No. 430
Memorandum by the Assistant Secretary of State for Near Eastern, South Asian, and African Affairs (Byroade) to the Secretary of State1

top secret


  • Greek Currency Reform


To reach an agreed U.S. Government position with respect to the proposed Greek currency reform and the extent to which American officials should support the Greek Government in carrying out the plan.


Recent telegrams from Athens indicate essential agreement among Embassy officials, MSA officials and Greek officials with whom the proposed currency reform has been discussed (Kartalis and Mantzavinos) that, despite inherent economic and political dangers, determined efforts should be made to carry through this basic reform as soon as practicable. It is also agreed that the present government is unable to implement this new policy and that the instrument most likely to succeed in carrying it out would be a three-party coalition whose formation would be accompanied by the announcement of future elections at some date to be fixed by mutual consent or in accordance with constitutional procedures. The possibility of such a new government has already been broached to the King and Queen who, without being informed as to [Page 800] the exact nature of the “drastic measures” required of such a government, have looked with some favor on the suggestion.

There are attached two Departmental memoranda. The first, from OFD, expresses the belief “that the currency reform is a feasible operation and does not contain within itself the seeds of its own destruction”.2 The second, from GTI, outlines in more detail the political considerations involved in the proposed change of Greek Government.3


It is recommended that the Department inform MSA/Washington that it has no objection to the early implementation by the Greek Government of the proposed currency reform.
It is recommended that Ambassador Peurifoy be instructed to support with the King and in any other official Greek circles he considers appropriate the formation of a government pledged to carry out such a reform and which it is considered would be able to do so. It should be clear that he is acting only in a friendly and advisory capacity in connection with Greek initiative.
It is recommended that MSA be informed that this decision is reached in spite of many misgivings as to the feasibility and wisdom, both politically and economically, of the proposed reform and that MSA be requested to give urgent consideration to measures which it might take in the event that the proposed plan does not produce the intended results.
  1. Drafted by Baxter and initialed by Richards, Byroade, and Jernegan. The source text bears the handwritten notation by Acheson that he agreed.
  2. The significant portion of this memorandum, July 28, by Jack C. Corbett (OFD) to Richards, is quoted above. (881.10/7–1952)
  3. This memorandum, July 28, by Dixon to Richards, pointed out the political obstacles to currency reform and suggested that a service government rather than a coalition might have a better chance to carry out currency reform. (881.10/7–1952)