868.51/1–946: Telegram

The Acting Secretary of State to the Ambassador in the United Kingdom (Winant)


309. For Hawkins and Taylor.4 Following is proposed draft on Greek Currency Committee proposal submitted to but not yet cleared by Sec Vinson.5 Do not consider this draft as approved or act on instructions contained herein until you receive telephone confirmation by State Department approximately Friday noon Wash time. Any changes in draft will be communicated to you at that time.6

Dept and Treas have given most careful consideration to Brit views on Greek situation set forth in urtels 273, Jan 9 and 119, Jan 47 (repeated to Athens as 8 and 4 respectively) to views of Emb contained in Athens’ 1497, Jan 18 (repeated to you as Deptel 128 Jan 5) and in Athens despatch 2002, Dec 15,9 and to Greek views reported in urtel 173, Jan 710 (apparently not repeated to Athens). As result of this consideration following views have been developed.

We are convinced that monetary measures alone cannot solve Greek problem but agree that comprehensive program of economic and administrative rehabilitation cannot be successfully implemented without some degree of currency stability.
We believe that proposed Currency Committee has serious shortcomings but recognize that it may have stabilizing effect which may assist initiation of comprehensive program mentioned above. We believe this is matter of judgment which in last analysis Greek Government must decide. Apart from matter of its technical effectiveness Currency Committee proposal is open to serious question from US viewpoint because: (1) US representation on Committee would result in degree of US participation in internal affairs of friendly foreign nation far in excess of that to which US Govt has heretofore been willing to agree, (2) There is danger that an American, even if appointed in private capacity, may be regarded by Greeks as representing US Govt, (3) possibility that Committee will fail in effectively stabilizing [Page 90] Greek currency can not be overlooked in which event US Govt might share onus of such failure and become subject to attack in Greek politics. Despite these misgivings we are prepared to agree to participation of an American in proposed Currency Committee if Greek Govt proposes its establishment and if Greek Govt clearly understands that U. S. Govt assumes no responsibility for operations of currency committee or for determination of exchange rates and is in no way committed to additional financial support on account either of decisions made by currency committee or participation of American individual therein. This decision is made because we believe that present situation justifies adoption of extraordinary measures, particularly since they appear to constitute only feasible immediate remedy.
This Govt notes possibility that Brit Govt may be willing to pay into proposed Greek currency reserve account sum not exceeding £ 5 million which should contribute to flexibility necessary to successful operation of scheme. U. S. Govt cannot commit itself at this time to pay equal sum into currency reserve account. Such proposal can only be considered on its merits when need for funds arises.
Final approval was given Jan 9 to $25 million Eximbank loan to Greece. Greek Ambassador will be informed late afternoon Jan 11. Note to Greeks will be released in press Jan 12.11 In view of fact that Greeks here were already aware consideration of loan had reached final stages it was not deemed appropriate to postpone announcement further.
Any U. S. Govt expert advisors who may be requested by Greeks to aid in formulation of economic rehabilitation program will act in exclusively advisory capacity under terms of reference which will clearly indicate that such advisors will have no authority to commit U. S. in any way with respect to additional loans to Greece.
We are not completely clear as to procedure for implementing Currency Committee proposal and manner in which decisions respecting such matters as exchange rate, amount of note issue and of currency reserve, etc., will be made. We presume these questions will be determined later and we will be given advance opportunity to examine proposals.
You are requested to inform Brit at earliest opportunity of U.S. position as outlined above so necessary steps can be taken to ascertain Greek reaction to Currency Committee proposal and implement project. Copies of this telegram have been provided to Brit Emb and Treas Delegation, Washington. For your info Dept informally advised Brit Emb here Jan 7 of Depot’s initial reaction on Eximbank loan and Currency Committee, indicating Dept felt there would be difficulty in postponing announcement of loan but Dept would not advance objection to appointment of American on Currency Committee on understanding U.S. and Brit members were not appointed as representatives of their respective Govts.
  1. Harry C. Hawkins, Counselor for Economic Affairs in the United Kingdom, and William H. Taylor, Treasury Representative in the United Kingdom, who were American participants in British-Greek discussions on the Greek economic and financial situation; see telegram 11089, December 27, 1945, to London, Foreign Relations, 1945, vol. viii, p. 297.
  2. Fred M. Vinson, Secretary of the Treasury.
  3. In telegram 339, January 11, 1946, 8 p.m., the Department informed London that President Truman, at discussions the same afternoon with Messrs. Acheson and Vinson, had expressed grave concern as to the possibility of success of the committee device and the extent of United States involvement through participation by an American on the Committee. Nevertheless he had approved proceeding on the basis set forth in telegram 309. (868.51/1–746)
  4. Neither printed.
  5. Foreign Relations, 1945, vol. viii, p. 298.
  6. Ibid., p. 284.
  7. Not printed.
  8. For text, see Department of State Bulletin, January 20, 1946, p. 78.