868.00/11–244: Telegram

The American Representative on the Advisory Council for Italy (Kirk) to the Secretary of State

1085. Following from MacVeagh:

No. 5 to Department from MacVeagh, October 30, 5 p.m. The present message follows and amplified [amplifies] my Greek No. 3 of October 29, 6 p.m.16

Senior ML17 officers advise that conditions in Greece differ considerably from those which they had anticipated and planned for. Port facilities have been less damaged, transportation facilities are far worse than expected (especially since all railroads, owing to serious damage or destruction of rolling stock, bridges and tunnels, are entirely out of commission) and trucks existing or imported are quite insufficient to transport supplies from the ports to the rural districts or from the latter to the cities. In addition, all authorities here agree that currency and supply problems are critical and closely related. The printing presses continue to print drachmas daily, in astronomic denominations, to cover the Greek Government’s expenses. These consist mainly of Government salaries and allowances to Government servants and to employees of industries and private concerns for the purchase, on the free market, of food and other essentials which, as they decrease in quantity, rise in price. Even prices expressed in gold are increasing daily. Official opinion appears prevalent that the Government cannot continue to exist unless this situation is rectified within a fortnight, but no complete plan has yet been suggested to cope with it. As a result of Mr. Eden’s conversations here, instructions have been sent to General Paget18 to forward urgently 300 trucks to relieve the supply situation; a proposal has been put forward to fly into the country, from the Middle East, approximately 2500 tons of luxury products, including coffee, tea, cocoa, fine leathers, pepper and spices, [Page 200] matches, cosmetics, and tobacco to be sold by the Greek Government on the free market at approximately the present prices, to augment its revenues; inquiries have been instituted as to what oil, oilseeds, raw cotton, sole leather and wool yarn, iron and steel can also be forwarded from that area to supply industry or to be sold on the free market; and finally another United Kingdom Treasury expert, Sir David Waley, arrived here yesterday.

Meanwhile, the Greek Government has stated officially that under present conditions its approximate weekly expenses total 26,000 gold sovereigns for food allowances to Government servants, 180,000 gold sovereigns for similar allowances to industry and other private company workers, and 235,000 gold sovereigns per week, with the likelihood that as commodities rise (expressed in gold) these expenses will increase. It seriously questions whether, until the currency is stabilized, it will be able to collect any revenue or taxes, and therefore considers it essential to obtain as much revenue as possible from the sale of relief supplies. However out of approximately 60,000 tons of allocated food supplies, 52,000 tons represent wheat which to a large extent will have to be given away, and therefore the Government fears very little revenue can be obtained in this manner. It further insists that every effort must be made to supplement the present ration distributed by the Swedish Swiss Commission, which for more than a fortnight has given out nothing but bread, and that this must be done within the next week. However, so far, it appears likely that only one oke of flour, to be supplied by the military, will be forthcoming during that period. The Commission has other kinds of supplies on hand but will not release these until they are in sufficient quantity to make general distribution possible.

The Commission has agreed in principle with the military to continue to distribute supplies, and considerable thought has been given to the possibility of selling these, including bread, at something above the handling and administrative expenses to those who can afford to pay. The Commission will, however, require authority from the United States and United Kingdom Governments, and presumably the Canadian Government, to sell in this fashion, as their instructions to date specify that they can only charge administrative, milling, baking and distribution costs. The Government is very anxious that this authority be given and promises that prices will be such as the entire population can pay. Meanwhile the Commission has four ships in the Piraeus, freighted chiefly with wheat, which as yet cannot unload, while the military have unloaded only 2000 tons of food supplies, mainly flour, for the civilian population, in the space of 15 days. In consequence ML has been forced to cable the Middle Eastern ports to hold ships another 5 days. This unloading delay appears to have been caused mainly by the necessity of giving priority [Page 201] to military stores, but also by misunderstandings and lack of coordination. Thus, some officers distributed food rations to labor, and when this was stopped labor refused to work.

Financial circles in Athens, while considerably perturbed over the alleged Communistic tendencies of the Government, the general lack of order throughout the country, the increasing demands of labor and the apparent weakness of the authorities, believe the currency chaos is entirely due to lack of supplies. They point out that the people have become goldminded and the shortage of commodities on the market is making even gold lose its value so that gradually the only means of exchange will be by barter. They recommend that since the currency situation is so tied up with the shortage of supplies every effort be made to increase the importation and distribution of the latter.

It is the opinion of this Embassy that if the present situation is to be brought under control, a full and coordinated plan must be urgently and carefully worked out, widely publicized and every part put into operation at the same time. This will require an entirely new currency to replace the present one, which the public insists has no backing, and will also require the fixing of a rate of exchange. Price ceilings for principal essential commodities and labor wages will have to be fixed. But before this fixation can be effected, considerably increased quantities of supplies must be imported to insure full rationing with a balanced diet at least on the subsistence level. In the larger urban centers, and particularly Athens, such rationing should provide MEA sugar, cheese, fats, and rice or spaghetti, as well as bread. Every effort should also be made to give the population at least the employment existing under German occupation, which can only be done by repairing roads, bridges and railroads and importing and supplying industry with raw material such as coal, cotton, wool, phosphate, rock leather and hides, iron and steel. Further delay in devising and implementing a program of this nature can only result in a mounting need on the part of the Greek Government (if such can continue to exist) for foreign financial assistance to cover its ever increasing expenses.

Repeat to Treasury. [MacVeagh.]

  1. Not printed.
  2. Military Liaison.
  3. Gen. Sir Bernard Paget, British Commander in Chief, Middle East.