The Chief of the American Economic Mission to Greece ( Porter ) to the Secretary of State
255. For Clayton from Porter. Greek economic situation rapidly deteriorating. Food prices up 4 percent this week, Govt deficit hit new high for last reporting period, imports mere trickle, food supplies about exhausted. This has resulted in widespread unrest which causes Govt to face serious labor crisis. Pending immediately are demands of merchant seamen for 110 percent wage increase, Piraeus dock workers for double present wages, threatened strike textile mill workers and repetition of last month’s civil service strike. Policy of Govt appears to be to make concessions all along line which would add wage inflation to present alarming budget inflation. Early this week Maximos issued declaration of principles of Govt’s economic policy under pressure of Currency Committee, British Economic Mission and ourselves. However, these policies are meaningless unless given content and implementation. Met for 3 hours Saturday with Maximos, his principal ministers concerned, Currency Commission and BEM on crisis precipitated by above described conditions. Maximos has requested Currency Commission and ourselves to suggest methods of effectuating what he professes to be his policies. Meeting Monday with BEM and Currency Commission to undertake formulation of agreed program of action. If Greek Govt awaits final recommendations of our mission after return to Washington situation will have deteriorated to point where little could be accomplished. Hope to get agreement British and Currency Commission Monday on program specific immediate undertakings by Govt that may prove helpful. Have grave reservations as to capacity of Govt effectively to meet this crisis but feel obligation to make attempt. This will delay plans for winding up inquiries here this week and much against desires of mission may delay for week or more our plans to finish assignment two months. Felt it necessary to advise you of current developments and request instructions if procedure proposed not acceptable.