The immortality of debt - Payment of Final Reparations from WW-I by Germany

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On Sunday, Germany paid off the last of the reparations set 92 years ago after the end of World War I. The final £60 million installment of the £22 billion debt was paid off pursuant to the 1919 Treaty of Versailles. The bill was originally an enormous 226 billion Reichsmarks, but was later reduced to 132 billion — or what was calculated to be the equivalent of £22 billion at the time.

The story underlines that the only thing truly immortal is money's negative equivalent debt. Germany has carried that one around for 92 years. Not even the Weimar republic record inflation, nor the revolution, nor the other world war could help us out of this. Debtees will always demand payment from nation states. That's apparently the iron law of nation state debt.

PS: Probably better placed in AoDA ...

 

I suggest that as a national holiday, all Germans are entitled to breathe deep, face in the direction of Versailles, and say a loud and pointed "**** you" in its direction.

You've earned it .

 

The worst mistake in the first world war was the treaty of Versailles. Keynes gives a decent description of why Germany had to give up so much in his book The economic consequences of the peace. His conclusion basically is that neither Lloyd George nor Woodrow Wilson wanted to offer any resistance to the demands of Clemenceau since Wilson was apparently slow of mind (quoting: "There can seldom have been a statesman of the first rank more incompetent than the President in the agilities of the council chamber") and George had an election at home to think off.

 

Not quite. Argentina for example decided to scrap a thirds of its debt during its own financial crisis and there are a lot more examples of similar behavior if we go back in history. Obviously the consequences of such actions are extraordinary with the interest rates jumping through the roof but sometimes nations have no choice but do disregard their debt, and at other times such choices have been made willingly.

EDIT: Come to think of it, Germany probably should have disregarded their debts and the treaty way earlier, it might have spared the world a whole lot of troubl, but then again perhaps not.

I disagree. The absolute worst mistake was starting the war in the first place. The second worst were the outdated strategic and political thinking that made the war so destructive, I might be persuaded to put treaty of Versailles in the third place but even of that I'm not sure.

I disagree even on this part somewhat. While the terms of the treaty were no doubt unfair and troublesome and a part cause to Germany's economic troubles later, they were hardly the sole cause and I find it significance to be often a little exaggerated. Disastrous economic policy, currency manipulations and first and foremost the great depression also played their part. The debtors gave Germany significant leniency in payments when the economic troubles became obvious, still the treaty played a major part in the economic disaster in Germany and bears great blame for the slowness of the German economic recovery, but even a more lenient treaty could have offered Hitler an excuse to blame and the recovery of the German economy would probably still have been slow, so how much it affected the final outcome is very much debatable.

 

What about interest?

 

Numbers like that are mind boggling. It's a wonder that Germany joined the European Union -- right or wrong, logical or illogical, I would imagine some people would say "I don't wanna join forces with the dumb malastards who saddled us with that silly reparation and are still yammering for it half a freaking century later!"

 

EU is basically founded upon Franco-German reconciliation after nearly two centuries of rivalry and mutual disrespect. Without that there would be very little basis for the Union to have been built upon.

 

T2,
it's paid, with interest and all that. Took us only 92 years, with another world war in between and reconstruction from rubble (thinking of it, that Marshall plan aid - repaid as well). And that was just 132 billion.

Think about how long it will take the US to repay the ~ $772 billion to China

 

That last remark, made my day.

Congrats at the finishing of the debt.

 

About time.

Now don't do it again!

 

Yes Minister described Germany's motive as being "applying for readmission to the human race."

 

Justified or not, I think it would certainly be cathartic . I thought the smilie would convey the general mood with which I made my statement.

 

Hey this is the alleys, you clearly haven't read the rules well enough if you don't know that there's a "no tongue in cheek"-clause.

 

Hah! Same thought crossed my mind - went and looked it up after reading the post. Seems you bet me to it, but I'm going to go one step further...

Hacker: Europe is a community of nations, dedicated towards one goal.
Sir Humphrey: Oh, ha ha ha.
Hacker: May we share the joke, Humphrey?
Sir Humphrey: Oh Minister, let's look at this objectively. It is a game played for national interests, and always was. Why do you suppose we went into it?
Hacker: To strengthen the brotherhood of free Western nations.
Sir Humphrey: Oh really. We went in to screw the French by splitting them off from the Germans.
Hacker: So why did the French go into it, then?
Sir Humphrey: Well, to protect their inefficient farmers from commercial competition.
Hacker: That certainly doesn't apply to the Germans.
Sir Humphrey: No, no. They went in to cleanse themselves of genocide and apply for readmission to the human race.
Hacker: I never heard such appalling cynicism! At least the small nations didn't go into it for selfish reasons.
Sir Humphrey: Oh really? Luxembourg is in it for the perks; the capital of the EEC, all that foreign money pouring in.
Hacker: Very sensible central location.
Sir Humphrey: With the administration in Brussels and the Parliament in Strasbourg? Minister, it's like having the House of Commons in Swindon and the Civil Service in Kettering!

 

Just my opinion, but I've always blamed the Treaty of Versailles for WWII. Sure, it was hardly the only factor, but I highly doubt Hitler would have had half the backing he did were it not for that insane debt.