However keen the Greek government was to help the defenders of Mesolongi, there was little it could do because it was, as for most of the war, desperately short of money. Loans from abroad were its only lifeline.
The first loan had been floated in February 1824 with the backing of the London Greek Committee, and the proceeds, some £350,000 after commissions and retentions, were passed directly to the Greek government. How the government spent the money was meant to be controlled by commissioners appointed and sent to Greece by the London Greek Committee, but the original commissioners never took up their task (Byron died and Stanhope was recalled to England), nobody of any standing replaced them, and the way the money was spent was unsupervised and, in the view of many, wasteful and downright corrupt. Much of the proceeds of the first loan was spent by the government in fighting the two civil wars of 1824, and by the end of that year the money was virtually gone.
The second loan was floated a year after the first on 7 February 1825, the same month as Ibrahim’s first landing in the Peloponnese. It was oversubscribed four and a half times by enthusiastic buyers who obviously had no inkling of the impact of Ibrahim’s arrival. This second loan, unlike the first, was arranged independently by the Greek deputies in London, not through the London Greek Committee, and with a different banking house, Jacob and Samson Ricardo. The nominal amount was larger than the first loan (£2 million instead of £800,000) and though the rate was lower (55½ against 59) the amount raised was considerably more (£1.1 million against £472,000). This £1.1 million was immediately reduced by commissions of £64,000, and retention of the first two years’ 5 per cent interest (£200,000) and 1 per cent sinking fund (£20,000). More was siphoned off into a so-called rejuvenating fund of £250,000 to buy stock of the first loan whenever its price went down, a move which was unconventional then and would be criminal today. That left £566,000 for the Greek cause.
This time the money was not simply to be handed over to the Greek government, in practice to use as it liked; the promoters had learnt a lesson from the first loan. The money raised by the second loan was to be spent almost exclusively on buying ships and providing other war supplies which would then be passed to Greece. Management of the expenditure was at least formally the responsibility of a four-man Board of Control in London, made up of Samson Ricardo the banker, Sir Francis Burdett and Edward Ellice, both Members of Parliament, and Byron’s friend John Cam Hobhouse. The last three were all members of the London Greek Committee, which therefore found itself answering questions about both loans in the controversy over them which erupted in the following year.
Thanks to the second loan it was now possible to conclude a long-nurtured project: to secure the services of Lord Cochrane as commander of the Greek naval forces. Thomas Cochrane, son of the Earl of Dundonald, was the model for several captains in the fiction of Frederick Marryat, who served under Cochrane, and later for C. S. Forester’s Horatio Hornblower and Patrick O’Brian’s Jack Aubrey. He had had an extraordinary career. As a young captain in the British navy he combined dash and pugnacity with meticulous preparation and extreme care for the lives of his crew. ‘Bold and adventurous as Lord Cochrane was,’ wrote a contemporary, ‘no unnecessary exposure of life was ever permitted under his command. Every circumstance was anticipated, every caution against surprise was taken, every provision of success was made; and in this way he was enabled to accomplish the most daring enterprises with comparatively little danger, and still less actual loss.’1 But his career was dogged by conflict with authority. As a junior officer he was court-martialled for insubordination (but acquitted); he quarrelled with the First Lord of the Admiralty, the national hero Earl St Vincent, over promotion; as a Member of Parliament but still in the navy he provoked the court-martial of his commanding admiral (the admiral was, probably wrongly, acquitted); he conducted a campaign in Parliament, fully justified, for reform of naval abuses, and in 1814 he was put on trial for Stock Exchange fraud and found guilty, though almost certainly unjustly. Four years later he was in South America, serving in the liberation struggles of Chile, Peru and Brazil, and combining dashing exploits with disputes over his pay. In 1825, with Brazil’s independence virtually won, Cochrane resigned from its service, ‘heartily sick’ of Brazil as he put it, and was available again. This was the naval saviour to whom the Greeks turned, a man of extremes in both action and argument but also, it was said, ‘in the estimation of the Old World and the New, the greatest man afloat’.2
In November 1825 Cochrane put before the commissioners for the second loan his conditions for serving in Greece. He required payment to himself of £37,000 initially with a further £20,000 when Greek independence was won, and a fleet of six steamships. ‘These vessels well manned’, he claimed, ‘appear to be sufficient to destroy the whole Turkish Naval power.’3
The steamship was the nautical wonder of the age, for the first time making ships independent of wind. Their use against the Turks had long been urged by Frank Abney Hastings, the English philhellene serving with the Greek fleets. The steamships of Hastings’ design were driven not by propellers, which were a later invention, but by paddle-wheels. The ships usually moved under sail, and the steam engines were used sparingly, only in action or in flat calm. Coal was needed for fuel, as wood did not produce high enough temperatures, and coal was not easily found in the eastern Mediterranean. Another difficulty was that the paddle-wheels took up a large part of the vessel’s sides, leaving less space for guns. Hastings’ solution was to have powerful guns but fewer of them: a thirty-two-pounder fore and aft, and a sixty-eight-pounder on each side. ‘It is not the number of projectiles’, he wrote, ‘but their nature and proper application that is required.’4 After a first shot from the bow, the ship would be driven in a tight circle by its paddle-wheels, firing from each gun in turn. Hastings also proposed the use of red-hot shot, hitherto used only on land, to be heated in the ship’s furnaces. ‘A single shot’, he claimed, ‘would set a ship in flames.’5 Admiral Lord Exmouth went even further: ‘Why, it’s not only the Turkish fleet, but all the navies in the world, that you will be able to conquer with such craft as these.’6
Hastings’ background and character had much in common with Cochrane’s. Hastings too was an aristocrat, grandson of the Earl of Huntingdon and second son of General Sir Charles Hastings. He too served in the British navy, as a ship’s boy at Trafalgar and in his early twenties as captain on the Jamaica station. There he fell foul of his admiral and was dismissed the service. In 1822 he arrived in Greece where he was at first suspected of being a spy, a charge he successfully rebutted, writing to Mavrokordhátos: ‘I venture to say to your Highness, that if the English government wished to employ a spy here, it would not address a person of my condition, while there are so many strangers in the country who would sell the whole of Greece for a bottle of brandy.’7 For the next two years this courageous and prickly character served with the Greek fleet. ‘Cold and haughty in manner,’ writes one historian, ‘direct and always to the point, self-opinionated and ungracious, he perhaps tended to belittle the efforts of others. Among the Philhellenes … he made no real friends. Yet the Greeks adored him: it was as though his gaucheness did not slip through the barrier of language.’8
Hastings was in London to promote his revolutionary ideas when the second loan was launched in February 1825, and within a few weeks had secured a payment of £10,000 from the loan to build the first steamship. The hull was to be built in the Thames shipyard of the firm of Brent, and the engines by Alexander Galloway of Smithfield; Hastings had offered to pay for its guns himself. The hull was quickly and efficiently built, but Galloway’s engines, promised for August 1825, were not ready till May of the following year. Engine breakdowns plagued the voyage to Greece and the new vessel, named Kartería (Perseverance) and captained by Hastings, finally reached Navplion in September, when it amazed the Greeks. In the next two years Hastings was twice able to use his novel tactics successfully, at Vólos and again in the Gulf of Corinth, in spite of constant failure of the Kartería’s engines. This showed that the idea of a rotating steamship firing red-hot shot was not just a fantasy, though it was still a long way from conquering the world.
If the tale of the Kartería was one of delays and disappointments, the story of Cochrane’s other vessels was worse. Since the Kartería counted as one of Cochrane’s required six steamships, five more needed to be built. Again the order was placed for the hulls with Brent and for the engines with Galloway, who promised completion by November 1825. Responsibility for the project was already becoming muddled. The Greek deputies in London had undertaken to build the five steamships, as part of their agreement with Cochrane; overall responsibility for expenditure of the loan belonged to the Board of Control (Ricardo, Burdett, Ellice and Hobhouse); but Cochrane was given authority ‘to construct, supervise and reject’, and did indeed reject the original engines for ones operating at higher pressure. Of the five steamships ordered, the Epichírisis (Enterprise) sailed in the summer of 1827, nearly two years late, and was further delayed at Plymouth for repairs to the engines and the rudder. The Ermés (Mercury) arrived even later when the fighting was virtually over, and of the remaining three one blew up during trials and two were never completed but left to rot in the Thames.
Worse still was the catalogue of muddle and mismanagement over another use of money from the second loan: obtaining ships from the United States. In March 1825 the Greek deputies in London sent General Charles Lallemand, a former French cavalry officer, to New York as their agent to procure two frigates, buying them if possible (it was not) but otherwise having them built. Lallemand knew nothing of shipbuilding and his only qualification for this mission was his friendship with Lafayette, the American hero and philhellene. Lallemand therefore hired two of New York’s most respected naval contractors, the houses of Bayard and of Howland, to direct the building of two frigates. The fixed cost estimates seemed very high at £75,000 to £100,000 for each frigate, so it was decided to build them by so-called ‘day’s work’, that is by buying materials and paying for work as it was completed. With this system the estimated price of each frigate was just under £50,000, but no contract was signed setting an upper limit on costs. The deputies were in a hurry and wanted completion by the end of the year; the day’s-work method was expected to save time as well as being cheaper.
Neither expectation was met. At the end of October 1825 the New York contractors Bayard and Howland wrote to the Greek deputies saying that the frigates would now cost £100,000 each and that they should allow for £110,000. A month later the contractors raised their estimate to £185,000 per frigate, and demanded more money, which the Ricardos, the loan’s London bankers, refused to pay out. Work on the frigates therefore stopped.
The impasse was broken by Alexander Kondóstavlos, a wealthy merchant from Chios who had been appointed by the Greek government to assist the deputies in London. He arrived in New York in April 1826, and quickly realised that the only solution was to sell one frigate to the United States government in order to pay for the completion of the other. Kondóstavlos was able to go to the top of the administration, being introduced by the long-standing philhellene Edward Everett to the president, John Quincy Adams, and to members of his cabinet and of Congress. The purchase of the frigate required an act of Congress; the process was begun on 10 May, Congress passed the act a week later, and the president signed it on 22 May. ‘Everything had been accomplished within twelve days,’ wrote Kondóstavlos in amazement. ‘Such an example of speed, I do not think one would find anywhere else.’9 Agreement on the price to be paid by the United States government took longer, but in August this was settled at just under £48,000 for a vessel on which about £88,000 had been paid out; so £40,000 of the sorely needed loan money had been spent for nothing. The other American frigate, the Hope, reached Greece in November 1826, a year later than planned, where it was renamed the Ellás. It was much admired, and Cochrane used it as his flagship, but it ended the war at the bottom of the sea.
In summary, of the £566,000 raised for the Greek cause by the second loan, nearly £400,000 by Gordon’s estimate had been spent on ships. Of the vessels ordered, only one of the two frigates and three of the six steamships had been delivered, all late and the steamships unreliable. A further £67,000 of the loan was spent on war supplies for Greece and further sums on a private yacht for Cochrane, leaving less than £100,000 for the sorely pressed Greek government. Of this sum the last major instalment of £40,000 reached Greece in October 1825, and a final £14,000, which Gordon called ‘the last sweepings of the second loan’,10 in May 1826 when the Greek treasury was down to its last sixty piastres.
By the summer of 1826 recriminations about the handling of both loans were flying in London, fuelled by press campaigns in The Times and in William Cobbett’s Weekly Register, and by the fact that the bonds of the first loan had fallen from an original £59 to £10 and those of the second loan from £55½ to £11. The large commissions on both loans were attacked. Bowring came under fire as secretary of the London Greek Committee, and replied that the Greek deputies, not his Committee, were responsible for the misuse of the first loan proceeds, and that the Committee as such had nothing to do with the second loan. As for the second loan, the shambles over the English ships was variously blamed on Galloway the engine-builder for incompetence and delay (perhaps deliberate, as he had a son in the Egyptian navy), on Cochrane who was meant to construct and supervise, and on the Board of Control (Ricardo, Burdett, Ellice and Hobhouse) for totally failing to live up to its name. For the American fiasco the Greek deputies were censored for appointing the unqualified Lallemand, and the naval contractors for overcharging. Even Kondóstavlos was later accused of profiting from the affair, though he was eventually cleared, and Edward Everett paid him a fully justified tribute: ‘The frigate’s success belonged to the patience and persistence of one man, Contostavlos.’11
In the murky events surrounding the two English loans it is tempting to look for one party to blame. The promoters exploited the situation by charging large though not unusual commissions, and so did the Greeks, who borrowed money that there was no prospect of repaying. But in another sense the Greeks were among the exploited, as the loan was floated at a heavy though again not unusual discount. Also exploited were the investors – and this includes the promoters – to whom the loans were sold on false prospectuses. So there is no simple antithesis between predators and victims or between gainers and losers.
The loans and Greece’s continuing crippling indebtedness to England soured relations between the two countries for generations. Only in 1878 was an arrangement made by which the debt, now over £10 million with unpaid interest, was reduced to £1½ million, to be serviced by specified government sources of income. In 1826 The Times maintained that the loans had delayed Greece’s independence, thundering: ‘The Greek cause has been betrayed. It has been betrayed in England. It would have triumphed ere now, but for England, and the English Stock-Exchange.’12 A century and a half later a Greek historian expressed the continuing bitterness about the loans, saying that they had made true Greek independence impossible. ‘The undeniable fact remains’, he wrote, ‘that the two loans, which were contracted to establish the independence of the Greek state, were the basic factors in its enslavement.’13 There is a Greek saying that good accounting makes good friends; the sorry story of the English loans shows that the converse is equally true.