868.51/11–446: Telegram
The Ambassador in Greece (MacVeagh) to the Secretary of State
[Received November 4—11 a.m.]
1501. Embtel 1500, November 2.33 Text of Prime Ministers note follows:
“I wish to draw Your Excellency’s attention to the extremely critical foreign exchange position of Greece.
[Page 260]The position with regard to our dollar assets is especially acute. Today we have only 10 million dollars in freely expendable exchange and these dollars represent a recent loan from the New York Federal Reserve Bank against our gold stock. At the end of September dollar holding of the Bank of Greece totaled $25,000,000. However against these assets there were outstanding $18,000,000 in confirmed credits and $4,000,000 has been set aside in our currency cover account. In early October we opened confirmed credits to the amount of $3,000,000 for the import of fertilizers, overcoats and blankets thus using up all our then available dollars.
Our sterling position is somewhat better but it is also very critical with our freely expendable sterling totaling only 3.5 million pounds. At the end of September we had 24 million pounds (including a 10 million pound loan from the UK) in our currency cover amount. In addition we had a balance of 6.8 million pounds but there were outstanding against this amount confirmed credits of approximately 3.3 million pounds leaving freely expendable sterling assets of only 3.5 million pounds. These figures exclude 4.7 million pounds due on BMA notes purchased by the Bank of Greece and 11.1 million pounds representing drachmae advances to the British forces. These assets are not at this time freely expendable for financing imports into Greece.
Our gold stock totals approximately $22,000,000 of which $10,000,000 has been pledged against the recent dollar advance from the Federal Reserve Bank of New York mentioned above.
In view of this situation we have in recent months been forced to impose severe restrictions on the import of many urgently needed consumer goods. Our concerted efforts to expand Greek exports are yielding increasing amounts of foreign exchange but it is clear these proceeds will not be sufficient to meet current needs during the next few months.
In the past several months we have made much progress in solving our purely internal financial problems but this tremendously difficult task will become impossible unless we can be assured of the continued import from abroad of the most essential consumers’ as well as capital goods.
I bring this very serious problem to Your Excellency’s attention in order to express the urgent hope that measures may be quickly found whereby the US Government may come to our aid in meeting our current foreign exchange needs.
On this occasion I would like to remind the promise given by Secretary Byrnes as to the early sending to Greece of financial experts in order that they should investigate into the country’s requirements.”34
Comment follows in next telegram.35
- Not printed; it stated that the Greek Prime Minister presented urgent notes addressed to Mr. Bevin and to Ambassador MacVeagh requesting extension of immediate financial assistance to Greece to avert a foreign exchange crisis (868.00/11–246).↩
- A parallel note was sent to the Department by the Greek Embassy on November 7 (868.5151/11–746).↩
- No. 1502, November 4, 1946, 1 p.m., not printed; it stated that the Embassy’s information substantially confirmed the seriousness of the free dollar–sterling exchange position as outlined by the Prime Minister (868.51/11–446).↩