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The Greek Government could not, of course, do otherwise than accept this settlement, although it was manifest that the commitments undertaken far exceeded its resources.

Apart, however, from the financial assistance which the British Government had agreed to afford for the equipment and maintenance of the Greek forces, the Greek Government secured further invaluable aid of a financial nature for the discharge of its mission as follows:

1) The United States Government assisted Greece in very many ways. In particular, a) it decided to despatch to Greece, under LendLease, 44 substantial quantities of foodstuffs for the suffering population, specifically pulse, rice, milk, fish and other valuable foods,45 which otherwise would have to be made at the cost of the Greek Government. b) In response to the Greek Government's appeal, it decided to furnish additional aid in accordance with the terms of the letter addressed on the 5th [4th] of May, 1943, by the Secretary of State, Mr. Cordell Hull, to our Ambassador at Washington.46

This assistance consists of: first, payment from the first of January 1943, of the costs of transporting to Greece the above-mentioned foodstuffs and the Canadian wheat by the Swedish steamers. These charges had previously fallen in part upon the Greek Government and in part upon the Greek War Relief Association. Secondly, it consists of American assent to an arrangement whereby the G.W.R. undertakes the cost of maintaining the Greek refugees as from the first of April 1943. By reason of difficulties which have arisen in Cairo, effect has not yet been given to this latter project.

2) The Canadian Government decided to make a free gift to the population of Greece of 15,000 tons of wheat and of certain other foodstuffs per month. Recently, the amount of wheat has been increased substantially, and provisionally this increase is being covered by a gift of the Argentine Government.

3) The Greek War Relief Association, an exclusively American institution, continued to provide invaluable assistance to the Greek people, even after the occupation of Greece by the enemy. Thus, it shouldered part of the cost of despatching foodstuffs from Turkey to Greece, and expended in this connection a sum of approximately £1,250,000. Through the Red Cross it despatched medicines, foodstuffs and other articles for the maintenance and relief of the population. As already stated, it paid part of the costs of the Swedish ships, and in addition to its other relief work, undertook to help in connection with the relief of the Greek refugees.

Figures are not available to make it possible to assess the financial value of the extensive assistance thus provided. This much, however, is certain: the extent of the assistance and the nature of the needs which it served have relieved the Greek Government of a heavy financial burden.

* For correspondence on the Lend-Lease Agreement between the United States and Greece, signed at Washington on July 10, 1942, see Foreign Relations, 1942, vol. II, pp. 814 ff.

: 45 For correspondence on the sending of relief supplies by the United States to Greece, see ibid., pp. 724 ff.

Ibid., 1943, vol. IV, p. 175.

46

In addition, this assistance has assured the daily bread and other vital needs of more than 3,000,000 inhabitants of our country, who otherwise would be exposed to the greatest privation and even to death from starvation.

Yet, in spite of the generous assistance which the Greek Government received, the remaining items of expenditure which it still had to meet were very substantial and were constantly increasing, while conversely the revenue at its disposal was meagre and progressively declining.

Thus, during the period of three years from April 1941 to March 1944, the Greek Government has incurred public expenditure in the sum of £13,214,600. Of this sum only £5,803,800 are covered by taxation and other forms of revenue created by the Greek Government outside Greece. Almost the sole source of such revenue is the Greek Mercantile Marine. The balance was derived from the assets of the country existing in foreign countries at the date of the enemy invasion.

These assets consisted of the country's gold, which had been saved from enemy spoliation and safely deposited outside Greece, and of other assets in dollar and sterling deposited in various accounts of the Bank of Greece with American and British Banks.

At the time of the occupation of our Country by the enemy, the aggregate amount of these holdings of gold and foreign exchange totaled £52,455,800 (we include small amounts deposited later, being the proceeds of interest, sale of merchandise, etc.).

On the 31st of March 1944, these assets had been reduced to £45,045,000.

The difference of £7,410,800 had been utilized by the Greek Government, as stated above, to defray public expenditure, by far the greater part of which was incurred for the armed forces.

In addition to the aforementioned £13,214,600, which embraces the sums actually paid by the Greek Government up to the 31st of March 1944, it is today called upon to make urgent payment of the following sums for expenditure relating to the same three year period: approximately £1,000,000, balance of the value of foodstuffs despatched from Turkey to Greece, part of which was, as stated above, defrayed by the G.W.R.; a sum of £756,000 against expenditure in connection with relief of refugees up to the end of last year.

Such is the picture which our country's finances present during the three-years period from the date when the Greek Government left Greek soil until the 31st of March 1944.

The forecast for the future is even more unfavorable. Our expenditure has increased to a very considerable degree, and is estimated at approximately £7,880,000 for the financial year 1944–1945. Out of this amount, £5,111,400 correspond to expenditure for the armed forces, and a further sum of £1,496,000 is also connected with the conduct of the war. Conversely, our annual revenue has fallen by reason of the tremendous losses sustained by our Mercantile Marine, and cannot be estimated at more than £2,500,000, including certain extraordinary revenues.

This situation compels the Greek Government to address themselves once again to the Government of the United States, and to request that favorable consideration may be given to the possibility of making available a measure of financial assistance whereby the Greek Government may meet their pressing needs.

We consider that a credit of £25,000,000 47 would be of the greatest help and would very greatly facilitate the Greek Government by relieving it of the need to make further inroads upon the country's assets, which constitute almost the sole national capital that has survived the general destruction of our country's economy.

I avail myself of this opportunity to convey to you, Sir, the assurance of my highest consideration.

K. VARVARESSOS
Ambassador Extraordinary for Economic Affairs.

Governor of the Bank of Greece.

868.51/8-544

Memorandum of Conversation, by the Assistant Chief of the Division

of Near Eastern Affairs (Kohler)

[WASHINGTON,] August 5, 1944. Participants: Mr. Alexander Argyropoulos, Director of Economic

and Treaty Division of Greek Foreign Office and Delegate to International Financial and Mone

tary Conference. Ambassador Lincoln MacVeagh, United States Am

bassador near the Greek Government.48 Mr. Francis F. Lincoln (FMA) 49

Mr. Kohler Following consultation with Mr. Collado 50 with regard to the Greek Government's request for a dollar loan (Under Secretary's memorandum of July 28, 1944) I asked Mr. Argyropoulos to call, and talked with him today on the subject in the presence and with the assistance of Ambassador MacVeagh and Mr. Lincoln.

47 Hereinafter this amount is referred to as $25,000,000. 48 The Greek Government was in exile in Egypt. * Division of Financial and Monetary Affairs. 5o Emilio G. Collado, Chief of the Division of Financial and Monetary Affairs.

We reviewed the Greek Government's previous request of about two years ago for financial assistance, 51 the attitude taken by this Government at that time, and the action taken to meet that request by relieving the Greek Government of its principal dollar obligations, i.e., charter hire of the Swedish relief vessels and payment for relief foodstuffs provided from this country, now amounting to about 30 million dollars per year in total. With reference to the present request we assured Mr. Argyropoulos that this Government was anxious to give the most sympathetic consideration to the Greek Government's needs, both those connected with the payment of its necessary operating expenses during the period of its exile and those connected with the postliberation reconstruction of devastated Greece. In order properly to evaluate these needs and to determine the methods by which this Government might be helpful it was necessary that we have considerable information additional to that furnished in Mr. Varvaressos letter No. 2654 of July 27, 1944. This information should include particularly the breakdown of the Greek Government's financial position in terms of dollars and of sterling, i.e., we needed to know, on the one hand, the Greek Government's dollar assets, dollar income and dollar expenditures and, on the other hand, that Government's sterling assets, sterling income and sterling expenditures. We also needed to know, particularly on account of domestic legal considerations, the use in some detail the Greek Government proposes to make of the requested funds, i.e., was it intended to meet current expenses or as a financial reserve for reconstruction purposes. Finally, we mentioned that Mr. Varvaressos paper raised certain questions for which our financial people would require answers, an example being that the Greek Government was apparently being called upon to reimburse the British Government for past expenditures made by the British for relief goods in Turkey. It was suggested that our authorities might be very reluctant to lend money to the Greek Government to enable it to reimburse the British Government for such expenses at a time when the American Government was itself making expenditures at the rate of almost 30 million dollars per annum for Greek relief. Mr. Argyropoulos promptly stated that no such use was intended, and was told in reply that this could and should be made clear by a fuller statement of the actual uses which the Greek Government contemplated making of a United States loan. Finally it was suggested to Mr. Argyro

a poulos that it would also be useful to have a statement of the financial relationship of the Greek and British Governments, since we under

51 For correspondence on this subject, see Foreign Relations, 1942, vol. II, pp. 798 ff.

stood that the British had expressed a willingness in principle to meet Greek needs for sterling.

Mr. Argyropoulos said that he would telegraph for the desired information and let us have it as soon as received.

868.51/10-2544 : Telegram The Acting Secretary of State to the Ambassador in the United

Kingdom (Winant)

WASHINGTON, October 25, 1944-midnight. 8899. In August [July] the Greek Government approached us for financial assistance in the form of a credit of $25,000,000, which they apparently contemplated using for current budgetary purposes. We asked for further information on certain points not covered in the original Greek request, and particularly for a dollar-sterling breakdown of current and anticipated expenditures. In this latter connection, we had in mind the Foreign Office statement, reported in your 5202, September 17, 1942,52 that, "the provision of sterling for the Greeks is generally speaking regarded as falling within the province of the British,” and that the Foreign Office would be glad if we could help them in other respects.

The supplementary information now received from the Greek Government 53 does not fully clarify its financial position. However, it appears that Greek dollar expenses, other than the $30,000,000 per annum expenditure for Swedish relief shipping and American relief foodstuffs met by this Government, do not exceed $1,500,000 per annum; and that the Greek Government's dollar position has in fact improved slightly since we took over these relief expenses beginning January 1, 1943.

52

Foreign Relations, 1942, vol. II, p. 803. 53 Memorandum of August 31 to the Under Secretary of State by the Minister Plenipotentiary and Director of Economic Affairs at the Greek Ministry for Foreign Affairs (Argyropoulos) not printed; it estimated expenditures of the Greek Government at £7,890,827 of which the major part was in pounds sterling and of which £5,111,400 represented expenditures for the armed forces, revenues at £2,576,400 and a deficit of £5,314,427. It fixed gold holdings at £6,719,000 and foreign exchange holdings at £38,326,000 as of March 31, 1944, as compared to gold holdings of the same magnitude and foreign exchange holdings of £45,736,800 at the time of enemy occupation in April 1941, a decline of £7,140,000 [£7,410,800] resulting from the Greek Government's prosecution of the war. The remaining holdings of £45,045,000 were said to be composed of £31,726,900 and $26,510,570.

The memorandum stated that Greek revenues had dwindled because of heavy war losses by the Greek merchant marine and that in the first stages after the liberation of Greece the Government would be unable to draw substantial resources from the ruined country while it would have to face vital and pressing needs. (868.51/8-1044)

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