Posts Tagged ‘reparations’


October 15, 2007

Economics, in the first half of the 20th century, was clearly a developing discipline. At the turn of the century, only a handful of countries were seriously industrializing, with Britain being the farthest along. How serious a problem economic naiveté can be, only became clear in the 1920ies. Even before the infamous crash in ’29, politics seemed insufficiently prepared to handle the new economic dynamics of industrialized nations.

Take war reparations, for example. Whether or not reparations in general are a good idea is debatable. It is widely acknowledged, however, that the reparation policies after WW I were disastrous. Set at 269 billion gold marks (roughly: $23 billion then, $393.6 billion these days) in 1921, they fueled hyper-inflation in the Weimar Republic, despite being lowered in subsequent negotiations. Notice the naiveté in requiring an already damaged economy to pay outrageous sums of money, but notice also the naive response of the Weimar politicians: just print more money.

One of the few good outcomes of the reparation policies was the LZ-126 (later: USS-Los Angeles) – a zeppelin built as part of the German reparations to the US. Hugo Eckener, chairman of Luftschiffbau Zeppelin, got the German government to pay for the airship, and this contract saved the zeppelins. Military zeppelins were not allowed in post-war Germany, and there was certainly no money for civil airships. You maybe don’t need to be a rocket scientist to figure out such a deal (or fly a zeppelin across the Atlantic, for that matter), but it should be noted that Hugo Eckener had a PhD. In philosophy.