868.00/12–147: Telegram
The Acting Secretary of State to the American Mission for Aid to Greece
Gama 540. From State and Treasury. 1. Although opposed to Greek internal gold sales Treasury is prepared only in view your strong representation to effect exchange Greek gold napoleons for gold sovereigns on basis of fine gold content of coin, as recommended in your 542, Nov 26. In determining amount of sovereigns to be delivered, deduction will be made for melting costs and other mint charges for converting napoleons into fine gold bars. A deduction of one-half of one percent will also be made covering the Treasury’s handling charges of one-quarter of one percent for both purchases and sales of gold. Detailed arrangements may be completed between Bank of Greece and Federal Reserve Bank New York.
2. Before authorizing further gold sales again urge careful reconsideration of desirability of continuing gold sale program even for temporary emergency purposes in view considerations referred to in Dept’s 341 and 475.1 Particular consideration should be given effect a gold sales program may have on Congress in its consideration of supplemental appropriations for Greek aid.
3. Furthermore, there is absolutely no possibility that new Greek or AMAG funds can be used for purchases of further gold. This means existing gold stock must be husbanded most carefully, and used only in the event of genuine crises of type where sale of small amount of gold will have direct and substantial effect. In light of basic inflationary conditions existing in Greece, which it must be anticipated will continue to exist for some time to come, it will be futile to attempt to maintain any given price level over any substantial period of time. The most that can be hoped for is to retard the rate of increase. Clay concurs.