868.5151/1–1548: Telegram

Governor Dwight P. Griswold to the Secretary of State


Amag 96. 1. Urgently recommend to meet critical situation here immediate and favorable decision by Department: First, authorizing conversion into sovereigns of two million dollars Greek gold at FRBNY and second, agreeing in principle to gradual repayment out of Greek foreign exchange of remainder of loan and conversion into sovereigns of gold so released, at such times and in such manner as Mission may recommend.1

Sovereigns so acquired would be sold in accordance present conditions whereby prior approval of Mission for each gold sale is required and every effort made to limit gold sales to smallest amount possible. Drachma proceeds from gold sales placed in suspense account and to be either retired from circulation or used solely to help finance part of cost of larger army and additional refugee aid.

Prompt public announcement of decision should be made, preferably by Mission because of our relation to government.

. . . . . . . . . . . . . .

6. As for future, we believe Greek Government now realistically undertaking to implement essential military and economic measures. In their unanimous judgment adequate reserve gold indispensable condition to degree of stability required for successful implementation of both military and economic measures. Mission endorses their judgment and regards it extremely inadvisable to gamble whole success [Page 30] of aid program and Mission on ability to control situation without gold sales.

7. Embassy concurs fully and most strongly.

. . . . . . . . . . . . . .

  1. The Department of State and the Treasury Department approved the recommendations in this paragraph on January 17 and suggested that the Bank of Greece communicate with the Federal Reserve Bank of New York regarding details of conversion and repayment (telegram Gama 84, 868.51/1–1548).