868.51/11–744: Telegram

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

4. Greek Ambassador called at Department October 3062 with regard to his Government’s request for credit of twenty-five million dollars. Ambassador stated that in discussions of credit requests last August his Government was concerned largely with meeting deficit on account of reduced income from shipping. Since then situation had radically changed and assistance is now urgently needed (a) to [Page 225] assist in stabilizing Greek currency (b) to meet internal expenditures (c) to buy foodstuffs from neighboring countries and (d) to pay for raw materials and machinery to start Greek economy to work again.

With regard to (c) Department stated emphatically it did not believe Greek Government should borrow for relief purposes but should rely on military and UNRRA. If present plans for UNRRA assistance were not adequate Greek Government should demand further assistance and this Government would support its request. It was also indicated that present relief problem did not seem to be one of credit but shipping, transport and distribution.

With regard to (a) and (b) doubt was expressed as to need for or advisability of foreign credits. It was pointed out that little could be done until Greek Government itself undertook internal monetary reform and that present substantial Greek holdings of gold and foreign exchange would appear to provide an adequate basis for monetary reform.

Ambassador was informed that under existing legal authority Export-Import Bank was probably only source of financial assistance by this Government and that Bank by its statutes would be limited largely to credits for purposes such as (d). Department further pointed out that unfortunately statutes establishing Bank prohibited loans to foreign governments in default to this Government on April 13, 193463 and that Greece appeared to have been in default on that date since it had not made reduced payments required under Hoover Moratorium.64

It was agreed, however, to put Greek Ambassador directly in touch with Export-Import Bank to discuss kinds of loan Bank would make if situation as to its legal authority to extend credits to Greece was cleared up by amendment of Bank statutes.

Ambassador met with Pier son, President of Export-Import Bank, on November 2.65 Discussion covered much the same ground as previous discussion with Department. Pierson alluded to default difficulty and said that an attempt would probably be made to amend default provision of statute when Congress reconvenes. He also indicated [Page 226] that Bank did not have authority to make loans to finance internal expenditures in Greece. Pierson suggested that even before amendment of statute it might be possible for Bank to assist Greece in a limited way by financing exports from U.S. to Greece providing credit was extended to a Greek enterprise or Greek bank and was not extension of credit to Greek Government. Pierson then suggested that Greek Government provide him with a specific estimate of the quantities and kinds of machinery, materials, etc. required for reconstruction or specific reconstruction projects since it was difficult for Bank to consider requests for loans on any other basis.

Ambassador inquired whether Bank or some other agency would be willing to send one or two industrial experts to Greece to assist Greek Government in formulating plans for industrial reconstruction and estimating requirements. Pierson said he would discuss matter with Department and FEA.66 Department would like your comment on Ambassador’s suggestion.

  1. Memorandum of this conversation not printed.
  2. Date of passage of Public Law 151, 48 Stat. 574; for correspondence on this subject, see Foreign Relations, 1934, vol. i, pp. 525 ff.
  3. For correspondence on the proposal by President Hoover for a moratorium on intergovernmental debts and the attitude of the Greek Government, see ibid., 1931, vol. i, pp. 1 ff., and especially pp. 207217. For correspondence on the negotiation of an agreement on this subject, signed at Washington on May 24, 1932, by the United States and Greece, see ibid., 1932, vol. i, pp. 626, 627. The text of this agreement is printed in the Annual Report of the Secretary of the Treasury … 1932, p. 291.
  4. Memorandum of conversation of November 2 not printed.
  5. Foreign Economic Administration.