On March 31, Ambassador Grady sent a letter to Prime Minister Sophocles Venizelos which called attention to the “less than satisfactory performance of the Greek Government in its conduct of economic affairs” and to the need for “a stable and efficient government, supported by the people and the Parliament” and capable of using American assistance to the fullest degree. The letter also held that “irresponsible talk of adjourning Parliament or of new elections” could “only create a climate of political and economic uncertainty.” It stated that Ambassador Grady and Paul R. Porter, Chief of the Economic Cooperation Administration Mission to Greece, could not approve the commitment of American funds for new projects, including the construction of four electric power plants, until the Greek Government assured the successful use of these funds for the purposes intended.
Specifically, the letter proposed adoption of a financial plan involving reduction of military expenditures, establishment of a ceiling on government debt, more efficient operation of the state-owned railways and the Agricultural Bank, a simplified and efficient tax system with collection of past taxes due, and encouragement of private investment. In addition, a reduction in the number of government ministries, delegation of responsibility to local officials, the holding of local elections, and the establishment of a nonpolitical agency to administer the electric power program were suggested.
Ambassador Grady concluded his letter with the statement that it was “in the hands of the Greek Government and the Greek Parliament to decide whether or not they wish to continue to receive American aid and hence to accept the responsibilities which will attain its purpose.” Finally, he expressed his “trust that this clear statement of the American concern in the Greek recovery will receive the earnest consideration of the Greek people and their representatives and that decisions to proceed boldly with an ambitious reconstruction effort will be taken quickly by the new Parliament.” (Telegram 702, March 31, from Athens, not printed, 781.00/3–3150; also, the Department of State Bulletin, April 17, 1950, page 600; and the New York Times, April 1, 1950.)