The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
February 5 , 19^7
Saar Joagt
Ton oan’ t imagine hov pleaaed 1 wa* to get your long
le t t e r w ith i t s amount o f oondltlona la Shanghai. Alao I
with to thank you deeply for your Chrlstaas card. X aa
glad you hs.ve fo'nd j^our vork a productive
I know
you will he happy In it eran though tha condition* ara diff
oult and the outlook unclear. Tou are young enough to ha
•hia to look forward to working with tha difficulties and
contributing to their solution. X hcpa in the prooeaa you
will keep in touch vith us her*.
N Tha In s titu te has ‘bean an a ctiv e plane th is winter, Wa
• t i l l hare Surfcee and Lin&berg hera , v h lla Folk® H llgerdt
la s t i l l llr ln g In Princeton although ha la working at Lake
Sueoeas. Th is la s t vatic S ir Henry Olay and B e r t il O hlln
vara r ia it o r s a t tha saaa tla a . Tou oan imagine that l t
was rath er busy, hut provided a #pod opportunity fo r a pro*
d u ctile interchajige of id eas.
T h is vatic va hanra S r. Penrose, vho used to he with tha
I.L .,0 . and la t e r v ith Mr. Winant la London, aad Professor
fran k Tannenbseaa o f ColuraMa, a rriv in g to stay u n t il June.
They hath expect to produce a hook w hile they are hare.
LenredsQT ia nov at !fttff ie ld . Ha w rites to us frequently*
Wartrlng aondltSoas in Oxford ara s t i l l d if f ic u lt , apparently
la rg e ly haesase o f the re at r io t ions on h u ll ding and housing.
Please resienhar aa to Hr. Oordon.
Be I s a good nan.
Mrs. M e fle r , as v a il as a l l your frien d s at tha In s titu te .
Jo in aw In sanding our very warmaat greet Inga.
S in cerely yours,
Mr. 8haa~K*ei Tong
Central Tfust of China
8 Tuan King Tuan Road
flba&^halt China
Winfield Riefler
Keproaucea rrom the Unclassified I Declassified Holdings of the National Archives
.m i '
C e n t r a l T ru s t o f C h in a
8 Yuen Ming Yuen Road
S h a n g h a i, C h in a .
Eovem ber 2 , 1 9 4 6 .
D ear M r. B i e f l e r :
A f t e r o a r l a s t m eetin g in
"P rin ce to n I l e f t f o r th e w est c o a s t w here I
s a ile d f o r S h a n g h a i.
The jo u rn e y was e x tre m e
ly p le a s a n t . N a t u r a lly , i t was a g re a t s a t i s
f a c t io n to he r e - u n it e d w ith my f a m ily a f t e r
te n y e a r s 1d e p a r t u r e ,e s p e c ia lly to f in d th a t
everyo n e had been we1 1 .
S h o r t ly a f t e r my a r r i v a l in
Shan g h ai I was ap p o in te d a s th e A s s is t a n t Con
t r o l l e r -G e n e ra l o f th e C e n t r a l T r u s t o f C h in a
w h ich i s a s u b s id u a ry o f th e C e n t r a l JJank o f
C h in a . The fu n ctio n © o f th e C e n t r a l T r u s t r e
sem ble* in many re s p e c tB th o se o f th e B econs^ r
t r u c t io n fin a n c e C o rp o ra tio n o f th e U n ite d
S t a t e s , b e in g a g o ve rn m en tal f in a n c ia l organ
engaged in g ra n tin g lo a n s ,b u y in g m a t e r ia ls ,
p ro m oting h o u sin g p r o je c t s and h a n d lin g s t a t e
t r a d in g . I t i s now c a r r y in g ou t th e b a r t e r
ag reem ents w it h S o v ie t R u s s ia and Ja p a n . The
w ork o f th e C o n t r o lle r i s to p la n and s u p e r v is e
th e e n t ir e o p e ra tio n o f th e o r g a n is a t io n . The
jo b i s v e ry in t e r e s t in g , and I f e e l th a t I am
d o in g u s e f u l w o rk .
In a d d it io n to th e job in th e
C e n t r a l T r u s t I am s e rv in g c o n c u r r e n t ly a s a
t e c h n ic a l e x p e rt o f th e S e p a ra tio n s Com m ission
o f the C h in e se C a b in e t . VTe a re p la n n in g and
n e g o tia t in g on the i n t r i c a t e is s u e s in v o lv e d in
t h a t p ro b lem .
S h an g h ai a irn e a rs v e r y much th e
same a s b e fo re e x ce p t th a t th e b u ild in g s and
s t r e e t s have been worn o u t . The p a rt o f th e c i t y
d e v a ste d by w ar i s r e l a t i v e l y s m a ll and e c o n o m i
c a l l y in s ig n if ic a n t .
The In t e r n a t io n a l S e t t le
ment i s now in th e c o n t r o l o f th e C h in e s e . I t
ieproduced from the Unclassified / Declassified Holdings of the National Archives
z
re m ain s th e most im p o rta n t and p ro sp e ro u s p la c e
in C h in a . P o p u la tio n in S h an g h ai h as in c r e a s e d
s h a rp ly s in c e th e V - J Day a s everyo n e l i k e s to
r e t u r n h ere jet even ju s t to ta ^ Ja JIL jg p k , B a n k in g
i s n o t f a r from h e r e . I t I s m o re^ te va^ ed th an
S h a n g h a i, b a t th e m ain governm ent b u ild in g s can
s t i l l te ut»ea a it® * r e p a ir . T r a n s p o rta tio n i s v e r y
d i f f i c u l t and e x p e n s iv e . Taod s u p p ly i s under co n t r o l t . B ic e i s oheap b u t f lo u r i s e x p e n s iv e . M eat,
v e g e ta b le s , eggs and m ilk a re a l l p le n t if u l o n ly
th e p r ic e s a re r is in g r a p id ly .
The p o s it io n o f w o rk e rs in Shan g h ai h as been
r a is e d p u r e ly f o r p o l i t i c a l re a s o n s . I s th e g o ve rn
ment i s a n x io u s to p le a s e th e w orkers l e s t th e y m ight
tu rn Com m onist, any th r e a t
s t r ik e may b rin g them
f in a n c ia l g a in . The wages a re now a d ju s te d to th e
change in th e c o s t o f l i v i n g in d e x ,in some c a s e s h ig h
e r th a n th e c o s t o f li v i n g in d e x . T h is i s c e r t a in ly
a blow to th e
in d u s t r ia l e n tr e p re n e u rs . The p r o f it
m arg in i s n arro w ed down, and b e s id e s , th e need f o r
w o rkin g c a p it a l i s in c r e a s e d . We a r e ,t h e r e f o r e , h av
in g a d e p re s s io n in th e m id st o f i n f l a t i o n . The
budget re m a in s in d e f i c i t , b u t n o t e - is s u in g i s no
lo n g e r the o n ly so u rse o f reve n u e a s th e goverm ent can
r a iB e money by s e lli n g g o ld and ememy p r o p e r t y . Soon*s u r p lu s from U .S . w i l l be s o ld f o r re v e n u e . The s a le
o f enemy f a c t o r ie s to th e p u b lic ,th o u g h h e lp f u l to
governm ent f in a n c e , i s n e v e r t h e le s s harm fuyto the
a c c u m u la tio n o $ 6 a p it a l s to c k b ecau se th e b u y e rs u s u a lly
have no in t e n t io n to ruM th e f a c t o r ie s . They ju s t
so ra p them and s e l l th e re m a in s . S in c e n o t e - is s u e h as
been c u t down and y e t th e demand fo r money i s s t i l l
la r g e ,t h e r a t e o f in t e r e s t h as been d riv e n up . I t i s
now on a v e ra g e IS
p er c e n t p er m onth. The C e n t r a l
T ru s t and o th e r g o ve rn m en tal f in a n c ia l o rg an s have
e s t a b lis h e d a p r i o r i t y system to a llo c a t e governm ent
ch ean o r e d it (aro u n d 5% p er month) to e s s e n t ia l
u ro d u c e rs .
The p o l i t i c a l c o n d it io n in C h in a rem ains c h a o t ic .
K e o e n tly , a n o th e r attem p t h as been made to b rin g
th e two pt^feies to g e th e r . But th e re i s no s u c c e s s . I t
i s p o s s ib le , how ever, th a t some aggement may be r e a c h
ed t h is w eek.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
3
People all over ^-hina are clamouring for peace,
So one can see any gain in continuing the civil stfUpfe.
Most of China is in acate poverty which cannot be
relieved until transportation is restored and funds
are used not for war but for reconstuction, We are
most afriad of any possible conflict between the
United states and Soviet Huesia which will lead to
another world war. Henry Wallace has found many a
sympathizer in China and his speech is widely dis
cussed.
We are also very much interested in the work
of the United Nations Assembly. But people usually
remain synical to the effort being made there.
£he intellectual life in China has sharoly deter
iorated. A lar^e number of university have been dama
ged; libraries have been looted;teachers have been
starved. She atmosphere is unfit for quite and lieeurely life. But still a good many intellectuals are
struggling to retain as much cultural life as possible.
I am
qonstant visitor to the U.S§ Information Service
whereTooolcB and magazines can be found. A few friends
and myself are organizing an eoonomic discussion club.
I have become a member of the Sino-American Club and
a member of the Sino-British Cultural Society. We have
recently given a lunch party for Prof. D. B. Copland
who is Australian Minister to China.
Princeton must be very beautiful in the late
fall. I still remember the days I raked leaves in the
garden and burned them, and 1 could still vaguely
remember how it smells. Desnite the happy memory,however,
I am happy that I am now in China where with my fellow
men I have a great task to undertake.I am most ths^cful
for the privilege I got in the United States which have
enabled me to shoulder greater resposibility.
There is a friend of yours in China, Mr. David L.
Gordon,who has become well acquianted with me,
Pleace remember me to Mrs. eiefler, Mr. Stewart,
Mr. Warren,Mr, Goldenweisser and Mr. Copper.
With best regards.
Sincerely yours,
ghan-Kwei J?ong
Reproduced from the Unclassified I Declassified Holdings of the National Archives
<. -£*
April 3,
Dear Herbert t
I t va-8 good of you to
to th# teP fer stool: a rtic le *
m 70117
reactions
Yorar wholo thoughtfal
le tte r reminds rj* asain that I have roaolvad to, see
a &r$at deal of you th is year, and have soon nothing
o f '7011*
on earth do»H you stop over In Prince**
ton ao.-.seiimo on your iaany trip s to 3 « York? I f I
got dovm your 4sray, you won't
afcle to 48G&pe a©*
Sinceraly,
Winfield r.ieflor
Mr* Herbert Fels
15 2 9 -
29th Street
Washington, D. C.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
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from the Unclassified I Declassified Holdings of the National Archives
Cable Addnu •
Official Depositorv o f iht
n a t io n a l
" GOVERNBANK
governm ent
THE CENTRAL BANK OF CHINA
SHANGHAI
A p ril 1 9 , 19^7*
Mr. W in fie ld R ie f l e r ,
The In s t itu te for Advanced Study,
School of Economics and P o l it ic s ,
P rin ceto n , New Jersey ,
U . So A .
Dear M r. R i e f l e r ,
Your le tte r of A p ril 7 th arriv es here to-day.
The speed in which a ir m ail goes has impressed me and
brought to me a very comfortable fe e lin g that I am not
fa r away from my frien d s in the U nited States?
My
w ife and m yself are both deeply g ra tefu l for the k in d
thoughts which you have expressed in your l e t t e r .
As you may notice i n the letter- head,,that I am
now working in the Central Bank of C h in a .
Since the
m iddle o f February, there has been a re- orientation in
China*s economic p o lic y , and Mr. Chang Kia-ngau has
been appointed as the Governor o f the Central Bank of
China*
Upon his assum ption o f o ffic e X was called
upon to serve as his s p e c ia l a s s is t a n t .
Although I
s t il l hold my job at the Central Trust, I p r a c t ic a lly
spend a ll my time at the Central Bank.
You may probably remember that Governor Chang
v is it e d Princeton In the Spring of 19 ^5
was enter
tained by you and M r. Stewart at the Nassan C lu b .
As
the n a t io n 's foremost fin a n c ie r he has always been looked
upon by the people as one who could put China*s finan ce
in o rder.
H is appointment is w idely acclaim ed as a
wise on e.
The circum stances i n which M r. Chang find s him self
a re, however, indeed very d i f f i c u l t .
It w ill take his
hard e ffo r t as w ell as his p restig e and p o p u larity to
restore Chlna*s economic condition to norm alcy.
In f l a t i o n ,
though less fervent as b e fo r e , remains a serious problem .
High dom estic p rice s have stim ulated imports and prevented
exports and as a consequence there is a serious pressure
on the balance of paym ents. Though the fo re ig n exchange
situ a tio n can be s lig h t ly re lie v e d by import regu latio n s,
but consequent upon such re g u la tio n s, the small amount of
m achinery and raw m a te ria l, imported from abroad e .g ,
co al, cotton and wheat, would not be s u ffic ie n t fo r domestic
in d u str ie s*
Bottlenecks in the economic system such as
these are always threaten in g to create a s it u a t io n in which
un-employment takes place in the m idst of In f l a t i o n .
Reproduced from the Unclassified / Declassified Holdings of the National Archives
- 2
A f t e r M r. C h an g 's in a u g u r a t io n , e f f o r t s are b e in g
made to c o n c e n tra te p r iv a t e h o ld in g s o f f o r e ig n c u r re n c y
b y is s u in g bonds in term s o f U . S* D o lla r s .
S h o rt-te rm
T re a s u ry C e r t if ic a t e s a ls o in t e r n s o f U . S* D o lla r s a re
is s u e d t o ab so rb n a t io n 's e x c e s s p u rc h a s in g p o w er. Th ese
bonds and T r e a s u r y C e r t if ic a t e s h ave been welcomed b y th e
p u b lic .
I t i s hoped t h a t when th e $ 5 0 0 ,0 0 0 ,0 0 0 *0 0 Im p o rtE x p o rt Bank lo a n m a t e r ia liz e s th e s it u a t io n w i l l be
s u b s t a n t ia lly im p ro ve d .
W h ile I f in d my w ork e x tre m e ly in t e r e s t in g I
o fte n r e a li z e t h a t my e x p e rie n c e i s y e t i n s u f f i c i e n t .
I
w i l l a p p r e c ia te i t v e ry much i f you w ould f r e q u e n t ly
e n lig h t e n me w it h y o u r w r it in g s , e it h e r p u b lic a t io n s o r
p e rs o n a l co rre sp o n d e n ce , so t h a t I may b e n e f it fro m y o u r
a d v is e a s I d id when in P r in c e t o n .
My b e s t re g a rd s to you and M rs. R i e f l e r
Y o u rs s in c e r e ly ,
Shan -K w ei Pong
Reproduced from the Unclassified I Declassified Holdings of the National Archives
mmm
V.
ty zsM
Goasient* on fh» Greek ProMea
Ju
a£l*|ge&
moral and character deficiencies of the present §re*fc
Oovernaient are an
ta fla tic a .
leadership
/rvrs/
inevitable outcose of nearly
Hyper*in flatio n
three
years of pro^greiaire
In any society acts ruthlessly to eliminate
baaed on aoleonlty of character.
serged aad m availahle fo r public posts*
Such individuals become w&~
fhe actual adm inistration of *
country in hyper-in fla t ion m at inevitably ’be conducted .'by' in&ividtiala vhe
Imve demonstrated th eir capacity to survive In an inflationary environment j
& oapacity that ie nearly always “baaed on dubious personal a c tiv itie s and
elastic
5.
eth ical standards.
Oesuina^persanent sta b ilisatio n of the #reek currency i t s. sine qua non
to the success of th© whole Araericaa. p rograa in Greece. On i t will depend
m% only the success of other economic measure* directed toward nsconstruotion of
a&ove
the eeonouy, hut- also, in tern al social aad p o litic a l stability and
a ll* the a b ility to fo ster the emergence of a governing personnel
possessing the
in
character and ethical standard8 to merit continued support
th e ir om rl^it, and not merely support as an altern ativ e to Russian
penetration to
the Mediterranean..
0. ;X.f i t ie a t a ll typical of other corap&ra’ble inflationary situ atio n !*
Greek society today is rife with unreal and malice toward a p ro fiteerin g ,
recoaatruoticn in the inter-war period-* and are surviving today “by
•elllug in the ‘black market and making no permanent money savings*
fhe
tra^ lag and professional middle classes tc which the country should look
for 1eateraMp are probably coarpletely absorbed in rnmrmt survival *
fhe
Reproduced from the Unclassified I Declassified Holdings of the National Archives
. 2total voluae of outstanding private dbbt sust %e large In drachma bat very
snail ia dellars at current black market rate* of exchange a&d aust be owed
largely Ijy* aucceesful speculators or speculative trader®,
fhe currency mm%
be circulating at a high fi.ee!ty and it® dollar rain# at current!relevant
(net official) rate* of exchange mist be small.
B.
Iff active currency stabilization will slow clovm the Telocity of circula
tion and create a vacuua both of currency and credit,
the current speculative element a intc the bank*.
Ttm it will the v
If the stabilisation it
Carried throu^i effectively and the banks are honestly and rigorously ad~
ministered, the stabilization of the currency in and by itself will act aa
the most powerful force that could be evoked to improve the character of the
Oreek Government and of the individuals in actual charge of administration,
She speculative elements will be baakruptediiout of circulation, and the acre
sober elements in the cofcaunity will again riee to the top.
In banking terae
they will possess the credit worthy qualities of character and experience
for economic reconstruction in an environment of currency stability.
X.
There is probably little real effective aoney saving in Greece today,
such as there ia aad must be in foreign currencies,
Shis condition wiUJt
probably continue until the currency Is effectively stabilised end I s expected
te remain so*
Bren after effective stabilization. Internal matey savings will
-bead) to be exported for reasons of political security tc safer
Inteimal investment of private noney savings in Greece will be limited largely
to those subs that can be prevented froa escaping through exchange control
techniques; techniques that are peculiarly difficult to apply in a country
as backward and unstable as Greece, and alec difficult to aake effective
«
in/a suntry mich at Oreeoe vheie economy for thousands of years has pivoted
around commercial and trading activities throughout the Kiddle last rather
Reproduced from the Unclassified I Declassified Holdings of the National Archives
* 3 ~
thaa around Internal primary production.
I.
Suck internal investment as takas place in Greece rrast depend on govern-
neat funds*
With tax revenues that are inadequate te 'balance the tadgat,
thesa must he raised either by further inflationary levies or by external
loans.
If the currency is to he stabilised, the proportionate amount must
come from external loans.
G.
Tot the American policy ef financial assistance to produce a constructive
result, it must provide funds not only sufficient to nialntain life on a
relief basis— i . e . , to meet recent deficits in the balance of payments arising
out of abnormally low Greek exports.
In addition it m at provide the bulk
sf the funds for current internal investment.
These two quantities are aet
SddltlV*, Investment funds vill provide exchange for the current balance ef
payments.
It is important however te comprehend the internal investment
necessities if the American program is to succeed In terms of currency
stability and full internal employment.
R.
She J\A.O. Report on Greek reconstruction is & valuable document but
It missed in its central economic focus,
fhe Greek economy has never rested
cm internal primary production of the type emphasised In the T»J0. Report,
or jrather it has not rested on this type of economic activity sines the
sarjty
of Athens as a city-state.
It has rested rather on commercial
j
activities throughout the Hear and Kiddle Sas$» merchandising, commerce,
Shipping, insurance, tourists, etc.
this will probably continue to be ths
fee as of Greek economic life sc long as It remains part of ths f*ee world*
Intsraal agricultural Improvement, ll$*t industries, and hydso-electrio
dsv ilopmeiit arc all valuable but In terms of Greek economic reconstruction
th^r arc s e c c n ia v g r to the reestablishment of Greece as a merchandising*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
.** & «•
commercial* end fin ancin g eeatey fo r the Middle la s t ,
Beoonstructlon of
the Greek ha&ks as instruueants fo r th* fin ancin g o f Middle Uastera commerce
(not sin p ly Greek come ro e ), o f the Greek aerehant se rin e , and o f a» en te r
p risin g hut re lia b le oowaerolal c la s s , are the three prim ary re q u isite s
Of Greek e oononio s u rv iv a l.
Suggested Prograa
1*
As the first move In the American fin a n c ia l program looking
the e cx>nomic, p o lit ic a l, s o c ia l, and stra te g ic reconstruction in Chreeoe,
X suggest the abolition, of the drachma and the su b stitu tio n , therefore, of
the d o lla r,
e ffe c tiv e .
S h is step vould he s ia p le , novel, hold aad e x tra o rd in a rily
I t would he charged hy the L e ft as d o lla r iraperiallsa, hut that
oharge io already ap p licab le to the en tire A aerlcaa program.
1» sore that
one oould atake would more e ffe c tiv e ly aocoirpliah our o b jectives In tha Middle
la s t .
I t would s ta b iliz e the currency without question, and that lead to the
emergence o f a new ru lin g group hated on sober n id d le -cla ss nerchaadising
and p ro fessio n al backgrounds,
I t would give the peasant a tangible aad
co sp ellin g lo y a lty to the Veat. (imagine it e e ffe c t along the troubled
Manchurian border when the peasants on one side of the lin e would hag*
d o lla rs to deal in as oospared w ith n e arly worthleaa aoney on the o ther)f
I t wfruld provide the Greek conmeroial hanks w ith a pecuniary aedltos on lA ie k
they could develop as the cre d it aerohants of ths Middle B u rt.
I t nonaid
draw haok into Qreeoe, and to the use of the Sreek econoay, the cash balances
of Qjreefc enterp rise suoh a s the shipping companies.
We have an exaaple la
o f the s ta b ilis in g e ffe ct o f a *ove o f th is kin d .
Iforoughoui the years
o f it s greateet u n re st, Oufea used d o lla rs as a Bedim o f exchange and escaped
Reproduced from the Unclassified / Declassified Holdings of the National Archives
- 5-
nany o f H**
oonsofasnoos o f it s in te rn a l in s t a b ilit y .
Sis* h r ie f
adverse economic e ffe ct lia r in th« fa c t that i t f a c ilit a t e d the flig h t Of
In te rn al sarin^s into external hoards.
oecrurred anyhov.
Bowerer, these vcirld prohshly hasr*
In the Greek ease, th is objection does not apply.
If
« y th ln g coaid help 'bring the In te rn a l searings o f a oonmerelal nation such
a t Greece hiwSfc to the a id o f the Greek econorgr, I t would he the p ro visio n
o f a pecuniary me&iun possessing the *n&gic* a ttrib u te o f d o llars*
2.
fhe initial cost of introducing the dollar as the official ottrreaoy
Of Greece ihould he small,
Tfader conditions of inflation attended hy high
velocity, a relatirely snail em in dollars should suffice for the exchange
of the entire drachma note Issue for dollars,
fhe plan could provide that
the Greek Government (or Central Bank:) could reintroduce the drachma at any
tlae that they had the dollars to repay the currency loan*
3,
With dollars ae the hasis of their currency, the Greek Gereraaent
vould lose the power to finance itself
he
hy recourse to inflation.
It would
forced, consequently, to rely on dollar loans to the extent that It did
m i eover its expenditures out of looal revenues,
4*
This situ a tio n would a a to a a tlca lly provide th* Jwerioan ad *iaist:m l(|rn
' v lth the powers he vould need to nak* American assistan ce co nstru ctive and
effefctlvo.
I t would enforce f is c a l refo n , and tho Greek Governsnat would hs
ro*u .red to execute sound development and construction programs as a haals
for the Amerioan lo an s,
fh * situ a tio n sd^ht soon derelOp to tho point where
tbs International Sank could take over*
5,
fhe
e sse n tia ls ta th * program a rst
(a ) Inslstonoo that tho droolaaa ho abolished fo r tho lists aad d o lla r*
stf>s*ituted.
oduced from the Unclassified I Declassified H oldings ot tne National Arcnives
- 6 •*
Cb) Insistence oa a wand or*s»iiatioa of tha ftrMk central
'bank aad of tha Greek private banka, vlth reliable and
conscientious a&ninistrattv* penwmel*
(o) Frovi*ion of aaple discretion to the American adninietrater
to place effective condition* oa farther financial aeeietance.
(d) frank acceptance by th* United State* that it intends t*
ieo the program through and to provide the necessary
assistance until the pro gras ia effective.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Federal Reserv
of
N
e w
Y
e
Bank
o r k
N e w Yo r k
A5
N.Y.
May 6, 1947.
Mr. Winfield Riefler,
The Institute for Advanced Study,
School of Economics and Politics,
Princeton, New Jersey.
Dear Win:
Enclosed is another memorandum prepared by
Coombs containing further comments on your note about
stabilizing the Greek currency.
As I recall it, you
said you wanted to have the facts of the problem de
veloped and this memorandum carries that idea forward.
At this stage it does not seem to me that you have hit
upon the solution of the problem although yc-u may well
nave some opinions to offer in rebuttal.
Meanwhile,
we shall be trying to develop what we think may be a
more likely approach.
With best regards,
Allan Sproul.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
tin? 10, W
B#ar Allan I
X m haoite trm my trip South soft find y<mr ssosstA latts*
cm n?r listk* That
arrived a* 1 vm* dspartinc ***£ ss*ve«i
th* gtod |mrp^m of krwrping as $&ist an ths Gresk situation,
w s th«m# I Aid aot have tiaa# te assjUsilai# the i»t#ll#©tia&X
oontsnt? folly. 8ov X 'non* to ¥e able to diktat >oth oostauni<mt»i«m* or rati® r all threa m m % im& <Nm»*$MtttXy %o he bsttsr
ii*£o»#&*
£hs has#
om the $slitl*al and ecQnonio
of the 0*ssk r*<ro*st it * aa^nifioeiit 4oh of expart &?*& Uafsmsd
attaiysit. At hsfore* X aa filled with tarjr of you, yswr wotiiian
and tltt Usseyv* Jtak, I wonder if ym «&>rsoi*t* what it &as&»s
to Iware iniRftdiate aooest not ©nlj to hsa?itif&lly 0*p#it#©& inforraittoa hmt «lso to experts ef tush sonpstt&sii* etXiiti* anti sjb?«*rtsno«. I bud tha saao fa*lin# in 1939 wts^a I ©aiae to you for
hs&p on ths K*tie&*l JSuastiet t M y ftf husi&stfi fia*ael]kg» f h « X
vat surtnrlssd *mt lea* so thm this tiss, In this oatie X had «jc~
ps&t*d w*ll~orf$imlt#&i ti|»~to~the~islj*at# Info maatIon imt i did m %
isa^ine jtm, would rXready h «w oa yostr stuff tor^sono who was rlisbt
ont of ths *e»t«r of tha whole Greek: situation.
I asafcs threa
ItMtifti oomsnts?
J*lrst. Of ths various iaoorreot preconceptions whioh X had,
tboss relating to ths sallher of tbs |M»aomeX of ths present
* * $ & » * wars s&st in error. X had iaa#;ined that thsjr wars acre
volatile h*A venal. I had not iawi^lneft that Ui* stii&ill*&tie»
lust yssr was sufficiently effective in ths ihort rm, and that it
had already tiro&Aced »a»y afferjte aaalc^oos to but iiot *« favoralls as X had ho^ed. ApT>*r«itXy a faar&-head«&» Itne^Tlslonsd*
thers**ighly aoeliwatsd leadership has sslssd ^ovarf ita& ii ia a»jr»
thine >«it attmctiws froa our $«$ttt of Tisw,
th s s it m tio a (ssriain ljr g irs s r l t s to dospoi^da]^ «y»r as/
oS^stnsdtlvs i^mroach to ths prohls®, sacc^t jb»fcWhlch"'ssfeme tt
h# ra lsd out on gsasral s*<mrity gsfmmds* sak»sX|r, that of Issnriag
i t soi^XfttsXy slo n s, tt i t is gut ^ rsulsa that the l^hitsd sta te s
i t row rss^oivsihls fo r a au scstsftil rssonstntotloa oa tha hsisls
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Hr. Allan %>roal
2
-
«sy 10,
of n&tir*, non-^sermwnlsit leadership, Item,
plan
w®
adopt ssist operate I® #Mft the l©a4ershi;p so far a* pottltsl©
from tho r«fidtlOBa.ry ri^jht, where 11 now reals, ionwrd ths eontor,
5h» economic cotmternart wmiM %em to m« a pis® wMksh f©stored
th» ®wsre<mo# of a a&ditl* elaftv*
It
h© that the conditions
earn m t present that w ill contribute to th is objective. That
tirtply nm m that onr idwle. acroltf^m t is foraSoosiod to fa ilu re .
If v® m'rmte at all, our s^roaoh wist vorfc In that direction, I
atill fool that * plan, vhioh provided for m <S*fiaitiv®
tioa of th® crenrrawsy, o«« that oonld m% e m m IvaS&y ha tapsot*
w a ld foror on l&alano© th© araorgoae* into l«k&«rship of in&iTtamls
vho »sM<*ra& ptoaistsswa tm the h& *ia of
con stru ctive *»»•>
itonio porformme snihwr than on the hauls of family, swnopoly,
•asafean^e *p#<raifttion, eo8w»&ity hoarding, hl&afc m *%»t «na#loa.
etc. It «W0r <*®11 h@ that it w a ld not he sufficient to «ohl«v#
th© &©«irfl*S remJ t , hat it w ald 'siosfe: Sis that direaiisiw I dto&H
tiao th»t nay ef th# ®th«r
do m m . m m ah. Hr* 5oa*awtf
baalo aaaomtdtHa wwl» a® v«ry posaiaiatia. It swwed to s<^ that
the #eorwmic titsjaiion v«* taohaios&Iy fsatlbl* proridad power
shifted to e® hanest e«nt*r gptvm m tb hat, at h® at&tea, thare
agjpears to ho w r y little that w n r w to aos$t that shift or w m
to work in it# diraotioa.
ftaaoadL.
Hr. Gooaha present* foraid&hle date to aha&a m out
ef ay oh*or*natioii3 ahmit tha is»oe«#ity of piTOtin^ x*eon»t?t*etlOtt
around a » m « :t il# activities rather thaa internal prodrnttcwt. I
hope you appreciate that these observation* of aine vert m t diota
hat siJtggostions for esploration. It m k»t se decidedly ttnftosifortahle
to «e« the* <jttOt»d as i f they oassc f j w a prepared aastorawSaw. They
sound foolishly hosthaetlo. It it Kr. JooBh** JuOgraent that there i«
asthinfj worth considering ia tha point? It i* always hard to
Btatlitioally the W a d of tson»id»ra.tior- I «a» ad-wwia^, aitlasir fron
n&tional inoat**, ^esployMnt, ttr h«l:aae® of
figure*, for
aaswpl#, Ars«riflm production jetetlatiot tend, to
th© iaportm e* of fer#i^ii trawl© la our «oonof»y— it s&pemm m ^LigSM .*. Ilfc»trlao tho entclssl ii^ortjmo* of London af & fSasssaoiug, ^rtshsatdiaissij,
s^rcantil® e«nter was always diffimxlt to read free Its
htla*oo of poytwmt®, or natioaBl inccsss st&tl#tio», % o«n a^rie#.,
f#r Caterer it is w rth , woxjld atill be to patrrld* edoqtmtaly tmd
«!OdWicraH&y in any plan f®r ©eononic mjoaatniyfjtloB for
ia
ths $rmfe «xt«5ml neresntilo position. The ?*A.O. report (vM<sh 1
li3s©&) did not oon-sris®* a® thftt th» tiltia&io solutioa for that te*~
totfppy oonntjiy with its tm&gpr r«aouro®« ooaia h© fottad la Iniwmal
r#ooore»« aloa®, That i» «!hy I foal it iwportant to ^iv« tho Or#ate
sHw'ohoat & tsirrfflwcy on vhicfi he «an op«mt© abroad.
tire untidbiiiieo / ueciassined Holdings ot the National Archives
- 3Mr. Allan dpronl
Stay 10, 19**7
Third. 1 sea *o t t j that yoa did not axtand your analysis to
ths raal ffagjg^stion vhioh wns the oooasion for our contact. I
did net oufiK*st either a 100$ dollar-baefeod dnxshna msrronqy, or
sal** of ffold for drachma* Both had ooenrrad to na msd both wera
ra,Jactad on <sanaral oansidvnvtlORS that ar* nr^tty sir&Xswr to ?tr.
Cooa’b** analysis. Tcm vlll r^esll that I oo atatad In our coiarar*
satlOR. I fta eorwaraad about this bmouta I wonld not wish to ba
•ssoeiajtaH or to hanr* sy narw asaooiatad vlth olther proposition.
rjy guggastlon was that tho draehraa “be withdrawn froa circula
tion and from tha raaerras of tho Oraofc hanks a&d that dollar oorrawjy ba aubatituted* As X road Hr. Soossbs* general vsoorandon
daacribln# tha a tabil lotion offort last yaar. and tba aaonemla
progma that was maedad than And Is still naadad now. 1 fcopt wishing
X had his Jad&aant on tho diffaranoea betvoan this approach and tha
ona afttnally atad, 1 .9 ., tha sale of fjold against draoJraa* I bapt
foaling that ay snggastion provided tho sissin^ link that woald hsra
ohang&d tho outlook corjplotaly. Xt saeoa to saa that there would hacra
boon ftxtr assantt.il diffar*n»a*t (l) Xt would haera nlnled?ed or
aliainatad th® orer-rriuation of tha oorremty.
it w n ld hare
boon profitable to oxport tobaooo ond wa vo'old not hare had tha phonoaanon of non-exportation at a tiae of ourrswoy stabilisations
Z) I t wotild hay* Inoraaaad tho lr.tamal ©ost of l\mry Inports
this n i^ t not hsra taan affective anoagjh to radtioa then to to la^
abl* lavels bat It vould hare vorfcad in that dir actloa ao corspnred
to vhat actually happened). { 3 ) It would hors prorldad tho utola
population, inelydias peasant® and labor, vlth a stable cjadise of
sawing and axobsaga, and not ctwrely tha noaayad olaaa <fith a classic
opportunity to increase thair personal profit by hoarding oold
agalnat ths ooracranity. (4) It vould havo decreased tha drain of
foreign reserves by tha extant to which It dielnlahad tha tandanoy
to hoard, both financial naecta and ooaesoditlas*
!
?ha 1 attar point detmrvea further exploration. A progrna for
econoeic raeonstraction, indXuAiag corranfic* stabilisation, that
n«&a* nsa of nonetaiy instruments Is followed by two typaa of tatins
on reserves. Tho first arisas mit of tha ax^aasioa in tha correragr
circulation (aad bank dapoalts) that rasnlts frora a docra&aa in
velocity. Tha aacnitn&a of this type of drain rarlao vlth tha
tnidoass of tha stabilisation ^ro^rm . Xt is am llost ^han tha
atablllsatioR plaa is ill-^'noaiTad and not aapaotad to last. Xt
is lar&aat uhan tha stabilisation plan is ao wall oonoslrad t>a.t
it otmnot fa il, in othsr words whan it ali?ilnat«s all expectations
unclassified / ueciassitied Holdings of the National Archives
Hr. Allan Spronl
Hay 10* 19**7
of failnre, Eheae TaiTing results arise because, in a precarious
financial set-*p« the velocity of circulation both of deposit* and
correacy is powerfully affected not only by actual crocrrmay iastability but alao br tbo eat^aattatloa of instability. I per sonally
am prepared to reooenand that adequate additional foreitf\ resotiroe*
■be aiade scrollable to taeet a. drain of this kind* that it , & drain fine
to decreased Telooitjr, if the general reconstruction plan ia sound.
That is why I BAde
ro^gostion. The actual substitution of dollar
currency tar draohae would ellslnate completely any expeetation of
farther carrency instability in Orteee, Xt w i l d , consequently,
cnll for plan* to raeet a m x iv m dam*id for trorranoy »ad reserves
itne to a decrease in the velocity of olrocl&.tion, Kr# Coombs has
e»tim t»d that 80 million dollars w n ld b® required to substitute
dollar corrency for drachm at the tise of e U tilisa tio n « and 5$
ail lion additional w i l d be required to ”*eet the further derwuts
that aroee froa a decrease In velocity, These do not se«n to rm
to bo eseJAitasnt aacroxts in view of the ©oanitrKmt m & the ®nds in
view if th*y wetild insure aa effoctlve onto«me.
The eeecrtd type of dm in on financial reserves that aa^ accostpioy & pro^rea of stabilisation is a hoar&big densnd* Wealthy
indlvi&sals, with local carreoey or deposits in sceeess of hsnd-tfrtwid or till noney needs* swy tutn this enrrencgr in for gold* If it
is available, or forel©* exchan^s. If they haere no currency or de
posits they may sell assets to acquire then m d turn tho resulting
oufrenoy In for gold or forai^i exchange. I f their credit standing
ia coed or they hoare preferred acces* to the banta, they aay borrow
in local m rrm ay tc obtain gold, $hey assy hoard tha aold or exchange
obtained either at home or abroad in sapectatlon of a farther devnlnratiftft* or tbsy aesr u*e it to Inport aoactodltles that are not essential
to the eeonony end would not ordinarily be imported, bat practise
exertional profit opportunities binder the axleting chaotic d r e w
stances* or thay nay invest the ftmd abroad in. foreign profit opp«v
taaitiea. Xn extreme eases of anticipated instability, the^ nsqr
personally follow their assets f&road, leaving the country. Thle
type of drain on resources contribute* nothing to the reoonstrwstion
of the economy la which it ooetxrs* Xt is at a stasia®! if the etablXlzattoa plan is ill~cone«iveA, and hold* little promise of aueceset
it is at a mininoa or even non-existent I f the stabilisation plea Is
so secure that there Is little expectation that lt will not suooeed*
It is iaportrmt to distinguish between these two types of drain
beaanso th^r will accompany in varying degreo any practical attest
to stabilise conditions. Any plan actually adopted shoold ooat«a^»Xate
.^ .u u u c e a from tne Unclassified / Declassified Holdings of the National Archives
- 5Mr. Allan Sprml
10, 19^7
vith equanimity tho first type of ds^ain— it is & condition of
musaes$* T^joally it should nlaiaise the second type of drsdr*-it constitutes a dissipation of mr« resources and only occurs
in m & iltn&e '^hen tho reoo&fttmotion. plan- is aafftaiefttly 111cemeived to invite failure. In these eirmxi^tnncee, tho hoarding
drain of itself is uau/slly gnxfflcleat to oorrrert potential veaknets
into actual dieaster.
?he sal* of gold for drachstaa is a particularly viciotis cample
of the latter type of drain. It diasl?>atos acarce foreign resources
with no aid to the econ*osny of the csnntiy. it leave® a vacant in the
currency that is filled hy farther not® inflation, it offer* the
wealthy, influential and qvAe§s>-witted, a mere opportunity to *#®t
theirs vhlle the going is $ood*“ A 100^ dollar secured drachm ismie
woreld he ctocst as had*. Xt would aot prodaoo a2spectatl*n* of
iracccssfttl lone-tera stabilisation* Jfceaarva* pat behind a otcrroaqy
hy legislation or administrative fiat can ho restored hy the %msm
fiams. I vonld not expect the boarding drain per isonth. to he a*
largo tender a 100$ doll&r-hacfcad drachm casrswsy a* under a pr©~
gram to sell ^old for drachm, trot I utrald **pect it to he sufficient
to m ete foreign resources Inordlnalely mad thus to Jeopardise any
plan for successful reconstruction ia a altmtlan cat difficult as
that of Greece* As stated earlier, I vfc'ild not personally vish to
he associated vith either plan.
The program I bar® ngjsested, naraely that the drachm he abol
ished aad the dollar substituted would operate to iceep th* hoarding
drain to a aiaisKra. It vould eliminate the tendency to se*k secarlty
or to msko profits hy c o it a l flight into either ^old or forei^a
currencies* *?he wealthy Sre^ifc, aa vrell aa the oemon maxi, i*® ., the
potential hoarder as veil as tha rest of the conrcranityvwjid have M s
existing: hand-to-hand mxrramy in dollar# :md his deposits la dollar
accossnts* He w o ld hesre no incentive vh&tever to speculate a&at&st
the currerwy or to hoard in anticipation of farther collapae. fhia
v<*.*ld not he true of «ny o ther plan. Sis ealy resialnlnc incentive*
to hoard or to withtma# currency above hia day-to-day rsaeds »© far
as I can see would he th* following: (&) fm r of failtire on the part
of the Oreek hari&a; (h ) fear of a M n i s t m t i w seisxtre and aonflsott*
tlon of his hasfc acccm is* (c) deal re to tafe» advaa ta&e of nore profit
able investsient opportunities abroad; (d) <3ealre to import, and (e)
desire to eaigmte and live abroad* Preiwrare for drains ©f these
types would he preset Tinder th* dollar currency plan as binder any
©ther, hat th*y vonld he the only potential drains to he eliminated
or yarded a^ainat* the ha^e drain dae to prof lt~sjalelng hoarding
weald he elislxiated* 7urthemore9 Incentives wonld he established
to return hoarded faada into circulation. Provided the hanks were
Reproduced from the Unclassified / Declassified Holdings of the National Archives
~
Hr, Allan
~
Maty 10, VfWf
iKrand asad tho*# ws* no espootiitlon o f co n fiscatio n , thero *ou!d
ho 230 iiu m tlT O fo r
Greek* to tzmop ftad * Id lo . Hr. 3ooefo*
ha* ladlo&t*d Ib st th* &ro«fc haftle* «v* cloaftly o»»tr©Xl#<t, M tfcagr
probably po*«#»* th * eenfi&aite® o f th * i?resont hoarder*, a d o lla r
mtm m ay mi$*% vOXX a ttra c t Ibaosfc tho fund* th$t yore &i**it*ated tgr
th® *el« e f gold pragm a t o t your*
Pim m forgivo -th* m m nl o f «£>&*$* X hiare d m to d to th# *shoir**
point* £h© ro^mral o f th* inoe&tlT# to houM 1f ao
th * M it r a l
jW tifio e & io n fo r aa$r propooal to «fcte*r*; M ao n to rft**&t* t%gft*t£i
c\tr r«a<%r H&M lls&tiott. that I fo o l % m »t aa&o th*- poa&tios elo sir.
I
G lv tlm tlf m sm s^p ^ V ono point in Br. OcKwa^** feworaa&**. M**lg% hl$ QGn»l&er$& Jii&gnant-, VvOOd on hi* &troet ox^orianieo,
that & Sontor $ovor«5i*stt, if It aonXd aot into 5>m*er» voHld W f&Xo
to float the mmoa&e' idtu»tloa hyt
(1 ) XRtTC^aeia^ mtteiine iaad prioo coatrel fo r iwsmtiol
foods m d olothixig.
(2)
fm Agft mdtemg* for •t**ntJU& lepert**
(3 ) % t& hxt*hi»c
m $ m & rate- th&t rerwp®d the uror*
▼ olm tion o f th* eopMRfly.
(4 ) % fo ro iag
ro fo rs, hoth Ixi tho *hK$!« of Xoa*
TOgrossiv# t«£»licn and in tho shns** of oXi&iaatioft
of mrplnn poraonaoX.
& » considered Jttd&mit th&t a rattatlae *yst«s Ihm^oA hy r»rlo© co»~
treX oo*tX& h# r m hsneotXy and tffftettvely* if it i* Xis&ted to the
itoes* ho a jw ifio *» aotftly food m f, clothing* 1* ^oro m ^ c a r ir ^ than
anythin 0X00 I haaro hoard with Toward to the $r**i? cltftatiosu
X t&XX diaem** tho preftttaa of gotting .&.$m%w i^fws$st s»d
of i^rsssading it to adopt iraoh a gro& r m at a Xator point in thi*
lotter* At thi* point X voudd Xii» to &ot .Hr, CJoorahw*
<m
vltother my sm^smtim for the o*t«hXia3^o«it of a dolXar cttrraocgr
wold w i t At drove |»rpOAO* with tho jiroijria ho outXlaos. iUi X
haw*- eon*id#r«d th# aatt«r# it « m m to m that a dollar audmnwgr
for <brm&$ «oald coutrihato 3or« th**t mp other to
It
yo^nt 0n»« I ««o nothing ia tho dollar *Milli?«tl«i propomal
to i«p#ii# th* oot&Mlstamt of mu offootiv® rationing: «?sd prieo cwct-*
troX *y*t*» for ffco& sml olotliia^ mdh m hm mtt.ltn**,. t f ®qjs$\ a
•grsfcfl* wm. ho latratacwd wi thout dollar ot«MlimtieaP.one mrttAtsl^r
fti&ct to ho ehlo to s«t It % m d or a stahlo m m aapi pis2rtio^ftrlx
ttiao# th© vxxh&ncp to pus^taso tho ^*od and olothl&g di«tributod ^1X1
ooswi froa the doXXor Xoon d?irittc tho first ^*10
2*. X a»a *eo ao m €^*t|s?ioo diiparitlos that voi&d ho tro»iblo*oa* arisslr^ wntaolljr if th*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
* 7 ~
Mr. A lim Sproul
10, 19^7
prioes of tbs rationed goods were established at levels that v n «
serionsily oat of linn vlth price and cost l«vols aa ttoy finally
dowa after the dollar stabilisation were completed bat these
presumably oould be oorrected % adjusting tha controlled price*.
Point gwo* Mr, Cooabfi* plan oont*«j>late» tto conservation of
foreign exchange for essential isports throngh th* device of iiaport
licences as veil at c&ohaage control. Xn&soaah m e*change control
would Tin woch siopc difficult to enforce if 0p *# w had a dollar cnrm e ^ , this seeas to ae to to the wost im>ortant point ^ » r f ay *og»
geetioxi night «p?ear to rtm counter to tho prograa Im ton in nlnd*
i^r own fooling 1$ that iaport licensing stonld to sacmiih and woold
to preferable, I caae to thin aa a rem it of
experience on tto
finance Cosrdtte* of tto tongae of nation* whom we devoted sweny *ee~
•ione to this pvdblm an it arose in tto cotmtrles wfcleh had placed
their finance* nsder «t*r supervision* ?toae countries were taslvarsally following policies that subjected iwport* to a dnal control,
M m threads inport licenses and. also throng «aechfm&» pem its* Tto
res<t of o«r consideration v&* tto reoflHBtentotloa that the system of
inport licenses to m&m tto control feature of isport control mid ex
change to granted antqoatieally for any liceneejl tepcrt. Oar reaeons
for thie coneInsioa were technical* It v&s testified almost t*nivw«
sally V thoee actually in charge of the controls that tto abort tern
financing of oe«serelel i^porte and esq^erte m e nade needlessly cantor*
asm and expansive by the imposition of two barriers, toth directed to
tto saae object. ?tosr nil agreed that Istports could to adequately
r e l a t e d by direct iiwport licensing alone*
X as* naturally inclined to carry over this reasoning over to
tto ®red? situation, I f «y suggestion that tto dollar to introduced
aa tto m xT*m z of tto country were adopted* X would conserve exchange
on trading aosftnat by refneiag inpcrt licenses for lw aiy #*ode and %
limiting licenses to essential laports*
?his neasnre, together with tto elimination of tto incenttwe to
hoard m rrenoy because of tto esqpectation of farther inflation, would
sdininate tto two hig eotiroee of onrrenoy drain that operated dnring
the et^bilisation last year*
would renain aa potsntlal inoentiire*
to dissim te fo m lm #xeihm%@9 resarree only tto possibility of with**
drawale (a) to take advantage of investment opportunities abroad; (h)
to e s o ^e oonflsoation» and (e ) to facilitate eeilgration* from Kr*
Ooonto1 deeeriptlon of the aotnal situation in
it is dlffloalt
tio laagine these possible souroes of drain achieving is^ortant dlBtsaeieiis» So long as profit levels in Greece reasto at scything like tto
levels to d»soritos, wealthy 0v*4k* will find it store profitable to
invest at tone than abroad. So long aa tto soctrene rii^ht governing
Reproduced from the Unclassified I Declassified Holdings of the National Archives
&r. Alim %>r«&
- a -
Hay 10, 1$**7
rogiao in as solidly oatroaahod In tnda#t?y and finanoo ao voll
ao In tknrorwaent, thoro would ooon to bo little dangor that th«y
vo&ld vith&rav dollar fm&* ftm Oroooo to oooap# oonflocation or
to faollitato thalr o*m (Migration. If tho progs*!! I mi oaggootlsg
ohsmld «s*ooo#dt this particular ro d s * vould bo foreod to yield po
litical pov*r to ono noaror tb® contor. Bror* njidor tfcooo condition*,
hovwer# X fl?sd it difficult to Im&m that thoy vosld faar-poroo«*
a&tlom to tho point tfhoro tl*ny uottld ehooso to lootvo the country.
point ffhrao. tho ootabliohssotit of aa oxchaago rato that roswod
oror-raltiation of tho curroncy wm ld oooa to b o to bo faoilit&tod by
the su^&ootien thul tho doUar bo aakotitatod for tho drachma* I b*lioro that tho correction of oror*«val nation nndor oseohamgo control it
a «eteh mr* difficult problem. Boring aqr osgiorionoo oa tho Tiimnoo
Gosnitteo at Oonwa this problow m# conota&tly on tho i^on&a. Tho
oxporte i?or® oomotanUy arguing
domlsafcloa of o*or--Talt*od ewa*r«ieio* taidor oxohango control. SorraetiYO action w t alw^ro olosr or
non*oxistoat»
Ooob&o1 dloctaoalon of tho efcoioo of tho rato of
5.000 drachmas inotoad of ono *t 7,500 which ho farorod, rowindod mo
oif nany wholly analogpao diacnoaloxui te tho finarto* Soaraittao boforo
tho var. Thor® aooa* to ho an inherent ton&oncy toward orer-valaetion
la tho ad&daiet ration of exchange control*
Point your. ?l»cal refers, both oa tho rmtmm oido in tho fom
of more rowgmorfctiY® taxoa and on tho dlolmroecMmt aid® in th* fom
of elimination of inesgiadiant aetivitiee and aurfclua porooisaol are
oowrxm obJectiYO* both of hi# oo«pr<*H<mslTe progran and of tho opeclfie
eag^eetlon for tho incorporation of a dollar currency in tho plan*
?«r* Oooa&e is eloqaont in aasgalng tho dlffiottlty of a&ttisc th* pres
ent ro«if!io to act effectively and of tholr tkillf^l tsso of tho pro*oarlotyi politlei^L oitmtlon
Vl&t&mXl, tho otta&tloii it oortidxily'
ono of tho soot difficult oiror fasod* bmt I do not too hov t1» waah*
*tittitioa of & dollar earr^vsy for tho draolsm w il d &oo«itiiato tld»
difficulty.
% pwroonol Jud^ooat w&o extd otU l it t^icit kmrlom proooaro
for fioool roftom and o£oo for tho ftdoption of tho idiolo procran
Hr. tloooilio odraaoo* «oi%Id ho loot diffloalt imdor & dollar otohills*tdon* Thin io & aattor of polltleal Judi^ont sad not m»«N^tfblo to
goflnitlvo p w f , pro or o ^u fho »oot I o«» do io to otstllno tho
0o»oldomtlono %h&% htnro lod ao to
oo»olttoioii« I bmm a f«all8|
t&at moot ©roafe lo^bor aad aoot <5wnaSc poaoonto h«ro hmrd & &*oat doal
«N«tt dolloro and dollar oarronoy Imt hsaro noror hsndlod dollar ourron^r m ioos It cfuso ao an ioRi^raat wtittanoo* I furthor fool that
Reproduced from the Unclassified I Declassified Holdings of the National Archives
~
ftr. A lla n Sprosjl
~
Hay 1 0 , 1 5 ^ 7
thoy vcmld «o«at It as a great hoon If they received thalr vage*
la the fom of dollar osarreney or sold their crops for dollars. It
would eonetitnte & tangible aridanoe of tho interest of the United
States In their welfare* jKHftethlag thoy would not easily &!▼* tip*
If this Is tm e and to tho extent it It true* m Internal relation
agslnst the revise w o ld flaw a greater tendency to os^port opposi
tion eleaents friendly to tbo Qhitod States and not oojaannlst eleuente*
If dollars were tbo currency rather than dr&ahaas. In other vords* it
was *sr thought that tbe dollar proposal w il d work to strengthen tha
political center* liberal and socialist, as tho opposition to tho
regia* rather than tho ooaaaaist loft* X think Mr* Coamhs would
a«ree that say stash effect* if it aoourrod lit foot, vm ld ves&eii tho
power of tho preeeat regi&e to maintain tho tactics ho describes*
nam ly, to defer internal iiooal refora fceomse they aro r<*re t>»
Steited States will not dare push its condition* to tho point *&ere
a Sowamiet cosya dlOtat lo possible. It wa* part of ny thcw^t that
a dollar mtrrenoy would tend to etre?>$thea tho vhale 8jjf non-oosasanisl
eleaent is tho population 'm a&ainet tha Qommlat* la othor words*
tho fcfeolo oatmtry would want to hold tho fcaarlcan affiliation and*
consequently* vonld export tho desn&nds of the fewHoan a&sinistrar
tloa rather than tho remiss** Certainly it would worfc in
direc
tion. Whether sufficiently so lo a different quastion.
fhe only situation 1 mm. sea that would hare tho opposite re
sult* mvnoly, that it would wppoft tho raulme to tho point where it
would he a'fela to Aofy our conditions* would arise if the substitution
of dollars for tho dradnas by itself solred all tho eoonoisle preV*
lone of t&» regiae aad left Sreeoe in no neod of further American
loeit, JMseording to Hr, Coos***1 tMsaoraatei, thie is highly uallfcely*
1
isrould l&se also to eaepand say thoti^ht on tho subject of the
actual power aa Ainarlean represeutat lire would h#re in tho situation
described V Mr, Ccoaba. I personally think tho dollar stabilisation
proposal would iraprcwe his trading posl*i«*u ?or oaeo^le, isMMSlske
tho situation that arose la*t year when the tesiporary stahllis^tioft*
aOhleired through sale* of sold for draohaa* jpsre rise to a need for
isiore d r a ^ a . to fill tlio Yaornta la tho w&rmttcgri and oos^are this
eitaatl03i with one that iromld arise i f a dollar staMllg&tlazi yere
effeotod and there tras a demand for store dollars to fill the vnmm
In the oorrenoy* In hoth oases* the &®erloaa ropreaimtatlTe on the
Onrronoy Board vould reeo^nlse the need for the increase in olroala^
tioa hat in hoth eases also he votild vaat to nOta* gemiine fisoal
refons a condition ef hie ooasent to the Inorease, Xa both oaeee*
the regftse noold
playing the fear of a SoasRiniet ooim a^sinet
0m Sm fiseal refora* In the former oase* the epeolflo notion the
iAnerieaxi w « ld *e aslged to approve \ ^ ld %e an exi^neioa in ths
araolsia note leeno* H e . * a decrease in th*t «ov«r. OrdlnaH.ly each
Reproduced from the Unclassified / Declassified Holdings of the National Archives
-
10
-
Kay 10* 19**7
Kr. Allan
nation it aosaplataly & aa/ttar of national *rr&rei04t3r. Ihran ths
aoat auspicious o f Ottr 3©ner*ta®i«& aigfit feal w had no hnalaiaa
iatarfarisic
situation* of that to rt. In tha lattar m m * tha
Aatrloan r «pratantati*a» if ha eonatntad* '*o«Xd alto Imra to pay
o*r$r hard dollart from tha liaitad fund pat at hit disposal t$r a
aSMKploiout and rolnotant Coagraaa* Xf I p<trto»ally « t » j**t In
tint position o f * trading it ont* vlth the typa of raaliatlo t o m ^
Oratk &r. dooatha daaorihaa, X would fa a l a$r trading potition vma
i n f i n i t y atron^ar in tha lattar aaaa*
Jnat ona vord in closing. Tonr nota lnTitad r<w»ark» froia ga
in rebuttal. Plaaaa don1! oonsl&ar thia lattar a rahntt&l in aay
aanta vhatevor. Mr*
wmmrmvtiam la cm# of tha haat that X
basra afar taan. X an full# aaftsra of ay ignaraaca of tha 0ra«&
position. I hasra also pi&rtioipatad aacm# in l»taraRti<5n»l nago*
tl&tiont to 1asow I m irritating lt la to anna ham, fail of tha
dstadls of a whole tanaa titnation. vlfh an instiaativa faal for
Its alaaaata* to fiad sqtsalf faoad with a ptagraw ar a basic *wggaatlon from aossafeody ^h© has had no roal contact with tha prohlan*
X cat writing at thia Xangth ta katp ay raeord straight over a aiaconception that vanld wawsr a* If it vara allowod to raaaia# and
alto to try to glva yon aora eoapratmslvply *ha Idaaa and ocaald"*
aratlona that lay hailte of «§r aaggattion. X*a» anra froa. raadlag
Hr* Coosfeaf aaraants an ay taggattion that ha hat not intarpratad
oorraetly tha baala Idaaa vhioh X was advancing, X hardly aaa how
ha ocrald hasra f*o« tha ron£t nataa *hl4h ha ao». Tht aasaaaa of
tha idaa la { 1} that it vaald allnlnata o ^ it a l tmmtfar aa a drain
an Cferaafe ratouraaa* ( 2 ) that It vonld allxtimta tha pawar of tha
ragiaa ta finmiea itsalf hy Inflation* and ( 3 ) that it would artata
a political nlllaa. vithin Graaaa sash that tha Aaarlaan adnlniatrar
tion aoald oontoaiplata a fall of tha ragisia* X iniaaidad ay vrlttan
notaa aa tossathiau to raoall to yon tha drift of oar oosraraatlon»
not at matarlal for diaa«ssiaatlon or am lytit* I had no idaa yon
vara in aantaot «lth aayhadr aa Intlm taly In oontaet vlth tha (hmok
aitnatlan at Mr. OoaniHi» Xf X hndt X w il d bm* atlead for %b»
OppOrtnaity to Itam froa hia hafora X pa«pad»
At avwrA
Vinfiald V* Riaflar
Mr. JUlm %ronl« Praaldaat
fadaral latarra Ba^c of Hav Yot4c
taw Toife, II. T,
Reproduced from the Unclassified / Declassified Holdings of the National Archives
WAR DEPA R TM EN T GENERAL. ST A FF
O P E R A T IO N S D IV ISIO N
W ASH ING TO N 25 , D . C.
28 April 19k7
Dr. Hinfield Riefler
The Institute for Advanced Study
Princeton, New Jersey
Dear Dr. kieflerj
We received your letter of 2l| April 19^7 today and -were delighted
to learn that you ■will be in Washington soon and will be able to meet
with us,
He should very much like to meet with you on the afternoon of the
1st of May aa you suggested# Our group is located in the -Pentagon
Building, room JU.C 768, telephone RE 6700, ext. 295I4,, In event that
you need transportation to get to the Pentagon, please call this of
fice on the morning of the 1st of May and I will make arrangements
for a car to pick you up*
Vie outlined to you in our letter of 17 April the broad problems
facing the group« It is our understanding that you have been Chairman
of the Committee on Social and Economic Aspects of Atomic Energy of
the Social Science Research Council*
As you can well imagine, the social aspects involved in possible
atomic warfare have a great bearing on the military aspects of our na
tional security. Therefore, in addition to discussing our program with
you, we should like to hear your views as to how the social and economic
aspects affect military employment of atomic weapons0 Also we would like
your views as regards the social and economic concepts of our national
security which could maintain the peace— in other words, prevent the war
which the military concepts may visualize.
Hoping to see you soon, I am
Sincerely yours.
Acting Chief, Advanced Study Group
Reproduced from the Unclassified / Declassified Holdings of the National Archives
M a y 1, 19^7
Dear Allan:
Thank you for sending me the memorandum.
I was getting worried.
I have only had time to
read it hurriedly this morning "before I get off
for Hot Springs but I will b e back b y Monday.
As ever,
Mr. Allan Sproul, President
Federal Reserve Bank of jJew York
lew Yirk, 5. Y.
R38tH»d1romtfre Unclassified / Declassified Holdings of the National Archives
Federal Reserve Bank
of
N e w Yo r k
45
N e w Y o r k f, N .Y .
M a y 12, 1947.
Mr. Winfield Riefler,
T h e Institute for Advanced Study,
School of Economics and Politics,
Princeton, N e w Jersey.
Dear Win:
Y o u r long and interesting letter of M a y 10th w ould be good fruit
even if, as you seem to fear, it is the fruit of misconception, on m y part,
of your approach to the problem of Greek currency stabilization. Let me
reassure you. I retained from our conversation the essential outlines of
your proposal, and X considered your memorandum nothing more than a reminder
of the drift of that conversation. That is the way it was passed along to
Mr. Coombs with a view, as you and I had discussed it, to developing the
underlying facts and then reexamining the idea. Perhaps the use of the word
nrebuttal” in my note of M a y 6th was unfortunate. That word is ordinarily
associated with debate, and this was certainly not a debate — it was a
mutual exploration of a proposal which, in the first instance, appealed to me.
Mr. Coombs is n o w studying your further views and I suggest that,
when he is ready, you come up to lunch with us so that we can get the bene
fit of the interplay of ideas which does not come through one hundred per cent
in correspondence. Could you do it next Monday or Tuesday, M a y 19th or 20th?
Meanwhile, one question about your insistence on the virtue of
substituting the United States dollar for the Greek drachma.
In transposing
this idea to a one hundred per cent dollar-backed drachma, I was not thinking
in terms of the Greek Government merely changingA present cover requirements
for the Greek currency, but in terms of the United States Government guaran
teeing for the drachma its one hundred per cent dollar backing.
This would
seem to me to be as reassuring as substituting the dollar for the drachma,
a n d to have lesser political handicaps.
I hope you can come u p to talk this all over.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Daatr Hr. Wtaaatt
i
ocrar a ©007 of the
jM pidaa Statist,ionl Aeaoelation B r ill at in far Hs&tsh. tt
has aft aartiole in it % &*s$.ai and JJrodia, t t # of tbs
nae&svs of owr staff in
, 06fl***alnc the results of
kita3lii|pmaa «asfe onOaywan a*wa»«i%a with tha actual
sittiatioa r a w J o d in Qerraai^ after tha war. It iilTistratae
strUrfjv&r one of tha **ry graat things th^t was dona at tha
Mmriom tofbwtf t e ln ^ Ahe
I tbasrh* jret* iiovad lifao
to Isneir ahoat It* I at^oaa 3**i hmm 90m *Tlm end. tha
Air '% * • $nfeliifes& V tha ^atianai ttm f*?Ot<*otion Associa
tion, Ten fcaov'that HoElroy m & issHbar >tf th* b.w.d*
ataff at friaoea Rit^horott^u 8ia description in this hoofc
af ■§6*9* ef* ttia wtte la Hirid# ?o$ mp imt-to rand it for
t m wm&iag poa tm&a*
y w i p iwpHowni#
Hie appearance df tha American statiatieel Xmmtntion
article haa reminded m 'of a situation uhioh has rade tna
w j r tudwpujr tinea t rotrtmed. I denft think that proper
re<#^ittoa in tha torm qf asdsCLs* odtatio&s, ate. * he*
fmm
ta any of the ?**Hba«*« of < w at»*ff« Ocntrityatto&s nava in
oasoa ttnitgoa* 1 had a pottos* tl* other
:^sf f*s» n A M o a $ « 8fbtt»» %dfe of Levia atefbits ♦ tiko
at friitW i m *bereT^i for three yea** aad heeded tho eoonotnie
researoh ipfe th<ire* 3# waft® ktm&A&Gmfc oontrihntlon, $a
fSW fcao^* ttm* ttoefcita wandered
each a* hia reooiirtd
jae irttef^^tloa i*« had ^*s tawfe o f aanr of 2d* colleagues at
Prindaa
I Jnat don't Isaev how to ensue? these
letters. In there aagrthlr^ «e om &d do o M t itf
/
«
P a m s e told *as earlier in tfoe
that there %rm
a ofcsaoe foa «i**it das* to eoas oat here to
us and do
Reproduced from the Unclassified I Declassified Holdings of the National Archives
«• 2 •*'
worn wwdfc m y o * r tx>ote hot*®,
for word that
I isar®
w a i t i n g a a s d a ra a ly
What are
wefr» trade.'in tt» Sast and froe.
t i * p Q # # iM liti# S ?
As « ? « ♦
wisfisld, W. S l c f l w
ftr* dteibft O,- Ifimmfc
'510 Part: A^mrma
M w I M , n . T*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
100 PER CENT RESERVES FOR THE GREEK DRACHMA
following amormtim le
t& ropljjr to /w r Im&dr? r»g«rdiii|
K f, S l«a «r, i $*ro$ooft*3. m &utit&klm of doJLUr w m cy for tb« proo*ot ifcHUhoo not*
oirouX&tlott ie & m « » «
In
th* M M n t of W i r « itq u iT ^ f w siMh
oporatia&# eno m »t a*tnr*liy eoiiooivo of «ft iaiti&X m n r t i w r»t* b*t*o«n dollart
and
ai*« of a
aa&lygl** Xr« liofXor*# prop***! imo boon r»~o»*t **
To
100 por oont delM r vw*tm
for t&o tfraotwMt* tba*
V9f«riQ«« to a d *X X a *»^«ira o*ffaiatfo r**to without ultorii*# th* sufc*t*a©o of hi®
proposal*
fho <tar&oft»B. U izmrnd fcy tho B*a* of Groooo «feioh* by th * erigim l t*nn«
of it# ofe*rto*i w&* roe|iiirod to m lat& ln * gold «it«£ foroIgn o*#t**«fO r m m
« i U i » t 40 pur m b ! itgiiAci lit aoto aad
•*a t wo# stt#^oa*ioa ia l$ 32* teo*sof«p#
s fM l* of tho Hoafc
9tt)«r dmua& U t M U U i i >
of
Thin rt uitt*
by Soptoobor i 9^ f gold oa£ oxoh***##
99m « i xto *oro than Zi par m at of it* oatoto&dtafe not#* #**«!
«th«r dm yti ii*b lL it£ ***
f^lovlo g t b A d t k fiiio a of ©roooo, a fcjpwrin fla t ly
g«o*r*to6 fey «e w ^ tlo a «i&orgo# oxpfcii&e^ th* aoto i«#t*<» to n««jrl4f
6 qutotillioo
•ar*oht#&# tof Uvmthm
i 10* X$44* m vhioh <kto tfco firot liberation g&vmetmmt iatro~
&»ood ft now -Ir&oh*#.* o~ulv&l*Bt to 50 M llio o old 4r*ol«*&®«
Tho Aot o f Hoootwry la fo sii oottffcliflhliitf t&o »■***
lla it a t it #
olroul&tic® to tho absurdly low muxXmm o f a b illlo s t&oofanft#* for wbiefe fcfi&ilobio
go&i a**4 oxoiiB&go r+mamm proridod * o o w o f
war# I2ina 1*20#
per ooot*
ft***?
fettrisotorjr d o fio it# e*u«od thia mtnrlMn to fco oaooo&od titM a throo oa&ths* ho«w*rf
oataotporod
r##*rvo ro^ulroaMotOf tho Boafc of aroooo ex^ondod It# isoto i^im # to
1$5 M lH ao jgyaofcftfto Uor tfco «ft4 of 2$45«
Reproduced from the Unclassified I Declassified Holdings of the National Archives
A BriUilHbiltlfttid o flW t t i momtmf rsivrsa, i M i i d
ftroofe Aer»—i»nt of Stamrf
In H w
26f 1946, j?rori«iod tlsot ttso Book of £r*eoo ahould m*1*~
iaia % f$jio3 not* i**$ao rooorto mmimXmt %& as williee t*ow$# *torli*if*
To
oo»i«t ootabXJj&Mantt o£ thl£ rooorro, tj» British QefmmmmX gi«at«4 #» tttvfeoaf*
rtAbilixstioa eroSit of 10 million p#m£* (m t amiliibl* for feotuol mw^m&ttaatm) #
tfco Sot&ic «f Ctroooo *ot «uiM# ft M m t 14 oiUioo pmmi» #torli®£ m & 4*03
Sillioo dolXor* 'to 0<^pX0t0 ttlO OOfOI* OOOOti&t*
OfOJP IRttlMMkGgOt&t SWttt&Jg, fflTfoftfl.ly
utaro*itrleto4 #*1* of fold m & *Xioe*tio& of o*ofe*sn^o #*gois>oi prlmim %oporto
$*34 »$& ax o h ^o !io34£iii* ootoido of tteo o&ror ooooiadt *»£*
aftor SNstofeor 15* 1$4$* « « n iNstiaitiod to oot into th* oowwr
iloolf.
Thu**
th# Xatoot ototittoot of tho Saak of Sroooo offcllofrlo^tteot of t)*3m bw 119 194&—
rooor4« « oovor ftoemmt of no soro th*a
1$ AilXira ^ e c itf iiooriy 3© 9*e ««*t loo*
{boa t&o rmmewm i^itjLFOoo&lo #pooifiod In tho A«tg3UHIr*«k ooaaowio a^yooBmet#
Althownl* tho ftrltlafe ®wmetmm% feo* eiifc#o$Mw«itXy oroAttodt tho Cforooie 0o*«Pizww«4t otth
5 fttUioo pou&4« «noifurt o9$*»dlttiro of British taroos*s io -Sroooo* ««4 oxport jpiro*
oood# to§oti*or with migrmt wwlXim***
oo&tloi»»d to floo i»* it i# M lio w t
tfcot *»«fc* «**hafl#o rooolpt# hnvo :ko&?* Isfesngoly oXloooto*! to ooooorroot ioporl
»«ato nrifeor ti**aa to rootor&tiw* of tfeo ooto loouo rooorvo*
2. flo»t af S«trtliihtoe 100 ft* C«at Collar H u m *
Siaoo ti»o g«3Ui *u»a i©U»r fooom o of th* $rotfr Sovonsowt f^rolmfcly do
aot oooood 10*4.5 oiliiois dollars «t tlio prooont mmm%t mi. l\&tttro 4o31«r roooip-io
ottot bo fuller 4*vot*d to ioport ro vv£Tm*mta$ **tobtlgbmm* of o
100 :^«r eo&t dollar
reoorvo o«»^:i l»o oltootoi only tl«ro«#i Xo«o or- outright %*m% of' tlio m^iiisito SSmti*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
fcgf tfe#
$t&t««» Wm dollar
sad** m y ia g
foer tld s fmrpMti
fd ik w *
bi
Mm. «£ tfc* «o4 #£ S m w tf X947*
t&a drst^sttft fiat* »1irn>l>tit<wi «aaeantad to 542 blXXltti drftftkuB&At fcar
i i s»y to#
«#tlAAtMl ifc&i ft ciir«aljfetl<m »i 600 billiea® oar ior» & *• tmm, m nm MU
At tls#
f»r«WMW*t a€,f:l«ii& «x«lefigi m l« «f 5»000 &m«iis»&» t© tfct d allar, a 3L*)0
43P4M&'i
doll&r
9 f t&B M m
m%* i»wm wmUd time tm m te* wpr&&m1mlp 12®
mlXULm 4alljwr#* I f * Hmwwt, tfe# dr«w©J» ©hould fc#
to vm&&& 7*500
to tfe* dollar # * • i t vm*% $£ •x$art* ***• to
doU&r rwmr*m
r+ Hirmuin tf
to# y<t&*6<4 td rtiw^bljr 30 wtlXSott -<S63JUtiNi»
It §tMwl4 Ini
to » « w 9 t&*t Hi# ««jrr**iU.y #»ttflfct#4 m%m iumm #ff
bill lee taMtam# A# £fe* M « * tk# X#**X* Appropriate t& * pr**jmtlv» #a#tefci*g#
p a r i t y # £ *7^ 5^0 4 $ ,%#S3tt&ji t*> t b # d u X X t r j iK ttlK Pttt # i i
#£
•ir*uXatl<m #»4 ottrt*il*d *olu®# of tr$&#«6ti0tt»» t&e pr#o#at not#
«<x&l4 h* $rma&& imflwimtm to wm% mweiasry rm*pk*wam\»%
tfc»t «urm t
p ris# X«?*i# o f 3J£> H m « pr— r a«di «2m*0 m%®& # f #5*90 tt««# p*mmF w ill botfe
#**attt*U7 »#ttX* 4m i *t ^^rcMdwoit*!^ 120 ti»*# ptmtm$ # eat# #ir#*4*ti4m reragfeljr
UO ttafti XfJ^ awwrmf# X«v«uL» otf •»£ HUJMm $r*stem *$ m 9 9^ biXXisa ^mvteMi w ill
•vwlnftUjr Ini rtquinMl* M
a •aswiml* not* tXrmiX&t&m *t a«#rljr * tariiXi«i
ayr^maui msild. »»«»ft0itftt« it|^r®priftti«ai « f
& X00 p»r ««Bt
3#« ay
Willi—
BTH,n ?*” " ^ v w r R w m m m
pttm w rf factor
^
p«##iteX» dfmXr*
as^jNwifisjr
^« U ti« c d «nd Emi«aii« S^^igrouiid o f Qr«^i t « ^ n t f«r
Mxmrimm & m l® *m m $* A f v U X0«
t© fr # fi4 »
rm m rm ftofwrn^*
li
tlwi
1^0 miXISm
p« 55»
fnrtli«»r
Reproduced from the Unclassified I Declassified Holdings of the National Archives
r$i«rvw I&
fU g &t tiws/or m
trad* b&l*ito* wwtM te* th* wiliiagn###
o€ tbo Gnit*d &%*,%** to put »£> n*w doXX&ni k
**i?lao«o*©t of not !»****+
o«**i4or ftm t tho eitu&tioa ixk «fel<& on Aarth«r dollar fm i« *<wl
Oa* ®ay
b* fortfcootslfig*
&i**a th* awuretic irt&t* of Or**k p^y^holo^y il&aljr to p^wmXX w
fojnNmnbl# lVUtrOf atttiuNrSjatttt. of
o*g*it&l tm w fa r *o»14 u&iii*«11o(iAbljr
o m i t oooarwati# projtouro upon th* W U r r*#ci**r«o» ©I1 tfeo »*ak of &y**o**
th# po$t ,ymr$ Ui* *k*a**li* miskmt Ab»w'1im& n&X«* of roughly
gold by th* &*ak ef $ro*oo &t pri*** &w«rfcgli*g i**&riy
parity %A-i s««riy I #5
tbo
0 f«r
20 mlllioa dolls*# in
1X20 par gam©* *t th* official
wmxm i& term* ox' th* fro* aou&ot 3©Il&jr rato*
th* *ocy*j*1oc of dx*ofea*ji i«l« gold tbm mmmmUA to Kra^hly 17 stHlim dollar*
«t th* flro* »*rk*$ dollar wtt# *ttilo
dollar* **ro jKrobiibiy off*otod.
traaaforv of & furtb*r 2Q~2$ tilUoii
Jtaate $«&& **£ oaofe&ago pttreh&**# *;u i valeot ta
roughly 70 willioo dollar* ^or*, of
utarotitfXy fl*peadwt upon r%*?4*o*»«et
of 4t»oIhs&o tfeorafegr idltbdr*vii froo olrossl&tloa by nm dr**h©& e?*dit« tm prtmtti
otttorpa*ioo md th* gGfmmmmt*
WhiX* ootttbllalaMait of « 100 por oont dollar roooanr* *
r*tiulr*®a»t for th* pro#*** not* i $ * 3» of 600 billiaa M » m
(S2 Billion <3oll*r*
at a* +wttoewi{* vmia of 7*590 4n*item to tfeo £oH*r) «M &d probably Xisdt fartfeor
«*l*itoX tr&xioforo to pesfeo?* no ia«ro tfe*a 25 aiH lcR dollar* by *x*rtla^ »to*&dllgr
i*or*a*i»f 4« f k t l 6ot27 prmBWxm, I wawld strongly Soubt that *»y $roofe
«0«14
fii^lit*
fey !»*§*
th* d*CUti«nur 3r •omntquim** of stM m%o&&%Lm *orr**ilo» *f e^pit*!
of <Kjr«fttirt*ttf3
tarftA*i«r w*ml^ b « ii4<rrlt*fely foXXow*^
for M k r t i 4U^«trmi» fisfi&Ueeary pr*«aur9.9 «i»d nitl«a^i»
of th* *on^tr»iQii p riv ily * or ntimttm of rooorv* r*'"uirwwet# to g«»anait roitorotioft
of t)io noroaX Horn of orodit*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
witli r*mpw% t©
nmrmmf m # r m r&mltisiu: £tm
mymllmml m&m*mt» «£ tft* t*m$* ^hsm m 9 m l? m ttm m lj tmtnktlrm wt&mtmm m&y
&• HftmunM* la lucii&t# ih« ®«&1rbik& daft#St* M o b msnsh isyeliefcl InfX&a&e#* a&ifet
mmm&»tm$ mmm wmt £ir«t mi &H ft*eiu4* ®*t^ar<Ub«iry
rm,v£rm*m%M iw
rmmmmttmUm md ^emX&pmmU It 1« *#$g»«49 tfc*r«f0r«# tti*t xhm
im»rX&m aiaal*t*&6* fNr«$*«M mi 330 mXXltmm
mt prmmr
will permit ite ll zwtitarmtiaa
oat> ut by J#i7 wtsil# manafcl **p#ri
of
mXlsim will bm
t&XIf rme®*mrm6 mr
QVmk mek MX tmwvmry m£ 1km Qrmmfc tmmosgy, mtti tverihmr tkmwmt&g
that world ptXmmtt M%i*lm $&m *t roughly iaufele thfeir prmmr level** & noraal
h&Xmm mi
f a r Qrmmmm w m M prm k& X j xmqmtorm mwrmgrngm mi
jras*,~&ly 230 m llU m -M harm iu Qaatjrolled im & m rt* fey
prmmmms mt *$■&***£»
*&t#ljr 15? million dollars $Xw
©tk*sr r®mmip%*
of & &irtfe«r 75 mlXXim <toU«r»» ®mfmrlmm%ml&$ th* ptmmtr im*®1#» tr-&4m mpmvtmmm
mma s«t prrnii&m & m i1starter? baal* f«r
th# midrnm mp *hl»k efmXiml
mr
hklum* mf p&$m®tm* ?hu*#
i&flummm flight mpm in msfa &
«i»p Vm fim fmrm pxmmm&img
m*$ Ml&tmtml elm&tM® m&rmmmt* *ttb Qmmmf
«8d mthmv Wmvpwm m*.t%m%m asmpm $mm tm d * flustt&ttlaa# mm^i4mmblft ri.$mrm#
mmbmgm oootroU limited import# £mm otiwr tt»rfc»t* to tmvmmt ***h4«*^ &«&il&fetli~
tl««# tfeil• «
frog****
to Xmmrnm Tmlimmm upm
mud edttun further ate«cisr«d th# cy»sllcal
<rth«r
i'mrmmm mpmrmtimgi
m th®
I & tfe * Abmmeft o f
at
Vhm mmmt t&at
isMstruetlvt $ r * m r
a^J«r thr#&t to
je^y m l y
mi ptymmi# « uliibi’lim arising
frea
Reproduced from the Unclassified I Declassified Holdings of the National Archives
‘ Vo.* i»pert #i«io wmm m fiaiiir# or t*o mm% mm »tn«r tom m pm
*o t o w * *
oootisor oofciiitlofto* Bors*i food Isport r*uir**#nt£ «t i m g o prooar lam&M of
70 aillion dollar** & glMtferotijg *mp
Scxwatic out£*it vill
year, «N k a* th*t «*p*ri«fi«oci In. X$45* «i$ht *dd «« mush m SO »lXlloat ioHon} te
*Kla4amst focM import **^&ro*a»*fct#*
Oa 1fe* «*$tort *?IHof o*«tkaafo
frw*
tho a*Jor expert £t*a* itaWLL5 pro*o foirly roolot*iii to oxtorool dopro*oleoo«
Poduotloa of *atl»»tod aors*l export pr****8** by roujfeXj 20 ffcsr eont* or about
JO »1XX1ob <k>lX#xm, in « fm r of s*orlw-#lde 4mpjr**m%m «m l4 to* oatimly
kowofor* «feil« rotittaM * ana hHmht roofripto al-glit iiiasaXtaiieottsly foil bf & fwitem?
20 m&Xlim* bmim norml Immks*
X» tho ovscit of ©sidt $ rflooitmt# easRbls&tt&it ©f
odf*r«o &xioot&9 barvttst* «*»£ ioproiM&att miwo***, tkortfor#, & b*1* 6*0 of pojveat*
d»fleit of a* oooh on 108 Million oollftr* » l # t titotmim to dovilep*
it" r ifii 10® jwr ooat rwerm
of aoar*et tmjr latp^ilug
deficit weall Umti to eeanroet iteelf bf fjre#lr4tfcti»$'* 6*n*ti«Nft*jr «A|«*taiant
of tii* ©cMit«*prie# &a& ixmm ftroilor«| tfa«r#tyr ofeootelaf the &et&*l loo# of reaer*oo*
Thi# &utoaatle mikm&SLm h*un loo# feoon aX*oredlt*d# feowevKri tbe def^ti«ift*y
oonoofttfeieee of $& i*g*tt*liii& deficit of eve© 50 oUliott c*olI*re * * oeapnro* eitfe
« •noam l* not* alrtralAtloa of 130 «£XHon ^eXXer# woold fee tm&e^rmfcle*
Til* w y
m vwmtmllt? wmVi pm&mtol? o#o*#-#|.t*to iitlttr o Xowiaartei^ of t&o
tbr«at of
rwtmnm rwrvirwami* or A»«rio«isi gr*at of r«rtki«r 4oXX«r roo«9f«Ki to pmmit r#®torotloo of not* i«*u# to
If# »t tiio ot$i#r
^rit#
s4vor*o tan^do
oot Xoso of
X^voXk
th*
orodit «^«&fto i«
$%&tm ^mUd b* miXltm
« i # t %>o pr©,iuood by oopltnX
w iotw
oas/or on
Iteo isn m i mot Xom» of <loXXtro wg^ia feo ooormcKui#
Ifiitdfctod
Reproduced from the Unclassified I Declassified Holdings of the National Archives
’‘f®T m owrliw o o n ««w »i m% pmmmamm m
i mmmxmii*
1mm momtml o *w tfco y»*t jmor to tfeo
d elln r# *
O w
o f n m fh ljf 10 ® & IX laa
**»» $>*riodtf l i p r l oo«t* fcow *xoo*dod «ap«ct proooo&o
«&* » % « r tmml#t# % *3?i*r©*iai&tftiy 230 nU U en (toUin*
la ttoo feaU neo o f p&jmmt*
Tim umraI «*t doflolt
to #3® s* ilX io a
*•
Mr* P*l«n.«r ohmum *!? fess la salad ft» amttfflMtt **&«***&? th« tlftilid
Stmtm* votftM
further SriUbar n 9« n w to ro$tl»oo
#44*ro$.
not l&smm mem mm*
£tth roopoot to ps&iilio flftMM** i'or #**»§£#* tfc# aro#* £Mw*r»«»
« w i oosld *!#»<* IM s«M*«r ifi ftaoaft* itoolf by rooourso to inflatioa* omi «g»14
foe mmwimmtl# iw m & *to rolf' **p«© 4»Ua*r Iona* to tto* oaetoet th*4i it &tA not
«ov»r its «{Mnillt»rf* out ©f loo*l
*r . lioflor fwethev aoooarto that
•thie altu*tlc*i iNKUd &<at*^tl©ftlly prorido th* t e i m
p$wtty$ t&o wisJUS: 8oo4 to
4k*srS,ssii
odBtadotrttor *ltfe tho
6<mst**sHstlv6 ^n4
3tr* EAofior1# oaalyot* mfort*©«t»ly ororloolto tti« foot tfcot sraeft aa
imwrimm »<3fd»l*tr*ior woutfj m% pooaoo# a&o^mto a^aotion pmwt* m hmg a* tfe*
proo*fL$}jr
la ta a m ttm l
Qontim*«s.
If
oilfe t&o
of » tmdgoto#? dfefioit* «* Juwjrioaa *<5»iiii»trfttor wsa&i fcuriUy 4oro to f | ^ M 4
doll&rff nc^utrod to
tfeo olvIX m t t o o a**! th#*r#l*jf to p*«*l£kitoto vmtimm letero*l
di#tt*Hso«ooo« MoIUm* *«wX«t Ini 4swro ta
cro&it towm utragr Cro» »ogr«Bt£*X »#«o to £Xot**oo
t&o 4 4 l « i« fDi^mfcrott to ropX*»o*
flight*
of « X$0 p«r M i t doUUr vmam&m wpitem w&s&A r«»ttx«r «m «tltyt% aa ^hmi isTitikti«8i
t o tho 0t#ide
Qmmmmwt to p r m i ft d#lib«r»t« p&Hm? of Wlfotiijry'
oxooo#lvo i*£ttrt*tloB ft»d rotsrdatloa of ftlX osport* &ot oabjoot to t^llitgo* $»£
gf««t of or«4it tmVLiWm to ^olitio^l fftvsrltoo*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
The preceding critical •oaeaat* upon I r . Mfcflar1* prepe**! bt<r* b#en
hastily developed in th* ah*rt ap&ee of’ tiae fc’ftiAXfcfcle* A *er* thoroo^b fttsMy ef
th* proposal w lU be gladly *atteriafc«ti at yeur requ^et*
Memorandum to Mr. Sproul
from C. A. Coombs,
April 29, 1947.
CAClW
Reproduced from the Unclassified I Declassified Holdings of the National Archives
A DOLLAR CURRENCY F O R GREECE:
FURTHER CGtolSSTS
With rafarence to the proposal of i«r. Riefiar for the substitution of a
dollar currency for the present Greek drachma circulation, I should lik9 to supple
ment my ;iamoranduti of April 29 with several further comments upon iir. Riefler* s
analysis and conclusions.
1.
Structure of the Greek Economy
In paragraph H of his memorandum, Mr. Riefiar states that "the Greek
economy has never rested on internal primary production of the types eaphasized
/on Greek reconstruction/ . . .
it has rested rather on commercial
activities throughout the Near and Ididdle East —
merchandizing, cohiaerce, shipping,
in the FAO Report
insurance, tourists, etc. . . .
Internal agricultural improvements, light indus
tries, and hydro-electric developments are all valuable but in terras of Greek
economic reconstruction they are secondary to the re-establishment of Greece as a
merchandizing, commercial, and financing center for the Middle East."
To the best of m y knowledge, based upon personal experience in Greece as
well as upon statistics of the Greek Government, Mr. Riefler's comments upon the
FAO report are erroneous.
The following breakdown of ths distribution of the Greek
working population above ten years of age in 1923 illustrates the heavy predominance
of agriculture and industry in Greek economic lifaj in 1928 nearly 79 per cent of
Gre ek employment was concentrated within these two major fields.
Workers employed
in transportation, finance, and commerce constituted only slightly over 13 per cent
of the totalj at the very most, half of these, or roughly 5 to 6 per cent of the
total labor force, might have been engaged in external trading or financial acti
vities and an even smaller percentage in economic pursuits directly linked to other
Middle East economies.
Since 1923, moreover, agricultural acreage has been con
siderably extended while industry has also experienced a striking development; it
Reproduced from the Unclassified / Declassified Holdings of the National Archives
-2-
is most unlikely, therefore, that the percentage share of the working population
employed in agriculture and industry has substantially declined since 1928.
DISTRIBUTION OF GAINFULLY EMPLOYED WORKERS IN GREECE , 1928^/
Occupation
P er Cent
61.11
0.26
17.80
4.42
0.95
7.68
2.38
3.56
1.8A
100.00
Agriculture and fishing
Mining and metallurgy
Industry
Transportation
Finance
Commerce
Personal services
Liberal professions
Public services
Further convincing evidence of the primacy of industry and agriculture
in the Greek economy is supplied in the following breakdown of the Greek national
income in 1939, as jointly estimated by the Bank of Greece and Ministry of Finance:
THE NATIONAL INCOME OF GREECE IN 1939
Sources
Agriculture
Livestock and allied production
Forests
Mining and salt production
Fishing and hunting
Millions of
Drachmas
17,4-90
4,800
2,058
673
750
Manufacturing
Rural home industry
Building and construction
7,500
Land transport
Sea transport
P o s ts-Tele graph-Telephone
Commerce
2,4-70
Finance and insurance
Rents
Service of loans to the State
2,600
4-,200
25,771
10,820
954
A1.0
1 .0
4 .3
17.2
3.9
1.7
1,0 56
4-00
5,650
27.8
7.6
3.3
1.1
1.2
11.9
64.0
2.680
Per Cent
of Total
.6
9,576
9.0
15.2
7,754
4.1
6.7
1.5
12.3
53,921
85.7
1 / National Bank of Greece. Annuaire Economique de la Grece pour 1 1Annee 1 9 3 8 .
Abrege; (1939), p. 13.
roduced from the Unclassified / Declassified Holdings of the National Archives
-3-
Sources (Cont!d.)
Per Cent
of Total
Millions of
Drachmas
Forward
Emigrants’ remittances
State and community services
Personal services
Free professions
53,921
85.7
2,108
3.4
5*6
3,5-42
870
2.126
1.4
JL 1
6.838
-10.9
1 0 0 .0
62,867
Thus, according to the above estimates, more than 58 per cent of the
national income in 1939 was derived from agricultural and industrial production.
S e a transport,
commerce, finance, and insurance —
Riefler as the pillars of the Greek economy —
the categories regarded by Mr.
are estimated to have provided no
more than 15 per cent of the total national income in 1 9 3 9 J
I would strongly doubt
that more than half of this amount derived from external transactions.
A n even
smaller share can be attributed to economic relationships with other Middle East
countries —
perhaps 2 or 3 per cent of total national income.
To dispel further doubts that ” commercial activities throughout the
N ea r and Middle East —
merchandizing, commerce, shipping, insurance, tourists, etc."
normally provide a substantial proportion even of foreign exchange receipts, one may
examine the following breakdown of the balance of payments of Greece on trade and
service account in 1938:
GREECE'S BALANCE OF INTERNATIONAL PAYMENTS DURING 1938 ON TRADE AND SERVICE A C C O U N T ^
Thousands
of dollars
Receipts
Exports
Emigr an ts 1 remittances
Devisen accruing from shipping
Expenses of foreigners traveling in Greece
Interest on the disposable devisen funds of
Greek banks abroad
Interest and dividends of Greek capital funds
invested abroad
Coupons of Greek national loans paid in Greece
State account
93,636
23,697
9,938
6,606
240
P er Cent
of total
63.7
16.1
6.8
4.5
0 .2
8,000
5.5
3,076
1.619
2.1
1. 1
146,812
100.0
X / B a n k o C Greece, Th e Economic Situation in Greece and the Ba nk of Greece in 1938
' ------------ — ---------- ---------------(1939) , Appendix, Table IV-
reduced from the Unclassified I Declassified Holdings of the National Archives
-4Per Cent
of Total
Thousands
of dollars
Payments
Imports
Insurance premiums
Expenses of Greeks traveling abroad
Interest and dividends of foreign capital
funds invested in Greece
Service of external public debt
Other State requirements
83.8
0.8
2.2
132,876
1,3 0 1
3,4-66
2,279
9,084
9,630
1.4
5.7
6 .1
100.0
158,636
W i t h respect to export proceeds providing nearly 64. per cent of total
exchange receipts in 1933, no less than 71 per cent were derived from shipments to
Germany, the United States, the United k i n g d o m , France, Italy, and Rumania; Egypt
accepted no more than 2 per cent of Greek exports, Turkey less than 1 per cent, and
other Middle East countries negligible shares.
Greek imports were similarly de
rived in roughly the same proportion from European and Western Hemisphere sources.
Transit trade primarily served the needs of Jugoslavia and other Balkan countries
through the port of Salonica.
Emigrant remittances, constituting 16 per cent of total exchange receipts,
were almost entirely provided by American donors while interest receipts also flowed
primarily from investments in the United States.
The tourist trade supplied Greece
with no more than 4 to $ per cent of total exchange receipts; at least half of such
receipts were probably secured from American and European travelers.
Insurance,
which Mr, Riefler mentions as a source of income, was on the contrary a debit item:
British and Italian companies provided the bulk of insurance not only throughout the
rest of the Middle East but even in Greece itself.
Wi th respect to shipping receipts, providing less than 7 per cent of total
exchange receipts, Greek ships sought cargo throughout the world.
Shipping receipts
derived from the Middle East trade provided perhaps 1 or 2 per cent of total exchange
receipts.
The conclusion is, I think, that Mr. Riefler*s basic concept of the Greek
1
economic structure is not founded on actual fact.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-5-
2.
Effect of Hyperinflation Upon Governmental and Coimaercial Morality
iir. Riefler attributes (paragraphs A-D) the "character deficiencies" of
the present Greek Government and, more generally, of the Greek "leading caste" to
the demoralizing effects of "nearly three years of hyper-inflation."
If Mr. Riefler
* is referring to the hyperinflation of the occupation period, tha three-year time
period is correct.
One might add that the occupation-period inflation was succeeded
by a postliberation inflation of considerably lesser magnitude, extending for a
further fifteen months until January 194.6.
Mr'. Riefler does not take account, how
ever, of the currency stabilization measures introduced in F ebrua ry 194-6 which have
subsequently secured a far higher degree of stability in the Greek price level than
that concurrently registered b y American price indices.
The price index which I
developed while in Greece (and which is still used b y the Greek Government) rose
b y no more than 6 per cent from February to December 194-6.
Prices have reportedly
remained stable over more recent months for which no index number calculations are
currently available.
While the stability of the drachma over the past year has probably elimi
n at ed the less competent among the speculative element, such a purge has not
noticeably improved the calibre of governmental and commercial morality.
The moral
corruption of the Greek governing group is not a surface outgrowth of recent
inflation, readily curable b y the surgery of deflation which Mr. Riefler suggests?
such ethical deficiencies are rather deeply ingrained traits of character, primarily
attributable to centuries of Turkish domination, constant political unrest, recurrent
revolutions and foreign wars, and an age-old struggle for existence in an area serious
ly deficient in natural resources.
Such conditions have naturally not been conducive
to a growth of public and private morality; on the contrary, the highest rewards
have normally gone to the most astute chicanery.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-
6
-
To the best of m y knowledge, the governing group in Greece today does
n o t differ substantially from that which the Metaxas dictatorship served.
large extent, moreover,
To a
the Metaxas dictatorship was characterized b y the same
corruption, inefficiency, and political repression that exist in Athens today.
T h e distinctive characteristic of the present Greek Government lies rather in its
ut t er lack of any sense of national responsibility —
an attribute which the Metaxas
dictatorship possessed in a remarkably high degree.
Such irresponsibility on the part of the present government has been
fostered by a growing conviction over the past two years that the United States and
the United Kingdom will underwrite any budgetary or trade deficit which m ay develop.
T h e validity of this conviction is being demonstrated at the present moment.
By
extending a blank check dollar commitment to Greece, over and above the proposed
grant of 300 million dollars now before Congress, Mr. Riefler1s proposal might well
further undermine the incentive of any Greek government to try to work out its own
economic salvation.
3.
Practical Application of Mr. Rief le r 1s Proposal in 1946
The high degree of price stability maintained in Greece over the past
fourteen months has been achieved b y a technique closely similar to that now pro
pos ed b y Mr. Riefler.
Unrestricted sale of gold, legal and illicit capital trans
fers, and unregulated allocation of exchange for importation have made the drachma
virtually convertible into gold and foreign exchange.
Through the powerfully
stabilizing effects of such gold sales, etc., the creation of a "currency and credit
vacuum,” which Mr. Riefler now urges, was accomplished over a year ago.
Ja n u a r y 31, 194-6
As of
the drachma note circulation represented an increase of no more
than sixteen times prewar levels, compared with average retail price increases of
158 times.
The currency and credit vacuum thus created has been subsequently
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-
7-
pa rt ia ll y fillad by expansion of the note circulation to 65 times prewar levels by
J an ua ry 31, 1947 and perhaps to about 70 times at the present moment.
The major defect of this technique of currency stabilization is that it
presupposes (in the absence of effective sanctions against budgetary and external
extravagance) replacement of dissipated gold and foreign exchange assets b y the
A m er i c a n Treasury.
No foreign government hoping to remain in office after its
gold and exchange resources had been exhausted would otherwise embark upon such a
course.
The Greek Government has acted on the conviction, however, that the
United States or the United Kingdom would be inevitably forced to supply whatever
foreign exchange assistance proved necessary to prevent economic chaos and further
growth of Communism in Greece.
While this conviction has proved justified to date,
St at e Department officials are apparently determined to prevent any further drains
upon the American Treasury; imposition of rigorous exchange and import controls,
thus forcing the Greek Government to rely upon various fiscal and economic reforms
rather than dissipation of exchange for the maintenance of price stability, has
b ee n repeatedly urged in recent weeks b y Department spokesmen.
Virtually all Anglo-
American observers in Greece over the past two years would heartily endorse such a
State Department policy toward Greece.
B y removing all remaining bars to capital flight and to further dissipa
tion of exchange upon less essential imports, Mr. Riefler's proposal would not only
permit a recurrence of the experience of the past year on an even more expensive
scale but would even convert it into a permanent institution.
The extension of such
a blan k check as a dollar currency to Greece would constitute an open invitation to
budgetary deficits, lavish grant of credit, capital flight, and unbridled importation,
w h i c h would be accepted in Athens with astonished delight.
I cannot agree with
Mr. Rief l er 1s contention that discretionary authority by an American administrator
to withhold further dollars would constitute an effective sanction.
Enforcement,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-
8
-
or even public threat to enforce, such a sanction would serve only to strengthen
the Communist pressures we are trying to curb.
The Greek Government is fully aware
of this weakness in our bargaining position and m a y be expected to press its conse
qu en t advantage to the limit.
C. A. Coombs
5/6/47
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Federal Reserve Bank
of
N e w Yo r k
A5
N e w Y o r k / , N .Y .
A pr il 29, 194-7.
SPECIAL DELIVERY
Mr. Winfield Riefler,
The Institute for Advanced Study,
School of Economics and Politics,
Princeton, New Jersey.
Dear Win:
Enclosed is a memorandum discussing your comments on
the Greek problem, prepared b y one of our men, C. A. Coombs, who
has had some firsthand experience in Greece. There is also en
closed, as of possible interest to you, a memorandum which Mr.
Coombs wrote a few weeks back on the general subject of American
assistance to Greece.
I am pursuing this matter further but want to emphasize
one point now — the ability of the Greeks to "blackmail” us as
they did the British greatly weakens the argument that we could
enforce fiscal reform and credit control.
I am also still
impressed with the political difficulties and possible reper
cussions of substituting dollars for drachma as the currency of
Greece.
That is why Mr. Coombs' memorandum recasts your
suggestion in terms of requiring 100 per cent dollar reserve.
W i t h best regards,
P.S.
I have been in touch with Washington and find that
any suggestions we have will not be lost if they are
not pressed for a few days. In other words, the
global figures hav en ’t too much detail behind them yet.
Enclosures 2
Reproduced from the Unclassified I Declassified Holdings of the National Archives
EIGHTIETH CONGRESS
C H A W ifl A. BATON, N . J . , CHAIRMAN
CHRISTIAN A. HERTER,
WILLIAM M. COLMER, M ISS.
THOMAS A. JENKINS' OHIO
CHARLES A* WOLVERTON, N . J .
JAMES P . RICHARDS, S . C.
AUGUST H. ANDRESCN. MINN.
FRANCIS E. WALTER, PA.
HAROLD D . COOLEY, N . C.
FRANCIS CASE* S . D.
JOHN C. KUNKEL, PA.
OKOR9EH. MAHON, TEX.
OVERTON BROOKS, LA.
CHARLES W . VURSELL, ILL.
EUOENE J . KBO0H, N , Y.
W . KINGSLAND MACY, N . Y.
A. S . MfKE MONRONEY, OKLA.
RICHARD M« NIXON* CALIF.
Room 836, House Office Building
Phone: NA. 3120, Ext.
£ ott*e of &e*>re*entattoes,
SELECT CO M M ITTEE O N F O R E IG N A ID
(tatyington, £ . C.
August 8,
19hl
Dr. Winfield iV. Riefler
Orleans, Hassachusetts
Dear Dr. Siefler:
I take great pleasure in appointing
you to the position of Consultant for the
Select Committee on Foreign Aid of the House
of Representatives.
I consider the w o r k of
this Committee to be of the greatest importance
and I an delighted that you have agreed to bring
your abilities to bear on one of the most press
ing problems of the day.
V er y sincerely^yoyr.q
Charles A. Eaton
Chairman
1301
Reproduced from the Unclassified / Declassified Holdings of the National Archives
FOR EIGN
AFFAIR S
A N A M E R IC A N Q U A R T E R L Y R E V IE W
HAM ILTON FIS H ARM STRONG
E D IT O R
5 8 E A S T S IX T Y -E IG H T H S T R E E T
N E W Y O R K 2 1 , N . Y.
C A B L E A D D R E S S ) F O R A F F A IR S , N E W Y O R K
August 11, 1947
Winfield W. Riefler, Esq.
The Institute for Advanced Study
Princeton, New Jersey
Dear Win:
I was laid up during most of my vacation and am still
only under half steam. However, I have my wits about me
enough to know that your article is first-rate and that I am
delighted to have it for our Anniversary Issue.
I don't
think you have trod unwarily in the political and military
preserves.
At any rate, what you say in those connections
fits in perfectly '.veil with McCloy and Langer.
The only possible omission that I can see is that you
perhaps overlook some aspects of the procedure by which the
United States converted to war production.
What degree of
government assistance and control was needed?
This seems
to have some important implications for the future, and maybe
you can think the matter over and add a paragraph when you
get proofs.
If you decide deliberately against going into
this matter, well and good.
With thanks again, and with all the best, believe me,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
FOR EIGN
AFFAIR S
A N A M E R IC A N Q U A R T E R L Y R E V IE W
HA M ILTON P IS H ARM STRONG
E D IT O R
5 8 E A S T S IX T Y -E IG H T H S T R E E T
N E W Y O R K 2 1 , N . Y.
C A B L E A D D R E S S ! F O R A ^F A IR S . N E W YORK
August 11, 1947
Winfield W. Riefler, Esq.
The Institute for Advanced Study
Princeton, H ew Jersey
Dear Win:
I
was laid up during most of my vacation and am still
only under half steam. However, I have my wits about me
enough to know that your article is first-rate and that I am
delighted to have it for our Anniversary Issue.
I'don't
think y o u have trod unwarily In the political and military'
preserves.
At any rate, what you say in those connections
fits in perfectly well with McCloy and Langer.
The only possible omission that I can see is that you
perhaps overlook some aspects of the procedure by which the
United States, converted to war production.
What degree of
government assistance and control was needed?
This seems
to have some important implications for the future, and maybe
you can think the matter over ahd add a paragraph when you
gat proofs.
If you decide deliberately against going into
this matter, well and good.
W it h thanks again, and with all the best, believe me,
c
p
r t m
e
n
t
o
f
j l t i t t e
OF THE
D o a i l t o w h o m th e d e p re d e n ts c o m e , g r e e tin g .:
1."J ltis id t o c e r tify - t h a t
h a d b e e n d e s ig n a t e d
Statistical
Congress
WINFIELD
a Delegate
to be h e l d
at
of
the
W.
RIEFLER
United. S t a t e s
Washington.
D.
G«,
to
the W o r l d
September
6
to
1 2 , 1 9 4 7 . _______________________________________________________________________________
F O R T H E H E C R E T A K Y O F STATKS
W A S H IN C J T O N ,
A lig n a t
^
30.
DA TE
1947
i i c t i n s ;
C ^ H I E F , D I 'V I S I O N
IN T K H N A T IO N A L
O F
c
p
r t m
e
i t t
o
f
^
t
o
f
A
m
a
t
f
e
r
OF THE
a
l n
i t M
3 ,
t
S
t
t e
s
i c
a
a i l to w h om'theAepreSentd come, greeting.:
^Jh is id to certify, t h a t ________
had h e n d e sig n a te d
a
WISPIfcLD h. KIBFLER
« P«l»£»te o f the halted S tates to the World
S t a t is t ic a l Congress to be held a t Washington^ S>. C«m September 6 to
lft» 1 9 4 7 .
FOM T H E S E C R E T A R Y O F STATES
W A SH IN G T O N . O,. € „
A c t i n g C H IK g, D IV IH IO y O F
IBTrERNATIONAL CONFKRRNCK»
Reproduced from (he Unclassified / Declassified Holdings of the National Archives
0
A M E R IC A N A S S O C IA T IO N O F U N IV E R S IT Y W O M EN
N A T IO N A L H E A D Q U A R T E R S , 1 0 3 4
EYE S T R E E T , N . W .
W A S H IN G T O N 6 , D . C .
2
T)
C*J
t3 Dear Winfield Rieffler
0 Riefflers:
Oct 6,4-7
7
and all the rest of the
1
■h
Friday several of this staff went over to
o t h e Free Building to see a pre-View of ROUND TRIP.
F
c I had no idea t h a t , I would see you in it in your role
^ a s pin up boy.
Particularly poignant were the
memotions seeing you in action...as I have just come to
■^Washington to this job to work again after the many year
since the Child research center.
As I saw you there
in the picture so convincingly^and in real competition
with Hollywood glamour boys, shaping tkxx public opinion
, we hope!, I could remeber with dismay sitting 6n the t
top step in your home doing ..So help the young, 'Parent
Guidance* and remembering too the story of Donald
whacking you over the head with a wooden spoon to let
you know that he was digesting his training experiences.
One other time you burst in on m y unexpectedly
and brought with you the/associations of the old days.
happy
1 was 750 miles from civilization in the Herbert Hoover
mining country north and west of Perth,,Australia,
m We had driven fron YOUA*"MI the old mine center to an
^ outer back sheep station through miles o £ spinnifex
>»and into the endless thickets of roof high M u l g d Scrub,
s, There I found the story book life of British culture ged
£ going on in that home from whose windows could only be
® seen the unvarying ffiulga scrub ,fancy looking at that fc
e for 25 years ... The mother appeared in a navy blue
ca dinner dress, looking as though she had just come fron
Eliz. Arden's.a bunch of English Violets on the Mantle j
shelf, and current magazines and books on the table.
Feeling absolutely out of this world I picked uj
up what I remember as a R a d e r s D i g e s t . ..was it?, to
see in very black on the white page your profile with ai
short article telling of your work in England,etc. J
Both thj$ paper and the hour say get on with you
job, but this morning I couldn't work till I got you
Reproduced from the Unclassified / Declassified Holdings of the National Archives
ADDRESS OFFICIAL COMMUNICATIONS TO
T H E SE C R E T A R Y O F ST A T E
WASHINGTON 25, D. C .
D EPA R TM EN T OF STA TE
W A S H IN G T O N
Dear Winj
November
10,
1947
As you know, the United Nations Sub-Commission on
Employment and Economic S ta b ility i s holding i t s f i r s t
session at Lake Success beginning November 1??, You are
a member of th is Sub-Commission, in your individual
capacity, and not as an o f f i c ia l representative of the
United States Government, Hence there w ill be no formal
in stru ctio n s for your guidance.
We do, however, want to make availab le to you any
information or help that you may need.
During the course of the sessio n , o ffic e space can
be furnished at the headquarters of the United S tates
Mission to the United Nations at 2 Park Avenue, New York,
telephone MU 5-6810, and Mr, William Fowler, the economic
o ffic e r of the Department who i s station ed there, w ill be
glad to be of a ssista n ce to you*
As to advance preparation, I am sending you herewith
a number of o f f i c i a l United Nations documents relevant
to the Sub-Commission* s work. Included among these i s
a copy of the draft Charter for the International Trade
Organization, which was developed at G-eneva la s t summer,
and which w ill be further considered at Habana beginning
November 21, with a view to obtaining fin a l in tern ation al
agreement pn the Organization.
In addition, I should be very glad to talk
about any of the Sub-Commission's business that
would lik e to discuss before the sessio n opens,
hope that you w ill l e t me know i f you f e e l that
consultation would be h elp fu l to you.
with you
you
and I
such
I should
Mr. W infield R ie fle r ,
Select Committee on Foreign Aid,
Room 230,
Old House O ffice Building,
Washington, D. C.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
*•
2
**
I should lik e to say again how very pleased I am
that you are going to serve on th is Sub-Commission,
Sincerely yours,
/
Willard L, Thorp
Enclosures:
1.
Charter of the United Nations,
2,
Agenda,
3,
Reports of F ir st and Second Sessions, Economic
and Employment Commission, (E/255 and E/445)
4.
R esolutions of the Economic and Social Council
at i t s Third, Fourth, and F ifth Sessions.
(Resolution 1 (I I I ) of the Third Session
contains the Sub-Commission1s terms of
refere n c e,)
5#
Report of the Second Session of the Preparatory
Committee of the United Nations Conference
on Trade and Employment. ( Geneva Draft of
ITO Charter,)
(E/CN„l/Sub,2/l)
Reproduced from the Unclassified I Declassified Holdings of the National Archives
TH E IN STITU TE FOR ADVANCED STUDY
SCHOOL O F M A T H E M A T IC S
P R IN C E T O N , N E W JE R S E Y
mvrnhrnr 18,
Ife Processors Alexander, &arX## Einstein, Goldman, bear#, timrltt, vjfetsaann,
Paaofsity, Hefler, $i#gel, Stewart, ?#ble% Warren and l#y l
Bear Colleague#!
In «fua# last an infoi^al ccmitt## of the Faculty- was formed with
tli# consent of a ll amber* of th# Faculty who could be reached at that time,
to arrange & r th# puroraa*# and presentation of a g ift to Br* Aydelotte on
his retirement as Director, this oosaltt## was oeaqpostd of fanofsls^, idefler
and Borse* Xt was tmoitikyH ha^y *Mgg#*Uon that w# obtain lialton*® View*
of Oxford, 1810* This 1* a collector*® item and i t bas taken mm time to
get* A suitable leather eas# for this has been mad#* the artisan who did
a giidlar task In connection with our gift to Dr* Fiexaer © stilted the cost
of th# leather case would be fXSO* 1M$ secaed a lit t le expensive, so with
th# advice of librarian Boyd the services of another artisan were obtained at
a coat of |7S# Hi# Views of Oxford were prised at $L$£ making th# total cost
$230,
Hi# members of the Faculty who are mm in this country and wr*o p resw
ably want to contribute number fifteen* This make# the assessment for each mem
ber |X5#33* Check my be sent to me* The b ills have already been paid*
i t the stiggestion of ra^fessor M#rttt* and with the concurrence of sev
eral other msabsr* of th# Faculty, I have arranged for tli# faculty to- drop in on
Dr* A^delotte at his hosse on Battle lioad at $ o*clock next fuesd^y, lovecber 25*
I hope a ll mmbers of tli#- Faculty can be present*
It m uM be well if we m%
first la the Counon !*oa& of th# Institute about ten to fifteen fidnuts# befor#
five, and then drove over to Dr* Ayd#X®tt#*s* fhe presentation will bt very
simple and infomaX and the whole affair should, aot last mry long*
I have sought Hie views of the ^es&ers of th# Faculty as far as I could
as the situation ha# developed. 1 liope you w ill find these arrangements satis
factory and approve of the gift, which seems to m a very attractive one*
Cordially yours*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Sforenhor 21,
1$%7
Dear Po ngt
It it alvajrs good to h e ar frora you. A let tor
from Shanghai ieeea libe a nessece across the yer.rs
a © veil a * the ocftens* X » slaA y o n likoA T o y n b e e ^
hook. He is g oing to “be at the Institute this winter.
I boro just recently eo~G h ^ d : fro a Steeland vhero
t vent aa consultant to the Select Committee on Fcreitfi
A i d of the House of *.<3rre8<mtati'resf Yoxfclng o n t?t0
Marshall ?lan.
Currently I an at Loire Success eittir^
o n the 9a!b*»0OBftittee on 3ccncnic Stability* Aloxrad^r
Loretey is here fro~ I n l a n d on the s,?.ue awVcccni sc i on .
It seene a little li!rc ol* tines, eaos-pt that yortc at
I d e e Success is »«ach sore foroal than it was at Gen/^ra.
I m u e n d o e i n ^ reprinto of a conple of articles I
t e n publish*** recently.
*?y W y
be?t
to y o u and Mrs. Fone,
Sincerely yen**,
Mr. Shoo-Ru*! Tone
Tho Central B an t o f CJhina
Shanghai, China
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Offid&t Dtpositow of the
NATIONAL
Cable Address
GOVERNMENT
"G O V E R N B A N K "
THE CENTRAL BANK OF CHINA
SHANGHAI
November
Prof. W i n f i e l d Riefler
Institute for Advanced
Princeton, N.J.
U . S. A.
Dear
prof.
the
receipt
wedding.
The
few months
Bank.
pleasei
who
is
and
our
gift
the
evening
death
with
of
in
us
during
brought
the
u.
Economic
for his
great
admiration.
I have
Central
the
Bank
Economic
staff
of
120
of
difficult
and
your
it
just
quite
the
Central
ceaseless
exchange.
a
and
historian,
difficult
like
my
a
kindness
the
very
for
for
the g r e a t
of
to
bottle
hos
to g e t
Your
colleague
of
the
in
of water
the
am
world
and has
a
as
from
serving
not
The
in
sudden
must have
for
only
remembered
which
at
him
I have
to h i s
friends
a whole.
the
as
The
contact with h i m
but have
a loss
Research Department.
to r e a d
whom you worked
last war
a brief
Council,
is
shocked
W i n a n t ’s s u i c i d e .
only
transfered
and
profoundly
and statesmanship
death
also
persons
for
foreign
days
had
Social
His
China
M r.
former
I have
been
I was
about
performance
country but
at
me
desert.
a news
the m o s t
to m e
Because
found
cost
you gave
Toynbee,
therefore,
distinguished
3ince
or his
have
evening,
you sorrow.
N*
of Mr.
which
is,
the
forwarded
in China.
we
acknowledgement
been mislaid
deeply grateful
work
books
paper
your
duly
belated
gift which
apparantly
known
Yesterday
the
had
I are
to
a much
magnificent
country,
especially
traveller
indeed
it was
to r e a d
in
tellectual
a
parcel
also widely
books,
Study
is
the
before
are
to
this
of
My wife
tilities
1947.
Reifler:
I fear
of
5,
Central
Trust
an assistant
to
the
director
Department maintains
collection
of
some
100,000
of
a
columes.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Cable Address
Official Depositor!/ of the
NATIONAL
“ G O V ER N B A N K "
GOVERNM ENT
THE CENTRAL BANK OF CHINA
SHANGHAI
It publishes,
on economic
will
among
other
statistics
constantly benefit
be m o s t
helpful
With
things,
and
me
a m o n t h l y and
analysis.
with
your
I will
advice
a weekly bulletin
appreciate
w h i c h will,
to m y work.
best regards
to y o u
and Mrs.
Yours
Riefler,
sincerely
O
..J
Shan-Kwei
Pong
it
if y ou
I am
sure,
Reproduced from the Unclassified / Declassified Holdings of the National Archives
THE CO M M ISSIO N O N A JUST A N D DURABLE PEACE
instituted by
THE FEDERAL C O U N C IL O F THE CHURCHES O F CHRIST IN AM ERICA
T E L E P H O N E G R A M ER C Y
C a b l e A d d r e s s “ f e d c il ”
5-3475
297 Fourth Avenue, New York 10, N. Y.
J o h n F o ster D u ll e s
c h a ir m a n
December 20, 1947
R ic h a r d M . F a g l e y
W a l t e r W . V a n K ir k
s e c r e t a r ie s
M r s . G e o r g e s . F r a n k l in
O . F r e d e r ic k N o l d e
a ss is t a n t s
C O M M IT T E E O F D IR E C T IO N
H e n r y A . At k in s o n
E d w in E . A u b r e y
Ro sw ell P. Ba r n es
J ohn C. B ennett
R u s s e l l C l in c h y
A lbert B uck ner C o s
J a m e s H . F r a n k l in
G e o r g ia H a r k n e s b
Ha r o ld a . Hatch
W . E r n e s t H o c k in g
Ke n n e t h S . L a to u r et t e
H e n r y S m it h L e i p e r
Elm ore M. McKee
H a r o l d N ic e l y
J u s t i n W r o s N ix o n
G . BROMLEY OXNAM
A lber t w . P alm er
A lm on R. P epper
H a r o l d C o o k e P h il l ip s
Lum an J . S hafer
E r n e s t F . T it t l e
C . H . T o b ia s
Henry P. v a n D u sen
A . L. W a r n s h u is
Ma r y E. W o o l l e y
Dr. Winfield w, Riefler
Institute for Advanced Studies
School of Economics
Princeton, N e w Jersey
Dear Dr. Riefler:
You are cordially invited to attend the special
meeting of the reorganized Department of International
Justice and Goodwill, at the Benjamin Franklin Hotel,
Philadelphia, January 8-9.
A major concern of that meeting
will be the European Recovery Program, and your counsel
would be very helpful in our consideration of policy recom
mendations for our churches.
Chester Barnard has agreed
to chair the section dealing with international economic
policy, and Willard Thorp and David Owen are speaking on
the U.S. and U.N. phases of the task.
I enclose a copy of
the program and a card for your hotel reservations.
We hope very nrueh that y ou can arrange your
schedule to attend.
Sincerely yours,
Richard M. Fagley
R M F:t
Ends. 2
@FedFRASER