868.00/4–148: Telegram
Governor Dwight P. Griswold to the Secretary of State
Amag 578. Occasional Greek comments and absence of pressure on gold market past 2 days indicates optimism as to Italian elections. If Italian election results favorable, conditions here should improve barring some adverse developments. If however Italian election results should be such as to be construed by Greeks as involving probable Soviet domination Italy, Department should be prepared for immediate adverse reaction in Greece, which might because of Greek attitude toward election easily develop into inflationary and political panic. While I do not anticipate any Communist uprising or immediate danger of Communists securing control of Greece, there would almost certainly be tremendous pressure on gold market and cessation of most private imports. In these circumstances, aggravated by Communist sabotage and terrorism and by increased demands for appeasement from such figures as Plastiras, Lambrakis and Tsouderos, the coalition government which is increasingly subject to internal strife would in all probability collapse under strain. Difficulties inherent in forming a new govt would add to confusion. Unless checked promptly, therefore, immediate psychological and resulting economic consequences of Communist victory or near victory in Italy could cause rapid deterioration of situation in Greece, with collapse of country and Communist control as possible end result.
[Page 68]Accordingly, possible action British mission and Dept during period immediately following Italian election should be agreed upon, advance with objective of minimizing adverse consequences here. Such action against any initial panic is of particular importance because it is anticipated that success in first major military operations against bandits not anticipated before end of April.
Following measures are recommended from a precautionary viewpoint:
- 1.
- I believe that I must have full discretion and authority to deal with whatever situation may develop, including such alteration of civilian program as I may think required to meet emergency.
- 2.
- Immediate reaction will be felt in gold market and I consider it of fundamental importance that this barometer of public confidence be held as stable as possible. In order to have gold on hand for this purpose, I urge that 2,000,000 Federal Reserve Bank New York be redeemed, converted into sovereigns and sent to Greece to arrive about April 10 unless intervening developments require earlier shipment; and if reaction here to election results adverse, that an additional 2,000,000 be sent immediately after election so as to demonstrate US confidence in Greece.
- 3.
- If Italian election unfavorable, Department should promptly issue calm and reassuring statement emphasizing particularly that sufficient food supplies will continue regularly to arrive in Greece. Department will have to take account in this connection of possible halt of private imports of food and other necessities into Greece and emergency substitution of government buying.
Will appreciate being informed Department views on situation Italian election and thinking as to development of appropriate courses of action in Greece.