The Greek Financial Crises: Getting by with the Half-Drachmai

Posted on 2/19/2019

Greek notes that were cut in half helped stave off government collapse during economic turmoil.

If you are relatively new to the world of numismatics you may think a banknote that is torn in half has little to no value. For the most part, it’s true, but then there are those uncommon exceptions, like the Greek half drachma notes from the early 20th century.

For this month’s article, we are going to explore why some of these notes were cut in half, and how they helped Greece’s government avoid total collapse despite economic troubles.

In the early 19th century, the Filiki Eteria, or Society of Friends, was founded in Odessa, in current day Ukraine. The secret organization’s goal was to promote Greek nationalism, overthrow their Ottoman rulers (who had ruled the region since the 15th century), and to establish an independent Greek state. These sentiments, as well as the Filiki Eteria itself, grew in strength and spread throughout the region until, in 1821, several revolts broke out against the Ottomans.

In order to finance the revolution, an organization of British bankers loaned £800,000 to the leaders of the Greek rebels. The English financiers saw the potential for a Greek state to become a future business partner, one that would be reliant upon Britain for manufactured goods, especially arms. Within four years, before Greece was even officially recognized as an independent nation, they had to default on the loan (many Greeks consider 1827 to be the beginning of Greek statehood, the year that the First Hellenic Republic was founded, although the major European nations did not recognize Greece as an independent state until 1830). This first brush with insolvency would set an unfortunate precedent for future financial issues in Greece.

1895-1907 Greece, Ionian Bank 10 New Drachmai (Pick# S143b), front. PMG graded 20 Very Fine. Figure 1: The 10 Drachmai note, like this one, were cut in half in 1910 and each half was considered as a 5 drachmai note.
Click image to enlarge.

1897 Greece, National Bank 5 Drachmai(Pick# 42), front
PMG graded Choice About Uncirculated 58. Figure 2: One of the Greek 5 drachmai notes that avoided being cut in half to help cover a government deficit.
Click image to enlarge.

Greece would once more declare bankruptcy in 1893. The economic depression led to a much-higher demand for smaller bills (the 10 drachmai being the smallest denomination available at the time).

Even after a 5 drachmai note was issued in 1897 (see Figure 2), the people continued the practice of cutting notes, despite the fact that new notes issued had printed on them the clause "ΑΠΑΓΟΡΕΥΕΤΑΙ ΝΑ ΚΟΠΤΩΝΤΑΙ ΕΙΣ ΔΥΟ ΝΟΜΟΣ ΒΥΧΑ" (It is prohibited by law to cut in two pieces).

The Greek government and National Bank must have either realized that the note cutting worked, or simply taken on the attitude of, “if you can’t beat them, join them,” because they would end up using a similar trick less than two decades later.

1922 Greece, National Bank 5 Drachmai = 2 1/2 Drachmai(Pick# 58), front
PMG graded About Uncirculated 53. Figure 3: The half-notes that depicted the Greek crown, like this one, were the stand in for a 6.5% bond while the other half would be exchanged for a newly issued 2 ½ Drachmai note.
Click image to enlarge.

The economic depression of the 1920s affected many nations around the globe, including Greece. In 1922, the Greek government issued a forced loan in order to finance their growing budget deficit. On April 1, 1922, the government decreed that half of all bank notes had to be surrendered and exchanged for 6.5% bonds. The notes (see figure 2) were then cut in half, with the portion bearing the Greek crown (see figure 3) standing in for the bonds while the other half was exchanged for a new issue of central bank notes at half the original value.

The forced loan raised 1.6 billion drachmai, or roughly the size of the deficit. The half-drachmai trick once again proved to be only a temporary fix and the economy continued to flounder. The financial woes, thanks to high inflation and a disastrous military campaign into Asia Minor, helped lead to the abolishment of the Greek monarchy in 1924, resulting in the short-lived Second Hellenic Republic.

1926 Greece, National Bank 500 Drachmai(Pick# 82), front
PMG graded About Uncirculated 50 Net. Figure 4: Another compulsory loan was issued in 1926, this time for the old National Bank 50 to 1000 drachmai notes. As before, the note was cut and one portion was exchanged for a new note at ¾ the original face value and the other ¼ would be exchanged for debentures.
Click image to enlarge.

While Greece has a long history of insolvency, it is not the only nation to face economic problems. For example, between 1900 and 1945 alone, Germany, Spain, Austria, Portugal and France defaulted on loans 30 separate times.

Today, many nations run their economies on a deficit (the United States deficit for the 2019 fiscal year is $985 billion). Furthermore, much of the development in Greece could not have been accomplished if it had not taken out loans. In other words, bankruptcy is favorable to decline. And, finally, if it weren’t for Greece’s deficit, we would not have these cool-looking half-drachmai!


  • Amadeo, K. (2019). Current US Federal Budget Deficit. The Balance. Retrieved from>
  • Chatziioannou, M.C. (2013). War, Crisis and Sovereign Loans: The Greek War of Independence and British Economic Expansion in the 1820s. The Historical Review, 10, 33-55. Retrieved from
  • Diniakos, A. (2015). A Brief History of Greek Debt. Vice Greece. Retrieved from
  • Makinen, G. E. & Woodward, G.T. (1996) Funding crises in the aftermath of World War I. In R. Dornbusch & M. Draghi (eds.), Public Debt Management: Theory and History (2nd ed.). New York, New York: Cambridge University Press. Retrieved from

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