The world financial crisis of 1930 and 1931 initiated a period of political chaos in Greece. The national economy was now based on export of luxury agricultural goods such as tobacco, olive oil, and raisins--commodities whose international demand fell sharply during the hard times of the Great Depression. Payments from Greeks overseas dropped at the same time. Having lost most of its foreignexchange sources, Greece experienced difficulties in servicing its large foreign debt in the early 1930s.

Because Venizelos did not address the economic dilemma effectively, his fragile political coalition began to unravel. Unable to maintain control, Venizelos relinquished power in mid1932 . Elections that fall divided power almost equally between the Liberals and the Populists, and the latter failed to form a viable government. Chaos and military purges resulted from this deadlock, and Plastiras attempted a military coup in 1933. After the failed coup and an unsuccessful attempt to assassinate Venizelos, the bitterness of the old disputes rose to the surface of public life. In 1935 the failure of another coup, in which Venizelos was directly implicated, completely destroyed his public image. Discredited, Venizelos retired to Paris, where he died in 1936.

The Populists clearly won the parliamentary election of 1935, aided by the Venizelists' decision to boycott the vote in protest at the imposition of martial law. The unstable Populist government soon toppled, however, and in October a rump parliament declared the restoration of the monarchy and rigged a plebiscite in which 97 percent of votes called for the return of King George to the throne. When he returned to Greece in November 1935, George attempted to repair the National Schism by pardoning all participants in the Venizelist coup of 1935.