delanceyplace.com 06/16/05 - reparations in world war I

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In today's excerpt - Margaret MacMillan writes that the 'reparations' paid by Germany to the Allies after World War I, and regularly blamed for the hyperinflation that in turn led to Hitler and the tragedy of World War II, were in fact a relatively small amount in contrast to the symbolic and psychological damage they inflicted. (Here and elsewhere it has been shown that the cost of the war itself was the real culprit). For us, this underscores the critical importance of magnanimity on the part of the victor toward the vanquished—in symbolism word and deed:

"[The German people viewed] reparations [as] 'punitive' and 'savage,' their unfairness compounded by the fact that Germany had to sign the Treaty of Versailles without knowing what the final amount would be. In Germany, the Diktat ('dictated treaty') took the blame for all that was wrong with the economy: high prices, low wages, unemployment, taxes, inflation. Without the burden of reparations, life would go back to normal ... Germans ignored the fact that fighting the Great War had been expensive ... Like most people since they also did not grasp that reparations payments never amounted to anything like the huge amounts mentioned in public discussions.

"The final figure was set in London in 1921 at 132 billion gold marks (about £6.6 billion or $33 billion). In reality,  ... Germany was committed to pay less than half that amount. It would pay the remainder only when circumstances permitted, such as an improvement in Germany's export figures. ... Even when the payment schedules were revised downward several times. however, the Germans continued to argue that reparations were intolerable. ... Germany regularly defaulted on its payments—for the last time and for good in 1932.

"In the final reckoning, Germany may have paid about 22 billion gold marks (£ 1.1 billion, $4.5 billion) in the whole period between 1918 and 1932. That is probably slightly less than what France, with a much smaller economy, paid Germany after the Franco-Prussian War of 1870-71. In one way the figures matter; in another they are completely irrelevant. The Germans were convinced that reparations were ruining them."