3. The First World War: The Neutral Ally

As the US maritime historian Michael Miller has pointed out, the 1914–18 war at sea was not primarily about naval ships fighting for local and global hegemony and control. Rather, “the real sea battle in the First World War pitched German surface raiders, mines, and especially submarines against merchant shipping in an effort to interdict and destroy Allied overseas supply lines.”¹³ This was not soldiers against soldiers on land or marines against marines at sea—this was military might against civilian seafarers.

The outbreak of wars usually leads to an increase in the need for seaborne transport. The belligerents need to move troops and supplies. Moreover, with normal trade relations interrupted, even neutral countries are forced to rely on more distant sources of supply, and often ships have to resort to inconvenient lengthy detours.¹⁴ As a result, the demand for transport capacity increases. Parallel with this, the amount of tonnage available in the open market falls. Ships are requisitioned by the authorities and ship losses increase as a result of enemy action. Bottlenecks, restrictions and time-consuming inspections in ports reduce the efficiency of the available vessels, and material and labour shortages make it difficult to keep up newbuilding activity in the shipyards. Shipping is no different from other markets. Increased demand and reduced supply usually have one immediate effect: higher prices.

Norwegian shipowners had previously benefitted from the freight rate booms associated with conflicts in both near and distant waters. This time, the situation was even more favourable. The strong increase in international trade in the second half of the 19th century—often referred to as the first era of globalization—had already laid the foundation for the growth of the Norwegian merchant marine. However, the expanding trade also implied that Europe had become much more dependent upon foreign supplies to meet everyday needs. When the war broke out, Great Britain imported almost two thirds of the calories that were consumed, as well as much of the raw materials that kept the country’s industry going; cotton, wool, petroleum, various ores and rubber.¹⁵ Shipping was more important than ever.

In the autumn of 1914, the German fleet was the second largest in the world, but British naval superiority rapidly neutralized the majority of the ships as the Allies took control of the sea lanes; “almost overnight, the German merchant flag disappeared from the high seas, not to reappear for more than four years.”¹⁶ Around 14 per cent of the world fleet, the share that the Central Powers held, was forced to remain in domestic and foreign ports. However, the blockade of Germany and Austria-Hungary also led to a decline in international trade, and a corresponding reduction in the demand for shipping.¹⁷

For the UK, superiority at sea was one of their main strengths—their policy had been “rule of thumb”-like: to have a navy that was at least as strong as the next two navies. The naval ships could be supplemented by vessels from the world’s largest merchant marine. Relatively soon after the war had broken out, British merchant ships were put under Government control, and the authorities also introduced official maximum rates and standardized contract terms. By the end of 1915, around 30 per cent of the British fleet had been requisitioned to contribute directly in the war campaign, transporting soldiers and other personnel, weapons and ammunition, provisions, etc.

Suddenly, two of Norway’s most important competitors among the world’s maritime nations were out of the picture. Some optimistic—and opportunistic—voices suggested that Norway had to take advantage of the situation. General Consul Storm, Chairman of Den oversjøiske eksportforening [The Overseas Exports Association] pointed out that Norway had an “opportunity to gain market shares in the world market that we will probably never see again” and should buy as many of the seized German ships as possible.¹⁸

This opportunistic business attitude was echoed in the press, where Norges Handels ogSjøfartstidende, the leading newspaper for merchants and shipowners, presented the dilemma as a choice between the “poverty line” [fattigkasselinje] and the “line of action” [handlingens linje]. The latter alternative “would lead to wealth, just as surely as the former would lead to ruin.” Neutral Norway “should take advantage of the situation […] and increase our exports. Our ships shall continue to sail and earn the high freights that are offered. […] Right now, when the competition is weaker, it is time to assert ourselves, both internally and externally.”¹⁹

The war years did see a spectacular increase in personal wealth in Norway, though the distribution was uneven. Speculators made rapid fortunes, and showed their windfall gains in obscene ways. For the majority of the population, however, the increased cost of living and the difficulties of obtaining crucial provisions were the main preoccupations. From 1914 to 1920, prices multiplied by a factor of three, and rationing and black market premiums aggravated the situation. In other words, Norway managed to follow both the “poverty line” and the “line of action”. A similar balancing act was seen in international politics. Norway stayed neutral throughout the conflict, but was in reality strongly involved, and ultimately played an important role for the outcome of the war.

Cut off from many of their normal sources by the British blockade, the German appetite for food and raw materials increased markedly. Norwegian exports to Germany more than doubled from 1914 to 1915, and in 1916 export revenues amounted to almost 300 million kroner, more than four times as much as in 1913.²⁰ Part of this was a result of increasing prices, but even when we correct for inflation, the Norwegian exports to Germany multiplied by a factor of more than three. Two types of commodities were particularly important during the first years of the war; minerals from Norwegian mines—in particular pyrite, copper ore and iron ore—and fish that could feed a German population on the brink of starvation.²¹

However, in 1916 Norway’s westwards-leaning stance became more pronounced. This was not surprising—the British pressure for support intensified. Norway’s position as a major cross-trader implied that politicians and shipowners had always tried to avoid challenging the UK, who through its navy and its network of bunkering stations was the ultimate maritime power. Britannia really ruled the waves, as guarantor of security, as energy provider and—most important for Norwegian shipowners—as market. The UK was still the centre of world trade, and an important entrepôt. Before the outbreak of the war, the number of Norwegian port calls in the UK was more than four times higher than the corresponding number for Germany.²²

This bias was not only linked to shipping, but more generally to the leading British position in the provision of coal and many other crucial products. As a result, several Norwegian branch organizations entered into agreements to ensure supply. In August 1915, The Association of Cotton Factories [Bomuldsvarefabrikkenes forening], fearing that cotton would be defined as “contraband”, signed an agreement with the British Government.²³ This is one example of how neutral Norway’s allegiance would become more and more determined by the question of supplies; “our foreign policy […] became a petty, mercenary, self-serving policy – a ‘trade policy’ in every aspect, practical and materialistic.”²⁴

A similar situation occurred in connection with fish exports. In 1915, foreign buyers of fish were extremely active in Norway, and it has been suggested that the Germans tried to corner the market.²⁵ The Norwegian fishing industry was in a difficult situation. Although Germany and the Continent were the main targets for their exports, they needed “coal, petroleum, salt, tin, olive oil, hemp and cotton for ships and fishing gear”, and it was estimated that the British had a market share of around 85 per cent in the supply of these goods.²⁶ For Norwegian fishermen, this was the worst catch of them all; Catch 22. They were in danger of losing the German market where they sold their fish, or in danger of losing the British inputs needed to satisfy this market.

An agreement on the sale of fish to Britain signed in the beginning of August 1916 was followed by an agreement on the export of copper ore and pyrite, signed at the end of the month.²⁷ The fish agreement escalated tensions between Norway and Germany, and the latter responded by targeting shipping along the Norwegian coast. In the last week of September, ten Norwegian ships were sunk in the Arctic Ocean, and the ruthless manner in which the Germansubmarines acted created a public outcry.²⁸

With regard to the merchant marine, two considerations had to be taken into account. On the one hand, transporting cargoes for other countries had been its main employment, and was an important source of revenue. On the other hand, the ships played a crucial role in ensuring that Norway had fuel, food and other necessities. The transport to and from Norway thus became particularly important during the war, and the shipowners found that the authorities increasingly restricted their room to manoeuvre.

In December 1915 the government had introduced a provisional decree banning the sale of ships abroad, and this restriction was made into law in July 1916.²⁹ However, the export ban was largely unnecessary. Norwegian shipping investors were in a buying—not in a selling—mood. In both 1915 and 1916 the imports of second-hand tonnage were three times higher than they had been in the years just before the war, and from the autumn of 1915 Norwegian owners “occupied practically all the capacity on shipyards in countries that were still neutral, primarily Norway, Denmark, the Netherlands and the United States.”³⁰ By the end of 1916, Norwegian newbuilding orders at US shipyards amounted to around 90 per cent of the country’s annual production capacity.³¹

The Norwegian fleet reached a peak in August 1916, before the increased German aggression began to fully take its toll. More than 300,000 deadweight tons were lost in the last four months of 1916, compared with around 265,000 deadweight tons in the first two years of the war.³² The combination of a more violent German policy and a strong increase in the submarine fleet—which more than doubled during 1916—can explain the higher losses.

The UK had by far the largest merchant marine at the start of the war, but had similar preoccupations as the Norwegians; at home, people and machines needed foreign inputs to be able to keep going. The authorities introduced a plethora of regulations, including compulsory voyage permissions, maximum freights and requisitioning, but even that was insufficient to cover their transport needs. They consequently cast their eyes on the neutral fleets, and had the means to persuade them: foreign steam shipping depended on British coal. By restricting access to this vital factor of production, British authorities could influence the manner in which the vessels were paid and used. In the first half of 1916 they introduced maximum freights for foreign ships on certain routes, and refused to deliver coal to neutral ships unless they had secured a return cargo that would bring them back to the UK.³³

For a while, the cooperation with the British was organized along the “one in—one out” principle followed by nightclub bouncers on a busy Saturday night. Norwegian vessels that were ready to sail to Scandinavia or The Netherlands with coal cargoes were not allowed to leave until they were replaced by another Norwegian ship.³⁴ These restrictions were relaxed when it turned out that the Norwegians reacted differently to owners from other neutral nations; “the dauntless Norwegians stuck to the dangerous work, but most others dared not risk their ships.”³⁵

A dispute about Norwegian exports of low quality pyrite to Germany led to a cessation of British coal exports to Norway from the end of 1916. However, “it was evident that the dependence of Norway on British coal” and the Norwegian shipowners’ large fleet made them “genuinely anxious to employ their vessels in the service of the Allies,” with whom they were already “on friendly terms.”³⁶ In February 1917, shortly after the Germans introduced unrestricted submarine warfare, the Norwegian authorities accepted the demands, and the British stopped twisting the Norwegian arms.

Around the same time, the British Minister of Blockade, Lord Robert Cecil, approached the Norwegian authorities with the view of purchasing tonnage.³⁷ The basis for the approach was that “Norway had a greater amount of tramp tonnage to place on the freight markets than any other country except Great Britain herself.”³⁸ The German escalation of the naval warfare—with a large number of much more efficient submarines—implied that the Norwegian fleet had become increasingly valuable. This paved the way for the tonnage agreement with the UK, negotiated in the spring and entering into force in the summer of 1917.

The tonnage agreement was a strange beast; it was negotiated by the Norwegian Shipowners’ Association and the British legation in Oslo, but with both countries’ authorities—the British Government and the Norwegian Provianteringsdirektoratet [Ministry of Provisioning]—looming insistently in the background.³⁹ The idea was that “all Norwegian shipping not required for the trade of Norway herself should, so far as possible, be employed in Allied interests, in return for a guarantee of the Norwegian coal supply.”⁴⁰ As a result of this agreement, neutral Norway devoted its most important asset—the merchant marine—clearly to one side in the conflict. By this time, there was no doubt about where Norwegian allegiance lay.

According to the agreement, a substantial share of the Norwegian fleet was time chartered through Furness Withy & Co., as agents for the British authorities. Moreover, in the dangerous North Sea trade, Norwegian ships—which due to neutrality could not be armed—were replaced by British vessels.⁴¹ Consequently, coal to Norway was “carried by armed British ships, among whom losses were likely to be smaller” while “the Norwegian steamers should be available for Allied service elsewhere.”⁴² The red-white-and-blue on the ships’ side, which had previously functioned well when neutrality was an advantage, had to be substituted by war paint and camouflage, because it would otherwise signal to the submarines that the ship was unarmed.⁴³

In late 1917, around 900,000 dead weight tons of Norwegian shipping, in addition to the requisitioned ships, served the Allies on time charters to the Executive, or on a trip-by-trip basis in the coal and ore trades. However, the important thing was not only the number of ships, but also the willingness to engage them in the most dangerous waters. A survey from January 1918 shows that 547,000 gross tons of Norwegian ships were performing Allied service in the war zone, compared with a total of 141,000 tons of Dutch, Swedish and Danish ships. The difference is remarkable: although Norway only owned slightly more than a third of the “neutral” Dutch-Scandinavian fleet, they had almost 80 per cent of the crucial tonnage servicing the war zone.⁴⁴

Norway’s novel definition of neutrality was exemplary from a British point of view: “In striking contrast to the friction which had arisen with so many neutrals, British relations with Norway were on a friendly footing.”⁴⁵ When the United States entered the war in April 1917, the pressure on Norway intensified. The Americans demanded a complete termination of Norwegian exports to Germany, in order to secure food supply to Norway. While the Americans and the Norwegians played diplomatic ping pong, daily life became characterized by rationing, inflation and civil unrest. The famous explorer and scientist Fridtjof Nansen represented Norway in the discussions with the United States.⁴⁶ Initially, he suggested limiting food exports from Norway to Germany to 40,000 tons of fish and fish products, but only when Norway introduced bans and restrictions on the exports of minerals and other military articles to the Central Powers was it possible to conclude a Norwegian-American agreement. The agreement, with severe limits on Norwegian exports to Germany, came into force in May 1918, after nine months of negotiations. Norway had truly become “the neutral ally.”⁴⁷

One of the main reasons for Norway’s westward stance was the deteriorating view of Germany in public opinion, which made it easier for the authorities to align their policies with the Allies. The manner in which submarine warfare destroyed human lives and merchant ships—neutral lives and neutral ships—changed public opinion and inflamed anti-German sentiments. For the majority of Norwegian citizens, Germany and the Central Powers became “the enemy” during the course of the war.

Domestic incidents contributed to the changing attitude. In Bergen, Den store spionsaken [The great espionage affair] caused public outrage in the spring of 1917. Members of a spy ring had sold information about Norwegian ship departures to the Germans, betraying their compatriots.⁴⁸ The court case led to riots and demonstrations outside the courthouse, where the accused were harassed by a large mob.⁴⁹ In Kristiania, in an unprecedented break of diplomatic courtesy, the German diplomat and spy “Baron von Rautenfels”—actually the Finnish-born civil servant Walter Harald von Gerich—was arrested in June 1917. He had more than 200 bombs in his possession, some hidden in trunks that had been sealed by Auswärtiges Amt, Berlin [The Foreign Office, Berlin]. Among the explosives, which totalled almost a ton, were nine bombs concealed as lumps of coal, to be hidden in the bunkers depots of ships. Norwegian newspapers linked the case to previous “suspicious accidents at sea.”⁵⁰

The accomplices of “the bomber baron” were given relatively long jail sentences in Norway. “Baron von Rautenfels” himself was expelled from the country, but was given an amnesty in Germany and escaped prosecution.⁵¹ This is characteristic of the international political situation during the war: the Norwegians pretended that they were neutral, and the Germans pretended that they respected the neutrality.⁵² During the First World War, political, economic, strategic and military considerations overlapped and clashed, creating uncertainty and complexity for individuals and for businesses.

Wars greatly increase the risk associated with shipping, and risk is sometimes difficult to deal with from a commercial perspective. Some weeks after the start of the war, Norwegian shipping companies, in cooperation with the government, established a compulsory and mutual warinsurance arrangement.⁵³ This was an important step—crippling insurance premiums and lack of access to warinsurance immobilized the fleet. Norwegian ships were already in or on their way to the lay-up buoys. Insurance premiums of 25–30 per cent of the value of the vessel had been quoted for some voyages across the North Sea, and the reduced shipping activity threatened both Norwegian imports of necessities and the freight revenues that financed them.⁵⁴

In the UK, Denmark and Sweden the authorities had established insurance arrangements, but the value of the Norwegian merchant marine, relatively to the size of the public coffers, made such a solution difficult in Norway. Moreover, it was claimed that “Norwegian shipowners were known for chartering their ships on risky voyages, almost like a predilection, if the profits encouraged it”—not a strategy that will convince insurers.⁵⁵ Regardless of whether or not this claim was correct, if this was the general opinion, it would negatively affect shipowners’ ability to obtain affordable insurance terms.

A committee was established on 11 August 1914, headed by Joh. Ludwig Mowinckel, Bergen shipowner and President of the Odelsting, one of the Parliamentary chambers. The committee worked rapidly, and the day after it had been appointed suggested the establishment of a compulsory and mutual insurance arrangement, where the authorities granted a temporary guarantee. Consequently, the costs of every individual loss would be shared by everyone. This solution was supported by both the politicians, who wanted to limit their own risk, and the shipowners, who wanted to limit the authorities’ influence.

The increasing insurance costs were warranted. Neutral Norway suffered heavily during the First World War. More than 2100 seafarers lost their lives. Almost 950 ships, with a tonnage of more than 1.3 million gross register tons (grt)—corresponding to around half the 1914 fleet—were lost.⁵⁶ Given that they were sailing for a neutral nation, the Norwegian ships were unable to retaliate when they were attacked.

Figure 3.1 shows the official Norwegian loss figures during the war. With the introduction of unrestricted submarine warfare in February 1917, and subsequently with the US entry into the war, developments changed dramatically. The new German policy—targeting all ships around the British Isles, outside France and Italy and in the Eastern Mediterranean—implied that the target became the ships, not their cargoes. The introduction of convoys in the North Atlantic in the spring of 1917 managed to drastically reduce the losses in that region, and the decline was strengthened by the deployment of Norwegian ships to less-dangerous waters after the tonnage agreement.

The acceleration of the German war at sea is evident from the statistics—as is the efficiency of the convoys at the later stages of the war. Regardless of the high losses, “posts at ships that were sailing in the danger zone were always in high demand,” according to the economist Wilhelm Keilhau. With a lack of reality orientation that can often be found behind a large oak desk, he claimed that “For many [seamen] the spirit of adventure must have played an important role.”⁵⁷

The loss of a ship was not necessarily bad for the company’s business. In the summer of 1917 it was claimed that a share in DS AS Vestlandet, the company that owned the recently torpedoed Nydal, was “a good paper,” partly as a result of the income associated with the sinking.⁵⁸ The ship’s insurance had amounted to more than NOK2.1 million, and the company had a book profit of NOK1.4 million as a result of the insurance payout after the Germans had sunk the ship.⁵⁹ While such profits were subject to income tax and war gains tax in the first years of the war, from July 1917 insuranceprofits became tax exempt if they were reinvested in new shipping capacity.

For the seafarers on board the ships, the case was of course different. They received a hazard bonus as a result of the war, and half a month’s extra pay if the ship was captured or sunk by the Germans.⁶⁰ This sounds ruthless, but was in fact not too bad: Danish and British seafarers actually had their wages stopped from the moment the ship was sunk. There was also compensation for personal belongings, and here we see the class system at play: captains were given 1000 kroner, mates were given 600 kroner and compensation for the rest of the crew was 400 kroner to cover clothes and other personal items that were lost.⁶¹

While the seafarers were counting their blessings, speculators were counting their money. The war led to an enormous increase in freight rates, and in revenues. In 1916, gross freight earnings—what foreigners paid for Norwegian transport services—were more than four times higher than they had been five years earlier, even when we take inflation into account. This massive inflow of money fostered optimism—shipowners reinvested their earnings, and shipping investments became attractive even to those outside the sector.

The war led to an enormous “investment” activity, where some shipping company shares doubled in value, then doubled again, and where the volume of transactions bordered on the ludicrous. High risk led to high potential profits: “Yesterday I bought a Tønsberg-boat at eleven in the morning for three and a half million, and sold it again at one o’clock for four,” boasts one of the shipowners in Nordahl Grieg’s classic play Vår ære og vår makt.⁶² The freight rate boom led to “an almost insatiable appetite for shipping shares and ship parts.”⁶³

Still, economic success was primarily a question of good or fortunate timing. “The shipowners that had bought ships in the first half of 1914 […] were winners in life’s peculiar lottery” and for the first years of the war values increased steadily.⁶⁴ During 1915 the price of a relatively large ship multiplied by a factor of five, and the second-hand price exceeded the newbuilding price for a similar vessel by 80 per cent due to its prompt availability.⁶⁵ The price of the shares of shipping companies that owned such tonnage naturally soared.

From the end of 1914 to the peak in 1918 the value of shipping shares multiplied by a factor of almost six. Because freight rates showed particularly pronounced boom movements, shipping shares became the favoured speculative object among those looking for a quick boost of their personal wealth. There was a real economic fundament for the boom in the beginning; the high freight rates led to record profits—even after the increases in coal prices, wages and insurance costs were taken into account. However, as the war progressed, the development acquired all the properties of a “bubble.” Investors ventured their money based on the expectation of continuing share price increases, rather than on the basis of future revenues.

The important factor was not the company’s revenue stream, but the ability to sell the shares at a higher price at a later stage. The aim was to find an even greater fool in a game of musical chairs. Norway “had never seen a gold fever like that, and probably not a similarly vulgar and provocative exhibition of money.”⁶⁶ Figure 3.2 illustrates how the shipping industry, more than other sectors, was affected by the boom and bust during the war.⁶⁷

From a societal point of view, the development was unfortunate. The war, inflation and rationing accentuated the difference between the haves and the have-nots. Shipping investors undoubtedly belonged to the first group. In 1917 inequality in Norway was at its highest point in modern history.⁶⁸ Quite a lot of people became wealthy from speculation, but most major maritime cities typically had one or two entrepreneurs that stood out. This development was most pronounced in Kristiania and Bergen, where we find the most liquid stock exchanges.

In 1915 the shipbroker Christoffer Hannevig jr. in Kristiania invited investors to buy four old sailing ships that would be fitted with engines, and promised that one voyage would give a return of “more than 50 per cent of the purchase price.”⁶⁹ At this point Hannevig was an outsider—and even frowned upon by established shipowners—but he still became the archetypal example of the new-found wealth during this early yuppie period.⁷⁰ By 1917 his fortune was allegedly NOK150 million—around NOK5 billion in today’s money: “Every child in Norway knows Hannevig. He has already become a mythical character, a Norwegian version of King Midas or brewer Jacobsen, a young Alladin or a new, shining Askeladd. Even before he started to splash millions about, it was established that he was the incarnation of the wonderful fairy-tale called Norwegian shipping during the World War.”⁷¹

Hannevig owned shipyards in the United States and a bank with offices in Old Broad Street in London, in New York and in Aasgaardstrand—a Norwegian village of around 300 souls: “incredible fortunes have been made in a couple of years; shipowners have had to establish their own banks in order to accommodate the money.”⁷² In 1921 Hannevig, who by then was in his late thirties, and several of his companies went bankrupt. He subsequently spent a lot of energy on litigation against the US authorities, claiming compensation for yards that had been confiscated when the United States entered the war. The First World War’s Norwegian King Midas died broke in New York in 1950.⁷³

Tryggve Sagen, one of Hannevig’s partners, is another rags-to-riches−to-rags story in Kristiania, while in Bergen the boom was associated with Erik Grant Lea.⁷⁴ He was a serial entrepreneur, who was also the victim of comparisons with King Midas and Aladdin.⁷⁵ Like many “jobbers,” Lea had managed to get a large share of outside capital in his companies; in the first one he owned only 16 of the 750 shares.⁷⁶ This made him vulnerable for shareholder revolts, and in 1917 six of his companies were taken over by another “typical speculative partnership”—a dog-eat-dog world. The new managers were Bjørnstad and Brækhus, who also took over DS AS Vestlandet, to benefit from the insurance payout after Nydal had been torpedoed.⁷⁷ In the period 1917–1920 Bjørnstad and Brækhus “raided” 15 different companies to gain control of valuable tonnage.

Ships and ship shares changed hands at high frequency—and usually at higher and higher prices. Before the war there had been eight stockbrokers in Kristiania—during the war the number grew to several hundred, and informal transactions took place in restaurants and cafes. The boom and bust in the equity market cast long shadows. Several decades after the war, the image of the stock exchange was negative to many people, linked with speculation, unrestrained risk-taking, uninhibited spending and a gambling mentality that was alien to Norwegian values. Moreover, shipping was seen as the archetypal gambling activity; “old, peaceful Kristiania [had] succumbed to a deluge of papers, of shares, of warrants and of contract notes.”⁷⁸

The speculative fever was fuelled by an abundance of money so large that even crooks from abroad were attracted to it. The Australian Mister Angus, who promoted the idea of a self-stopping locomotive, left the country after having deprived investors of their funds. “There were invitations to subscribe [to new shares] that even the most ignorant must have understood were meaningless.”⁷⁹ In the absence of good investment objects, the wealthy—and in particular the newly wealthy—chose risky investments and conspicuous consumption.

The abundance of money among the successful speculators was partly channelled into new investments, fanning the flames of the boom. Still, there were also funds for other purposes. The phenomenal profits were channelled into luxurious houses, expensive food and wine, horses and yachts. Enormous houses of exquisite materials were built, and the newspapers carried a large amount of advertisements for castles in Sweden and estates in Denmark. Christoffer Hannevig bought a 154-foot-long racing sailboat that had previously belonged to Count Gustav Krupp, but had been taken as prize of war in Germany in 1914. Sailboats were status symbols, and one investor owned a 12-metre, a 10-metre and an 8-metre, in addition to a large motorboat and an inland estate equipped with telephones made of silver.⁸⁰

Another favoured investment object was fine art. For investors like Hannevig and Lea, the boom and the wealth were temporary. However, for Norway, the abundance of funds had long-term cultural effects.⁸¹ In 1917 large sums were donated to establish a trustee association for the Norwegian National Gallery. Tryggve Sagen, who was among the founders, had the previous year donated 60,000 kroner to the gallery earmarked for the purchase of foreign art—50 per cent more than the gallery’s annual budget and almost four times as much as the gallery’s public funding for art purchases. Works of art by famous and soon-to-be-famous artists were bought inexpensively on the Continent, helped by a strong Norwegian krone and the desperate circumstances in war-torn Europe; “the international art market had a broken back, and a group of trustees in Kristiania had a honeypot bursting with money.”⁸²

Fine art was hardly a concern for the population in general. For most Norwegians, the abundance of money was seen mainly in rising prices, and their bitter experience was that wages did not keep up. In 1916 and 1917 demonstrations and strikes were frequent in Kristiania and the other major cities. “Sailors are drowning, people are starving, capital is reaping the benefits,” was the disillusioned message on a poster in a rally against the high cost of living.

As a result of the increasing inequality, social tensions grew—particularly in the cities and other places with manufacturing industry, where food was bought, rather than grown. Ordinary workers—and even more so the unemployed—struggled with rationing and the rapid increase in the cost of living. The lavishness and luxury that characterized the lifestyle of the most successful speculators were provocative. The result was a feeling of contempt and a growing class consciousness—syndicalists, communists and anarchists gained support. The revolution in Russia had created hope. Norwegian politics became polarized and was permanently changed.

The authorities increased their influence on the Norwegian economy during the war. Rationing and maximum prices became the order of the day. Monopolies were established and public expenses increased rapidly. The tax burden increased. Johan Schreiner, who has written the most extensive work on Norwegian shipping during the war, emphasizes that “the relationship to the authorities was radically changed [as] the traditional freedom of action was drastically restrained by commands from domestic and foreign branches of government. […] A similar transformation occurred in the relationship between shipping company and seafarers.”⁸³

The Norwegian authorities and shipowners managed the difficult balancing act that the First World War represented relatively well. At the same time, it is evident that in public opinion, shipowners lost some of their sheen—they were now more closely associated with speculators than with society builders. There were still shipowners who played an important political role—Joh. Ludwig Mowinckel, for instance, would go on to become Prime Minister on three occasions in the interwar period. However, the boom had been particularly pronounced in shipping, and although fly-by-night “newcomers”—who saw casino-like opportunities in shipping—had been responsible for the worst excesses, many long-term, responsible shipowners were also tainted in the public’s perception.

The 1920s would bring economic challenges as well. In the words of one shipowner, “The transition from the golden boom years was difficult, prices fell vertically, and many of those who at the beginning of 1920 were millionaires – at least on paper and according to tax reports and share values – were suddenly stony broke. Every day new bankruptcies and new misery, frauds and hair-raising stupidity were revealed.”⁸⁴

When peace returned in November 1918, many things had changed, both in Norway and at the international stage. As shipowners prepared for the post-war boom, the “first era of globalization” was still an ideal. Unfortunately, the 1920s and the 1930s never lived up to the expectations.