The Chargé in Greece ( Shantz ) to the Secretary of State

No. 1892

Sir: I have the honor to refer to the Legation’s despatch No. 1876 of September 20, 1937, transmitting the Greek Government’s reply to the Legation’s note proposing a Modus Vivendi to replace the exchange of notes of December 9, 1924.

On October 2, 1937, I called upon Mr. A. Argyropoulos, Director of Conventions and Commerce at the Foreign Office, who is the officer mainly responsible for negotiating trade agreements, and asked him for the Greek Government’s views on the specific provisions of the draft Modus Vivendi, since this subject was not covered in the Government’s reply to the Legation’s note.

Mr. Argyropoulos answered by reiterating the difficulties of Greece’s position and the anxiety of Greece to have all the freedom of trade [Page 421] advocated by the United States. But, he said, Greece could not accept our proposals without fundamentally changing its entire foreign trade framework. Under our proposals Greece would have to adopt quota contingents by countries instead of as at present by articles. It could not do so without granting similar treatment to other countries. Holland has already made proposals similar to ours, and Great Britain has indicated its desire for an arrangement of this nature. But Greece does not consider such a change practicable. If we persist in negotiating a Modus Vivendi, it is certain that definite progress cannot be made this year nor even the first half of next year.

Meanwhile, he said, Greece is more than anxious to do everything in its power to meet the wishes of the United States. In other words, Greece desires to give the United States all the practical advantages that the latter would obtain from the Modus Vivendi without agreeing to any theoretical or “doctrinaire” principles. We only have to state the particular instances in which we feel we are receiving unjust treatment and they will be very pleased to negotiate. The President of the Council, the Vice Governor of the Bank of Greece (Mr. Vavaressos, the Premier’s principal financial adviser), and the Minister of National Economy are all equally desirous of doing everything feasible to meet the wishes of the United States, but practically, and without any treaty changes.

I said I would transmit his views to the Government, and then asked him whether anything more was to be published on the German trade agreement. He smilingly replied that the communiqué already published said nothing. “Yes,” he continued, “in five or six days the Official Gazette will publish the text of a new clearing agreement and of changes in the Greco-German commercial treaty. But frankly, there is a third agreement which will not be published because Germany insists that it be confidential.”

Under this agreement all of Greece’s present credits with Germany are placed in a Class B account. This account will be entirely liquidated by orders already placed for (1) the Government’s military requirements and (2) merchandise amounting to 10 million marks. Payments for future exports from Greece will be placed in a Class A account, the total of which is not to exceed Greece’s normal requirements for German goods. Exports to Germany are to be limited to specified contingents. For example, Germany has been buying the entire export from Greece of raw materials such as skins and certain ores. The production of these is limited and Greece is well able to sell them to other countries for free exchange. Consequently Greece will limit its future export of these to Germany in order to avoid excessive credit balances which could only be liquidated in the past by forcing merchants to buy from Germany, sometimes at prices 20% greater than they would have had to pay elsewhere.

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The views expressed by Mr. Argyropoulos are transmitted for the Department’s information, and may safely be considered as authoritative.

As to the extent to which the United States is at present failing to receive most-favored-nation treatment, the Department is referred to the Commercial Attaché’s special report No. 14 of August 23, 1937, entitled “A Statistical Analysis of Greek Imports from the United States”,10 which also indicates that the constant efforts of the Legation and the Commercial Attaché to increase the United States’ share of Greek imports have met with some success. There is reason to hope that further progress in this direction may be anticipated.

Respectfully yours,

Harold Shantz
  1. Not printed; a copy was enclosed with despatch No. 1982, November 29, from the Minister in Greece.