Foreign Relations of the United States, 1946, The Near East and Africa, Volume VII

868.51/8–1246

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

confidential
No. 3013

Athens, August 12, 1946.
[Received August 30.]

Sir: I have the honor to transmit a copy of a Memorandum,⁴⁷ prepared by Mr. Gardner Patterson, U.S. Member of the Greek Currency Committee, on the financial situation in Greece as of mid-July, 1946. This Memorandum was very kindly drawn up by Mr. Patterson at my suggestion, to inform me of the condition and progress of his work with the Greek Government, and is wholly ex-curricular and unofficial. The Department may find it, as I have, of real interest in connection with the general problems of Greek finance and economy, and it may even provide officials of the Department and the Treasury with some useful background in their dealings with members of the Greek Economic Mission now in the United States, or with the Export-Import Bank and the Greek Embassy on the question of further American loans to Greece (see especially Department’s telegram no. 883 of July 17, 1946⁴⁸); but the greatest care should be observed not to refer to it explicitly in any way, in order to safeguard Mr. Patterson’s position, which is that of a paid employee of the Greek State.

Mr. Patterson describes the Greek financial situation as “gratifyingly quiet” and more satisfactory than at any time since September 1945. Inflation has been arrested for the moment, but the danger has not passed and continued improvement will depend on the handling by the Government of its problems. Mr. Patterson ventures to predict that “with appropriate policy the financial and economic situation can continue to improve gradually.” On the other hand, a few serious errors could put Greece’s economy “back into the chaos of last fall and winter.”

Gold purchases by the Bank of Greece, the declining rate of increase in currency circulation, the increase in tax receipts, and the holding of the wage rates are mentioned as favorable factors. Serious problems remain, among them the heavily unbalanced budget, the expenses of the wheat collection scheme, the financing of imports following the cessation of UNRRA assistance, a necessary further depreciation of the drachma^* to expand exports, and labor’s demands for higher wages.

In conclusion, Mr. Patterson states that with the exception of Mr. Varvaressos’⁴⁹ efforts last summer, no one of the post-liberation governments can show that its policies were basically responsible for improving the financial situation; all tended to rely for assistance on what they conceived to be the strategic military and political interest of the United Kingdom and the United States, whereas Greece, which “needs a great deal of foreign aid”, also “needs to do a great deal more for herself”.

Respectfully yours,

Lincoln MacVeagh

47. Dated July 22, not printed.
48. Not printed.
49. A separate memorandum on this subject is being prepared by Mr. Patterson, and will be transmitted as soon as possible. [Footnote in the original. The memorandum, dated August 12, was transmitted to the Department in despatch 3020, August 19, neither printed.]
49. Kyriakos Varvaressos, Greek Deputy Prime Minister and Minister of Supply from June 2 to September 1, 1945; for documentation on his economic program, see Foreign Relations, 1945, vol. viii, pp. 222–236, passim.