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The net capital transfer into Germany amounted to 17.75 billion marks, or 2.1% of Germany's entire national income over the period 1919–1931. In effect, America paid Germany four times more, in price-adjusted terms, than the U.S. furnished to West Germany under the post-1948 Marshall Plan.
Most of Germany's reparations payments were funded by loans from American banks, and the recipients used them to pay off loans they had from the U.S. Treasury. Between 1919 and 1932, Germany paid out 19 billion goldmarks in reparations, and received 27 billion goldmarks in loans from New York bankers and others.
Of this figure, Germany was only required to pay 50 billion gold marks ($12.5 billion), a smaller amount than they had previously offered for terms of peace. [65] Reparations were unpopular and strained the German economy but they were payable and from 1919 to 1931, when reparations ended, Germany paid fewer than 21 billion gold marks. [66]
The government of Adolf Hitler declared all further payments cancelled in 1933, and no further reparations payments were made until after the defeat of Nazi Germany in the Second World War. Germany finally paid off its debts under the Versailles treaty, which had been reduced by 50% at the 1953 London Debt Conference, in 2010. [157]
When Germany stopped making payments in 1932 after the agreement reached at the Lausanne Conference failed to be ratified, [12] Germany had paid only a part of the sum. This still left Germany with debts it had incurred in order to finance the reparations, and these were revised by the Agreement on German External Debts in 1953. After another ...
132 billion gold marks ($31.5 billion, 6.6 billion pounds) were demanded from Germany in reparations, of which only 50 billion had to be paid. In order to finance the purchases of foreign currency required to pay off the reparations, the new German republic printed tremendous amounts of money—to disastrous effect.
The aftermath of Germany's loss in World War 1 saw the country experience severe hyperinflation, with the Weimar Republic finally tackling the issue by 1923. A period of known as the Golden Twenties then saw major economic stabilization and growth fuelled largely by foreign investments and loans. However, the Great Depression resulted in the ...
Much of the money returned to Britain, which then paid off its American loans. From 1931, German payments to Britain were suspended. Eventually, in 1951, West Germany would pay off the World War I reparations that it owed to Britain. [51] With the coming to power of Hitler and the Nazis in 1933, relations worsened.