France will grant Ukraine licenses to manufacture Aster 30 anti-aircraft missiles for the SAMP/T air defense system, AASM Hammer air-to-ground bombs, and SCALP cruise missiles.French President Emmanuel Macron announced this […]
The reparations scheme in the Treaty of Versialles had a far worse worse bark than the bite. Over 60% of the amount requested were C bonds that charged no interest and had no schedule for payment and so were basically a fiction designed to make the peace look better for Entente civilians furious at Germany over the war but without excessively burdening Germany. The A and B bonds were less than what Germany had offered to pay up.
However, Germany almost immediately set about not paying the payments it agreed to nor making up for it in shipping out goods like coal to France which was a flexibility that was permitted to make payment easier for Germany. That caused a crisis so they actually offered to pay Germany for each shipmint of coal to France to make it easier for them to keep paying… and they STILL continued to default on their obligations dozens of times even as the coal quotas were lowered. France and Belgium got fed up with this since much of their richest land had been turned into a moonscape by the war, they were in economic crisis that the reparations they were not receiving could help with, and Germany appeared to be acting in bad faith on meeting its obligations, so they launched the occupation of the Ruhr to secure the resources to pay off the German reparations manually since Germany wasn’t contributing as had been threatened earlier.
This was not an especially great economic salve because the cost of the occupation ate up most of the reparations they got. In the meantime, this incensed Germans and the government had the Germans in the Ruhr strike and largely refuse to work for the foreigners. They needed money to keep not working, so the government paid them more and more paper marks to just sit on their butts. Churning out a huge amount of money to go to non-productive ends after already having a policy of spending crazy amounts of paper marks to secure gold-backed currency and paying the massive debt owed to German people (the German war effort in WWI was financed by debt rather than more taxes) led to hyperinflation which devastated the German economy and also made the internal debts more or less irrelevant at the expense of all the Germans who thought they’d be seeing a return on those loans to the government. Though, the gold based foreign debt not so much.
This led to a lot of political instability in Germany which frightened the US because if Germany had a coup from the political extremes then they might decide to default on their debts entirely which would be really bad because that could destabilize France and the UK which had massively borrowed from the US. So the they got together with the Dawes Plan to end the occupation and get Germany massive amount of loans which were used to stabilize the currency and provide the capital to establish incredibly productive industry, thereby boosting Germany’s economy significantly such that it had more ability to pay reparations and loosening tensions so that they were more willing to and for the first time they were consistently meeting the payments.
Five years later however they were already looking to get it further lowered and that succeeded with the Young Plan which devolved other foreign control of aspects of the German economy to Germany while reducing payments and getting Germany more loans. It would have gone further but while hammering it out an unprecedented financial crisis struck America. The contagion from that spread in quick order to Germany which had significant American debts.
The economic crisis led to political crisis and Germany opted to refuse to pay reparations at all, which also locked it out of being able to borrow from anyone so that was kind of a shot in the foot. America stepped in and made the Hoover Moratorium where Germany didn’t have to pay any reparations for a year. That was considered not enough either and a new conference was called at Lausanne where Germany sought total end of reparations. The reparations were reduced to a paltry 3 billion marks (miniscule compared to the advertised total at the start of the Treaty of Versailles of 132 billion marks) but the Treaty of Lausanne wasn’t fully agreed on so in that vague realm Germany kept paying interest but not reparations based on the Young Plan before Hitler scrapped paying anything at all. It would take another world war for Germant to start paying money again.
Really the Germans were in a material sense better off for it because they got a huge amount of productive industry created off of American loans, consistently stiffed the UK and especially France who were both burdened by their debts to the US and did not get the expected relief from reparations in the intervening years, and America didn’t really make off well in the end from the massive loans to most everyone either because essentially everyone in Europe defaulted on those loans by the early 30s.
The reparations scheme in the Treaty of Versialles had a far worse worse bark than the bite. Over 60% of the amount requested were C bonds that charged no interest and had no schedule for payment and so were basically a fiction designed to make the peace look better for Entente civilians furious at Germany over the war but without excessively burdening Germany. The A and B bonds were less than what Germany had offered to pay up.
However, Germany almost immediately set about not paying the payments it agreed to nor making up for it in shipping out goods like coal to France which was a flexibility that was permitted to make payment easier for Germany. That caused a crisis so they actually offered to pay Germany for each shipmint of coal to France to make it easier for them to keep paying… and they STILL continued to default on their obligations dozens of times even as the coal quotas were lowered. France and Belgium got fed up with this since much of their richest land had been turned into a moonscape by the war, they were in economic crisis that the reparations they were not receiving could help with, and Germany appeared to be acting in bad faith on meeting its obligations, so they launched the occupation of the Ruhr to secure the resources to pay off the German reparations manually since Germany wasn’t contributing as had been threatened earlier.
This was not an especially great economic salve because the cost of the occupation ate up most of the reparations they got. In the meantime, this incensed Germans and the government had the Germans in the Ruhr strike and largely refuse to work for the foreigners. They needed money to keep not working, so the government paid them more and more paper marks to just sit on their butts. Churning out a huge amount of money to go to non-productive ends after already having a policy of spending crazy amounts of paper marks to secure gold-backed currency and paying the massive debt owed to German people (the German war effort in WWI was financed by debt rather than more taxes) led to hyperinflation which devastated the German economy and also made the internal debts more or less irrelevant at the expense of all the Germans who thought they’d be seeing a return on those loans to the government. Though, the gold based foreign debt not so much.
This led to a lot of political instability in Germany which frightened the US because if Germany had a coup from the political extremes then they might decide to default on their debts entirely which would be really bad because that could destabilize France and the UK which had massively borrowed from the US. So the they got together with the Dawes Plan to end the occupation and get Germany massive amount of loans which were used to stabilize the currency and provide the capital to establish incredibly productive industry, thereby boosting Germany’s economy significantly such that it had more ability to pay reparations and loosening tensions so that they were more willing to and for the first time they were consistently meeting the payments.
Five years later however they were already looking to get it further lowered and that succeeded with the Young Plan which devolved other foreign control of aspects of the German economy to Germany while reducing payments and getting Germany more loans. It would have gone further but while hammering it out an unprecedented financial crisis struck America. The contagion from that spread in quick order to Germany which had significant American debts.
The economic crisis led to political crisis and Germany opted to refuse to pay reparations at all, which also locked it out of being able to borrow from anyone so that was kind of a shot in the foot. America stepped in and made the Hoover Moratorium where Germany didn’t have to pay any reparations for a year. That was considered not enough either and a new conference was called at Lausanne where Germany sought total end of reparations. The reparations were reduced to a paltry 3 billion marks (miniscule compared to the advertised total at the start of the Treaty of Versailles of 132 billion marks) but the Treaty of Lausanne wasn’t fully agreed on so in that vague realm Germany kept paying interest but not reparations based on the Young Plan before Hitler scrapped paying anything at all. It would take another world war for Germant to start paying money again.
Really the Germans were in a material sense better off for it because they got a huge amount of productive industry created off of American loans, consistently stiffed the UK and especially France who were both burdened by their debts to the US and did not get the expected relief from reparations in the intervening years, and America didn’t really make off well in the end from the massive loans to most everyone either because essentially everyone in Europe defaulted on those loans by the early 30s.