War reparations requests and non-payments

1921

Germany was due to pay the first £1billion of its Reparations obligations by 1 May 1921. … A puny amount of £4.2 million had been credited.  Yet France and Denmark had paid this as credits to Germany for property received under the Treaty.  Germany itself had paid nothing at all.  p.81

Germany agreed to pay the handsome sum of  £6.6 billion in reparations over fifty years.  The burden was not quite as onerous as it appeared, however, as the Allies were not expecting all the reparations to be paid in cash.  Surrendered military equipment  … coal, timber (etc) could be used as credit against the reparations debt.  …           Both Britain and Germany had a national debt of £7.5 billion in 1818.  Germany’s depreciating internal currency had eliminated three-quarters of its internal debt by 1921.  France’s slightly smaller £6.4 billion debt been swelled by the unrepaid costs of repairing wartime devastation.  So the demand for £6.6 billion from the Germans did not seem so large.

The small print of the reparations agreement, however, revealed that the Allies  were actually asking for far less than £6.6 billion. … To all intents and purposes, the German debt had been set at 50 billion gold marks (£2.5 billion)      p 84-5

Erzberger’s murder caused foreign confidence in Germany to collapse.  With the aid of short-term credits the government managed to scrape together the initial £50 million due under the reparations schedule agreed in May, but the value of the mark plummeted.  It then asked for a moratorium after the next quarterly payment of £25 million, due in November.  So the arduous exercise of extracting reparations from Germany …. was shelved for another year.  p.86

1922

Unfortunately Rathenau’s death and the ensuing unrest caused the mark to collapse.  Germany asked the alarmed Allies for a moratorium on the payment of reparations, not only for the current year but also for the (next couple of ) years 1923 and 1924. p.92

Keynes did realise that the German economy was fundamentally strong for he continued, ‘ One must not lose sight of the other side of the balance sheet  … The burden of internal debt is wiped off.  The whole of Germany’s payments to the Allies so far … have been discharged by the losses of foreign speculators’.  (However, he was prejudiced against France)   p.98

On 13 November 1922 the German government declared that the mark could only be stabilised if the country was released from all reparations payments for the next three or four years.  p.98

1923

[Germany’s alleged default on coal and timber reparations deliveries led to France and Belgium’s occupation of the Ruhr in 1923]

1924

The Reparations Commission claimed that so far Germany had paid roughly £521 million (in the value of credited items) while the German government said that it had paid five times as much, approximately £2,829. million.  .. The only figure that Germany and the Reparations Commission agreed on was Germany’s cash payments, which amounted to a paltry £80 million.

The Washington Institute of Economics had a hard time producing a diplomatic report, which came half way between that of the Reparations Commission and the German government.  Although it did not allow Germany to claim for the ships sunk at Scapa Flow, it credited nearly the full £504 million claimed for Germany’s private property and investments abroad, lost when it went to war in 1914.  It was also generous in calculating the value of the merchant fleet, which Germany had handed over in 1919, at many times the sum spent on building a new fleet between 1921 and 1923.      p 123

1924 – 1929 THE DAWES PLAN

(Under the new scheme) The reparations payments were to start at a lowly £50 million for 1924, which would be further reduced by a loan of £40 million to help the Dawes Plan scheme get off the ground.  Thereafter the payments would rise gradually to the full yearly annual amount of £125 million after five years.    p.124

Poincaré had ensured that the coal reparations would be collected without traumas.  The 1929 Institute of International Affairs Survey described how France’s ‘deliveries in kind’ were paid after 1924.  French coal merchants’ payments (in francs) for German coal were made to the German government and returned to France as reparations.  German coal producers were paid for their reparations coal deliveries by their government with marks raised by taxes on industry and the highly profitable railways.  Coal, coke, lignite, dyestuffs and fertilisers and other heavy materials made up the major part of ‘deliveries in kind’, although by 1929 practically any Commodity or service could be sold under their aegis

Britain’s reparations were paid by the simpler method of imposing a tariff on Germany’s industrial goods.  Originally the tariff had been 26% but after Britain returned to the Gold Standard in 1925 the tariff was raised to 30%.

By the end of August 1929, when the Dawes Plan had come to an end, Germany had paid nearly £400 million in reparations under the complex provisions of the scheme.    p 133

Old wounds from the war seemed to be healing and an age of mutual trust appeared to have dawned.  France had received most of its reparations in kind, in coal and German exports.  It now wanted reparations to be paid in cash to fund its war debt repayments to the US.  p.143

1929 THE YOUNG PLAN

Yet although internationally praised and trusted, (chief reparations negotiator Hjalmar) Schacht was actually a devious man with a personal agenda.  He was determined to use the current negotiations, not only to secure lower reparations payments but also to remove the untrustful Allied controls over the German economy, which had ensured the payment of the reparations since 1924.     p.149

Under the terms of the Young Plan, the reparations were to be reduced to approximately £1.9 billion …  German payments were to begin on 1 September 1929; they would increase gradually from an initial payment of £52 million to a maximum of approximately £127 million in 1965 thirty five years later. Germany was to receive a £60 million loan to enable the new arrangement to get off to a flying start.  …

The New York Times commented on the triumph of Dr Schacht’s negotiations:  … in their desire to reach a settlement … ‘Germany’s European creditors abandoned practically all their reservations (including) the recovery system (the untrustful Allied controls over the German economy) which Great Britain and Belgium have profitably used’.    p.154-5

(In the Autumn of 1929, Alfred Hugenberg, leader of Germany’s second largest political party, mounted a successful petition, leading to a referendum, against Germany paying any reparations on the grounds that Germany was guiltless of starting the First World War.)

1930

(Despite Hugenberg’s  pernicious petition) America made a very special ‘private’ agreement with Germany over its 5% allocation of reparations  (which declared)

‘The United States accepts the full faith and credit of Germany as the only security for the fulfilment of Germany’s reparations’.

Unfortunately, however, the ‘private’ agreement was immediately broadcast to the world by an ungrateful German government.

The publication of the ‘private’ settlement caused consternation among the Allies.  …  At the second reparations conference at the Hague, there was no happy talk about nations trusting each other to pay their debts, merely endless debates about what economic arrangements should be made if Germany requested a moratorium.

p.171-2

Brüning disclosed (to the German Labour Federation) that his chief aim as Chancellor would be to liberate the economy from … reparations and foreign debt.  This would require an unpopular policy of tight credit and a rollback of all wage and salary increases since 1927.  p.174

In the summer … he imposed hefty tax increases on the middle classes and the urban workers too.  … A poll tax was also to be introduced …      p.175

In the autumn … Brüning raised … unemployment insurance premiums to 6.5% and cut salaries for members of parliament, civil service employees, the Reichswehr, and railway employees.     p.181

1931

On 24 January he (Brüning) explained that it was only possible to reduce the ‘tribute burden’ of the reparations if he showed ‘ardour in economic matters’.

(After Germany and Austria’s declaration of a customs union led to a banking crisis in Austria and Germany) Hindenburg signed an emergency decree imposing ‘drastic’ new increases in taxation, and more cuts in salaries and unemployment benefits … Chancellor Brüning, nicknamed ‘hungerkanzler’ (then) declared: ‘We have reached the limit of the privations we can impose upon our people’ (to pay the reparations)      p.181-3

(President Herbert) Hoover offered a one-year moratorium on all debts arising from the war, declaring that ‘these democratic governments were the basis of any hope for a lasting peace in Europe’.       p 184

1932

After lengthy negotiations the Allies had agreed to renounce 90% of their original reparations claims, merely asking for what seemed like a token payment so that Germany could demonstrate its good faith.  … but it soon became clear that the German parliament had no intention of ratifying the Lausanne (reparations) agreement.

Cash reparations payments under the much-vilified Young Plan totalled only £20.5 million.  p 204

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  • How Hitler Came To Power Press Release

              How Hitler Came To Power describes how what amounted to a conspiracy of the German military and industrial cliques, manipulated Allied leaders and misrepresented the Treaty of Versailles to further their ambitions, with zero regard for the human cost.
             Germany was far stronger economically by 1929 than she had been before the First World War. How Hitler Came To Power makes the case that she was primarily responsible for the Wall Street crash. By 1931 she was the greatest exporter in the world, with a mountain of cash in the bank. Yet the German people were subjected to high taxation, mass unemployment and misinformation in the cause of ridding Germany of the shackles of Versailles and returning the country to dictatorship