wardepressionwar.pdf - dietmar rothermund War-Depression-War The Fatal Sequence in a Global Perspective THE LONG SHADOW OF THE FIRST WORLD WAR When the

wardepressionwar.pdf - dietmar rothermund...

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d i e t m a r r o t h e r m u n d War-Depression-War: The Fatal Sequence in a Global Perspective THE LONG SHADOW OF THE FIRST WORLD WAR When the war was over, the nations that had participated in it were burdened by enormous war debts. They had financed their war expenditure to a large extent on credit. War bonds had been taken up by the people and in addition foreign loans, mostly from the United States, had also been raised. The United States provided $ 10 . 3 billion to the allies; Great Britain received $ 4 . 1 billion. The debt service due on those credits was a crushing burden for the respective national budgets. The British had resorted to tax increases, particularly to a wealth tax, during the war, but they had also issued war bonds held by British citizens. Most of them were redeemed only after decades. The German government had trusted that it could pay for the war by imposing reparations on the vanquished—in the meantime it had resorted to printing money. By the end of the war the German mark had depreciated by about 50 percent since 1914 . Inflation was tolerated even after the war. This led to a brief postwar boom in Germany, while other nations experi- enced a recession in 1920 . However, Germany then experienced a hyperinflation in 1923 , which has remained a memory haunting the nation ever since. The gov- ernment could wipe out its internal war debt in this way, 1 but the social and political consequences were devastating. The people did not trust the government any longer. Many of them lost their savings of a lifetime. Only the owners of real estate and factories benefited from this radical cut. The ruin of a liberal or con- servative middle class contributed to the rise of left-wing and right-wing parties, which challenged the political order of the Weimar Republic. The American Dawes Plan of 1924 , which will be discussed later on, restored the German econ- omy briefly, but a decline could be noted already in 1926 even before the Great Depression affected Germany. 2 The need to pay reparations burdened the German economy, the more so as the victorious powers did not provide much of an opportunity for Germany to earn the money for such payments by means of 1 . Frank B. Tipton and Robert Aldrich, An Economic and Social History of Europe, 1890 - 1939 (Houndsmill, 1987 ), 177 . 2 . Albrecht Ritschl, “International Capital Movements and the Onset of the Great Depression: Some International Evidence,” in The Interwar Depression in an International Context, ed., Harold James (Mu ¨nchen, 2002 ), 1 14 . Diplomatic History, Vol. 38 , No. 4 ( 2014 ). ! The Author 2014 . Published by Oxford University Press on behalf of the Society for Historians of American Foreign Relations. All rights reserved. For permissions, please e-mail: [email protected] doi: 10 . 1093 /dh/dhu 029 840
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the export of goods. This applied also to the French and British payments of war debts to the protectionist United States.
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