Office of the Historian

868.51/11–545: Telegram

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

Athens, November 5, 1945—6 p.m.
[Received November 7—12:56 a.m.]

1248. Minister Finance Kassimatis3 in press statement Friday promised present complete program within few days adding that his first act would be to convoke economic council (described my despatch 1021, May 15,4 for wide discussion problems. He outlined four principal aims:

(1)
Increased assistance from Allies;
(2)
More rapid and equitable distribution goods;
(3)
Tax revision according capacity to pay and manner in which wealth acquired;
(4)
Prompt betterment condition poorer classes.

In response questions, Minister said he favored stabilization by Bank Greece of gold price using its stock 385,000 sovereigns, freedom for foreign exchange transactions, abandonment pegged rate drachma to sterling and utilization country’s foreign exchange reserves for productive purposes.

At invitation Minister Finance representatives American and British Embassies and UNRRA attended 24[th?] meeting his office Sunday morning discuss above questions. Ministries Supply and National Economy also represented. Kassimatis read lengthy statement his projects which already discussed economic council. He proposed balance budget by increased taxes notably on tobacco, war profits, luxuries and by levy on all who imported from Germany during occupation. Also favored early sale enemy property in Greece obtain revenue and a substantial increase selling price UNRRA relief supplies. Minister advocated realistic exchange rate for drachma [Page 256] about 1,250 to dollar especially no [to?] permit exports tobacco other products currently impossible and to encourage remittances lately declining due artificial valuation drachma. Kassimatis laid particular stress necessity fresh Allied aid for psychological reasons and for treatment Greek “gold neurosis”. Wants credits purchase goods through private trade channels supplement UNRRA program and loan short-term basis minimum 650,000 gold pounds in actual coin which he estimates sufficient with present holdings Bank Greece to control local gold market by purchases and sales. Available gold coins would then equal about 75% note circulation at present open market rate 44,000 drachmas per sovereign.

Sir Quintin Hill as financial representative British Embassy had obtained British Treasury views from London in response telegram sent previous day and stated Treasury considers budget balancing primary importance and should come before anything else. Until such action taken persuade Greek public inflation under control, British Treasury believes making gold and foreign exchange available only lead further speculation, that extent drachma rate out of line is uncertain and that unpegging immediately would upset plans budget balancing. Hill instructed by Treasury to “press” for budget action and stated his personal opinion there would be neither gold nor credits, certainly not until budget in order. Hill remarked that suggestion announce freeing exchanges next few days as part Government’s program would “precipitate first class financial disaster”. Lippincott and Coombs,5 two Americans representing UNRRA, assured Kassimatis UNRRA Mission fully supports Hill’s views.

Minister Finance inquired whether Hill’s instructions from British Treasury must be taken as a “decision”. Hill replied affirmative but on further question whether “irrevocable”, he said “nothing is irrevocable”. Minister will prepare memo outlining views which Hill promised communicate British Treasury. Meanwhile Minister public statement policy postponed, but Kassimatis felt little hope success his program without “psychological” help in form credits and gold. He hinted stability new government at stake.

MacVeagh
  1. Gregory Kassimatis, Minister of Finance in the Panayotis Canellopoulos government formed on November 2, 1945.↩
  2. This despatch and telegram 439, May 2, 1945, 6 p.m., advised of the formation on May 1 of an Advisory Committee on Finance consisting of Kyriakos Varvaressos, Michael Pesmazoglu, and George Sideris, in the capacities as Governors of the Bank of Greece, the National Bank, and the Agricultural Bank, respectively, and three former bank governors and cabinet ministers (868.00/5–1545, 868.51/5–245).↩
  3. Richard E. Lippincott, Special Assistant to the Chief of the UNRRA Mission to Greece, and Charles A. Coombs, financial adviser to the Mission.↩