders to cash their coupons in the absence of a definite and improved offer. You will also recall that in the advertisement published in this country September 26, 1935,12 in which the Greek Government asked holders of the Stabilization and Refugee Loan of 1928, to present their coupons for payment of 35 percent of their face value, the Greek Government stated that acceptance would not prejudice the rights of bondholders towards any further payment whatsoever which might eventually be agreed upon for the year 1935–1936. While no agreement has been reached between the Greek Government and any bond-holders protective organization regarding the payment of interest falling due since April 1, 1935, I see no sufficient reason why the United States should not receive, with appropriate reservations, the amount the Greek Government is prepared to tender.
I have not, as yet, acknowledged the receipt of the note of the Greek Minister. I shall be glad to have any comment or suggestions you may care to make as to the terms of the reply I should send him.