In 1919, John Maynard Keynes resigned his position as principal representative for the British Treasury at the Paris Peace Conference. “Germany will not be able to formulate correct policy if it cannot finance itself,” he warned when the scale of wartime reparations Germany was forced to pay at the close of WWI became apparent.
92 years later, Germany is finally off the hook for those debts. Indeed, the official end to the first World War is not until this coming Sunday, when Germany will make it’s final payment to the tune of approximately 59 million British pounds.
“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.
Keynes was right, of course, as the rest of Europe soon learned. Though nobody could have predicted the quick rise to power of Hitler and the National Socialist Party in Germany or the disintegration of the German economy after the 1929 stock market crash that helped propel Hitler to power, it didn’t take a world-class economist and thinker like Keynes to see that the demands being made on the German people – already crushed by the expensive and disastrous World War – would be too much for that country to bear. That it led to radicalism and eventually a second World War is no great surprise.
The lessons of our mistakes in 1919 were taken to heart at the close of World War II. No crippling reparations were forced on the Germans. Instead, Americans implemented the Marshall Plan which helped all of Europe regain its economic footing after the horrors of the second World War.
Incidentally, according to Wikipedia, there are only three surviving veterans of what was once known as The Great War. including American Frank Buckles, who is America’s oldest living combat veteran at 109 years old and currently resides in Charles Town, West Virginia.