AHC: What would be the effect of WWI War Debts and Reparations being Slashed?

[Van555]

Say that for whatever reason The U.S. agreed to forgive 75% of Allied War Debts in Exchange for them forgiving 75% of Germany and the other central powers war debts?

What would be the effect of such and action on the interwar period economically and politically?

 

[Dathi THorfinnsson]

Say that for whatever reason The U.S. agreed to forgive 75% of Allied War Debts in Exchange for them forgiving 75% of Germany and the other central powers war debts?

What would be the effect of such and action on the interwar period economically and politically?

Firstly, the president who proposed would be impeached quickly.....

 

[Faeelin]

Well, the US effectively forgave these debts in OTL, no?

 

[Van555]

Well, the US effectively forgave these debts in OTL, no?

Yeah but they didn't do so in the early 1920's...

 

[Van555]

Firstly, the president who proposed would be impeached quickly.....

Have I bankrupted the House of Morgan accidentally.

 

[wcv215]

Other than the likely impeachment of the US president, or at least him being unceremoniously booted out of office at the next national election, following a period when both parties treat him with contempt, not much. Germany never particularly tried to pay the reparations, because they refused to acknowledge actually being defeated.

 

[Van555]

Other than the likely impeachment of the US president, or at least him being unceremoniously booted out of office at the next national election, following a period when both parties treat him with contempt, not much. Germany never particularly tried to pay the reparations, because they refused to acknowledge actually being defeated.

I see I'm already beginning to suspect this.

 

[Faeelin]

The Dawes Plan did reduce reparations and did involve a loan from America to Germany. How much more do you want?

 

[iddt3]

Other than the likely impeachment of the US president, or at least him being unceremoniously booted out of office at the next national election, following a period when both parties treat him with contempt, not much. Germany never particularly tried to pay the reparations, because they refused to acknowledge actually being defeated.

No they paid the reparations until they were slashed, they just purposely inflated their currency so as to make the reparations mostly worthless.

 

[Van555]

The Dawes Plan did reduce reparations and did involve a loan from America to Germany. How much more do you want?

Wait are you talking to me? because I'm wondering if a 75% reduction in 1921 would cause Germany to avoid hyperinflation.

 

[wcv215]

No they paid the reparations until they were slashed, they just purposely inflated their currency so as to make the reparations mostly worthless.

Sorry, I meant they kept trying to find ways out of the treaty terms rather than fulfill the damn things. Something over half of the reparations were a publicity stunt that never had to be paid back (the "C bonds") trying to convince the Etente countries Germany was being punished more than they actually were. The German economy was the largest in Europe, it was thought by most experts and the time that the reparations could easily be paid in full, and those experts were probably right.

Wait are you talking to me? because I'm wondering if a 75% reduction in 1921 would cause Germany to avoid hyperinflation.

No. The German economy suffered hyperinflation because they didn't want to fulfill the treaty terms.

 

[Van555]

Sorry, I meant they kept trying to find ways out of the treaty terms rather than fulfill the damn things. Something over half of the reparations were a publicity stunt that never had to be paid back (the "C bonds") trying to convince the Etente countries Germany was being punished more than they actually were. The German economy was the largest in Europe, it was thought by most experts and the time that the reparations could easily be paid in full, and those experts were probably right.



No. The German economy suffered hyperinflation because they didn't want to fulfill the treaty terms.

Hmm I see...

 

[Salamander]

Well, the US effectively forgave these debts in OTL, no?

Some of the (German) debt was forgiven, Hitler refused to pay the rest, the post WW2 German government paid the final instalment in 2010.

British debt, from both wars & the late 40's was finally paid in 2006/07. Would have been sooner if not for Germany (and others*) defaulting in the interwar period, the Great Depression & WW2.

* Britain was funding the war effort of the Empire, as well as all of Italy's, 60% of the French & Russian war effort and many of the smaller nations (Belgium, etc.). Failure to promptly repay on their part hindered British repayment of her American debt, which in turn led to the economic clauses of Lend-Lease during WW2.