3. Wartime and Liberation Economic Policy

Bank II p. 196.

Bank II p. 205.

Bank II p. 197.

Bank II p. 198, footnote 1 and p. 199 and footnote 2.

Bank II pp. 198–199. The Germans officially proclaimed a credit balance of 264,194,981 Reichsmarks (R.M.) in their favor, whereas after Liberation, a Committee of the Greek ministry of Finance estimated the German trade debt as 929,328,391 R.M.

One of the larger relief NGOs, Oxfam, had its roots in the starvation of the Greeks during Occupation. The name “Oxfam” comes from the Oxford Committee for Famine Relief, founded in Britain in 1942. The group campaigned for food supplies to be sent through an allied naval blockade to starving women and children in enemy-occupied Greece during the Second World War.

Prompted by Greek tycoon Spyros Skouras, the president of Greek War Relief (GWR), an American agency for the relief of occupied Greece; author’s interview with K. Papachysanthou, September 1989. For a general reference see Alexandros Kyrou: “The International Response to Famine in Occupied Greece, 1941–1944: The Determinant Rolf of the Greek-American Community,” in Journal of Modern Hellenism #29, 2012–2013, pp. 157–194.

At first the British refused to lift the blockade, Candilis (1968) p. 14.

These reserves had remained mostly intact at this crucial time; later, they were to be spent on gold coins; see pp. 121 ff.

They were not restored for production until 1950–1951, when the Americans piled up strategic materials from Europe during the Korean War.

The policy of hoarding raw materials would also survive after Liberation.

Bank II p. 209. The index of industrial production reached 60% of its 1939 level only in 1946, the second year of Liberation.

In a report dated 01/Feb/1944; Thomadakis in Iatrides (1981) p. 66.

Bank II p. 197.

Bank II p. 199. For different reasons, the Germans tried to arrest the inflation, which was making their rule difficult, which the British needed as a strong means of payment to support the resistance.

(a) Candilis (1968) p. 16; (b) Bank II p. 242; (c) Thomadakis in Iatrides (1984) pp. 117–144.

The forced extraction of output has been estimated at around 20% of GDP, and was supposed to cover both the cost of foreign Occupation and needs of German and Italian industry. It was applied through requisition of a part of output from producers, and through forced circulation of the occupying powers’ currency.

X. Zolotas Η Πολιτική της Τράπεζας Ελλάδος από 19 Οκτωβρίου 1944 έως 8 Ιανουαρίου 1945 (The Policy of the Bank of Greece between 199 October 1944 and 8 January 1945) Papazissis Athens 1945, thereafter Zolotas (1945) p. 23.

For instance the Political Committee for National Liberation (PEEA) had advised the use of grain in transactions, Angelopoulos (1974) p. 36.

Milward (1987) p. 108.

Angelopoulos (1974) vol.1, pp. 26–27.

It lasted effectively until March 1947.

Stephen G. Xydis, Greece and the Great Powers, 1944–1947, Institute for Balkan studies, Thessaloniki 1963, p. 6; and for the full text of the Agreement, see ibid., Appendix I pp. 683–8.

Memorandum of the Greek Government on the Financial Problems of Greece, dated 12 June 1942; Department of State, Foreign Relations of the United States [hereafter referred to as FRUS] 1942/II/798. On the Greek concern over surplus population, see also Chap. 2, p. 20.

Xydis (1963) pp. 14–15, and for the full text of the Agreement, ibid., Appendix III pp. 693–697.

Xydis (1963) p. 14.

Xydis (1963) pp. 12, 14, 26.

MacVeagh (1980) pp. 450–451.

Tsouderos to Varvaressos d.7/6/1943 no 1746 HABoG_A4S1Y1F39T26. Varvaressos to Tsouderos d.10/06/43 HABoG_A4S1Y1F39T27. Agnidis to Varvaressos, no 1679/A/43 d.22/06/43. HABoG_A4S1Y1F39T30.

This should not be confused by the later requested figure of 2,800,000, based on the estimated deterioration of the economic outlook of Greece in 1944/45, out of which 75% or the annual figure of 2,100,00 tons were retained.

The figure supplied by Varvaressos for import requirements of 918,000 tons should be compared with the pre-war figure of 744,000 tons (average for the years 1936–1938). See “Preliminary Report on Food Requirements” in Sbarounis (1951) pp. 257–258. Obviously his estimates were based on the reduction by half in the domestic supply of foods, which necessitated this doubling of pre-war imports.

Varvaressos to Tsouderos no 492 or 1, dated 04/08/1943. V.A. HABoG_A4S1Y3F4T3.

Bank II pp. 173–176 for more details on this matter.

According to Varvaressos, he did not oppose this regulation when it was introduced, preferring to present to the UNRRA subcommittee on supplies, reasons to exempt Greece from it. [Venezis (1955) p. 229.]

Sbarounis (1951) p. 277.

Sbarounis (1951) p. 284.

Varvaressos used a lot of inside information in preparing this report, since Sbarounis, a senior figure of the pre-Occupation Greek administration, had remained in Greece until 1944 and carried on as Director General of the Ministry of Finance. He had been involved in most negotiations with the occupiers, and in particular Germany, and he had kept sending reports to the Government in exile in Cairo. He joined the ranks of the Government in exile in 1944. Varvaressos’ accounts of the wartime Greek economy, as well as the post-liberation studies of the wartime economy by UNRRA, and finally the account of the Occupation economy in the post-liberation Reports of the Bank of Greece, rely (either directly or indirectly) on Sbarounis’ account. Many of those wartime reports of Sbarounis are published in Sbarounis (1951).

K. Varvaressos, Greece’s Capacity to Pay, Report to the first session of the UNRRA Council, Atlantic City 1943, 95p., HABoG_A4S1Y2F4T1V.; Sbarounis (1951) p. 279.

Angelopoulos (1974) vol. 1, pp. 32–33.

FRUS;1944/V/181, 182, 189, 194, 195–196, 198, 201–202.

Angelopoulos (1974) vol. 1, p. 32.

As we will see, even this low figure did not materialize before the eruption of Civil War in Athens, Angelopoulos (1974) vol. 1, p. 33.

This British currency would cover the local expenditure of the British Forces, and would be exchanged with sterling if presented to the Bank of England at the rate of one to one.

Angelopoulos (1974) vol. 1, p. 110.

See later (p. 58) how they used the exchange of BMA pounds to create the public illusion of a sterling gold standard.

MacVeagh (1980) p. 457.

MacVeagh (1980) p. 652.

MacVeagh (1980) p. 573. The USA was associated with the Memorandum of Agreement between the British and the Greek Government of 24 November 1944 only in what concerned relief and reconstruction. M.M. Amen, American Policy in Greece, 1944–1949: Military and Institutional Aspects, Frankfurt am Main, 1978, pp. 30, 37; G. Seferis, Πολιτικό Ημερολόγιο (Political Journal), A. Xydis, editor, volume A, 1935–1944, Ikaros, Athens 1979, p. 203.

Bank II pp. 242–46 and Candilis (1968) pp. 23–30.

Bank II p. 243 and Candilis (1968) p. 23.

Bank II p. 249 and Candilis (1968) p. 24.

Bank II p. 244.

Zolotas (1945) p. 25.

Zolotas (1945) p. 26

Bank II pp. 245–6.

LD 424/1941 had prohibited unauthorized dismissals; Bank II p. 240.

Data are not available for the Liberation period, so we used instead the results of an UNRRA survey of employment in industry in 1945; UNRRA III pp. 14–15, 16–17.

L.D. no 118/1945 allowed for the first time the dismissal of excess employees, and was applied originally only to the Capital. Simultaneously an Unemployment Fund was established, first only for the Athens area and for industrial workers, then expanded to include the rest of the country and every kind of employment, with the exception of farming and shipping. [Bank II p. 240.].

F. Spencer, War and Post–War Greece, An Analysis based on Greek Writings, Washington 1952, p. 88. On the left’s account, see A. Svolos Ιστορία Μιας Προσπάθειας (History of an Endeavor) Athens 1945.

Angelopoulos’ account of the economic policy of the coalition Government does not contradict the version offered by Zolotas; rather, both are written along similar lines and complement each other, see Angelopoulos (1974) and Zolotas (1945).

Salaries were adjusted every five days during the period of the last Quisling Government. Employees were paid according to a basket of foodstuffs. See Delivanis and Cleveland (1949) pp. 93, 109. It seems that the shopkeepers had good contacts with the Ministry of Finance, because every time they were able to increase their prices accurately in anticipation of the pay increase.

In addition, in the Government’s payroll were now included those previously paid by local authorities or public utilities, because they had become bankrupt. So, though the scope of those payments was limited, the amount involved was considerable, compared to the same needs in pre-war Greece, and in any case, revenue was non-existent.

Zolotas (1945) p. 4.

It was estimated by the Red Cross and other agencies at the time of Liberation that while those in receipt of free meals amounted to 260,000, their true number should be closer to 100,000, since those on the public payroll in the capital represented another quarter of a million out of a total population of 1.3 million people [quoted from Zolotas (1945) p. 43].

Zolotas (1945) p. 21.

Zolotas (1945) pp. 29–30.

Zolotas (1945) p. 35.

Bank II p. 246.

Zolotas (1945) pp. 48–67; MacVeagh (1980) p. 646.

Zolotas (1945) p. 37.

Enough to back up 25.8 billion new drachmas at the rate of 600. Pre-war money supply equaled 10 billion drachmas in 1938. Though the rate of exchange to sterling was approximately the same (600 against 550), it should be remembered that the purchasing parity of the pound stood at approximately half the pre-war value. Since the national income was equivalent to half, 10 billion should be enough for transaction, if normal conditions were restored and velocity declined.

Zolotas (1945) p. 56.