Lords of Finance: The Bankers Who Broke the World

by Liaquat Ahamed

Who then was to blame? The first culprits were the politicians who presided over the Paris Peace Conference. They burdened a world economy still trying to recover from the effects of war with a gigantic overhang of international debts. Germany began the 1920s owing some $12 billion in reparations to France and Britain; France owed the United States and Britain $7 billion in war debts, while Britain in turn owed $4 billion to the United States. This would be the equivalent today of Germany owing $2.4 trillion, France owing $1.4 trillion, and Britain owing $800 billion. Dealing with these massive claims consumed the energies of financial statesmen for much of the decade and poisoned international relations. More important, the debts left massive fault lines in the world financial system, which cracked at the first pressure.

Similar to post-WWI, the world is now emerging from a crisis with high debt loads