Germany Pays Off Reparations Imposed at Versailles — 92 Years Later!

Fascinating piece, at the Times of London, "First World War Officially Ends" (at Memeorandum):

The First World War will officially end on Sunday, 92 years after the guns fell silent, when Germany pays off the last chunk of reparations imposed on it by the Allies.

The final payment of £59.5 million, writes off the crippling debt that was the price for one world war and laid the foundations for another.

Germany was forced to pay the reparations at the Treaty of Versailles in 1919 as compensation to the war-ravaged nations of Belgium and France and to pay the Allies some of the costs of waging what was then the bloodiest conflict in history, leaving nearly ten million soldiers dead.

The initial sum agreed upon for war damages in 1919 was 226 billion Reichsmarks, a sum later reduced to 132 billion, £22 billion at the time.

The bill would have been settled much earlier had Adolf Hitler not reneged on reparations during his reign.

Hatred of the settlement agreed at Versailles, which crippled Germany as it tried to shape itself into a democracy following armistice, was of significant importance in propelling the Nazis to power.

"On Sunday the last bill is due and the First World War finally, financially at least, terminates for Germany," said Bild, the country's biggest selling newspaper.

Most of the money goes to private individuals, pension funds and corporations holding debenture bonds as agreed under the Treaty of Versailles, where Germany was made to sign the 'war guilt' clause, accepting blame for the war.

France, which had been ravaged by the war, pushed hardest for the steepest possible fiscal punishment for Germany.

The principal representative of the British Treasury at the Paris Peace Conference, John Maynard Keynes, resigned in June 1919 in protest at the scale of the demands.

"Germany will not be able to formulate correct policy if it cannot finance itself,' he warned.

When the Wall Street Crash came in 1929, the Weimar Republic spiralled into debt. Four years later, Hitler was elected Chancellor of Germany.

Yes, Keynes was right (see, The Economic Consequences of the Peace), but it's a much more complicated story. The United States was deeply implicated in the harsh settlement at Versailles. Americans would not agree to inter-Allied debt forgiveness for Britain and France, both of whom were facing financial collapse from the war, which in turn compelled them both, and especially France, to demand a punitive armistice with steep reparations. (And then there's the infamous "War Guilt Clause," Article 231, which made Weimar Germany responsible for damages caused by the war. There's a bit of historiographic controversy on this, discussed at Wikipedia. The word "guilt" appears nowhere in the article and it was actually designed to make Germany responsible only for the civilian costs of the war and not TOTAL costs. See William Keylor, The Twentieth-Century World and Beyond. That said, historical memory imputes tremendous symbolism to the war guilt clause, and over time it has come to represent intense allied vindictiveness and short-sightedness. Note how the Times article above is sure to cite it.)

Versailles. A flawed peace. Paved the way for the Second World War.