Compound interest debt binds generations - First World War German Debt ends on Sunday
By Allan Hall, Berlin
First World War officially ends
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.
Most of the money goes to private individuals, pension funds and corporations holding debenture bonds as agreed under the Treaty of Versailles,
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.