868.51/12–1547: Telegram
Mr. John B. Howard to the Secretary of State
urgent
Amag 666. 1. On December 15 the Bank of Greece dispatched the following cable to FRBNY:
“Anticipate having several million free dollars available prior to December 23 when our gold security loan with you matures. If part payment of loan made from these funds, are you prepared to release corresponding amount of gold security? If so, will it be possible to extend for additional three months balance of loan? We fear disastrous effects local situation if you insist upon calling the loan in its entirety on forthcoming maturity date.”
2. For reasons set forth Amag 6431 Mission recommends first, Department support of Greek request to extent of two million dollars at present and second, simultaneous Department approval principle of gradual repayment of entire loan and release of gold security.
3. Any major military offensive probably be postponed until spring. Consequently any substantial bolstering of public confidence through military successes cannot be expected during winter months.
4. For reasons set forth subsequent telegram, severe intensification inflationary pressures virtually certain during early winter with renewed threat of panic.
5. If economic situation seriously worsens deterioration or break in coalition government is likely consequence.
6. If Mission is to have capability to maintain control economic and political situation during winter additional control envisaged recommendation paragraph 2 regarded as indispensable.
7. Cables follow giving data on gold rate and sales by Bank of Greece and further analysis of economic and political situation.