Made in Germany : the German currency crisis of July 1931

and services.
Relevant data are set out in Table 3. Exports reached their peak in 1929 and fell
thereafter. But imports fell faster, leading to a rise in net exports. Capital imports also
fell in 1929 and 1930. These two movements largely offset each other, as of course they
must to make the balance of payments add up. (Other, smaller items in the balance of
payments did not change as rapidly as these categories.) Net income, the resultant of all
these forces, was remarkably stable.
The need to pay Reparations meant that Germany's balance of payments was not
in equilibrium when net imports equaled the capital inflow, but rather that the balance of
payments was in equilibrium when the capital inflow exceeded net imports by the amount
of Reparations payments, which amounted to between one to two billion Rm. depending
on the time period one reckoned over. This represented a shift of the location of
equilibrium and a burden on Germany, but it did not change the dynamics of the balance
of payments. 32
The balance of payments is national, while Reparations were an obligation of the
Weimar government. This distinction between the national and government budgets is
important. Even though Germany had sufficient foreign exchange earnings to pay
Reparations, these earnings arose largely from the excess of exports over imports. The
foreign exchange therefore was largely in the hands of exporters, that is, private firms
within Germany. The problem for the government was to get hold of these assets. In
early 1931, this did not seem all that difficult. The consensus view was that "there will be
no difficulty in making transfer" of the payments due under the Young Plan. 33
But more than just the favorable trend in the balance of payments reassured
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