Reparations and War Debts in 1932

April 18, 1932

Report Outline
The Reparation Problem and the World Economic Crisis
German Crisis of 1931 and the Hoover Moratorium
Economic Aspects of Reparation and Debt Problems
Political Aspects of Reparation and Debt Problems
The Lausanne Reparations Conference, June, 1932
Special Focus

The Reparation Problem and the World Economic Crisis

The Hoover moratorium on payment of reparations and intergovernmental debts expires July 1. 1932. The financial and economic conditions in Germany which made the moratorium necessary have not yet sufficiently Improved, it is generally agreed, to permit resumption of reparation payments under the Young plan at that time. Chancellor Bruening declared last January that Germany could not continue to make political payments, and in the German budget for the fiscal year 1933, now in preparation, no provision has been made for payment on the reparations account. A conference attended by representatives of Germany and of the nations entitled to reparations is to be held at Lausanne, Switzerland, in June to consider the general situation and to attempt to work out some plan for the further relief of the Reich.

While the United States will not participate in the Lausanne conference, it is vitally interested in any action taken there, since an agreement for further postponement of reparation annuities would inevitably be followed by a request that this country allow further postponement of war debt payments. The United States still officially adheres to its original contention that reparations and war debts are separate and distinct questions, but President Hoover virtually recognized their interrelation by his action last June in proposing a moratorium on debt payments to run simultaneously with a moratorium on reparations. At all events, few persons believe that war debts will be paid unless reparations also are paid. Although it has been specifically denied that Secretary of State Stimsoirs present trip to Europe has any other purpose than attendance at the disarmament conference, it seems likely that he may hold informal conversations with European statesmen respecting the pressing problems of reparations and war debts.

Relation of Reparation Problem to World Economic Crisis

In his annual report for 1931 as director of the Division of Intercourse and Education of the Carnegie Endowment for International Peace, Nicholas Murray Butler blamed the continuance and accentuation of the world economic crisis on “attempts to achieve the unreasonable and the impossible in the field of war reparations and so-called intergovernmental war debts.” Lloyd George, in his book The Truth About Reparations and War Debts, published April 14, 1932. contends that world economic ruin can be averted only by immediate and complete cancellation of reparations and war debts, a downward revision of tariffs, and disarmament. Alfred E. Smith, in an address delivered at Washington April 13, 1932, proposed a 20-year suspension of war debt payments and annual cancellation of an amount equivalent to 25 per cent of the gross value of American products purchased by the debtor countries.

ISSUE TRACKER for Related Reports
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