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A return in the past: Greece forgets its mistakes from two centuries ago

25 March 2010 / 14:03:30  GRReporter
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The loans from foreign countries which are a question of present interest these days have tortured Greece since its creation in 1821. Since the beginning of the revolution in 1821 the need was established of a service to control the finances necessary for the purchase of weapons, military provisions, food and salaries for the army. As it is written in a note of the “Hellenism” Foundation, in the beginning the needs of the revolution were covered locally, however the procedures for the creation of a Central administration for budget governing, accounting etc. were started very quickly. The amounts which were initially collected by “Filiki Eteria” as well as the money from the Filelinian committees and the Greek colonies were substantial, however were not enough to cover the needs for continuing the revolution.

So since 1824 an important development of the events is the taking of two big loans from English creditors. The conditions for their payment were like stealing and parallel to taking the credits, mortgages were risen on the governmental properties – meaning the ottoman properties which passed in the hands of the revolutionists.

According to professor G.V. Dertili in his double volume “History of Greece 1830 – 1920” both loans from 1824 – 1825 were a practical robbery. The government was in debt with 2,8 million pounds out of which it practically received 540 00 pounds. “The government of the revolutionists borrowed a capital of 2 800 000 pounds in order to receive 1 570 000 pounds. Out of this amount, however only 540 00 pounds got to Greece. The difference of 1 032 000 pounds was spent by those who were carrying on the negotiations and most of all by the managers of the loan. The management of the loan was undertaken by Greek delegates from the revolutionary government and British bankers who undertook the approval of the loan as well as British private people a part of who were adventurers presenting themselves as philelins, however also true philelines who were more then optimists” says prof. Dertelis.

A typical case of what the money from the loan were spent on is the fact that lord Kohran who was appointed captain of the Greek marine, took a payment of 57 000 pounds which according to historians was approximately equal to the 50 years of incomes of a bourgeois family.

The loan of 2 800 000 pounds was taken with an annual interest of 5,5%, or in other words 154 000 pounds per year. This means that the Greek government would spend the entire amount of 540 000 pounds it received only to pay the interests for four years.

Actually the interest on the real amount was 10%, which means that the spread (if we can describe using this word the difference between the difference with the normal interest for that age of 4%) reached about 600 units or 6%. The fact that the last money of the loan taken 1824 were paid in 1930 is very indicative for its robbery nature and it is not surprising the fact that the Greek government in 1843 decreased the salaries of the employees in the public sector.

In the period of 1824 – 1825 the country takes two loans. The first is in the amount of 800 000 pounds from Lofnan, however the amount which arrives is only 298 000 pounds. A great responsibility for the bad conditions of the loan have two people who were responsible for the negotiations – Andreas Luriotis and Ioannis Orlandos, who spend great amounts of government money in London as if they were nobles. It has been calculated that in the days of the negotiations they spent over 5 000 pounds.

The second loan was taken by the bank of the Ricardo brothers with a nominal price of 2 million pounds. The net amount was decreased to 816 000 pounds (55% of the nominal value 1 100 000) and 284 000 pounds were stopped to prepay the interests for two years, the commission and other expenses. According to information of the researcher A. Papadimitriou from the loan have been stopped 212 000 pounds to cover the first loan, 77 000 pounds for the purchase of weapons, out of which a very small part reaches Greece, 160 000 pounds for the purchase of two frigates in the shipyard in New York out of which only one reaches Greece and the second is sold in order to finance the building of the first one. At the end of the day in Greece arrives the amount of 232 558 British pounds – an amount lower than the one from the first loan even though the second was contracted for amount twice bigger.

Based on articles of “Elevteros tipos” newspaper 

Tags: HistoryPoliticsLoans
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