Money Matters, an IMF Exhibit -- The Importance of Global Cooperation

Conflict and Cooperation (1871-1944)

Part 3 of 6

Conflict &
(1871 - 1944)

Destruction &

(1945 - 1958)
The System
in Crisis

(1959 - 1971)
the System

(1972 - 1981)
Debt &

(1981 - 1989)
Globalization and Integration
(1989 - 1999)

Cost of the World War

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As this contemporary illustration graphically shows, the cost of the "World War" was staggering when compared with the costs of earlier hostilities. Governments were forced to stop redeeming their currencies for gold, since they had to print so much paper money to pay for the war.


Cost of War



Postwar Conundrum

  • The defeated countries had no gold to pay their reparations. Their economies were exhausted, and the peace terms offered little hope of earning gold through exports.
  • Without the reparations money, the allies could not repay their war loans from the United States.
  • The United States refused to cancel the allies' debts, insisting that the loans represented commercial transactions.


Impossible Debt


What will "the next war" cost?

Impossible Debt
Finally, the German, Austrian, Hungarian, Polish, and Bulgarian monetary systems collapsed under runaway inflation called hyperinflation. The United States loaned money to Germany through the Dawes Plan. This loan, along with private investment, enabled the defeated countries to make scaled-down reparations payments. However, the victors collected only a small fraction of the reparations, and the United States eventually had to cancel the remaining debts of its allies.
The Golden Era Meltdown Cost of the World War
Global Depression The End of the War is in Sight How Could Leaders Ensure a Future of Global Peace and Prosperity?

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