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Pastimes : Book Nook -- Ignore unavailable to you. Want to Upgrade?

To: Thomas M. who wrote (282)	5/11/2001 12:09:05 PM
From: Thomas M.	Read Replies (2) \| Respond to of 443

"The Rationale of Central Banking and the Free Banking Alternative" by Vera C. Smith I found this book as boring as the title sounds (though, to me, the title was intriguing), and I had to force myself to finish it. The book covers the historical debate between central banking and free banking in Europe and the U.S. over the past several centuries. Generally, the author finds that free banking is superior, but that by the 1930s it was no longer realistic to start a movement towards that end, because central banking was entrenched. The key point of note was that free banking relied on one crucial factor, effective clearing of banknotes so as to keep shady banks in line. Scotland is the notable example of a free banking system that was very effective.

To: Thomas M. who wrote (282)	5/11/2001 12:18:08 PM
From: Ilaine	Read Replies (2) \| Respond to of 443

The history of German reparations after WWI is complex, and I think an important element in the causes of the Great Depression, so what follows is a gross oversimplification: To begin with, Germany never really accepted that it was responsible for WWI, and there is some truth to that. Germany was the first of the Great Powers to attack, but Russia, allied with Serbia, mobilized first. Germany did not attack France until after France decreed mobilization. Austria fired the first shot in Serbia, in order to preserve its empire. Germany always claimed that it was unable to pay reparations, so other countries, as far as I know at this point only the US, but maybe others, loaned money to Germany, far in excess of what it ever paid. Between 1924, by one estimate, Germany paid DM11 trillion, and borrowed DM18 trillion, net DM7 trillion to Germany. By another estimate, Germany only paid DM5 trillion, and borrowed DM30 trillion. During that time, German industry was retooled, revamped, and modernized, and the German military was rearmed into the most formidable military in the world. Yet, Germany never stopped complaining. For example, a large portion of the payments were interest, and yet Germany wanted the payments to be credited to principle. Further, Germany demanded that the value of its lost colonies be credited towards reparations, and also the cost of its own military losses, e.g., the fleet scuttled at Scapa Flow. The German hyperinflation began after the French invaded the Ruhr in 1923. German workers in the Ruhr went on strike rather than work for the French. The German government paid the strikers. The German government sent the plates used to print banknotes to the generals in the Ruhr, and told them to use them in their discretion against the Allies and to print as much money as was needed. Economic and political chaos ensued. A young man named Adolf Hitler tried to stage a putsch in Munich when the Bavarian government threatened to separate from the Reich. The Munich authorities suppressed the Nazis and made peace with Berlin. The crisis led to the adoption of the Dawes Plan, in 1924, which essentially financed German reparation payments by loaning Germany US money. After the Dawes Plan was adopted, France ceased the occupation. In effect, the US loaned Germany the money that allowed them to start WWII.