868.5151/6–445: Telegram

The Ambassador in Greece (MacVeagh) to the Secretary of State

515. For Dept, Treasury from Embassy, Patterson. My tel 500, May 30.35 DePriMin Varvaressos36 outlined Patterson today economic program publicly announced tomorrow. Involves heavy taxation especially commercial and industrial profits; strict control over prices essential items with penal sanctions, fines and requisitioning; control processing imported raw materials; quick distribution UNRRA clothing; new drive against gold speculation. Also reorganize Ministry Supply. In effort obtain popular support, process [price?] UNRRA ration lowered this month; hoping charge “economic” prices later and legal wages raised 50% to 70% over February. Latter largely recognizes existing situation. Govt soon also preparing [partially] valorize bank savings accounts existing April 1941 in effort to encourage public again deposit funds.

Drachma devalued tomorrow, new rate was not disclosed.37 Army Finance Officer informed. He was present Saturday when Varvaressos verbally agreed any surplus drachmas resold at same rate required [acquired?]. Govt may make some adjustment later to those who received support remittances 149 rate but this not yet final and [Page 223] similar privilege definitely not be extended to drachmas purchased and spent by foreign agencies.

Varvaressos anticipates strong opposition industrial and merchant classes but seeking support public opinion generally. Will make strong fight and optimistic. We believe reasonable chance arresting situation.

Rptd London as 619 for Embassy, Taylor. [Embassy, Patterson.]

MacVeagh
  1. Not printed.
  2. Kyriakos Varvaressos took his oath as Deputy Prime Minister and Minister of Supply in the Voulgaris government on June 2. He continued simultaneously as Governor of the Bank of Greece.
  3. In telegram 518, June 5, 1945, noon, the Ambassador in Greece reported that the new exchange rate was 500 drachmas to the dollar and 2,000 to the pound (868.5151/6–545).