UNIVERSITY OF THESSALY
2nd International Conference on Economic and Social History
"Markets" and Politics
Private interests and public authority (18th-20th centuries)
Volos, 10-12 February 2012
|
 |
|
 |
|
 |
|
 |
|
 |
|
Abstracts
- Stratos Dordanas Krupp vs. Ehrhardt: competition between German entrepreneurial groups for the Greek armaments programmes before the Balkan Wars
Intense competition among the major companies of the Great Powers to win orders in the armaments programmes of the newly formed Balkan states was a phenomenon that was neither uncommon nor infrequent in the first decades of the 20th century. In the fierce battle over foreign economic interests, it could in fact be said that the commission agents, either through diplomatic manoeuvring and/or backdoor lobbying, fully exploited the divergent objectives to attain the greatest benefits for private economy. This, obviously could be achieved through their securing highly advantageous agreements for their companies. The Balkans was considered an especially dynamic market largely on account of the various unresolved national tensions and the many outstanding, unsettled territorial disputes.
In the period leading up to the Balkan Wars (1912-1913), the clash of business interests was further intensified as rival companies contended to secure contracts for the sale of military equipment to interested countries. Besides the active German-Krupp and French-Schneider-Greuzot “front”, there was also another between the two German ammunition and armaments manufacturing giants, Krupp and Ehrhardt. Thus, the military conflict in the Balkans was set against a backdrop of these two other “wars” of a different nature. The first was transnational, between Germany and France competing for the dominance of Europe in both a physical and moral sense, while the other was an inter-German entrepreneurial war, comprising all the classic conditions of an outright civil war.
On 17 July 1909, the German ambassador to Greece, Freiherr von Wangenheim, on a visit to the Greek Prime Minister, George Theotokis, was astonished to be told “not with some irony about the practices adopted by Krupp and Ehrhardt in the war between the two”. Apparently, every time the former made an offer to the Greek government, the latter immediately submitted a counter-offer. In his capacity as Minister for War, Theotokis clearly stated that no decision would be made until he was assured that in his hands he held both companies’ final offers.
To the German ambassador it was blatantly apparent that this business war was detrimental to the competitiveness and reputability of the German armaments industry as a whole. Finding itself in this predicament, the Imperial German Embassy had no intention of exercising the least bit of influence on the Greek government, in order for Germany to win the arms and ammunitions contracts, not even parts of these orders. These developments were jeopardasing the German bargaining position as the Chargé d’affaires of the rival countries were free to present their states’ interest in a more favourable light through the usual formal and informal channels. Even though Theotokis had been informed that the German embassy would take a neutral stance in the “battle” between Essen and Düsseldorf, Krupp and Ehrhardt, the ambassador not only expressed his bitterness about the conflict itself, but also about the “unfair practices” employed by the Athens representative of the latter.
The conflict reached a peak when Ehrhardt’s representative in Greece attempted to gain the lead over Krupp by submitting an unforeseen offer. Without there having been any previous actions, he approached the Greek government offering to construct a weapons factory which would in due time pass into the control of the Greek state. The only stipulation was that the Greek government signed annual contracts for the order of a large quantity of ammunition with the factory. Although the proposal was undoubtedly favourable to Greek interests, it was not at all so for Germany.
The operation of an ammunitions plant in Greece was certain to end orders from abroad. This eventuality would by extension provoke the loss of jobs within Germany, which were secured through the Krupp Company’s excellent international trade policy. In contrast, the profits that Ehrhart expected to generate could only be considered as transient, since after having exported the machinery to the Greek plant, only supplies of raw material would be required.
However, it was by no means self-evident that the Greek government considered the operation of an ammunitions factory in a positive light. As the German embassy was in a position to know, this offer was not approved of by the Ministry for the Armed Forces, and in effect, many arguments had to be marshalled against it being rejected outright. The most basic of this was that orders were dependant on economic factors, which would no longer be valid since Greece would be obligated by the contract to place orders for a particular amount of ammunition every year.
What in essence was at risk at that time, was the overall furtherance of the German trade and economic interests in Greece. And although both these companies strengthened the German presence in the Balkans through their successful contracting deals, Berlin could and would not support one at the expense of the other as German foreign policy did not tolerate such action. Within this context, in order to ensure it was rejected, it became imperative to undermine Ehrhardt’s proposal by not giving it the least bit of support when being forwarded to the Greek government. In the hypothetical scenario, where Krupp proposed to build a shipyard in Greece for small escorting destroyers, the same stance would have to be maintained because yet another German company, Vulkan was successfully operating in that field. Not only had Vulkan built torpedo bombers for Greece in the past but it was at that time contesting new contracts.
In the end, although the metal products company of Düsseldorf was hindered in constructing an ammunitions factory in Greece, this merely meant that it had lost a battle not the war in the defense industry. The case being that since orders from the army and navy were not only going to continue to be received but would in fact increase, this was most promising for the profits as well as the market share of the arms industry as a whole. On the whole, competition between the foreign companies (even between companies from the same country) not only for the Greek orders but also those of the other Balkan nations, was definitely stiff. However, the primary goal of the commission agents was to achieve the (specific) economic and (wider) national interests of their respective companies and then, to a much lesser extent, meet the needs of the purchasers.
Nevertheless, it was not solely the financial factor that influenced the Greek orientation on the supply of military hardware. Who the nation would purchase weaponry from posed a strong political message to the Great Power alliances of the era. France and Germany were not simply the major suppliers for the Greek armed forces, more importantly they were the two leading Great Powers of the rival alliances of Europe. Although the line of each was to strengthen their own economic advantage by weakening their foreign opponents, under no circumstances would the political leadership tolerate the business interests of their respective companies getting in the way of national concerns and causing internal conflicts.
It was in the aftermath of the Balkan wars that this position was most clearly depicted on the European scene. Up until then, the individual Balkan states had organised, armed and fought one another primarily with German and French arms and ammunition. Their triumphs and defeats on the battlefields, however, were not solely due to the performance of the war products they had been sold but were mainly the outcome of the deep moral commitment to and unswerving faith in the justness of their struggle to liberate their unredeemed brothers in the still subjugated Ottoman territories.
