Background of news –
German reparations
By Bertram Benedict
German reparations this time are to be almost entirely in kind. At Potsdam, Russia renounced all claim to captured German gold, indicating that the other Allies will take it – but that won’t amount to much. Neither will German financial assets in other countries, also to go toward reparations.
The reparations total is to be fixed later by agreement among the Big Five. Evidently the agreement will specify also how much of the total is go to each claimant. The total will allow Germany to maintain, but only by hard work and determined will, a standard of living as high as that of other European states aside from Great Britain and Russia.
In the meantime, the Big Three have agreed on how the reparations in kind are to be collected. Russia is to take them from the Russian-occupied part of Germany, the other claimants from the other parts of Germany.
In addition, Russia is to get outright 10 percent of the German industrial capital equipment outside of the Russian-occupied zone. Russia gets an additional 15 percent for which it will pay in foodstuffs, minerals, or other raw materials.
To be self-supporting
Russia will get reparations in kind also from German enterprises in the Balkans, Eastern Austria, Hungary and Finland. Evidently the other Allies will get reparations from German enterprises, if any, in other countries.
The Potsdam Declaration lays down the principle to govern the taking of reparations in kind.
They are to be such as will allow Germany to be self-supporting as a state devoted to agriculture and “peaceful domestic industries.” This does not mean that Germany is not expected to export and import.
This problem of German exports helped to wreck the reparations system of World War I. Under that system Germany was to pay both in kind and in money, but the money payments were to be much the larger.
The reparations total was not fixed in the Versailles Treaty, largely because the United States, Great Britain, and France had divergent aims. The United States wanted no reparations, but insisted that Great Britain, France, and other Allies repay the war loans made them.
Great Britain eventually was willing to settle for enough reparations to balance war debt payment. France wanted all she could get from Germany, and for an indefinite period.
Payments stopped in 1931
In 1921, the Reparations Commission did fix the reparations total at $32 billion, but did not provide how Germany was to pay it. The Dawes Commission of 1924 fixed the amount to be paid annually, but did not specify over how long a period the payments were to be made. In 1929, the Young Commission put the reparations total at $29 billion and arranged for 59 annual payments.
Reparations payments, also war debt payments, came to an end altogether in the economic depression and financial crisis of 1931.
The point was that if Germany was to pay reparations largely in cash after World War I, she would have to build up her industrial machine, in order to get foreign exchange by exports. In actual fact, such reparations payments in Germany did make (the total was about $4½ billion) were made possible largely by loans and credits from the United States and other countries. And in building up its industrial machine, Germany was getting in a position to begin another war.