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The Post-War Reconstruction of Greece pp 121–147Cite as

Palgrave Macmillan

From Liberalization of Foreign Trade to the Exhaustion of Reserves

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Abstract

Prior to the creation of the Currency Committee (CC) in February 1946, functions related to the exercise of general economic policy were assigned to the Government Economic Council, established in June 1945 at the suggestion of Varvaressos. After February 1946, credit and monetary policy were taken over by the CC.

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Notes

  1. 1.

    Poulopoulos (1958) pp. 42–45.

  2. 2.

    It lasted in effect until 1982, while the veto of the non-Greek members until the early 1960s.

  3. 3.

    1938=100, X. Zolotas Νομισματικό Πρόβλημα και Ελληνική Οικονομία (The Monetary Question and the Greek Economy) Economic Analysis Studies no 3, Papazissis, Athens 1950, p. 41.

  4. 4.

    As far as the statistics of the union of Greek Industrialists allow us to discover. These statistics have been criticized for systematically underestimating the industrial output, in order to get more credit support from the Government, or free raw materials, or to evade taxation.

  5. 5.

    UNRRA IV p. 22.

  6. 6.

    1938=100, Zolotas (1950) p. 40.

  7. 7.

    Bank I, 1941–1946. For instance, self-sufficiency in grain in the 1930s was around 63%. C. Panagos, Εισαγωγικό Εμπόριο και Ανασυγκρότηση (Import trade and reconstruction), Athens 1946, p. 23.

  8. 8.

    Bank II p. 255.

  9. 9.

    This did not concern foreign exchange already possessed but one for which proof could be provided that it was imported and for which no legal obligation existed to be surrendered to the Bank anyway. Bank II p. 256.

  10. 10.

    Delivanis and Cleveland (1949) p. 146.

  11. 11.

    For instance, in the case of the extraordinary contribution, its rate was an increase in February 1946 to 225% of its level upon introduction in August 1945, while the average price increase was 1400%. UNRRA IV p. 11.

  12. 12.

    UNRRA IV p. 11.

  13. 13.

    The total outstanding credit of the Bank of Greece to agriculture and the concentration of agricultural production, mainly through the Agricultural Bank of Greece, was drachma 443 billion on 31 December 1946, against drachma 8 billion on 31 December 1945 (Bank I 1941–1946, pp. 69–70, 99). Credits to industry expanded slower, from drachma 6 billion granted in 1945 to drachma 66 billion outstanding on 31 December 1946 (Bank I 1941–1946, pp. 78–79).

  14. 14.

    Volume of 66,484 tons. See Board of Trade, Greece, A Review of Commercial Conditions, London 1948, p. 30. Exports in 1945 were a mere $0.3 million. (Bank I 1941–1946, table I).

  15. 15.

    Delivanis and Cleveland (1949) p. 162; Bank I 1941–1946, table I.

  16. 16.

    Bank I 1941–1946, p. 88.

  17. 17.

    Bank I 1941–1946, p. 67.

  18. 18.

    Five thousand tons sold for consumption apparently by the British Forces in Germany, a follow-up of Tsaldaris’ visit to London in summer 1946 (Bank I 1941–1946, p. 67).

  19. 19.

    There were no exports to either the Western or Eastern Zones of Germany, though Britain bought $5 million of tobacco, presumably to be consumed in the British zone in Germany; the UK had also agreed to import 40,000 tons of currants during Tsaldaris’ visit in summer 1946, or half the volume of its pre-war imports of currants from Greece.

  20. 20.

    Bank I 1941–1946, p. 90.

  21. 21.

    Board of Trade (1948) p. 31.

  22. 22.

    Board of Trade (1948) p. 31.

  23. 23.

    Delivanis and Cleveland (1949) p. 162.

  24. 24.

    UNRRA I pp. 25, 29.

  25. 25.

    OEEC, Foreign Trade Statistics, Series I, 1928, 1937–1953, Paris 1954, p. 89.

  26. 26.

    Delivanis and Cleveland (1949) p. 154.

  27. 27.

    UNRRA IV p. 30.

  28. 28.

    Delivanis and Cleveland (1949) pp. 154–155.

  29. 29.

    UNRRA I p. 11.

  30. 30.

    Later licenses required approval by the Government Economic Council. Delivanis and Cleveland (1949) p. 136.

  31. 31.

    Delivanis and Cleveland (1949) p. 136.

  32. 32.

    UNRRA I p. 12.

  33. 33.

    The tax ranged from 110% for foodstuffs, books, reviews, and paper to 125% for raw materials and 150% for all other goods. Delivanis and Cleveland (1949) p. 136.

  34. 34.

    Bank II p. 255.

  35. 35.

    Delivanis and Cleveland (1949) p. 137.

  36. 36.

    UNRRA I p. 12; also N.O. A-1/11-1946/33.

  37. 37.

    Board of Trade (1948) p. 28; UNRRA I p. 12.

  38. 38.

    For a total of drachma 1 billion, Delivanis and Cleveland (1949) p. 136.

  39. 39.

    UNRRA I p. 12.

  40. 40.

    Delivanis and Cleveland (1949) p. 137.

  41. 41.

    Delivanis and Cleveland (1949) p. 146.

  42. 42.

    UNRRA I p. 12.

  43. 43.

    Drachma 64 billion out of drachma 190,886 billion. UNRRA IV pp. 6, 11.

  44. 44.

    On the role played by UNRRA commodities and the foreign exchange and gold sales, see Table 6.3 on the drachma note issue in 1946, in appendix, p. 141.

  45. 45.

    UNRRA I p. 35. The first director of the FTA later supported this claim. On 21 August 1948, the departing first FTA Director Dawson made the following statement on the policy followed in 1946: “The policy of unlimited imports adopted by the Government in 1946 drove Greece quickly to disaster. Foreign exchange was being spent very quickly, in many cases on goods which had little to contribute to Greece’s economic situation.” N.O. B-10/Sep-1948/551, 557.

  46. 46.

    UNRRA I p. 35.

  47. 47.

    The decision to sell sterling to the public was not approved until 16 May 1946, though contained in the agreement of 25 January 1946; 9th M.C.C. of 16 May 1946 and 10th M.C.C 30 May 1946.

  48. 48.

    UNRRA I p. 27. Made of $1.8 million and for Θ4.2 million.

  49. 49.

    UNRRA IV p. 32.

  50. 50.

    UNRRA I p. 28. Table 6.2 p. 131.

  51. 51.

    V.A. HABoG_A4S1Y2F15T1 pp. 2–6.

  52. 52.

    N.O. A-9/Jul-1947/472.

  53. 53.

    FRUS;1946/VII/188–189.

  54. 54.

    We have had only limited access to the summary records of the Currency Committee, at the Bank of Greece; full minutes, thought to exist, were not available.

  55. 55.

    Exceptionally, meetings were held two or three times per week.

  56. 56.

    On the lack of cooperation of the Populists with the British, Seferis (1985) pp. 92–93. On the partisan interpretation of the principle of non-intervention in the loaded atmosphere of Athens, ibid. p. 83.

  57. 57.

    Records of the Bank of Greece of 7th–64th meetings of the CC, held between 2 May 1946 and 14 February 1947; Minutes of the CC are held at the Bank of Greece (hereafter referred to as MCC).

  58. 58.

    24th M.C.C., 29 Aug 1946.

  59. 59.

    UNRRA I p. 29.

  60. 60.

    41st M.C.C., 19/Nov/1946.

  61. 61.

    44th M.C.C., 04/Dec/1946.

  62. 62.

    46th M.C.C., 07 December 1946.

  63. 63.

    Thus effectively reducing the program the ministers of Supply and National Economy, Kantzias and Helmis, had submitted in the 44th M.C.C., 4 Dec 1946.

  64. 64.

    49th M.C.C., 14 Dec 1946.

  65. 65.

    51st M.C.C., 21 Dec 1946.

  66. 66.

    Delivanis and Cleveland (1949) pp. 136–137.

  67. 67.

    See for instance the case of the diversion of Bank credits for the collection of tobacco to gold sovereigns, as was discussed during the 8th and 9th M.C.C., 9, 16 May 1946.

  68. 68.

    Minutes of first and third Weekly Conference of Greek Government with the British Economic Mission and UNRRA Greek Mission, held respectively on 14, 20 February 1946, T.A. F. 150. HABoG_A3S1Y2F201T24, HABoG_A3S1Y2F201T14.

  69. 69.

    UNRRA IV pp. 18–19.

  70. 70.

    Varvaressos’ letter to daily Ελευθερία of 06/Jul/1947; N.O. A-9/Sep-1947/493.

  71. 71.

    Namely commercial imports by private importers and imports on the Government’s account.

  72. 72.

    Bank I 1941–1946, p. 81.

  73. 73.

    Bank I 1941–1946, p. 80.

  74. 74.

    N.O. A-2/Dec-1946/54–55.

  75. 75.

    N.O. A-2/Dec-1946/54–55.

  76. 76.

    Board of Trade (1948) p. 28.

  77. 77.

    Letter to newspaper Ελευθερία also published in N.O. A-9/Sep-1947/493. Also, Varvaressos’ reply to Diomidis, published in N.O. A-7/May-1947/358.

  78. 78.

    Zolotas, ΒΗΜΑ 22/Jun/1948.

  79. 79.

    Delivanis and Cleveland (1949) p. 135.

  80. 80.

    UNRRA IV p. 27. For the sale of foreign exchange to have such an effect, the condition is that these are net sales, over the balance of current receipt minus current expenditure; in other words, they amount to a reduction in assets.

  81. 81.

    UNRRA I p. 28.

  82. 82.

    Even as late as October 1946, Tsaldaris would claim before Parliament that the economic policy was successful, see Min.Par. for 1 Oct 1946 pp. 616–617.

  83. 83.

    Delivanis and Cleveland (1949) p. 154.

  84. 84.

    W. H. McNeill The Metamorphosis of Greece since World War II, Blackwell, Oxford 1978, p. 81.

  85. 85.

    N.O. A-2/Dec-1946/64.

Bibliography

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    • Poulopoulos, S., Η Νέα Οικονομική Πολιτική στην Ελλάδα (The New Economic Policy in Greece), Papazissis, Athens 1958.

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    Authors and Affiliations

    1. Athens, Greece

      George Politakis

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    1. George Politakis
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    Appendix

    Appendix

    Table 6.3 The drachma note issue, 1946
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    Fig. 6.5
    figure 5

    Government income and outlay

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    Fig. 6.6
    figure 6

    Evolution of Monetary Indicators

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    Politakis, G. (2018). From Liberalization of Foreign Trade to the Exhaustion of Reserves. In: The Post-War Reconstruction of Greece. Palgrave Studies in Democracy, Innovation, and Entrepreneurship for Growth. Palgrave Macmillan, New York. https://doi.org/10.1057/978-1-137-57734-4_6

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