Abstract
The First World War was characterized financially by a complicated web of loans between the Allied powers. At the end of the war (November 1918), total indebtedness amounted to around $21.6bn.1 The defeat of Germany was followed by huge reparations imposed on her by the victors. However, payment of reparations was closely linked to the settlement of the war debts, and the attitude of the Allied powers towards Germany was strongly influenced by their respective debit-credit positions. The United States had the biggest net credit position, followed by Britain. The American position was one of credit for $7.1bn, with a debit of just $0.4bn. The United Kingdom had lent $9.3bn to other Allies (mainly Russia, France and Italy), but also borrowed $6.1bn, mostly from the United States.
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Notes
Bonn, Moritz J.: The Reparation Problem, in Annals of the American Academy of Political and Social Science, vol. 104, November 1922, p 150
Bonn, The Reparation Problem, pp 150–151 (while the amount of 20bn would be, approximately, what Germany paid during the whole history of war reparations). It was observed by Frank Graham (in Exchange, Price and Production in Hyperinflation: Germany, 1920–1923, Russell & Russell, 1967, p 31 [first edition 1930]) that those payments in kind were declared to be even inadequate to meet the cost of the armies of occupation, and that, consequently, the Germans were held to have failed to pay any reparations at all. According to Sally Marks, these 8bn were ‘consumed by prior charges, notably occupation costs and the expense of provisioning Germany’. See Marks, Sally: The Myths of Reparations, in Central European History, vol. 11, n 3, 1978, p 233.
Reparation Commission: Official Documents, Relative to the amount of Payments to Be Effected by Germany Under Reparations Account, HMSO, 1922, vol. I, pp 4–5
Hetzel, Robert L.: German Monetary History in the First Half of the Twentieth Century, in Federal Reserve Bank of Richmond Economic Quarterly, 88/1, 2002, p 5
Reparation Commission: Statement of Germany’s Obligations, IV, HMSO, 1923, p 22
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© 2014 Alessandro Roselli
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Roselli, A. (2014). War Reparations and Hyperinflation in Germany. In: Money and Trade Wars in Interwar Europe. Palgrave Macmillan, London. https://doi.org/10.1057/9781137327000_1
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DOI: https://doi.org/10.1057/9781137327000_1
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