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It should be stated in this connection that this report does not take into consideration the amount of $1,433,757.39 carried and shown on the books of the Treasury as an indebtedness of the State of North Carolina on account of moneys deposited with said State under section 13, act of June 23, 1836 (5 Stat. 55), as amended. The act of_June 25, 1910 (36 Stat. 776), authorized credit to be given the Treasurer of the United States for the amounts he had been charged on account of moneys advanced to various States under the act of 1836, but provided that the credit authorized should in no wise affect or discharge the indebtedness of the States, and that such credit should be acted upon in such manner as to debit the respective States chargeable therewith upon the books of the Treasury Department "until otherwise directed by Congress.' No further direction has been given by Congress in this respect. This matter has been previously reported by this office and appears in Senate Report No. 1559, Sixty-ninth Congress, second session, herein before mentioned. Respectfully,

J. R. McCARL, Comptroller General of the United States.

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FUNDING OF GREEK WAR DEBT TO THE UNITED STATES

MESSAGE

YROM

THE PRESIDENT OF THE UNITED STATES

TRANSMITTING

COPY OF THE REPORT OF THE SECRETARY OF THE TREASURY

REGARDING THE PROPOSED PLAN FOR SETTLEMENT OF THE DEBT OWED BY GREECE TO THE UNITED STATES AND OF THE DIFFERENCES EXISTING BETWEEN THE TWO GOVERNMENTS ARISING OUT OF THE TRIPARTITE LOAN AGREEMENT

FEBRUARY 6, 1928.– Read; referred to the Committee on Finance and ordered

to be printed

To the Congress of the United States.

I am submitting herewith for your consideration a copy of the report of the Secretary of the Treasury regarding the proposed plan for the settlement of the debt owed by Greece to the United States and of the differences existing between the two Governments arising out of the tripartite loan agreement entered into at Paris under date of February 10, 1918.

The plan of settlement has my approval, and I recommend that the Congress enact the necessary legislation authorizing it for the following reasons:

It provides for the funding of the Greek war debt to our Government and for the settlement of the Greek claim for further advances under the tripartite loan agreement made during the war. While our Government is to advance some twelve millions to Greece, the loan is amply secured, is to be repaid over a period of 20 years at an adequate rate of interest, and is to be used exclusively for reconstruction work of great humanitarian as well as economic value. This loan discharges what the Greek Government has consistently contended is a legal and moral commitment of our Government,

CALVIN COOLIDGE. THE WHITE HOUSE,

February 6, 1928.

TREASURY DEPARTMENT,

Washington, February 4, 1928. MY DEAR MR. PRESIDENT: I have the honor to submit the following report regarding the terms of the proposed plan for the settlement of the debt owed by Greece to the United States and the differences existing between the two Governments arising out of the.tripartite loan agreement entered into at Paris under date of February 10, 1918.

On January 1, 1928, the indebtedness of the Greek Government to the Government of the United States amounted, principal and interest at 5 per cent per annum, to the sum of $19,659,836. The indebtedness arose by virtue of an agreement dated February 10, 1918, under the terms of which the Governments of the United States, Great Britain, and France agreed to advance to the Greek Government by equal shares not to exceed 750,000,000 francs. The object of this agreement was to aid the Greek Government in procuring in Greece the credits required for the conduct of Greece's military operations against the central powers. Advances were to be subject to the approval of an Interallied Financial Commission, composed of one representative from each of the signatory governments, and the use of the funds was to be controlled by this commission and by a military commission similarly established. The reports of the American consul general at Athens, who represented the United States on this commission, show that Greek expenditures under the agreement reached the total of 682,134,693.54 drachmae (the drachmae being equivalent at par to the gold franc). There is no doubt but that Greece expended for war purposes under the 1918 agreement an amount largely in excess of the advances she has since received.

Upon the recommendation of the American delegate on the Interallied Financial Commission, the Secretary of the Treasury, with the approval of President Wilson, established on the books of the Treasury the following credits in favor of Greece for which the Treasury holds the obligations of that Government:

Amount June 20, 1918.

$15, 790, 000.00 Dec. 3, 1918.

23, 764, 036.00 Mar. 25, 1919

3, 858, 930. 00 July 31, 1919.

4, 823, 663. 05

48, 236, 629. 05 Against these credits the Treasury made cash advances as follows:

Amount Dec. 15, 1919

$5, 000, 000 Jan. 16, 1920.

5, 000, 000 Sept. 24, 1920.

5, 000, 000 All told, we advanced $15,000,000, leaving credits amounting to $33,236,629.05 remaining on the books of the Treasury. No further advances were made after the fall of the Greek Government in 1920, the incoming régime not being recognized by the United States for a considerable period of time. Meanwhile, the Greek Government committed certain acts which were construed by this Government as violations of the 1918 agreement. Secretary Houston stated to the Senate Committee on the Judiciary, and I assured the Committee on Ways and Means, that no further advances would be made to Greece without first submitting the matter to Congress.

The Greek Government has consistently contended that it was entitled to further advances up to the full amount of the credits established by the Treasury of the United States. On the other hand, the Government of the United States has taken the position that events which transpired subsequent to November, 1920, relieved it from making any further advances. This difference of opinion has heretofore prevented the reaching of an agreement for the settlement of the indebtedness of the Government of Greece to the United States.

In April, 1927, the British and Greek Governments reached an agreement for the settlement of the indebtedness of the Greek Government to the British Government which had arisen under the terms of the agreement of February 10, 1918, Great Britain having advanced approximately £6,540,000 or $31,826,910. Under the terms of this settlement the obligation is to be discharged over a period of 62 years at a low rate of interest and all claims for further advances under the 1918 agreement were waived by the Greek Government. Shortly after the conclusion of the above-mentioned Greco-British settlement the Greek minister at Washington took up with the Departments of State and of the Treasury the question of reaching an agreement regarding the Greek indebtedness to the United States. The Greek Government refused to enter into any agreement for the funding of this indebtedness unless the matter of additional credits was considered at the same time. So strong are the Greek Government's conviction of its rights under the 1918 agreement that it has been willing at all times to submit the matter of additional credits to arbitration. In the conversations with the Greek minister, the British debt settlement with Greece was taken as a basis, our position being that the United States Government was entitled to as favorable a settlement as that accorded to Great Britain. The Greek Government conceded the soundness of this contention, but pointed out that in order to enjoy as favorable a settlement as that accorded to Great Britain the United States Government should in fairness advance a sum as great as that advanced by Great Britain under the terms of the 1918 agreement. Great Britain having advanced the equivalent of approximately $31,826,910, and the sum advanced by the United States Government being $15,000,000, which with interest to January 1, 1928, at 5 per cent, amounts to $19,659,836, the amount of new money to be advanced by our Government in order to reach the amount advanced by Great Britain is $12,167,074.

As a result of the conversations between the Greek minister and the Departments of State and of the Treasury, the Secretary of State and the Greek minister at Washington exchanged notes which set forth the terms of the proposed settlement. This proposed plan of settlement has been formally approved by the Greek Chamber of Deputies. Copies of the above notes, dated January 18, 1928, a copy of the Note No. 156 of the Greek minister, dated January 28, 1928, certifying the approval of the proposed plan by the Greek Chamber of Deputies, together with copies of the reply dated January 31, 1928, of the Secretary of State thereto, and of his letter, dated January 31, 1928, transmitting all these copies of documents to me, are inclosed. The terms of the proposed settlement are as follows:

1. The $15,000,000 of principal owed by the Greek Government to the United States with interest at 444 per cent up to December 15. 1922, and on the amount then due with interest at 3 per cent to

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January 1, 1928, amounting in all to $18,127,922.67, less the sum of $2,922.67 to be paid in cash upon execution of the agreement is to be funded over a period of 62 years. There are listed below the payments to be made by the Greek Government to the United States under this settlement: July 1, 1928.

$20, 000 Jan. 1, 1929

20, 000 July 1, 1929

25, 000 Jan. 1, 1930.

25, 000 July 1, 1930.

30, 000 Jan. 1, 1931.

30, 000 July 1, 1931.

110, 000 Jan. 1, 1932

110, 000 July 1, 1932

130, 000 Jan. 1, 1933.

130, 000 July 1, 1933, and semiannually thereafter to Jan. 1, 1938, 10 payments each of

150, 000 July 1, 1938, and semiannually thereafter to Jan. 1, 1990, 104 payments each of..

175, 000 2. The Greek Government is to forego all claims for further advances under the tripartite loan agreement dated February 10, 1918, which agreement, so far as the United States and Greece are concerned, is to be regarded as terminated.

3. The United States will advance to the Greek Government $12,167,000 at 4 per cent per annum, payable semiannually, with provisions for a sinking fund to retire the loan in 20 years.

4. The Greek Government undertakes to limit the amount to be borrowed under the terms of the Greek loan protocol signed at Geneva September 15, 1927, to an amount which when added to the proposed loan from the United States of $12,167,000 will yield an effective sum equivalent to not more than £9,000,000 sterling.

5. The Greek Government will furnish as securities for the new loan described in paragraph 3 above, the revenues at present under the control of the International Financial Commission established by the law of February 26, 1898, in so far as the yield of these revenues is not required for the service of the loans having a prior charge upon the said revenues, as enumerated in Annex II to the Greek loan protocol signed at Geneva September 15, 1927. The loan described in paragraph 3 above, is to rank with and is to share the same securities as the loan approved by the Council of the League of Nations on September 15, 1927, and as set forth in the Greek loan protocol signed at Geneva September 15, 1927. In the event of i here occurring in any year a default in the payment of the service of the new loan described in paragraph 3 above, the ratio in which that loan is to share the same securities as the loan set forth in the Greek loan protocol signed at Geneva September 15, 1927, shall be the same as that which the amount of the annual service charge due the United States bears to the amount of the annual service charge due the holders of the bonds issued in accordance with the abovementioned Greek loan protocol as modified in amount by paragraph 4 above. The amounts required for the service of the loan described in paragraph 3 above shall be and remain a charge on the revenues above mentioned, ranking immediately after such prior charges upon the said revenues as were in existence on September 14, 1927, and as enumerated in Annex II of the Greek loan protocol, signed at Geneva September 16, 1927, and the Greek Government acknowledges that

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