Library Header Image
LSE Research Online LSE Library Services

The German transfer problem, 1920-1933: a sovereign debt perspective

Ritschl, Albrecht (2012) The German transfer problem, 1920-1933: a sovereign debt perspective. European Review of History, 19 (6). pp. 943-964. ISSN 1350-7486

Full text not available from this repository.

Identification Number: 10.1080/13507486.2012.739147


Weimar Germany's economic plight has oftentimes been blamed on reparations in simplistic fashion. Alternative interpretations ignored reparations entirely, instead emphasizing gold standard constraints or wage increases in excess of productivity growth. This paper argues for a strong but subtle link between Germany's slump and these policies. Based on sovereign debt theory, it provides an incentive-based interpretation of the transfer problem, the compensation of reparations by counteracting capital inflows. I argue that the German transfer problem resulted from transfer protection under the Dawes Plan, which gave commercial credits seniority over reparations. This gave Germany a strategic incentive to drive out reparations through foreign borrowing. The Young Plan of 1929 implied a reversal of this seniority scheme, causing a sudden stop in the balance of payments that lasted to the late 1930s. The Young Plan could only have worked in the absence of an international recession; attempts to salvage it in 1931 were necessarily futile.

Item Type: Article
Official URL:
Additional Information: © 2012 Taylor & Francis
Divisions: Economic History
Centre for Economic Performance
Subjects: D History General and Old World > DD Germany
H Social Sciences > HC Economic History and Conditions
JEL classification: G - Financial Economics > G1 - General Financial Markets > G18 - Government Policy and Regulation
G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure
G - Financial Economics > G3 - Corporate Finance and Governance > G33 - Bankruptcy; Liquidation
G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers; Acquisitions; Restructuring; Corporate Governance
H - Public Economics > H5 - National Government Expenditures and Related Policies > H54 - Infrastructures; Other Public Investment and Capital Stock
H - Public Economics > H6 - National Budget, Deficit, and Debt > H63 - Debt; Debt Management
Date Deposited: 03 Sep 2012 09:24
Last Modified: 20 Oct 2021 23:12

Actions (login required)

View Item View Item