The Minister in Greece ( MacVeagh ) to the Secretary of State

No. 3569

Sir: Pursuant to the suggestions made in the Department’s instruction No. 628 of October 18, 1939, commenting on my despatch No. 3333 of August 21, 1939, I have the honor to report as follows regarding the operation of the Greek foreign exchange restrictions as affecting funds in the United States belonging to American citizens residing in Greece:

In reply to the Department’s question as to whether the Greek authorities are attempting, by virtue of Article 12 of Emergency Law No. 1704, effective July 18, 1939, or any other exchange measure, to limit the control by American residents in Greece over their funds held outside Greece, it may be said that the Greek authorities do in fact attempt to exercise a control over actual remittances, through the operation of the censorship. Thus, taking the example suggested by the Department, letters placed in the Greek mails, if containing checks on foreign banks, are returned by the censor to the sender, or, more frequently, are sent to the Bank of Greece for its examination.

The authorities explain that this practice is designed primarily to extend control over the businesses or foreign income of Greeks, or of persons of foreign nationality permanently domiciled in Greece, and that the censorship, which is not competent to pass on the legality of these transactions, in effect merely redirects all remittances to the attention of the Bank of Greece, for rulings in the individual cases. So far as the Legation has been able to learn, the Bank of Greece interposes no objection in the matter of a foreigner’s disposition of his funds outside the country, unless representing income earned in Greece, and the Bank officials usually suggest to persons desiring to [Page 616] send out of Greece checks drawn on foreign banks that they bring their letters to the bank for sealing, in order to pass the censor. The Legation has learned of no case in which an American has been refused permission to dispose of his funds, if not representing earnings in Greece, as he pleases.

As regards dollar checks received through the mails by American residents in Greece, the practice has been to require that they should be converted into drachmas. Here again it is the censorship which detects the arrival of the checks and presumably apprises the Bank of Greece of the fact. The recipient, if a foreigner, may, however, apply to the bank for permission to mail the check abroad without conversion. Bank officials state that this permission is regularly granted, unless it is evident that the remittance represents earnings in Greece.

The Legation is not sure that the conciliatory tone of the Foreign Office’s note of August 17, commented on in the fourth paragraph of the Department’s instruction under acknowledgment, may be taken as more than an assurance that careful consideration will be given to individual applications of American residents in Greece who wish to dispose abroad of part of their earnings resulting from services rendered in Greece. On the contrary, the Bank of Greece still expects that the amounts representing the earnings in Greece of Americans residing here should be subject to the exchange control, and Article 14 of the law provides penalties of fine and imprisonment in case of violation. Nevertheless, the bank has been willing, up to the present time, to allocate foreign exchange for retransfer abroad, upon the individual application of Americans whose earnings have been placed under this control. These applications must set forth the purpose for which the remittance is desired. Thus far a formal and general approval has been assured only for such purposes as “the support of a family, the education of children, and the payment of insurance premiums”.

The general question of exchange control as affecting American residents thus remains in the indeterminate stage reported in my despatch No. 3333 of August 21.

Since the receipt of the Department’s instruction no case has arisen requiring representations by the Legation. Should such a case be brought before the Legation, the facts will be reported to the Department by telegraph before discussing the matter with the Greek authorities.

Respectfully yours,

Lincoln MacVeagh