The London Agreement 1953Tuesday, April 13, 2021 Category: Uncategorized
When evaluating the LDA, we must take into account political motivations (particularly foreign policy) in relation to economic objectives. Although we must attribute to the 1953 LDA the most cynical and instrumental motives (the need for a strong Germany in the context of the Cold War of the 1950s, in addition to the awareness of the mistakes of the Versailles Conference and its consequences), it is clear that this debt relief was firmly designed to help Germany to develop. It has always given priority to the German economy over debt repayment. We anticipate that from 1953, after the introduction of the LDA, social spending will increase relative to the other ten categories. We use Weitzel (1967) data and aggregate budgetary expenditure into fourteen consistent categories for the period 1948-1962.12 The post-treatment period begins in 1953, so the post indicator for 1948-52 is zero and another. In addition, we look at the locations of social expenditure processing groups, which include the categories of health, education, economic development and housing spending. The control group contains the remaining 10 categories. We look graphically at the problem of parallel trends in Figure A1 of the appendix. This figure shows that spending in the social and non-social categories was about equal in 1948 and increased about as fast as other categories between 1949 and 1952, and that spending in the social categories increased much faster in 1953 than in the non-social categories. Despite these and other problems, Dernburg (1953, 309) described how, when the agreement was signed in 1953, the press considered the terms agreed by Germany for Germany and the creditors as expected during the 1951 and 1952 negotiations. International attention was drawn to The Economist, The Figurant, The New York Times and the London Times, who regarded the relief as generous as circumstances permitted and who satisfied Germany`s desire to restore its credit, and with great success in anticipating problems during the negotiations. The Economist commented in the summer of 1952: “The agreed terms promise a more satisfactory solution than many observers at the London conference had anticipated. Until recently, these discussions had been viewed with caution and even scepticism in the face of the immense complexity of the problem, at the sinister beginning of the discussions by The first and ridiculous offer of Germany and the subsequent development of deep differences of opinion between different groups of national creditors…
If, in spite of everything, an agreement has been reached, it is on the basis of a spirit of cooperation and conciliation that very few expected at such a conference. August 16, 1952, 408). But there is also a sense that the American press was biased towards a business history and that it was focusing primarily on the impact on private creditors in the United States. On the other hand, West German newspapers saw the agreement as a new beginning for Germany and anything but isolated (Guinnane 2014, 100). But East German newspapers, which saw the deal as a deal between war criminals and something cooked up on Wall Street, were more critical. The amount negotiated amounted to 16 billion Marks of debt from the Treaty of Versaille after the First World War, which had not been paid in the 1930s, but which Germany wanted to repay in order to restore its reputation. This money was owed to public and private banks in the United States, France and the United Kingdom. An additional 16 billion Marks were post-war U.S. loans. According to several commentators, the pre-war debt amounted to 16.1 billion Marks, while the debt after the war was estimated at 16.2 billion Marks.
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