What happened to Germany's war debts accrued during WWI?

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Sid Guttridge
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What happened to Germany's war debts accrued during WWI?

Post by Sid Guttridge » 04 Nov 2019 14:01

Like all European combatants, Germany's government borrowed heavily in WWI to finance its war effort.

What happened to Germany's WWI war debts?

The British and other Allies were in a position to pay theirs off, and did so, but presumably Germany could not?

So what happened to its war debts? Were they ever paid off? Are they still outstanding? Were they rendered meaningless by the hyperinflation of 1923?

Cheers,

Sid.

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Sheldrake
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Re: What happened to Germany's war debts accrued during WWI?

Post by Sheldrake » 04 Nov 2019 14:53

Sid Guttridge wrote:
04 Nov 2019 14:01
Were they rendered meaningless by the hyperinflation of 1923?
There is a difference between the debt accrued from the sales of war bonds and the reparations imposed by Versailles. The former were wiped out by hyper inflation while the latter were finally payed by the FRG in 2010.

Sid Guttridge
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Re: What happened to Germany's war debts accrued during WWI?

Post by Sid Guttridge » 05 Nov 2019 13:06

Hi Sheldrake,

Thanks. It was the war bonds I was thinking about.

Did Germany borrow any money in other countries during WWI? If so, were they paid off?

Cheers,

Sid

pugsville
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Re: What happened to Germany's war debts accrued during WWI?

Post by pugsville » 05 Nov 2019 14:29

Sid Guttridge wrote:
05 Nov 2019 13:06
Hi Sheldrake,

Thanks. It was the war bonds I was thinking about.

Did Germany borrow any money in other countries during WWI? If so, were they paid off?

Cheers,

Sid
I'm fairly certain it was not a large factor. Before the USA entered the War, Entente loans raised in the US were done on commercial basis and required collateral, generally British owned US securities, which were compulsory acquired by the British Government (Exchanged for war bonds?) I a bit shaky on this part. So if the loans failed the securities would be forfeit and effectively repay the loans. As the Germans were not in much of a position to buy things in the US and ship them back to Germany (though there was some of this see merchant transport submarines) such a method with German owned securities is not going to be a big factor.

If Great Britain was unable to borrow on credit from Neutrals I cannot see Imperial Germany being able to do so.

Loans owned to the US after the war, were made after the US entered the war, credit extended to an Ally. Though most of this was done through British as they were required to underwrite other Entente borrowers as they were not regarded as safe as loaning to the British.

The British did not pay off their ww1 debts to the USA but defaulted. The US had done various deals without almost every nation of the planet except the British writing down the amount of the loans (though most others also defaulted) The US loans shad to be paid in US dollars, and as the US erected a tariff wall, this become harder and harder. The British were shipping large amounts of Gold to the US. The British were pretty browned off by US attitudes in the Negotiations, the British stopped paying in about 1934. This complicated the US0-British relations coming into world war 2. Which is why lend lease was created. And it's why some British statesmen (like Chamberlain) avoiding bring the US into anything as they thought the US would tighten the finical screws again. (there was perceived use of these loans to supplant British trade and fiances around the world)

Note the British were owned by other nations (France, Italy, Russia mainly) more than British owned the US, they did not get there money either. French reparations mostly;ly went to pay US debts, as I understand it.

Sid Guttridge
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Re: What happened to Germany's war debts accrued during WWI?

Post by Sid Guttridge » 06 Nov 2019 11:02

Hi Pugsville,

Thanks, you have opened up some interesting areas for further investigation.

Cheers,

Sid.

pugsville
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Re: What happened to Germany's war debts accrued during WWI?

Post by pugsville » 06 Nov 2019 12:31

Sid Guttridge wrote:
06 Nov 2019 11:02
Hi Pugsville,

Thanks, you have opened up some interesting areas for further investigation.

Cheers,

Sid.
the Whole War debts issue is pretty important one and on that shaped the Versailles treaty, and a lot of the politics of 1920s and early 1930s.

Sid Guttridge
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Re: What happened to Germany's war debts accrued during WWI?

Post by Sid Guttridge » 06 Nov 2019 12:46

Hi pugsville,

Indeed, but I was trying to direct this thread towards Germany's non-reparation debts, such as domestic war bonds or foreign loans.

Cheers,

Sid.

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Re: What happened to Germany's war debts accrued during WWI?

Post by The Ibis » 06 Nov 2019 13:56

Sid,
Do you have Strachan's The First World War Volume I: To Arms? He has a lengthy chapter on war finance and the balance the Germans, and the other powers, struck between borrowing and taxation (both direct and indirect). The Germans were not able to borrow very much from abroad. They were able to sell foreign securities in neutral countries early on, though.

Regarding domestic debt, as Sheldrake noted, it was wiped out by post-war inflation. Further, the Germans didn't have heavy debts to its former allies. IIRC, Adam Tooze goes into this in The Deluge.

Take care
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