DRACHMA. The monetary unit of Greece, divided into lepta. Until 1936 it was nominally equivalent to the franc, the par of exchange with London being Dr. 25.22 to the pound, while at par in New York it exchanged for 19.295 cents.
Greece entered the Latin Union in 1875, following on the law of 1867, but the currency in circulation has always been paper, and even before the World War was quoted at a discount to gold. During the War, Greece occupied what was in one respect a favourable position, as the presence of the Allied forces at Salonika was the cause of a steady demand for drachmae by the Allied Governments. Foreign exchanges, consequently, were well maintained, and this favourable position continued for a year or so after the Armistice.
The outbreak of war with Turkey dealt the first blow to the drachma, and by the end of 19 2o, it had fallen in New York to cents, while the note issue had risen to Dr. 1,508,000,000 from Dr. 245,000,00o in 1913. Defeat in the field and its conse quences led to further depreciation, and from 1921 to 1927 the drachma remained between one and two cents. In 1924 the Greek Refugee Loan was issued under League of Nations' auspices, and ineffective steps towards stabilization were taken at the end of 1927. In Sept. 1936 stabilization was finally achieved by the link ing of the drachma to sterling, the buying price being fixed within the limits of J40 to 55o to the f and the price of other currencies on the basis of their parity to sterling.
See also CURRENCY and GREECE: Ecenomv and Finance.