The 1929 Young Plan’s seniority reversal drove American capital out of Germany.
Evidence
- Also at play here was the “seniority swap” that occurred when the 1929 Young Plan for reparations payments reversed the credit-default seniority of commercial claims over reparations claims that were present in the previous Dawes plan arrangements. Once this credit-protection clause was removed in 1929, commercial (i.e., American) capital evacuated Germany. — Mark Blyth, Austerity, 1007
Categorization
- XREF: Connects to Mattei and the broader austerity literature on interwar reparations and capital flight; also to Galbraith-style arguments that creditor seniority structures determine capital flows. — connects to: Fed rate hikes in 1928 reversed capital flows and triggered austerity in Germany. — Mark Blyth, Austerity: The History of a Dangerous…, 502
- QUESTION: Worth chasing: does Ritschl’s LSE paper quantify the magnitude of capital evacuation attributable specifically to the seniority swap versus other factors?