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.

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, the people continued the practice of cutting notes, despite the fact that new notes issued had printed on them the clause "???G???????? ?? ????O???? ??S ??? ????S ????" (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.

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.

To read the complete article, see:
The Greek Financial Crises: Getting by with the Half-Drachmai (https://www.pmgnotes.com/news/article/7195/The-Greek-Financial-Note-Crisis-of-Early-1900s/)