868.51 War Credits/773: Telegram

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

188. Your no. 193, August 12, 5 p.m. The Department has taken note of the Greek Government’s renewed assurance that it has no intention of treating the American loan of 1929 in a manner less favorable than that accorded the stabilization loan of 1928, and of the Greek Government’s undertaking to meet its obligations under the American loan within a short time and at the latest by the end of 1940.

As regards the assurances of an intention to accord equitable treatment, the Greek Government leaves unexplained and unmentioned the actual facts, which appear to point clearly to a contrary intention. During the period November 10, 1938, through November 10, 1939, when three payments on the American loan fell due, the Greek Government made no payment to the American Government although offering 40 percent of the interest due to holders of the 1928 loan, and when a further payment on the American loan fell due on May 10, 1940, the Greek Government made no payment to us although it had offered to holders of the 1928 loan 43 percent of the interest falling due during the Greek fiscal year beginning April 1, 1940. These obvious facts make it difficult to understand the Greek Government’s repeated assurances of no intention to accord less favorable treatment to the American loan, particularly when these assurances are unaccompanied by any actual payment.

While appreciative of the fact that conditions in Europe are not normal, the American Government feels constrained to point out that the Greek Government was aware of its resources for foreign debt service when it made the above-mentioned offers to the holders of the 1928 loan, and that there has been no indication that the Greek Government intended to make any payment to the American Government until the matter was brought to the Greek Government’s attention.

As regards the Greek Government’s undertaking to meet its obligations under the American loan at the latest by the end of December 1940, this undertaking would naturally carry more assurance if accompanied by a substantial immediate payment on account of the arrears past due, as tangible evidence of the Greek Government’s avowed determination to accord equitable treatment. This suggestion is made with the present European situation particularly in mind.

If you perceive objection to the submission of any of the foregoing to the Greek Government at this time, the Department will be glad to give consideration to your views. Any payment which the Greek Government may make should be made to the Federal Reserve Bank [Page 619]of New York for the credit of the Treasury of the United States as heretofore.

Welles