868.51/1–2645: Telegram
The Ambassador in Greece (MacVeagh) to the Secretary of State
[Received January 29—4:30 p.m.]
98. For Department and Secretary of Treasury72 from Embassy and Patterson.73 Re 483 [83] of January 22.74 At a meeting today with General Scobie,75 Finance Minister Sideris said that he could not meet the necessary internal expenses of Greece without financial help from the United States and United Kingdom. He said that such expenses could not be met from his own resources because tax receipts would be very small for many months, there was not enough cover in the form of foreign exchange to permit the needed issues of drachmas, and such disbursements by the Government without any tax receipts would result in uncontrolled inflation and the complete depreciation of the drachma. In particular he asked that the United States and/or United Kingdom Government pay all the expenses of the Ministries of War, Navy and Air. He is proposing that the rates of pay for the armed forces be at a rate equal to two-thirds the rate paid by the British to Greek armed forces in the Middle East before the liberation of Greece. This is over 10 times larger than the wages paid the Greek soldier before the war. Details of the budget for the above three Ministries are promised us in the very near future.
The financial advisers to General Scobie advised that a decision on this request could be taken only in Washington and London, but that they failed to see the economic justification for the aid Sideris was requesting.
They reported that the sub-governor of the Bank of Greece76 had informed them only yesterday that the foreign exchange holdings of Greece are not pledged as backing for the drachma and therefore there was no legal problem of scarcity of cover. Further they suggested that the inflationary effects of paying the armed forces would be the same whether they were paid by the United Kingdom or United States or by the Greek Government. They added that there might well be psychological reasons for having these expenses met by the Allies, but this point was not considered important by Sideris.
General Scobie told Sideris that he was not prepared to give an answer at this time to his request and that in view of the disagreement between his financial advisers on the one hand and the Minister of [Page 196] Finance on the other as to the economic justification of such advances the problems should be studied further.
Sideris reported that Prime Minister Plastiras was going to send a formal request to General Scobie requesting financial aid to pay the armed forces as well as foreign loans for other purposes.
After the meeting Sbarounis77 stated confidentially that in his opinion what Sideris really wants is a foreign advance to pay troops so that the foreign exchange would be available to import needed goods when shipping permitted. However, Sideris had earlier been specifically asked if this was what he had in mind and he had replied that it was not.
Sent to Department, repeated to London as 13 for Embassy and Treasury Representative.78 [Embassy and Patterson.]
- Henry Morgenthau, Jr.↩
- Gardner Patterson, Treasury Representative in Greece.↩
- Not printed.↩
- Lt. Gen. Ronald M. Scobie, General Officer Commanding British Forces in Greece.↩
- George Mantzavinos, Deputy Governor of the Bank of Greece.↩
- Athanassios Sbarounis, Greek Under Secretary of Finance.↩
- William H. Taylor, Treasury Representative in the United Kingdom.↩