The Prime Minister’s reply to the Legation’s note has just been
received and is enclosed, together with a translation. In this reply
the Greek Government expresses its perfect accord with the
principles set forth in the Legation’s note, explains how its
present situation [Page 417] arose,
and states that it is ready to undertake the necessary negotiations
for the conclusion of an agreement to replace the exchange of notes
of December 9, 1924. The reply does not, however, make any comment
on the specific provisions of the draft Modus
Vivendi.
A possibly significant statement in the reply is that “it would not
be possible, in the opinion of the Greek Government, to consider
solely the free exchange of the results of production, that is to
say, of merchandise, while neglecting the factors of production,
namely labor and capital.” It appears from this that the Greek
Government, in its negotiations, may bring in the subject of
American immigration restriction and the opening of American
financial markets to Greek loans. The question of immigration quota
restrictions is apparently one which weighs heavily on the Prime
Minister’s mind as he has made more than one reference to it in his
public speeches.
I have not had an opportunity to discuss the reply with Mr. A.
Argyropoulos, Director of Conventions and Commerce at the Foreign
Ministry, who drafted the note prior to his departure for Berlin to
take part in trade negotiations with the German Government.
[Enclosure—Translation]
The Greek Minister for Foreign Affairs
(
Metaxas
) to the American
Chargé (
Shantz
)
No. 15815
Athens
, September 16,
1937.
Mr. Chargé d’affaires: I have not
failed to receive the letter, under No. 220, that His Excellency
Mr. Lincoln MacVeagh kindly addressed to me on July 19, last,
concerning the commercial relations between the United States
and Greece and including a proposal for an agreement to serve as
a basis of negotiations between our two countries.
I have not failed to take into serious consideration the contents
of this note and in reply I have the honor to bring to the
attention of Your Excellency that which follows:
The Greek Government appreciates the considerations contained in
the statement that the Legation of the United States was good
enough to present to it in the name of its Government, the more
since it is in perfect accord with the principles therein set
forth as concerns the necessity for a more liberal regulation of
international trade, with a view to the recovery of economic
activity in the world.
In fact, Greece, because of its economic structure, has always
felt the need for such freedom of trade to safeguard her
interests, which were the first to be injured, following the
economic crisis of 1931, by [Page 418] the introduction of restrictive systems in
various countries. Thus it is only in self-defense that she was
led in turn to pursue the line of restrictions of trade and
means of payment at the moment when, the majority of the
countries having adopted restrictive measures, she saw her
export trade and invisible resources which in the past permitted
her to cover her commercial deficit, strongly compromised by the
measures under consideration. For a long time she struggled to
avoid introducing into her economic relations with the countries
in question anti-economic regulations restraining trade. But the
results of this struggle proved particularly deceptive for her.
In fact, she found herself, in the spring of 1932, driven into
the position of being unable to maintain the payment of the
value of the merchandise imported into the country, and in order
to bring an end to the accumulation of overdue commercial
obligations which dangerously compromised the value of her
national currency and her credit abroad, she was forced to
proceed resolutely to the establishment of import quotas and to
the adoption of measures for the protection of her money.
Law No. 5422 of April 26, 1932, established the foundation of
this policy, which has since developed on the basis laid down by
this law. It provided for the introduction of a control of
foreign exchange and the regulation of the importation of
foreign merchandise within the limits of the means of payment
available to the country. It provided for the settlement in free
foreign exchange of the entire value of merchandise having to be
imported from abroad within the framework of the general import
quotas, authorized by the law and subsequently imposed by
Ministerial decision No. 29624 of May 7, 1932. It provided
further for the transfer in free foreign exchange of semiannual
instalments on overdue commercial debts which had not been
settled up to the date of its promulgation, as well as on the
moratorium interests connected therewith; thanks to which, these
debts toward foreign countries can already be considered as
practically liquidated. It authorized, finally, the settlement
in free foreign exchange of certain non-commercial obligations
contracted abroad.
That is to say, that while imposing on import trade certain
general quantitative limitations in conformity with the
diminished purchasing power of the impoverished country, this
law assured on the one hand the full payment in free foreign
exchange for merchandise imported within the above-indicated
limits, and on the other, a complete freedom, within the same
limits, of international activity and competition. In this way
an improvement was shown in the internal market.
But unfortunately, countries with economic power incomparably
superior to that of Greece and which had always constituted the
principal [Page 419] outlets for
her products, subsequently began to block the value of Greek
merchandise exported to them. This is notably the case with
Germany, which represented one of the principal countries where
Greece normally possessed a highly favorable export trade.
Thereafter the situation became considerably more complicated
and the new and important gap in the means of payment of Greece
which resulted, compelled her to take defensive measures, which
had become unavoidable, and forcibly brought about her adoption
of the method of clearings and of measures intended to control
even the origin of imported merchandise.
This policy has never constituted for Greece anything but a means
of defense against a situation that she was the last to cause or
even to encourage. Thus the Greek Government is entirely in
accord with the Government of the United States in its
declaration that it is only by a return to more liberal
principles of trade and by a progressive removal of the
obstacles which are now strangling international economic life,
that the world economy can be restored to health and directed
toward the desired recovery. For this purpose it is
incontestably highly desirable to bring about a freer play of
economic factors. Nevertheless, in envisaging this problem it is
important not to lose sight of the ensemble of these factors in
considering only a certain number of them. Thus, if one wishes
to arrive at lasting practical results in the domain of world
economy, it would not be possible, in the opinion of the Greek
Government, to consider solely the free exchange of the results
of production, that is to say of merchandise, while neglecting
the factors of production, namely, labor and capital; It is in
the play of all these factors together that the Royal Government
sees the means of overcoming the economic difficulties which now
weigh upon international life. Thus, so long as the problem is
not attacked in all of its aspects, the results sought could
only be partial and precarious.
In these circumstances and so long as the majority of the
countries continue to practice the policy of restrictions,
Greece, despite her earnest desire to see a normalization of the
situation brought about by a return to more liberal principles
which, it is well understood, would correspond to her interests,
is not in a position to return alone to freedom of trade. Her
restricted means would allow her to do so only within the
framework of an international movement, intended to re-establish
in its ensemble the free play of the factors which govern the
economic life of the world.
Nevertheless, the Greek Government, appreciating particularly the
importance which the market of the United States holds for Greek
products, and attaching a special value to the development of
the economic relations between the two countries, has exerted
every effort to [Page 420] the
end that the system of control, often troublesome, which it has
been forced to apply to trade, should be applied in such a
manner as to avoid, as much as was practicably possible, its
resulting in a disadvantageous treatment of American trade; and
the more because it recognizes that the relations of close
friendship which have always existed between the great American
Nation and Greece have always been, for the latter, a source of
profit.
The Greek Government is consequently moved by a desire to see
that the system of quotas in force in Greece should not operate
in a discriminatory manner with respect to American interests.
The Royal Government would even be happy to see American imports
into Greece increase to the full extent that the Government of
the United States should find the means, on its part, to assure
an outlet for a number of Greek products which are at present
directed toward countries practicing a policy of restriction of
payments and which compel it, by that very fact, to have
recourse to their markets to a greater extent than it would have
wished, in order to guard against an accumulation of blocked
credits.
Thus the Hellenic Government is disposed to consider all means
which in the actual circumstances would be of a nature to
eliminate as much as possible the inconveniences resulting from
the exceptional conditions to which trade is subjected and to
favor its development between the United States and Greece.
Therefore, it is ready to undertake the necessary negotiations
for the conclusion of an agreement to replace the provisional
agreement resulting from the exchange of notes dated December 9,
1924, at present in force.
Please accept [etc.]
