Andreas Louriotis and the Greek Debt of 1824-5

Andreas Louriotis                                            ΑΝΔΡΕΑΣ ΛΟΥΡΙΩΤΗΣ

Born 1789 in Ioannina                                      Died 1854 in Athens

Section One, Number 466

Money Often Costs too Much  (Ralph Waldo Emerson)

Picture the Scene: a group of revolutionaries have had amazing success at the beginning of their rebellion against Ottoman oppression. Local leaders, foreign philhellenes, and Greeks from other areas in the Ottoman Empire and Europe, have been united in their cause.

Then two things happen.

The Ottomans begin pushing back in earnest just as the leaders of the rebellion are attempting to create a constitutional framework for their proposed republic. As this effort progresses, the participants not only realize that they are on very different pages when it comes to the set up of the new country and just who should be in charge, but also that the money gathered for the cause was not nearly enough. 

In the beginning, the insurgents had had the rudiments of the way in which to begin the struggle: money brought by wealthy Greeks or Philhellenes (contributors such as IoannisVarvakis and Alexandros Mavrokordatos to name two) as well as money gathered by Philhellenic institutions such as the London Philhellenic Committee. The existing Greek fleet that comprised of at least 650 ships and many thousands of sailors, not to mention the many willing fighters on the ground were sufficient at the start. But the nascent state could not continue the struggle without cash – and lots of it...  Revolutions cost money.

A Loan would have to be sought.

The Greeks had some advantages on the world stage: a great deal of public sympathy and the support of liberal thinkers such Jeremy Bentham and Lord Byron. European intellectuals, especially those of liberal persuasion, had become very aware of their debt to ancient Greece, and their struggle for freedom struck a sympathetic chord because it echoed their own struggles for a more liberal society. On another plane altogether, there were many Europeans who saw the struggle as a struggle for Christianity as well as freedom. And there were the Greeks of the diaspora: Greek businessmen in many European centres of commerce and Greek intellectuals like Adamantios  Korais  who were ready and willing to use their influence to garner European sympathy. In a way, also, Greece was the ‘fashion’ in the run up to the revolution. Every neoclassical building in Europe and America (and there were many) served to bring to mind the glory that was Greece.

But the minus column was daunting.

The Greeks were not in an enviable position. In 1822, there was no Greek nation. The provisional government was a shaky entity situated in various freed towns or islands, very much in the process of becoming.  Greece, as a state, was not internationally recognized at the time.  What could they use as collateral?

Then there was the fact that each large European power was far more interested in preserving its own spheres of influence and balance of power than freedom for Greece.  When it suited them, the Ottoman Empire was not seen as a natural enemy and, even if it was, it was powers like France, Russia, and England that wanted the lion’s share in the event that it was broken up. It is a sad fact of financial life all through the nineteenth century that many European bankers were lending money to Greece and to the Ottomans at the same time...

 In this shifting political sea, Greece was a tiny ship tossed in a storm of conflicting interests: sometimes on the crest – but just as often in the trough!

Money Has No Politics

  

As luck would have it, the Greeks’ need for a loan in 1823 coincided with an economic boom in England, one that had created a great deal of surplus cash looking for a profitable home. Greek legislators called upon Ioannis Orlandos and  Andreas Louriotes and Andreas Zaimis  to form a committee and the first two travelled to London in 1823 to secure some of that loose cash  for the Greek Cause.

Louriotis in old age

Andreas Louriotis had been educated  in Ioannina, Germany,  and France, had  joined the Filiki Etairia, returned to Greece when the fighting began, and became a close political ally of Alexandros Mavrokordatos. Orlandos was a ship owner from Hydra with close connections to the Koundouriotis family and Andreas Zaimis was from the Peloponnese, so there was some attempt to represent various political factions.

In London they were greeted by none other than the Secretary of State for Foreign Affairs George Canning (whose contribution as a Philhellene got a square in central Athens named after him) and in due course, the First British Loan of 800,000 pounds became a reality. A second London Loan would follow in 1825.

These two loans were considered a real coup for the fledgling state and, to be honest, many Greek nationalists felt that this money was no more than their due for having contributed so much to European culture.

The Fatal Consequences

It is possible that no one predicted at the time that these two Greek loans, one in 1824 and one in 1825 would set off a chain of events that would lead to Greece becoming an monarchy instead of a republic, of having her finances overseen throughout most of her history by foreign creditors and their governments, and to having her internal finances crippled because of a debt it was nigh impossible to repay: – each new debt incurred was,  in fact,  secured to repay the previous one – a poisoned chalice indeed!

Perhaps the initial negotiators were naive. Or maybe they just had no other choice.  I have to admit to a certain naiveté as well because, during my early readings of Greek history, I had assumed that the famous  ‘London Loans’ were, in fact government loans, and I felt a kind of satisfaction that Britain was on the right side of history. But these were not government loans: they were private loans on the part of London financial speculators who expected a good return on their money and proved more than willing to call on government intervention when necessary to see than they got it.

Were the Terms Fair?

Not really, although I have read serious articles that claim they were. One problem was collateral. At one point the Greeks demanded changes in the terms so it would not appear that they were offering future Greek territory as collateral. But, whether they knew it or not, they were offering up future Greek citizens as collateral.

The Loan:

Bankers issued sovereign bonds in the name of Greece and sold them on the London Stock Exchange. They were sold for far less than their face value.  A hundred pound bond could be bought for 59 pounds, but the debtor was responsible for the face value of the bond. Not only that, the issuing bank took a hefty commission.

From the outset, Greece only received 1.3 million pounds of two loans valued at 2.8 million.   The interest was 5% and that was expected to be paid for the face value of the bond regardless of what had been paid for it in the first place.

Beggars Cannot be Choosers:

(On a personal note, our one and only foray into borrowing in Greece came during the same year as the Cyprus crisis. As a naive Canadian, I was shocked that a thousand dollar loan for a year was calculated in this way: the bank gave us only 700 dollars (I was thinking in Canadian dollars in those days) and 1000 dollars was to be paid in full in a year. There was no reduction allowed for early repayment. Highway robbery I thought at the time, but we were broke and my parents were coming. We paid and I have had a jaundiced view of debt and creditors ever since.)

In 1826, the Greek provisional government had to suspend debt payments. Partly this was because of the high cost of the fighting (some mismanagement too probably) but mostly because London and other European centres were no longer flush with extra money, Their own financial bubble had burst and banks were in no mood to lend more - something that debtors like the provisional Greek government had counted on.  In 1829 the provisional government did offer to resume payments if the debt was reduced. This was refused by the creditors who wanted a one hundred percent return.

How to Get Blood Out of a Stone

The United Kingdom, France and Russia formed a Troika (that word!) and the first order of business was to find a suitable prince. The proposed republic was in disarray and could not pay, and Greece was involved in civil strife, so Othon the son of King Ludwig of Bavaria was to become the first in a string of kings in Greece.

Somehow sanctioned by God as well as by creditors!

At the same time, the Troika agreed that any British or European banks holding the Greek bonds should be supported. The plan was to exact full payment of the loans of 1824 and 1825.  The Troika asked French banks to issue a loan of 2.4 million pounds and they promised to pay if Greece defaulted. This loan was meted out in 1833 and it is interesting to note how it was handed out.

Of the 44.5 million Greek drachmas, only 9 million (20 percent) actually went to the Greek State treasury. The Rothschild bank took a ten percent commission, advance interest was paid to the creditors, and just under 30% was paid to the Ottoman Empire as compensation for their loss of Greece. The creditors of the original loan got 2 million GDR and 7 million went to King Othon to give him and his regency a good start. This included 3500 mercenaries recruited in Bavaria and sent to Greece.

Otto’s Bavarian troops sightseeing

On May 7, 1832  King Ludwig signed an agreement with the great powers requiring the new independent state to give absolute priority to the repayment of the debt. Lord Palmerston signed for England, Talleyrand for the Tsar, and a representative of the King of Bavaria for Greece.

17 Year Old King Othon was in debt before he ever set foot in the new kingdom!

Protocole de Londres­ 1832 - London Protocol, 1832

In reality, the Troika controlled everything via the king. Although the Fifth National Assembly had legislated that the king could not act alone in levying taxes, he could and he did. Until 1843 Greece was ruled by an absolute monarchy. Things got better after 1843 and 1860 but not much.

And whenever the horrible spectre of arrears on the Greek debt came up, foreign governments were always ready to interfere to protect their own interests, and did. This had a disastrous effect on social spending and on any kind of public investment.
This story has repeated itself again and again, really until the 2008 financial crisis when another troika took charge.

Whom to Blame?

When the ramifications of the London Loans began to sink in, the negotiators, including Andreas Louriotis began to be accused of financial misconduct, of commissions taken but not earned etc. They were still refuting those claims as late as 1839.

Were the Greeks totally innocent bystanders in all this? Of course not. Many Greek financiers bought the bonds and probably wanted their money back too.  Greek politicians have had difficulty uniting either themselves or the country all during modern Greek history and that has not helped. But being in constant debt is part of that too.  It is hard to see how the Greek dependence on Europe which has been such a large part of our story could have been handled differently given our debt situation. Greece has always had to react to events –fifth business on the European stage.

Could It Have Been Any other Way?

I would love to think so. In the best of all possible worlds, things may have been different. But not in this one, a world that seems to insist that paying ‘one’s debts’ is the essence of morality and that the ‘one’ mentioned in the last sentence can be a forefather or a former corrupt leader or a good leader. We live in a system where debt is encouraged when times are good and yet debtors in over their heads immediately assume a cloak of moral degeneration if they cannot pay. Debt is never really forgiven.
We Greeks not only have had to put up with a national debt that would have choked the Trojan horse, but also the sneers of  our creditors who, unwilling to accept any complicity in offering bad loans, have no problem is assuming that not paying theirs is tantamount to the original sin.

Today

We are still paying our debts here in Greece and the Corona virus has hi-jacked our efforts to rebuild our economy. And now the debate rages in Europe over as to whether the richer members should participate in a new loan to folks like us or whether Europe as a whole should assume the debt in a bond issue. I can see the point of view of the well off countries who think a loan would be just dandy. After all, they manage to get paid somehow no matter what - or when. But I am all for a bond. It would nice to be part-creditor as well as a debtor for a change!

 

The Grave

 The exquisite bas relief is by the Fytalisbrothers

Section 1, Number 466

The Map

Sources

See https://helios-eie.ekt.gr/EIE/bitstream/10442/13997/1/193.pdf for a discussion of the loan. This is excellent.

See also Bowring and the Greek loans 0f 1824 and 1825: https://ojs.lib.uom.gr/index.php/BalkanStudies/article/viewFile/77/86  I have printed this out!

From: https://www.cadtm.org/Newly-Independent-Greece-had-an

 I got this by googling Greek government debt from 1830

Charilaos Trikoupis

Charilaos Trikoupis                                  ΧΑΡΙΛΑΟΣ  ΤΡΙΚΟΥΠΗΣ

Born in Nauplio, 1832                   Died in Cannes, 1896

  

                                

Section 5, Number 896

The Family Plot: Charilaos and his sister Sophia in the background; their parents Spyros and Katerina in the foreground. 

Charilaos Trikoupis: cosmopolitan, multi-lingual, and an accomplished dancer, served as Greece’s Prime Minister seven times between the years 1875 to 1895.  He brought  something new to the Greek political scene – a coherent and liberal policy of internal reform accompanied by a more reasoned foreign policy (1)    Trikoupis had tremendous self-confidence, a quality that neither the English or the French, used to controlling Greece from behind the scenes, would entirely forgive. He was also eloquent. When he spoke in parliament, foreign officials and diplomats listened; his speeches were widely published abroad.  In spite of his failure to fully realize his vision, historians still rate him as a colossus in the political history of Greece.

His statue (by  Thomas Thomopoulos)  outside of the old Parliament building on Stadiou Street. Emblazoned under the angel’s protective arm are the words “Greece wants to live (prosper), and will live (prosper)”

 His Life

Trikoupis came from an illustrious family. His mother was the sister of  Greek prime minister  Alexandros Mavrokordatos.  His father, Spyridon,  the son of a  primate in Missolonghi, had fought in the Greek revolution and served as the Greece’ first prime Minister in 1833. (2) 

  Charilaos studied law in Athens, and then continued his studies in Paris and London. In England, he fit in so well with the ambiance that he gained the nickname “the Englishman”. In 1862 , at the age of 30, he became attaché of the Second National Convention of the Greek community in London. In 1863 he followed in his father’s footsteps becoming chargé d’affaires at the Greek Embassy there, where he skillfully handled the negotiations for the 1864 treaty in which Great Britain surrendered the Ionian Islands to the Greek nation. 

 

But it was politics at home, not diplomacy abroad, that interested Harilaos.

In 1865, at the age of 33, he was first elected to the Greek parliament, representing  Missolonghi. He quickly became the  Minister of Foreign Affairs. As a newly minted minister, he requested that foreign ambassadors first visit him in his offices rather than him going to theirs as had been the custom. It was a symbolic gesture of independence from foreign influence, and one that has remained the protocol in Greece ever since.

 

This photograph may have been  used by Thomopoulos for his statue!

By 1872, Trikoupis had already founded the Fifth Party (Πέμπτο Κόμμα), the first party in Greek history to be based on a clear set of principles rather than on the charisma of its leader. He began to attract  progressive politicians to his point of view. In 1874 he wrote the now famous article Who is to Blame? (Τις Πταίει;)  in which he  harshly criticized the existing political system, in particular the role of the  king. The king, using  his  constitutional prerogative, (3) had chosen the leader of a minority party to become  Prime Minister rather than the leader of the party which had gained the most votes. This undemocratic  constitutional right of Greek royalty encouraged political leaders to prefer gaining the king’s favor over the wishes of the majority.

In another article, Past and Present, Trikoupis presented a majority rule proposal: that parliament must be led by the leader of the party which gained the most votes. This principle, so logical to us today, was reluctantly accepted by the king and, according to its principle Trikoupis, as head of his newly formed ‘New Party’, became Greece’s prime minister for the first time On April 27, 1875. 

The new system encouraged small parties to band together to achieve the needed majority and, as a result, a two party system developed: Trikoupis’ forward looking New Party versus the Nationalist Party, a group of entrenched Conservatives led first by Alexandros Koumoundouros and later by Theodoros Deligiannis. They represented the ‘old guard’ families of Greece who saw no ‘possible benefit’ in changing the  ‘patron-client’ system in which they had prospered. The last thing they wanted was real reform.

Political power changed hands in a dizzying number of elections during these years: the conservative’s populist choices would attempt to defeat any progressive moves made by Tricoupis during his tenure. Deligiannis would often say, without apparent embarrassment that, as a policy, he was  against “anything that Trikoupis was for”! 

 Trikoupis famed dancing prowess  was certainly tested as he and Deligiannis embraced each other in a drawn out political fandango that could not end well for Greece.

A cartoonist at the time depicting Trikoupis and Deligiannis going at it like school  boys.

Painting by N. Orlov which depicts a sitting of the Parliament in the 1880s. Harilaos Trikoupis is at the rostrum and Theodoros Diligiannis, his arch enemy, is sitting in the benches.  Athens National Historical Museum.

 The Era of Trikoupis

In spite of this, the years between 1882 and 1897 are still called ‘the era of Trikoupis’ because of his effort to modernize and expand the economy, re-organize the civil service, complete important public works projects, and encourage urban development. He believed that only a strong Greece with a growing economy and a reorganized army and navy could succeed and properly represent Greek national interests. Thessaly and the part of Southern Epirus around Arta had became part of an expanded Greek state in 1881, making changes even more necessary and reforms vital. 

Under Trikoupis the Corinth Canal was completed and four new rail lines were created. Consider this: from 1882 until 1890, the road network in Greece went from 1,359 kms to 5,221 kms, and the rail network from 19kms to 1,300 kms! For this last accomplishment, Trikoupis is today known as ‘the father of the railroad’. (4)

However…

The reorganization of the state, the resulting increase in civil servants, the cost of strengthening of the armed forces, and the introduction of huge public works resulted in heavy financial burdens. Loans were made, taxes were increased, and customs duties were raised against imports, especially luxury goods. 

Trikoupis  was asking the Greek people for more sacrifices than their ability or willingness to accept. It wasn’t long before farmers and the poorly paid city dwellers began to see his costly expansion programs as monsters eating their money, money that many would have preferred to be spent on the more immediate improvement of their own lives. The conservative opposition was not slow to fan these flames of malcontent. 

  Biographer Lyndia Tricha writes: It was as if Trikoupis was a pediatrician and the Greek people the baby: every time the country became ill, they called on him to cure them even if the therapy which he offered was painful, but when the problem was momentarily alleviated and the fear was overcome, the ‘child’ would distance himself from the doctor  - and vote against him. (5)

.

Trikoupis’ Athens 

During the Trikoupis years, Athens changed from a village into a city. It now had many impressive and beautiful buildings, most of which were gifts of wealthy Athenian benefactors. Many were created under the watchful eye of the brilliant architect Ernst Ziller. In spite of difficulties, the Trikoupis years  were a period of growth and optimism in Greece. Trikoupis’ own impressive mansion on Academias Street was practically next door to Ernst Ziller’s. The avenues of Athens were then lined with such stately homes.

It was torn down in 1936

Trikoupis lived with his unmarried sister Sophia whom he loved dearly.

http://vivi.pblogs.gr/2014/07/o-papagalos-toy-trikoyph-kai-oi-danteles-twn-mayrokordatwn.html

In spite of her rather austere appearance, informed gossip reports that, as a young woman, Sophia had an affair with none other than her brother’s great rival Theodoros Deligiannis! Athens was a small town back then and strange liasons did occur...

Trikoupis remained a bachelor all of his life although Georgios Souris (Γ. Σουρής), the editor and writer of the satiric magazine Romios targeted him with a totally untranslatable ditty: «επιθυμώ αλήθεια να δω και τον Τρικούπη, που του ΄χει γίνει τώρα ο έρωτας κουνούπι», having him smitten by love’s arrow – a not so subtle reference to Trikoupi’s long affair of the heart (and possibly more) with the Baroness Maria Von Trauttenberg, the wife of the Austrian ambassador to Greece. (6)

The Economic Crisis 

In order to achieve his goals, the Trikoupi’s government had made huge loans in the international money market, loans that caused the Greek debt to spiral upward into the stratosphere.  Trikoupis could not stop the economic death spiral and that led to his famous 1893 admission in parliament: “Unfortunately we are bankrupt”. Greece defaulted on all foreign loans and all non-essential spending was immediately cut. 

In the elections of April 16, 1895, his party suffered a humiliating defeat and he was voted out of parliament by his Missolonghi constituents. 

He left for Europe. His absence from the political scene was soon felt and in absentia his friends put up his name for election in Valtos in Aitoloakarnania where he was elected by a landslide in 1896 but, unknown to them, he was already gravely ill. 

 

His Death

  Trikoupis died on March 30, 1896 in Cannes at the very time the time that the first Olympic Games were being held in Athens. (7)  Apparently both his sister and the baroness were at his side. It is impossible to know the  facts about his relationship with the baroness  because his sister edited his  letters with an eye on ‘propriety’ before allowing them to be published.

His political enemy, Theodoros Deligiannis, refused to release a Navy vessel to bring Trikoupis back home, so his friends covered the cost. First among the donors was wealthy Andreas Syngros. 

The Funeral of Harilaos Trikoupis.

 

At his own request, he was buried without state fanfare and was laid to rest in the  First cemetery of Athens. Each  grave in the enclosure is adorned with a simple wooden cross – quite a contrast to the grand tombs of many other politicians. (8)

 

On national holidays, his grave is festooned with flowers and Greeks flags 

   

Some have called Trikoupis a failure, but most agree that he a visionary who managed to guide the Greek state into the 20^th century. He had even envisioned a bridge spanning the Corinthian Gulf between Rion and Antirion – something the technology of his day could not have accomplished. But when the bridge did become a reality in 2004, it was named in his honour.

The Map

Section 5, Number 896

Footnotes

1.     No Greek politician of that era ever abandoned the ‘Great idea’ of the expansion of Greece until Constantinople, but Trikoupis, unlike his conservative rivals, saw the enhancing and strengthening of the existing state  as his first priority.

2.     Almost all Greek politicians during the nineteenth century and on into the 1900s came from either Phanariot families who had been prominent during the Ottoman era or primates, large landowners  and fighters in the Greek struggle for independence) from the Peloponnese or Mainland Greece.  It was as essential a prerequisite for power as, say, serving in the American military used to be in the U.S.

3.     The Constitution of 1864 had given the king the power to choose the prime minister.

4.     1835 was the first year that a proposal for a rail network was proposed. A rail line between Piraeus and the Thission was first approved when Mavrokordatos was Prime Minister in 1855. 

5.     «Χαρίλαος Τρικούπης - Μια βιογραφική περιήγηση», της Λύντια Τρίχα.

6.     Unfortunately we cannot find a picture of Maria…

7.     Trikoupis had not been in favour of the Olympics for many of the same reasons many did not want them in 2004 – too much money spent during a time of economic difficulty for too little gain. On the other hand, his populist rival Deliyiannis wanted to go full speed ahead  for the “Glory of Greece”.

8.      The   Greek writer Alexandros Papadiamantis  published a moving eulogy in the Acropolis newspaper. See https://www.sansimera.gr/anthology/446.

Sources

http://www.mixanitouxronou.gr/o-politikos-pou-allaxe-tin-ellada-ke-iche-to-paratsoukli-milordos-theorite-o-pateras-tou-eksigchronismou-ke-den-distase-na-ta-vali-me-to-vasilia-ke-na-filakisti-pethane-mono-stis-kannes/

http://www.kathimerini.gr/807580/interactive/epikairothta/hgetes/xarilaos-trikoyphs

http://www.hellenicparliament.gr/UserFiles/f3c70a23-7696-49db-9148-f24dce6a27c8/trikoupis_1.pdf

http://www.nostimonimar.gr/3-istorika-simia-stin-odo-stadiou-pou-kriftikan-me-to-perasma-tou-chronou-apo-ton-kosta-kousarida/

http://www.patris.gr/articles/291290?PHPSESSID=#.WKbHL_I2jcs