The post-war reconstruction of the Greek shipping industry had one thing in common with efforts to transit from sail to steam some 70 years earlier. It had to start all over again, from scratch.
With the exception of a few shipowners, who had accumulated substantial capital in US dollars by operating vessels under the Panamanian flag during the War, most Greek owners were at a disadvantage. The insurance compensation for ships lost during the War was still tied up by British banks. On the other hand, operating expenses of Greek-flag ships had skyrocketed due to high crew wages. It is worth noting that in 1939, total monthly wages for the crew of a British-flag ship, excluding its master, were 195 pounds sterling, compared to only 153 of a Greek-flag vessel. In 1944, shortly before the end of the War, the cost of the British-flag ship was 1,519 US dollars, whereas for a Greek ship the sum had climbed up to 2,270 US dollars!
Furthermore, the attitude of the Greek government in Cairo towards the only industry that had contributed financially to the war effort during that time of great distress was tough. Despite the fact that the government was meeting most of its expenses while acting from abroad, thanks to surplus funds from the operation of the Greek merchant fleet as per the Anglo-Hellenic Agreement, there were efforts to extract additional capital from the shipping industry. Even before the end of the War, the government took shipowner Andreas Vergottis to the British courts, in order to prevent him from collecting the insurance compensation for the loss of one of his steamships. The obvious aim of Finance Minister at the time, Kyriakos Varvaressos, was to set a precedent, enabling the Greek government to become the post-war financial administrator of all insurance compensation for the loss of Greek steamers. The trial took place in August 1943 in London, where the judges felt that the initiative of the Finance Minister was similar to that of the confiscation of private capital and therefore unacceptable by British law.
This negative attitude towards the shipping industry continued after the War. In September 1945, a law was established in order to withhold 30% of any insurance compensation paid for the loss of steamships. However, there was a provision that all above sums would be returned to any owner who would replace lost tonnage with acquisition of ships up to 20 years of age, within seven years.
Shipowners, however, were not prepared to invest in an industry no longer competitive, burdened with special taxes imposed on imaginary profits. On the other hand, Greece was at the time going through a devastating civil war. This adverse environment, along with the need to secure capital from international sources, gave no alternative to most shipowners and their families but to migrate abroad.
Their destinations were the important shipping centres of the time, London and New York, where several Greek owners had settled from the beginning of the War, working collectively as the New York Union of Greek Shipowners, headed by Manolis Kulukundis. Consequently, the reconstruction of the fleet started with foreign-flag ships, but with impressive results. Within a short time, the Greeks had placed under their management a considerable number of ships under various flags, including those of the United Kingdom, Canada and the USA. The latter gave the prospect for the revival of the Greek registry through the possibility of an en bloc sale of war-built Liberty-type cargo vessels.
The birth of these legendary ships goes back to 1941. At this time, continuous torpedoing of the Allied fleet, since the beginning of the War, as well as the growing need to supply the United Kingdom with necessary products, brought up the issue of seeking solutions for the rapid replacement of lost tonnage. British shipyards were not able to cover these needs and also were in daily danger of being attacked by the German air force.
With this in mind, the Allies implemented a long-term plan in 1941 to have a large number of ships built in the USA and to a lesser extent, Canada. Within four years, over 5,000 vessels of various types were built. Their role in the war effort was instrumental and determined its successful outcome to a great extent.
Of all these vessels built in the USA, 2,700 belonged to a cargo type vessel of around 10,000 tons deadweight that became known as Liberty. Fifteen of these ships were placed under Greek management straight from their building berths. Fourteen survived the War and along with another 84 similar ships, they were to comprise at the end of 1946 the largest mass acquisition by Greek shipowners.
The sale of a large number of American war-built ships to foreigners had already been decided before the end of the War. An article in a US magazine in September 1944 referred to the possibility of selling ships to the Greeks, who had suffered great losses, under a specific plan. The plan included long-term financing at low interest rates and was later adopted by the US government in order to assist several shipping nations to reconstruct their fleets. Apart from Greece, Liberty ships were sold to the UK, France and even Italy, which was on the enemy side during the War.
When the plans to sell some 700 Liberty ships to foreign interests were announced, Greek shipowners based in New York acted without losing time. By 1946, close to 50 ships were sold to Greeks, who had available cash in US dollars. Other shipowners, however, whose funds were tied up in British banks, had to enter a list of candidates for the mass acquisition of 100 ships of the same type. However, this required the guarantee of the Greek government. The guarantee did not, in essence, reflect the concern of the Americans for the repayment of loans, many of which were paid back before their due dates anyway. The US government was mostly interested in being able to requisition the ships in case another war broke out, avoiding another costly process of building new ships. Under an agreement guaranteed by the Greek government, the Americans would be free to regain control of the ships.
As the United States was the only country which had a large number of merchant ships for sale in post-war years, Greek shipowners in New York had no alternative but to ask the Greek government headed by Constantine Tsaldaris to guarantee their loans. Fully supported by the government’s vice president Sofoklis Venizelos and the Minister of Merchant Marine Nicolaos Avraam, the acquisition of the 100 legendary ships, which marked the post-war reconstruction of the Greek registry, was successfully accomplished, with the last ships being delivered in April 1947.
However, those 100 Liberty ships did not bring any significant earnings to their owners through their operation. The running costs of Greek-flag vessels were, as previously mentioned, very high due to increased crew salaries and heavy taxation. There was no room for real profits compared to ships under foreign flags, which the Greeks continued to acquire and manage from offices abroad, without any kind of assistance from the Greek government.
Around 4,000 Greek seafarers found employment on these vessels and were not forced to emigrate as many Greeks during that difficult time. This proved instrumental in keeping active a large part of the seafaring family, whose overall performance in following decades enhanced the development of Greek shipping. Many seafarers, who sailed on these vessels, evolved, not only into important shipping executives, but also into distinguished shipowners enjoying international fame.
Along with the acquisition of the Liberty ships, the entrepreneurial initiatives of Greeks in major shipping centres, especially in New York, continued to impress. Greek shipowners, timely anticipating the rapid evolution of oil as the major source of energy and after securing loans from US banks and insurance institutions, began to invest in the construction of tankers in US shipyards, despite their high cost of building. Within a decade, Greeks had built over 50 large tankers in US shipyards, a significant contribution to the US economy. This also facilitated the continuous functioning of US shipyards until the time they were almost totally committed to the building of warships during the Cold War.
The shipbuilding activity of Greek owners expanded soon into UK shipyards and contributed to the establishment of a new registry, that of Liberia, which played an important role in the evolution of the post-war international shipping industry and, consequently, the global economy. The new registry’s operation started in 1949 with a newly built tanker owned by Stavros Niarchos, whereas the addition of another 579 Greek-owned newbuildings, registered during the course of the next two decades, decisively enhanced its status among the world’s most qualitative and respected registries.
Meanwhile, the Greek registry showed no signs of recovery. The catastrophic civil war was still plaguing the country and even worse, had started affecting the relations among crew members on board Greek vessels.
Nevertheless, Greek owners did not give up efforts aiming at strengthening the national registry through the addition of existing tonnage from a fleet of some 450 Greek-owned vessels under foreign flags, acquired since the end of the War. On 7 August 1948 the speaker of the Parliament, Ioannis Theotokis, set up a committee with the participation of members from various political parties to find solutions to ageing issues concerning the industry. However, as many times in the past, this committee failed in bringing in results. Shipping was still being targeted by the state, while the adoption of policies aiming at extracting additional funds from shipping activity continued at the same pace. The government acted quickly even when a joint decision by the Ministries of Finance and Merchant Marine imposing a flat tax on all vessels -based on the assumption that they all made equal profits- was cancelled by the State Council. It demanded that owners pay a contribution totaling 15 billion drachmas, which went on record as “levy by the wealthy”. At the same time, recession within the industry led many Greek vessels to lay-up, forcing at the same time thousands of Greek seafarers into unemployment. In March 1950, in a short but harsh statement, the Union of Greek Shipowners announced its dissolution.
Fortunately, a reasonable solution was found at the last moment. In April 1950 a new government under Nicolaos Plastiras was sworn in. Following successive meetings between Sofoklis Venizelos, the Minister of Merchant Marine Stavros Costopoulos and shipowners’ representatives, especially Stavros Livanos, an agreement addressing most critical issues was reached.
The improvement within the local scene was followed by a serious event affecting international shipping. The Korean War, which broke out in August 1950, resulted in a booming market, encouraging the Greeks to invest once again in acquisitions of vessels placed under foreign flags. These favourable business developments ultimately contributed to the restoration of order on board Greek vessels. Following negotiations, held for the first time after many years, a new collective agreement was drawn up between shipowners and seafarers on March 3, 1951.
The Korean War resulted in great opportunities in world shipping business. Greek owners succeeded in taking full advantage of the situation, and despite the fact that by 1952 the freight market was showing signs of depression, they rushed to place newbuilding orders, investing the majority of profits realised during the course of the aforementioned war.
Among the countries to receive Greek orders was Japan, a country struggling to achieve economic growth after the devastation experienced during the War, especially in Hiroshima and Nagasaki. In February 1952, the Japanese handed over to Greek owners two newly-built tankers. Since then, the Greeks have built more than 1,600 ships in the Land of the Rising Sun. This equals to one vessel built on average every two weeks over 60 years!
By late 1952, the Greek-owned merchant fleet had surpassed in quality and size the Greek-flag fleet that was decimated during WWII.
Source: Greek Shipping Miracle