First World War’s legacy and memory rapidly fading into history
World War I, or called at the time the Great War, is rapidly fading into the mists of history, as distant and as elusive as the Napoleonic Wars of the 19th century, or even the Middle Ages. Standing less than a decade from the centennial of the outbreak of World War I, the world that spawned the Great War is alien and bewildering. Competing also with the legacy and memory of that other great war, the Second World War, still fewer survivors of WW I can tell their story. At this moment, only three living veterans of World War I are verified. All are from the Allies. The last Central Powers veteran died in 2008.
Elsewhere, the memory of WW I is also fading. Nearly 92 years after the official end of World War I, Germany made its final reparations-related payment for the Great War on October 3, thereby ending the conflict financially. The German newspaper Die Welt discovered a last installment for the Londoner Schuldenabkommen of 69,9 million euro’s in the German budget. Not being a direct reparations settlement but rather the final sum owed on bonds that were issued between 1924 and 1930 and sold to foreign (mostly American) investors, but then never paid.
The Treaty of Versailles and the German war reparations
The Treaty of Versailles of 28 June 1919 was one of the peace treaties at the end of World War I. It ended the state of war between the German Reich and the Allied Powers. Of the many provisions in the treaty, one of the most important and controversial required the Weimar Republic as successor of the German Empire to accept sole responsibility for causing the war (the so-called 'war guilt' clause), to disarm, make substantial territorial concessions and pay heavy reparations. Both before and after the publication and signing of the Versailles Treaty, there was extensive debate about the justice and likely impact of the reparations demands. Most famously, the principal representative of the British Treasury at the Paris Peace Conference, John Maynard Keynes, resigned from the Treasury in protest at the scale of the reparations demands, arguing that reparations would cripple Germany's economy. Keynes protested publicly in his best-selling The Economic Consequences of the Peace (1919).
But what took Germany so long to pay for the war? The history of German reparations involves several payment plans, broken promises, canceled debts, and years of hyperinflation. When Germany made its first payment in August 1921, it just literally printed the paper money. In fact, Germany began printing money for almost everything, thereby deliberately devaluing its currency. By 1923, Germany had defaulted on its reparations so many times that France sent troops to occupy the Ruhr region in northern Germany to force them to pay.
In 1924, an American banker named Charles Dawes, outlined a new reparations agreement what came to be known as the Dawes Plan under which commercial banks issued bonds to (mostly U.S.) private investors on behalf of Germany, which agreed to pay them back when the money became due. But when the first batch of bonds came due in 1928, Germany again defaulted. So in June 1929, a new plan – the Young Plan – was enacted, floating more U.S.-backed bonds and reducing Germany's payments to be paid out over 59 years. Unfortunately, the Young Plan collapsed during the Great Depression.
When the Nazi Party rose to power in 1933, Germany cancelled all reparations, making all these bonds out there instantly worthless. Nevertheless, it did't make the agreement null and void. The bonds, the agreement, still existed.
In June 1953, at an international meeting that came to be known as the London Agreement on German External Debts (Londoner Schuldenabkommen), West Germany offered to slowly pay back some of the bonds on which it had defaulted back in the 1920s, but said that it wouldn't pay everything until the country was one day reunified. Nonetheless, West Germany paid off the principal by 1980. In 1995, no longer divided, Germany took up the task of settling all its debts. On Oct. 3, Germany paid off the last installment of interest, finally settling its World War I reparations.