The end of the First World War finds Greece facing serious economic problems. The anticipated however Allied Credits were encouraging hopes for recovery.

Immediately after the termination of the war, the country became involved in the Asia Minor Campaign, a fact which meant renewed war expenses. The issuing of currency, in anticipation of credits which never materialized in their entirety, led to rampant inflation. The needs of financing the campaign were covered by an increase of taxation, especially by means of indirect taxes. At the same time, the government imposed heavy taxes on income derived from the war effort, especially on the profits of transport, shipping, and insurance compensations of shipwrecks, military commissions and so on. However, the rich, who benefited from the war, refused to sacrifice their gains and contribute to the common cause. Thus, the attitude of shipowners, who refused to have their profits taxed, claimed and eventually achieved the amendment of the relevant bill.

The loss of allied credit required the pursuit of new sources of finance for the furtherance of the campaign. Efforts to contract loans from western European countries did not bear fruit, because these countries did not favour the political change that occurred in 1920 and the reinstatement of King Constantine I, who had fervently opposed them in the course of the First World War.

The inability of the Greek governments of the period 1921-22 to contract loans from abroad compelled them to turn to the raising taxes and internal loans. Prime Minister Protopapadakis introduced a compulsory loan that did not affect foreign companies or, of course, those Greek capitalists who had invested in them. Lastly, the currency was divided, that is banknotes were actually cut in half, thus doubling the circulation and increasing inflation. In this way, the Greek economy immediately after the Asia Minor Catastrophe was in a tragic plight, overindebted and with its credit undermined in the international market.