Those bonds were issued at the time to investors hoping to make money out of Germany’s financial quagmire.
“The still-open contract for interest and amortisation payments is around 56 million,” agency spokesman Boris Knapp said. “That is the debt still outstanding from all those years ago, but Germany will make good on it.”
The news that modern-day Germany is still in debt for one world war that laid the foundations for the next one was revealed by the agency after a written freedom of information request by a newspaper.
With the signing of the Versailles accord, Germany accepted blame for the war which cost nine million men their lives.
Article 231 of the peace treaty – the so-called “war guilt” clause – declared Germany and Austria-Hungary responsible for all “loss and damage” suffered by the Allies during the war and provided the basis for reparations.
The treaty was despised by Germans and seized on by the Nazis to foster a feeling of victimhood among their countrymen.
The initial agreed sum for war damages in 1919 was 226 billion Reichsmarks, a sum later reduced to 132 billion Reichsmarks. This was the equivalent at the time of some £24 billion.
France, which had been ravaged by war – its farmlands devastated by battles, its industries laid waste and some three million men killed – pushed hardest for the steepest possible fiscal punishment for Germany.
The principal representative of the British Treasury at the Paris Peace Conference, John Maynard Keynes, resigned in June 1919 in protest at the scale of the demands, warning correctly that it was stoking the fires for another war in the future.
“Germany will not be able to formulate correct policy if it cannot finance itself,” he warned.
When the Wall Street Crash happened in 1929, the Weimar Republic – Germany’s first and only democracy until after the defeat of Nazism in 1945 – spiralled into debt.
What the Bank of England now calls “quantitative easing” was started in Germany, with the printing of money to pay off the war debt, triggering inflation to the point where ten billion marks would not even buy a loaf of bread.
Up until 1952, Germany had paid some 1.5 billion marks in war reparations to the Allied countries. However, in 1953, the outstanding balance was suspended pending a reunification of East and West Germany.
After the two states officially became one on 3 October, 1990, the old debts went into effect again, with 20 years for them to be paid. Germany plans to pay off all its First World War debts by 3 October next year.
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