Since 2010, when Greece signed the painful bailout of a €110 billion loan with the European Commission, the European Central Bank and the International Monetary Fund (IMF) – the so-called troika – and was caught in the crosshairs of mockery by the European media for almost ten years, its relations with many member states of the European family were seriously put to test – particularly its relation with Germany. This mockery reproduced a dire image of the country that was dominant throughout the 19th century, when Greece was becoming a free, modern, and sovereign state. The derision was oftentimes particularly offensive, as it was the case in the cover of FOCUS magazine on 22 February, 2010 (p. 3) or with the reproduced stereotypes of a reckless Greek, partying with the money of the prudent German.1 But why did Greece’s recent financial crisis have such strong negative connotations of its past? In her book, Korinna Schönhärl tries to explain the attitudes of foreign investors who were dominating Europe in the 19th century and wanted to invest in the young Greek state. This attitude was not primarily formed by rational criteria created by strict financial information, but by intellectual inclinations to the country’s history and cultural influences rooted in its ancient past, as the author argues. This is the main analytical line of her research, which is masterly intertwined with approaches of banking and cultural history.

Korinna Schönhärl sets the framework of her narrative by explaining her aims with notions from behavioral finance, cultural history and the degree of their application with the Greek case. She unlocks the behavior of financiers in times of high risk and problematic trust, i.e. in times of crises in Greece, without adopting a monocausal approach. In this framework, a number of questions are being set, the most interesting of which – in the author’s words – are: “What did they (the investors) select as being relevant information and how did they interpret it based on their past experiences and their value systems? Which information did they supplement in order to render their impressions meaningful and to form closed images and visions of the future?” (p. 17)

The book is structured chronologically and covers the so-called long 19th century. The focus is put on two major investment sectors with the best return of the time in question: government bonds and industrial finance. In almost all of the nine case studies, Schönhärl meticulously investigates how elements of Greek antiquity are interweaved with cultural history and Behavior Finance in the process of investment decisions. The first three cases describe the investment on state finance, i.e. the several loans discussed for the future Greek state and the property trade, which heavily depended on personal networks between European and Greek actors but also – unorthodox for today’s criteria – emotions which derived from ancient Greek imagery. The rest of the case studies focuses on mining (Lavrio), infrastructure (railway and the Canal of Korinth), agriculture and trade (Lake Copais, currant trade).

Another noteworthy novelty of the book is that the author does not focus on the Greek viewpoint on the foreign investments, which is usually the case in relevant historiography, but on the investors’ perspective. In her analysis, she employs the tools of Behavior Finance as well as cultural-historical ones, which bring to the fore two critical notions: risk management and trust, both strongly connected to Philhellenism. However, Korinna Schönhärl does not confine her research analysis to this usually idealized particular content of the cultural-historical dimension. It expands to the projection of Greece as the oriental “other”, reproducing colonial perceptions. For instance, the lack of recognition of the Greek government by the bankers during the negotiations for the 1824/5 loan was not only provocative but also reflected their colonial beliefs. In other words: under the guise of acting for the sake of the Greek nation, the bankers rejected its institutional representation and dealt with individuals who acted as brokers between themselves and the Greek government – a strategy that gave them a latitude not only to minimize their risk but also to gain profit. This strategy, which ended in a fiasco and haunted the Greek financial market for over 50 years, is cleverly unfolded by the author (p. 38 ff.).

In chapter three, which completes the loan circle up to the time the new Greek state was established, Schönhärl structures the following interesting but also genius argument: how cultural ideas formed by the philosophical and sociological scholarship of the time, namely by the positivists Auguste Comte and John Stuart Mill up to the set of the progressive ideas of Saint Simon, affected the bankers’ decision to take risks and invest in the new Greek kingdom. More specifically, she argues that cultural views that shaped the profile of prominent international bankers of the time, such as the von Eichtahl family, are proven to be stronger than rational calculations of investment (p. 99). However, it is not clear why the particular investment plan of Gustave d’Eichtahl to establish colonies in Greece was regarded legitimate, profitable or even feasible – which in the end proved to be utopic. The “cultural” factor, which did not seem to work in Eichtahl’s favor, would revive the painful experience of foreign rulers the Greeks had just experienced. Therefore, the perspective of being recolonized by another ruler could only have annulled the cause of their revolution. In other words: despite the fact that the colonization argument is interesting and important, this financial initiative planned by Gustave would need further investigation. It is striking, if not unique in Europe, that it was the link to antiquity rather than Greece’s contemporary image that created the conditions of the investment discussions. There is one extra peculiarity that the author of this book not only illuminates, but also uses as a main analytical category: the civilizing or “ennoblement” of Greece had to be achieved with financial means by the European elite, who wanted to project ancient imaginaries into the new state. Exactly this imagery, according to Korinna Schönhärl, became an important factor of the investment risk. One minor mistake though needs to be corrected, regarding the geography of two places in Attica mentionhed as Gustave’s holiday places in the framework of his plan to convert Greece’s national estates into colonies, namely Livandie and Phtoiotide (Livadia and Phthiotida), which are wrongly placed in Peloponnese (p. 108).

The following chapters of the book deal with investments, which are more familiar to the reader and particularly to the Greek audience: the exploitation of the Lavrion mine (chapter 4), the opening of the Korinth Canal (chapter 6), and the draining of the Lake Copais (chapter 7). These investments along with the currant trade, which is emblematic for Greece’s exports, seem to follow a more rational path in taking financial risks. This time however, as the author argues, the cultural element came to the fore as a defensive reaction against the “oriental” attitude of the Greek government, which was putting legal obstacles to foreign investors a posteriori and ad hoc, due to the nationalistic sentiment of the Greek people. This was made clearer in the Lavrion mine case. Greece’s ancient past was instrumentalized again, though inversely to justify the investors’ cultural discrimination between Orient and Occident, generalizing the “negative experiences by applying them to the entire Greek economic area, which was denounced for its hostility to foreign investment” (p. 177). This à la card treatment of Greece as a potential investing place has survived to some extent until today.

Besides the cultural factor, the political factor determined the interpretation of the decision-making in chapter 5, where the author investigates the 1889 loan Greece took from the banker Gerson von Bleichröder. In this case, despite the high risk factor this investment had, the decision was made in order to keep diplomatic balances according to the Congress of Berlin. Similarly, in chapter 8 she describes the decisive role of the International Financial Commission (IFC) in the development of the Greek market by re-establishing the confidence of the international financial markets in Greece, five years after the country’s bankruptcy in 1893. In other words: investment in Greece was a matter of cultural or even political perception rather than a rational assessment of risk factors based on positivist financial tools.

Korinna Schönhärl’s book, which was translated from her originally German published work in 2017, is a must read book for anyone who is interested in Modern Greek History, Cultural History and Banking and Economic History.2 Unfortunately, the author slips herself into some unnecessary stereotypes and prejudices by considering as assured “a next Greece crisis” or by referring to the unchanged 19th century “tax morale” of the contemporary Greeks when she introduces her work to the readers (preface to English translation p. xi). Nevertheless, I highly recommend it as a brilliant book based on a large number of multi-national state archives and private sources little known until now, which are masterly interpreted and contextualized with a range of theoretical tools from diverse disciplines.

Notes:
1 SPIEGEL cover on 11 July, 2015.
2 Korinna Schönhärl, Finanziers in Sehnsuchtsräumen. Europäische Banken und Griechenland im 19. Jahrhundert, Göttingen 2017.