740.00119 E.W./12–545
The Greek Embassy to the Department of State 42
Translation from the Greek text of a letter addressed by Mr. Emmanuel Tsouderos to the Ambassadors of the United States and Great Britain, as received by cable at the Greek Embassy in Washington, D. C.
“Following a conversation with the British Under Secretary for Foreign Affairs, which took place in the British Embassy on the 21st and 22nd of November, and referring to the views expressed to him in my memorandum of November 17th,43 I should like to communicate to Your Excellency the following considerations and suggestions.
“We are facing an emergency, which though it has not developed recently, should be dealt with immediately. Our currency which in the first days of the new Government showed a trend towards steady improvement, begins to show again signs of instability. The rate of the golden sovereign is fluctuating today around 65,000 drachmas, due obviously to speculation. If this upward trend and the prevailing instability in the value of the gold sovereign continues, any attempt towards reconstruction of the country’s economy will be in vain. This factor will destroy the equilibrium of the budget in spite of steps being taken. The prices of bare necessities will be increased and salaries will again become inadequate to cover the needs of the working people. Thus the crisis will become more acute, resulting ultimately in panic and further lack of confidence in the drachma.
“If conditions are allowed to deteriorate, the assistance which will be required later for the economic reconstruction of the country will have to be greater and the situation will be more difficult. It is, therefore, necessary to consider in time what steps should be taken. In this connection a step that may have favorable effect upon the present situation would be a public statement by the Greek Government, [Page 282] to be made at the earliest possible time, announcing that the allies will positively back up our efforts and more specifically by means of credits, apart from the assistance in the form of commodities promised by Mr. McNeil. Without such assurance we are unable to make any public pronouncement regarding the economic situation, because if the pronouncement were to be vague on this particular point it would cause disappointment and speculators would be given the opportunity to bring about a sharp depreciation of the drachma. Many people, especially those connected with the Stock Exchange and the Banks, are aware of the fact that our reserves in gold and foreign exchange are small compared with the great needs of our country. By depreciating the drachma they are anticipating that we will soon find ourselves in a state of total poverty, which means economic disaster. This explains the psychological factors, if not the facts, that are helping speculators to boost the price of the sovereign to which businessmen are resorting daily as a means of investing the proceeds of their transactions.
“In our view the assistance which, when announced, will save the situation may be summarized as follows.
“Besides the allied assistance discussed with Mr. McNeil with respect to the indispensable continuation of British help in the general field of our military expenditures, as well as other assistance to be given us for the rebuilding of roads, railways, harbors, farms etc., it is necessary that we be placed in a position to announce to the Greek people the following.
- “1) That the credit account of the Bank of Greece with the Bank of England accruing from expenditures of the British armed forces in Greece is not subject to any restrictions and can be used for the purchase of goods in accordance with an agreement reached by the Governments of Greece and Great Britain.
- “2) That the allies are ready to make partial advance payments on account of the total sum due Greece for reparations, especially of the sum due Greece for loans made to the Germans and the Italians during the occupation. On the basis of estimates known to your economic and financial counselors, this latter sum amounts to $90,124,520.
- “3) That on account of said German debt the allies agree to turn over to Greece an equal amount of German gold from that seized by them in Germany and that this gold will be used for the country’s needs.43a
“If all the above points could be made public soon and concurrently with an economic and financial program carefully prepared in cooperation with your experts whose arrival we are expecting, we would then be certain of improved conditions. The people’s outlook will change. The public will recover its courage and speculation will be defeated. Otherwise the perspective of economic developments does not appear very encouraging indeed.
“We beg Your Excellency to communicate the foregoing urgently to Your Government etc.”
- Handed to the Division of Near Eastern Affairs on December 8 by the Counselor of the Greek Embassy (Economou-Gouras).↩
- Not printed; copy sent by Mr. Tsouderos to Ambassador MacVeagh on November 19 (Athens Post Files: 851, Financial Conditions).↩
- In connection with paragraphs numbered 2 and 3 of this communication, the Department in a memorandum of January 11, 1946, to the Greek Embassy, stated, in part: “While keenly aware of the economic plight of Greece and of the necessity for remedial measures, the United States Government must inform the Greek Government with regret that it cannot accede to the proposal that the Allies make a partial advance payment on the total sum due Greece on reparation account and allot to Greece a portion of the gold uncovered in Germany.” (740.00119 EW/12–545)↩