And You Thought Paying Back Your Student Loan Was A Bitch

And I’m sure it was but…

Debt

Germany’s World War I Debt Was So Crushing It Took 92 Years to Pay Off – After the Treaty of Versailles called for punishing reparations, economic collapse and another world war thwarted Germany’s ability to pay…

The Allies exacted reparations for World War II, too. They weren’t paid in actual money, but through industrial dismantling, the removal of intellectual property and forced labor for millions of German POWs. After the surrender, Germany was divided into four occupation zones, and in 1949 the country was split in two. Economic recovery, much less reparations payments, seemed unlikely.

By then, West Germany owed 30 billion Deutschmarks to 70 different countries, according to Deutsche Welle’s Andreas Becker, and was in desperate need of cash. But an unexpected ray of hope broke through when West Germany’s president, Konrad Adenauer, struck a deal with a variety of western nations in 1953. The London Debt Conference canceled half of Germany’s debt and extended payment deadlines. And because West Germany was required to pay only when it had a trade surplus, the agreement gave breathing room for economic expansion.

Soon, West Germany, bolstered by Marshall Plan aid and relieved of most of its reparations burden, was Europe’s fastest-growing economy. This “economic miracle” helped stabilize the economy, and the new plan used the potential of reparations payments to encourage countries to trade with West Germany.

Still, it took decades for Germany to pay off the rest of its reparations debt. At the London Conference, West Germany argued it shouldn’t be responsible for all of the debt the old Germany had incurred during World War I, and the parties agreed that part of its back interest wouldn’t become due until Germany reunified. Once that happened, Germany slowly chipped away at the last bit of debt. It made its last debt payment on October 3, 2010—the 20th anniversary of German reunification.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: