Greek Bankruptcy of 1932

In 1932, during the Great Depression, Greece was forced to default on its foreign debt and abandon the gold standard. In the late 1920s, the government of Eleftherios Venizelos had borrowed heavily abroad to fund the settlement of refugees, public works and economic development, including major irrigation and drainage projects. When the global economic crisis struck after 1929, Greek exports, especially tobacco and currants, collapsed, emigrants sent less money home, and foreign loans dried up. Greece found it increasingly difficult to pay its debts. After Britain left the gold standard in September 1931, the drachma came under severe pressure, and Greece's gold and foreign currency reserves ran low. In April 1932, the government abandoned the gold standard, allowing the drachma to lose much of its value, and in May it suspended most payments on its foreign debt. The crisis brought hardship, unemployment and political instability. It contributed to the defeat of Venizelos in the elections of 1932 and 1933 and to the growing polarization that led to the restoration of the monarchy and the Metaxas dictatorship.