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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (30421)	5/22/2002 10:27:49 PM
From: Ilaine	Read Replies (1) \| Respond to of 281500

now you blame the US for not providing a Marshal plan in 1918? Actually I understand that area of history quite well. It's an area I have studied thoroughly because I am working on a history of the Great Depression. Also working on a Master's Degree in history at George Mason -- twentieth century. I understand the history of Germany inter-war better than any country other than the United States. Germany surrendered because they believed that Wilson's Fourteen Points would apply to them. Wilson could not deliver, and the Treaty of Versailles was a disaster for Germany, and ultimately led to the downfall of the Weimar Republic. The reparations burden was, in the eyes of many, too high. One person who thought that was John Maynard Keynes, who said so in his book, The Economic Consequences of the Peace. This is a much debated subject, but all agree that even if Germany could pay the reparations, it would be difficult. Perhaps you are familiar with the history of reparations, and so know about the Dawes Plan and the Young Plan. If so, you understand that Germany was unable (or unwilling) to pay reparations out of surplus capital, and borrowed heavily from the US. US investors were happy to buy German bonds due to high interest rates until 1928, when their preference shifted to the stock market. At the height, if memory serves me, outstanding German bonds totaled $4 billion, at a time when US GDP was roughly $12 billion. I don't know what German GDP was then, but far less. Germans had been repaying borrowed money by borrowing more money, so when they could no longer float bonds in the US, they were put into a precarious situation, and started the slide into depression. When the Depression started in the US, US investors called their investments in Germany, which made matters worse. And so, little by little, that crazy little Hitler started to seem more credible. The United States had never supported reparations, but stayed out of it due to isolationism. The US would not even sign the Treaty of Versailles, much less try to put through Wilson's 14 Points. We also did not take part in the negotiations which led to the Dawes Plan, the Young Plan, or the Bank for International Settlements. There were US representatives of banking interests engaged in the various negotiations who reported back to the Treasury and President, but they were not acting on behalf of the United States government. The Federal Reserve did not join the BIS (Bank for International Settlements) until very recently. Unfortunately, this meant that the Nazis were able to use it to hide looted gold.