ABSTRACT
German banker Gerson von Bleichroder had just gone through a difficult time in his relationship with Bismarck: in 1888, the chancellor had initiated a ‘financial war’ against Russia and prohibited Lombard credits on Russian bonds in Germany. Bleichroder, who was active in the Russian market, disapproved of this decision as he believed it only profited France and thus paved the way for the Russian-French alliance feared by the chancellor. The tone of the reports that regularly reached the German chancellor Otto von Bismarck was clear: to acquire further orders for German industry in Greece, the German bankers would ultimately have to show their commitment to the country. In terms of the principal-agent theory, the costs and risks of the Greece loan for von Bleichröder can thus be understood as the so-called signalling costs that served to promote the agent to his principal and were intended to make Bismarck aware of Bleichröder’s importance and indispensability.
