The Greek state and the international financial community, 1922-1932 : demystifying the 'foreign factor'
In the decade between the Asia Minor debacle of 1922 and the foreign loan default of 1932, the Greek State formed tight links with the international capital market. This thesis examines the foreign loans raised. It investigates: the negotiations involved; the institutional framework through which these loans were provided; how they were used; and how they enhanced foreign tutelage over Greece. Book I explores the loans issued under the auspices of the Legue of Nations. It analyses how the League tackled the Refugee problem and uncovers how the stabilization plan was devised. It demonstrates the manner in which the League, the Bank of England and the British Treasury co-operated as regards Greece; and how these institutions withheld foreign finance (e.g. via embargoes) to force Greece to attain political stability and curb military expenditure. Book I also focuses on the divergent economic philosophy of the Greek authorities vis-a-vis the League and the Bank of England. Moreover, it brings to the surface the underlying antagonism between the International Financial Commission and the League of Nations. In addition, the parameters, other than the world economic crisis, that contributed to the demise of free convertibility in Greece are delineated. Finally, the stabilization experiment of the twenties is placed in a comparative perspective. Book II discusses foreign capital inflow outside 'formal' international control. This category of loans financed the development of infrastructure by foreign firms through 'agency' contracts. The terms and how the projects were carried out is investigated. The momentum attained in public works prior to stabilization and why it was not maintained during the gold exchange standard system is delineated. The growing dependence of the State on Hambros and the intimate relationship this merchant bank enjoyed with Greece's supervisors and the National Bank of Greece is brought into relief. Finally, an important issue analysed throughout the thesis is the internal weakness of the Greek state.