American Money and the Weimar Republic

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By 1924, a decade of war, revolution, and hyper-inflation had destroyed Germany's once strong capital market. What little money was available commanded real interest rates in the range of 50 percent per year. Germans looked to New York to relieve this financial pressure. Between 1925 and 1930, American private bankers lent nearly three billion dollars to German borrowers—over twice the amount Germany received from the United States under the Marshall Plan after World War II. In both Germany and the United States, the loans became critical tools in efforts to define a broad range of international and domestic policy options. For the United States, the foreign lending that emerged in the 1920s represented America's first use of the financial power it had won in the First World War. But how would the new world power use its wealth? Revisionist historians writing in the 1950s and 60s concluded that America used its power to dominate the world economy in the service of narrow business self-interests. More recently, a more sympathetic consensus has formed among American historians who agree that the United States was indeed active in European affairs but argue that American policy was formulated to help stabilize European economies, not exploit them.