Germany to Pay on Bonds from Pre-Hitler Period

Article excerpt

Germany is taking steps to clean the slate with U.S. investors for loans Adolph Hitler disavowed after taking power in 1933.

The government is offering about $40 million worth of 3 percent bonds as payments linked to securities that Germany issued in the 1920s amid crushing reparations from World War I. Hitler refused to honor most of those international obligations and, after World War II, West Germany exchanged them for new bonds in a 1953 London treaty.

Though it honored the pre-war debt, West Germany refused to pay back-interest from 1945 until 1953, claiming that East Germany was responsible for at least part of the obligations. Instead, West Germany issued securities called Talons to lenders, promising back-interest if the country was ever unified, an event many thought wouldn't happen.

With Germany's reunification in October 1990, however, the bill came due. Germany now has also begun making payments to U.S. investors who own its dollar-denominated securities.

The German Debt Administration Office in Berlin estimates that Germany still has $260 million of post-World War I reparations to pay off.

Germany turned to foreign investors to work off its reparations burden in 1923, after the country's first democratic government wrecked the economy in an attempt to inflate its way out of debt. …


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