I am pleased to provide you with the below paper drafted by faculty Mrs Gelina Harlaftis, this paper provides a very good and accurate description of Ari's business structure, the issues he encountered from time to time and how he tackled those issues. I couldn't have wrote it better so i prefer to provide you with her good work, thanks Gelina!!!
EP
"I never gamble, it doesn‟t amuse me" said Onassis to the reporters. " I don‟t oppose it. I understand it. My whole life has been a terrific gamble".1 Onassis was a great player in a game of "global chess" as it unraveled in a highly publicized case that stunned the world in the 1950s. This paper examines the confrontation of Aristotle Onassis with the American government in the 1950s. The ultimate goal is to examine the strategies used by weatlthy international family businesses to confront governments in host countries. The history of attacking entrepreneurial elites of foreign origin has been a repetitive story in international business.2
Footnotes
1 New York Times, 20 June 1958.
2 It is highly interesting to see how in 1885, seventy years before the Onassis case, the Russian government under the new conservative Tsar Alexander III, took to trial wealthy Greeks, and particularly Maris Vagliano, a Greek tycoon involved in trade, shipping and finance of the South of Russia for fraud against the Russian government. See Gelina Harlaftis "The "multimillionaire Mr Marakis" Vagliano, the scandal of the Tangarog Customs and the 133 catastrophes of Anton Chekhov", Historica, 2011 (forthcoming, in Greek) and Gelina Harlaftis, «From Diaspora Traders to Shipping Tycoons: The Vagliano Bros.», Business History Review, vol. 81, no.2, Summer 2007, p. 237-268.
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This paper has three parts. In the first part I give a brief analysis of the development and structure of Onassis‟s businesses from 1920s to early-1950s, before the "game" with the U.S. government started . In the second part I analyze how I use game theory to examine the U.S. government vs Onassis case in the 1950s. In the final part I examine the various stages of the "game" as they unfolded.
Before the Game
EP
Mr Onassis and Game Theory
Footnotes
1 New York Times, 20 June 1958.
2 It is highly interesting to see how in 1885, seventy years before the Onassis case, the Russian government under the new conservative Tsar Alexander III, took to trial wealthy Greeks, and particularly Maris Vagliano, a Greek tycoon involved in trade, shipping and finance of the South of Russia for fraud against the Russian government. See Gelina Harlaftis "The "multimillionaire Mr Marakis" Vagliano, the scandal of the Tangarog Customs and the 133 catastrophes of Anton Chekhov", Historica, 2011 (forthcoming, in Greek) and Gelina Harlaftis, «From Diaspora Traders to Shipping Tycoons: The Vagliano Bros.», Business History Review, vol. 81, no.2, Summer 2007, p. 237-268.
During the 1940s and 1950s a large number of Greek shipowners previously based in London had transferred their base to New York, at the time which was increasingly becoming a world maritime centre. In the post-WWII the United States, at the time the world‟s leading power was not a maritime nation and shipping under the American flag cost quite highly. In this way, it did not fill the oceans with American flag ships but promoted the adoption of flags of convenience from main traditional European shipowners from maritime countries. The flags of convenience, then the PanHoLib fleet -of Panama, Honduras and Liberia-, were cheap flags that provided cheap sea transport.3 In the 1940s and 1950s it was the Greeks that exploited such an opportunity and became the main transporters of the US under flags of convenience. Established in New York a large shipowning Greek community was soon flourishing. By mid 1950s Onassis had more than 60 vessels registered under various flags including Honduras, Costa Rica, Liberia and Panama, and a large whaling fleet. He had residences in New York, Paris, Nice, Monte Carlo, Montevideo, Uruguay, and offices in major ports. He controlled over 30 corporations throughout the world. He held a major business that included the gambling casino at Monte Carlo, which gave him a great deal of influence in the political setup of Monaco.
This paper has three parts. In the first part I give a brief analysis of the development and structure of Onassis‟s businesses from 1920s to early-1950s, before the "game" with the U.S. government started . In the second part I analyze how I use game theory to examine the U.S. government vs Onassis case in the 1950s. In the final part I examine the various stages of the "game" as they unfolded.
Footnotes
3 For an insightful analysis see Cafruny, A. W. (1987): Ruling the Waves. The Political Economy of international shipping, (University of California Press). For a classic on flags of convenience, see Metaxas, B.N. (1985): Flags of Convenience, (London, Gower Press). For the resort of the Greeks to flags of convenience see Harlaftis, G. (1989): "Greek Shipowners and State Intervention in the 1940s: A Formal Justification for the Resort to Flags-of- Convenience?", International Journal of Maritime History, Vol. Ι, No. 2, pp. 37-63.
3 For an insightful analysis see Cafruny, A. W. (1987): Ruling the Waves. The Political Economy of international shipping, (University of California Press). For a classic on flags of convenience, see Metaxas, B.N. (1985): Flags of Convenience, (London, Gower Press). For the resort of the Greeks to flags of convenience see Harlaftis, G. (1989): "Greek Shipowners and State Intervention in the 1940s: A Formal Justification for the Resort to Flags-of- Convenience?", International Journal of Maritime History, Vol. Ι, No. 2, pp. 37-63.
For a sample see Nicholas Fraser, Philip Jacobson, Mark Ottaway, Lewis Chester, Aristotle Onassis, Ballantine Books, New York, 1977. This is the most reliable account of Onassis‟ activities written by the team of journalists of London Suday Times. They refer that they have used as sources, apart from the newspapers, documents from the Department of Justice, without any more reference though. Joesten, Joachim, Onassis. A biography, London,New York, Abelard-Schuman, 1963; Willi Frischauer, Onassis, London : Mayflower 1969; Doris Lilly, Those Fabulous Greeks: Onassis, Niarchos and Livanos, Cowles Book Company, New York 1970; Peter Evans (1986), Ari: The Life and Times of Aristotle Onassis, Summit books; Peter Evans, Nemesis. Aristotle Onassis, Jackie O. and the Love Triangle that brought down the Kennedys, Regan Books, 2004; Frank Brady, Onassis. An Extravagant Life, Prentice-Hall, Inc., Englewood Cliffs, New Jersey, 1977; Francois Forestier, Onassis, l’homme qui voulait tout, Editions Michel Lafon, 2006; Nicholas Gage, Greek fire: the story of Maria Callas and Aristotle Onassis, Pan, London, 2001; Christian Cafarakis, The fabulous Onassis: his life and loves, New York, Morrow, 1972; Harvey, Jacques, Mon ami Onassis, Paris : A. Michel, c1975; Ingeborg Dedichen, Onassis mon amour, Éditions Pygmalion, Paris 1975. For a more recent publication see Onassis and his legacy, Alexander S. Onassis Public Benefit Foundation, Athens, 2003 and George Foustanos (2009), Onassis. Pioneer in Shipping, Argo. The latter says that he has made some new research but apart from a couple of new letters and interviews, he re-circulates, without references, the accounts of a previous (unquoted) bibliography. The contribution of the latter volume is a few new photos from the collection of Onassis‟ half sister Meropi Conialidis and photos of Onassis‟ ships with their technical details.
Writing about Onassis has proved both fascinating and frustrating. As he attracted world‟s attention and he was on the headlines of newspapers and magazines, all over the world for years, there are references about him everywhere. There are thousands of articles (the
New York Times alone has more than 2,500 columns on Onassis) that are still getting produced more than thirty years after his death. Reporters, journalists, gossip columnists, novelists, story-tellers, popular writers, movie makers, opera composers, photographers, previous lovers, previous housekeepers, previous business partners, have all produced columns, books, movies and music compositions about Onassis.4 What is remarkable is that none of the books on Onassis have any
Footnotes
5 Gelina Harlaftis, Greek Shipowners and Greece, 1945-1975. From Separate Development to Mutual Interdependence, Athlone Press, 1993; Gelina Harlaftis, Α Ηistory of Greek-Owned Shipping. The Making of an International Tramp Fleet, 1830 to the present day, Routledge, London, 1996; Gelina Harlaftis, Helen Beneki and Manos Haritatos, Ploto, Greek shipowners from the late 18th century to the eve of WWII, ELIA/Niarchos Foundation, 2003 (in Greek and English); Ioannis Theotokas and Gelina Harlaftis, Leadership in World Shipping: Greek Family Firms in International Business, Palgrave/Macmillan, 2009; Geoffrey Jones and Paul Gomopoulos, "Aristotle Onassis and the Greek Shipping Industry", 9-805-141, rev. 18 October 2008, Harvard Business School.
6 See for example New York Times, 20 June 1958.
8 "As you might have noticed recent news stories, concerning the marriage of Aristotle Onassis and Mrs Jacqueline Kennedy have reported his age as 62. I thought you might be interested in knowning that information furnished to the Department of State by Onassis‟ daughter and son Christina and Alexander show he was born in 1900. Files of the Passport Office disclose that Christina Onassis born on 12/11/1950 at New York City was last issued passport Z-762056 at the Embassy in London on 10/27/67. In her application she listed her father as Aristotle Onassis, born at Smyrna, Turkey, on January 20, 1900". FBI Archives "Aristotle Onassis", Bufile, 100-125834, Document 100-125834-19, 4 October, 1968.
12 "Reports on the Financial, Commercial and Industrial Situation of Argentina and Greece", Department of Overseas Trade, London HMSO, 1920-1929, in Harlaftis, A History of Greek-Owned Shipping, Appendix 6.6.
13 Gelina Harlaftis, «The Greek Shipping Enterprise: Investment Strategies, 1900-1939», in M. Dritsas and T. Gourvish (eds.), European Enterprise. Strategies of Adaptation, Trochalia Publications, Athens, 1997, pp. 139-159. 6
from the state company of the Canadian National Steamships two steamships that he named after his parents, Socratis Onassis and Penelope Onassis which he put under the Greek flag and manned them with Greek seamen; each ship cost him 3.750 sterling pounds.14 Costas Gratsos, from a traditional seafaring family of Ithaca, Onassis‟ invaluable adviser, loyal colleague and close friend, did not provide him only with his friendship and advice; he provided Onassis with the traditional know-how of Greek shipping: Onassis‟s ships were manned ever since by the excellent and experienced Ithacan seamen. 15
14 Foustanos claims that he found the evidence on the price of the ships in the Greek Registers of Shipping; see George M. Foustanos, Onassis. Pioneering in shipping, Argo, 2006, p. 27.
15 For detailed analysis of the thousands of the Ithacan seamen on board Onassis vessels see the recent study by Dimitris Paizis-Danias, Memories of the Sea, Athens 2008.
16 This information without reference in George M. Foustanos, Onassis. Pioneering in shipping, Argo, 2006, p. 27.
17 Ingeborg Dedichen, Onassis mon amour, Éditions Pygmalion, Paris, 1975.
New York Times alone has more than 2,500 columns on Onassis) that are still getting produced more than thirty years after his death. Reporters, journalists, gossip columnists, novelists, story-tellers, popular writers, movie makers, opera composers, photographers, previous lovers, previous housekeepers, previous business partners, have all produced columns, books, movies and music compositions about Onassis.4 What is remarkable is that none of the books on Onassis have any
Footnotes
5 Gelina Harlaftis, Greek Shipowners and Greece, 1945-1975. From Separate Development to Mutual Interdependence, Athlone Press, 1993; Gelina Harlaftis, Α Ηistory of Greek-Owned Shipping. The Making of an International Tramp Fleet, 1830 to the present day, Routledge, London, 1996; Gelina Harlaftis, Helen Beneki and Manos Haritatos, Ploto, Greek shipowners from the late 18th century to the eve of WWII, ELIA/Niarchos Foundation, 2003 (in Greek and English); Ioannis Theotokas and Gelina Harlaftis, Leadership in World Shipping: Greek Family Firms in International Business, Palgrave/Macmillan, 2009; Geoffrey Jones and Paul Gomopoulos, "Aristotle Onassis and the Greek Shipping Industry", 9-805-141, rev. 18 October 2008, Harvard Business School.
6 See for example New York Times, 20 June 1958.
references; usually at the end or the beginning of the book some general and vague references are made. As a result a mythology has been built and reproduced over the years. There are extremely few scholarly accounts of Onassis business and these are also mostly based on secondary evidence.5 It is rather extraordinary that this is probably the first paper on Onassis based on archival evidence directly referred to. I will base the analysis on Onassis business and his confrontation with the American government mainly on FBI archives; these will combined with previous archival research on his shipping fleet I have carried out based for example on International Shipping Registers like Lloyd’s Register of Shipping, on the only long article he wrote himself and selectively from reports from the Press.
Onassis contributed to his own mythology. The beginning of his career was in all the main American and European newspapers in the 1950s. The story went as follows: Aristotle at 16 in 1922 went to Greece as a refugee; within months he boarded a vessel and sailed as immigrant to Argentina. There Aristotle worked as a telelephone operator and a tobacco importer. At the age of 24 he was named Greek consul general in Buenos Aires, and at 25, the story goes, he had amassed his first million dollars.6 And the world wondered at this Horatio Alger classic story of the rise of the penniless boy to a world-admired millionaire. The gossip columnist Doris Lilly, among all the fiction she has created from her own interpretations of the Onassis story, has one comment that is quite perceptive: "this is the story Onassis tells today – to his friends on the Riviera, to the statesmen and business tycoons with whom he deals , to the lovely and highly placed ladies he enchants and highly amuses with stories of his boyhood and youth, to reporters, and to his most recent biographer Willi Frischauer. There is no question but that he believes it in detail, as we all believe the stories that we tell about our childhood. I believe it is true in outline, if not in every detail".7
Footnotes
7 Doris Lilly, Those Fabulous Greeks: Onassis, Niarchos and Livanos, Cowles Book Company, New York 1970, p. 17. Footnotes
8 "As you might have noticed recent news stories, concerning the marriage of Aristotle Onassis and Mrs Jacqueline Kennedy have reported his age as 62. I thought you might be interested in knowning that information furnished to the Department of State by Onassis‟ daughter and son Christina and Alexander show he was born in 1900. Files of the Passport Office disclose that Christina Onassis born on 12/11/1950 at New York City was last issued passport Z-762056 at the Embassy in London on 10/27/67. In her application she listed her father as Aristotle Onassis, born at Smyrna, Turkey, on January 20, 1900". FBI Archives "Aristotle Onassis", Bufile, 100-125834, Document 100-125834-19, 4 October, 1968.
9 The fact that he graduated from the Evangelical school is also according to his own narration. It is highly probable however, that a Smyrniot prosperous Greek merchant would send his son to the best Greek school in town.
10 Theotokas and Harlaftis, Leadership.
10 Theotokas and Harlaftis, Leadership.
Yes, the real story is similar but also quite different. Onassis emigrated to Argentina in 1923 when he was 23 years old. Upon his entrance in the US, at Ellis Island in 1940, he declared that he was born in Salonica in 1906; place and date of birth are both wrong, invented by Onassis. It was only 28 years later that the FBI found the real date and place of birth stated in his children‟s passport: Onassis was born in Smyrna on 20 January 1900.8 He was the son of a middle-class tobacco merchant and graduated from the Evangelical School, the best Greek school of cosmopolitan Smyrna9; he was certainly fluent in Greek, Turkish, French and most probably must have learned some English. The Asia Minor Catastrophe in 1922 brought Onassis to Greece, like hundreds of thousands of Greek refugees from Ottoman territories. He stayed in Athens for barely a year before emmigrating to Latin America. In 1923 he arrived in Argentina and was soon followed by his first cousins Nikolaos and Constantinos Konialidis; the latter was also his brother-in-law as he married Onassis‟ half sister Meropi.10 It was this traditional family business network that was Onassis‟ great asset and the one on which he relied to start his business. In partnership with his cousins they imported oriental tobacco to Argentina and expanded their business to Uruguay. After a short stay in Argentina, Constantinos Konialidis moved to Montevideo in Uruguay, where he was lived permanently, applying himself to the tobacco trade and shipping. Nikolaos Konialidis remained in Argentina and collaborated with A. Onassis in the tobacco trade for most of the interwar period. Within a decade Onassis had accumulated sufficient capital to turn to shipping, which remained his prime business activity from 1933 until his death.
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Onassis and his dad - very rare photo
If the beginning of Onassis‟ wealth lay on the foundation of entrepreneurship and traditional tobacco
tarde of the northeastern Mediterannean extended by him in the south Atlantic,its apogee happened when he met, penetrated and eventually became one of the leader of the international maritime Greek business network. He did this through his friend Costas Gratsos, a member of the traditional international Greek shipowning community that was visiting often Buenos Aires on the account of his family business. Buenos Aires had become very important for Greek shipping in the 1920s. Greek-owned shipping developed since the 19th
tarde of the northeastern Mediterannean extended by him in the south Atlantic,its apogee happened when he met, penetrated and eventually became one of the leader of the international maritime Greek business network. He did this through his friend Costas Gratsos, a member of the traditional international Greek shipowning community that was visiting often Buenos Aires on the account of his family business. Buenos Aires had become very important for Greek shipping in the 1920s. Greek-owned shipping developed since the 19th
century as an international cross trader almost exclusively involved in tramp shipping.11 It carried bulk cargoes, particularly grain from the Black Sea and coal from north western Europe. By the eve of the First World War, Piraeus-London, the main axis, , around which Greek shipping evolved during the 20th century was already formed. The fleet‟s activities were still centred within European waters, carrying grain from the Black Sea and coal from the Great Britain as a return cargo. However, a substantial number of Greek ships had also started to plough regularly the Atlantic and Indian oceans.
The outbreak of the First World War closed down the straits of the Dardanelles and excluded the Greek ships from the Black Sea grain cargoes. In this way they were forced to leave the Mediterranean market and to carry cargoes mainly on the routes of the Atlantic; they eventually turned to the Argentinian grain trade – the so-called "La Plata-Continent" route - to northern Europe with return coal cargoes. In this way Buenos Aires became one of the centres of Greek shipping in the 1920s. From 2 Greek steamships arriving in Buenos Aires in 1920, the number had rocketed to 333 steamships in 1929.12 The establishment of powerful shipping offices in London that represented a large number of Greek shipowners was pivotal for the operation, survival and growth of the fleet during the great 1930s crisis. In fact, the Greek fleet was the only European fleet in the 1930s that expanded instead of contracting. Western European shipowners, particularly the British, sold ships at extremely low prices and the Greeks via their London offices bought them.13 And it is exactly what Costas Gratsos advised Onassis to do; he introduced him to his uncles‟ respected London Greek shipping office, the Dracoulis bros. When Onassis bought his first two steamships from the Greek office of the Dracoulis brothers in London, world shipping – and consequently the price of ships – had reached its nadir. Through the Dracoulis office Onassis bought in Canada
Footnotes
11 Gelina Harlaftis, Α Ηistory of Greek-Owned Shipping. The Making of an International Tramp Fleet, 1830 to the present day, Routledge, London, 1996. The outbreak of the First World War closed down the straits of the Dardanelles and excluded the Greek ships from the Black Sea grain cargoes. In this way they were forced to leave the Mediterranean market and to carry cargoes mainly on the routes of the Atlantic; they eventually turned to the Argentinian grain trade – the so-called "La Plata-Continent" route - to northern Europe with return coal cargoes. In this way Buenos Aires became one of the centres of Greek shipping in the 1920s. From 2 Greek steamships arriving in Buenos Aires in 1920, the number had rocketed to 333 steamships in 1929.12 The establishment of powerful shipping offices in London that represented a large number of Greek shipowners was pivotal for the operation, survival and growth of the fleet during the great 1930s crisis. In fact, the Greek fleet was the only European fleet in the 1930s that expanded instead of contracting. Western European shipowners, particularly the British, sold ships at extremely low prices and the Greeks via their London offices bought them.13 And it is exactly what Costas Gratsos advised Onassis to do; he introduced him to his uncles‟ respected London Greek shipping office, the Dracoulis bros. When Onassis bought his first two steamships from the Greek office of the Dracoulis brothers in London, world shipping – and consequently the price of ships – had reached its nadir. Through the Dracoulis office Onassis bought in Canada
Footnotes
12 "Reports on the Financial, Commercial and Industrial Situation of Argentina and Greece", Department of Overseas Trade, London HMSO, 1920-1929, in Harlaftis, A History of Greek-Owned Shipping, Appendix 6.6.
13 Gelina Harlaftis, «The Greek Shipping Enterprise: Investment Strategies, 1900-1939», in M. Dritsas and T. Gourvish (eds.), European Enterprise. Strategies of Adaptation, Trochalia Publications, Athens, 1997, pp. 139-159. 6
from the state company of the Canadian National Steamships two steamships that he named after his parents, Socratis Onassis and Penelope Onassis which he put under the Greek flag and manned them with Greek seamen; each ship cost him 3.750 sterling pounds.14 Costas Gratsos, from a traditional seafaring family of Ithaca, Onassis‟ invaluable adviser, loyal colleague and close friend, did not provide him only with his friendship and advice; he provided Onassis with the traditional know-how of Greek shipping: Onassis‟s ships were manned ever since by the excellent and experienced Ithacan seamen. 15
14 Foustanos claims that he found the evidence on the price of the ships in the Greek Registers of Shipping; see George M. Foustanos, Onassis. Pioneering in shipping, Argo, 2006, p. 27.
15 For detailed analysis of the thousands of the Ithacan seamen on board Onassis vessels see the recent study by Dimitris Paizis-Danias, Memories of the Sea, Athens 2008.
16 This information without reference in George M. Foustanos, Onassis. Pioneering in shipping, Argo, 2006, p. 27.
17 Ingeborg Dedichen, Onassis mon amour, Éditions Pygmalion, Paris, 1975.
Following the traditional practices of eminent diaspora Greeks of taking some diplomatic office of their country or other countries in order to acquire privileges in their host country and/or state support, Onassis sought to connect himself with the Greek state, since as a Smyrna Greek refugee had also Greek citizenship. He returned to Greece in 1928 when he wrote a detailed memorandum on the importance of Greek shipping in Buenos Aires addressed to the Prime Minister Eleftherios Venizelos who directed leave him to the Foreign Affairs Minister Andreas Michalakopoulos. Michalakopoulos, with whom Onassis met, appointed him Envoy Extraordinary in the Greek Consulate of Buenos Aires.
In Buenos Aires, Onassis had the opportunity of observing the practices not only of Greek shipowners but also those of their Norwegian counterparts who, together with the British, were the most important owners visiting Buenos Aires. The Norwegian shipowners were also involved in the new and upcoming trade in crude oil, and the ships that transported it, tankers. Onassis perceived the potential and prospects for the development of crude oil as a basic global energy source globally. In 1934 travelling from Buenos Aires to Europe he met Ingeborg Dedichen, the daughter of the Norwegian shipowner Ingeval Martin Byde. Their affair that lasted for almost a decade brought him into contact with the Scandinavian shipping circles.
In Buenos Aires, Onassis had the opportunity of observing the practices not only of Greek shipowners but also those of their Norwegian counterparts who, together with the British, were the most important owners visiting Buenos Aires. The Norwegian shipowners were also involved in the new and upcoming trade in crude oil, and the ships that transported it, tankers. Onassis perceived the potential and prospects for the development of crude oil as a basic global energy source globally. In 1934 travelling from Buenos Aires to Europe he met Ingeborg Dedichen, the daughter of the Norwegian shipowner Ingeval Martin Byde. Their affair that lasted for almost a decade brought him into contact with the Scandinavian shipping circles.
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