Loans and Debt Resolution

Richard W. Van Alstyne and

Joseph M. Siracusa

Problems arising from unpaid debts owed by foreign governments to private bankers and, later, to international agencies, troubled American policymakers during the twentieth century. Initial concerns arose regarding the political motives of European governments who sought to employ their military forces to enforce repayment of financial debts incurred by South American and Central American countries. When its World War I allies stopped paying on wartime loans during the 1920s and 1930s, U.S. officials were faced with a series of unpleasant choices. To avoid this problem during World War II, President Franklin D. Roosevelt established the lend-lease program that provided economic and military aid to America's allies yet left no substantial postwar debt.

During the Cold War years, the United States employed foreign aid packages that consisted largely of grants with occasional loans to aid its allies. Initially, the new International Monetary Fund and the World Bank provided developing countries with economic assistance; later, in the 1970s, commercial agentsβ€”individual banks and consortiumsβ€”extended loans to the same clients. This subsequent surge of credit resulted in greatly increasing Third World debt and, after 1981, increasing concern with possible defaults and debt rescheduling.


Aggarwal, Vinod K. Debt Game: Strategic Interaction in International Debt Rescheduling. New York, 1996.

Biersteker, Thomas J., ed. Dealing with Debt: International Financial Negotiations and Adjustment Bargaining. Boulder, Colo., 1993. A most helpful introduction to the basic issues of the post-1980 debt crisis.

Bergmann, Carl. The History of Reparations. Boston and New York, 1927. Presents the German side of the reparations question.

Brennglass, Alan C. The Overseas Private Investment Corporation: A Study in Political Risk. New York, 1983. Reviews the use of government loan guarantees to private investors from 1948 to 1980s.

Carew, Anthony. Labour Under the Marshall Plan: The Politics of Productivity and the Marketing of Management Science . Detroit, Mich., 1987.

Dobson, Alan P. U.S. Wartime Aid to Britain, 1940–1946. London and Dover, N.H., 1986.

Dougherty, James J. The Politics of Wartime Aid: American Economic Assistance to France and French Northwest Africa, 1940–1946. West-port, Conn., 1978.

Eckes, Alfred E. A Search for Solvency: Bretton Woods and the International Monetary System, 1941–1947. Austin, Tex., 1975. Standard account of the Bretton Woods system.

Eichengreen, Barry, and Peter H. Lindert, eds. The International Debt Crisis in Historical Perspective. Cambridge, Mass., 1989. Very helpful in relating the various financial and debt crises to U.S. policy.

Feis, Herbert. The Diplomacy of the Dollar: First Era, 1919–1932. Baltimore, 1950.

β€”β€”. Foreign Aid and Foreign Policy. New York, 1964. A thorough pragmatic and standard postwar analysis of Allied foreign aid and international politics.

Fossedal, Gregory A. Our Finest Hour: Will Clayton, the Marshall Plan and the Triumph of Democracy. Stanford, Calif., 1993.

George, Susan. The Debt Boomerang: How Third World Debt Harms Us All. Boulder, Colo., 1992. A critical look at World Bank and IMF policies and the dangers of the huge Third World debt to developed nations.

Healy, David. Drive to Hegemony: The United States in the Caribbean, 1898–1917. Madison, Wis., 1963. A revisionist study of the rise of American official dominance of independent states of Central America and Greater Antilles.

Herring, George C. Aid to Russia, 1941–1946: Strategy, Diplomacy, the Origins of the Cold War. New York, 1973. The starting point for the study of lend-lease.

Hogan, Michael. The Marshall Plan: America, Britain, and the Reconstruction of Western Europe, 1947–1952. New York, 1987.

James, Harold. The German Slump: Politics and Economics, 1924–1936. Oxford and New York, 1986.

Johannsson, Haraldur. From Lend-Lease to Marshall Plan Aid: The Policy Implications of U.S. Assistance, 1941–1951. Reykjavik, 1997.

Jones, Kenneth P. "Discord and Collaboration: Choosing an Agent General for Reparations." Diplomatic History 1 (1977): 118–139.

Kent, Bruce. The Spoils of War: The Politics, Economics, and Diplomacy of Reparations, 1918–1932. Oxford and New York, 1989. Argues that creditor governments understood Germany could not pay but prolonged the agony to stave off challenges from below.

Keynes, J. M. The Economic Consequences of the Peace. New York, 1920. Argues that the reparations forced upon Germany were more than three times the capacity of that nation to pay.

Leffler, Melvyn P. "The Origins of Republican War Debt Policy." Journal of American History 59 (1972): 585–601. Makes the case that Republican Party leaders decided that debts should be collected for domestic reasons.

Martel, Leon. Lend-Lease, Loans, and the Coming of the Cold War. Boulder, Colo., 1979.

Miller, Morris. Coping Is Not Enough! The International Debt Crisis and the Roles of the World Bank and the International Monetary Fund. Homewood, Ill., 1986.

Massad, Carlos, ed. The Debt Problem: Acute and Chronic Aspects. New York, 1985.

Moulton, Harold G., and Leo Pasvolsky. War Debts and World Prosperity. Washington, D.C., 1932. The indispensable study of the subject.

Munro, Dana G. Intervention and Dollar Diplomacy in the Caribbean, 1900–1921. Westport, Conn., 1964. Contends that the United States intervened in the Caribbean to promote stability and progress in order to prevent imperialist European nations from intervening and thus threatening American security.

Nelson, Joan M. Aid, Influence, and Foreign Policy. New York, 1968. A brief but useful introduction to the rationale behind American foreign aid from the end of World War II to the late 1960s.

O'Leary, Michael K. The Politics of American Foreign Aid. New York, 1967. One of the first attempts at a comprehensive analysis of how foreign aid appropriations are made.

Perkins, Dexter. The Monroe Doctrine, 1867–1907. Gloucester, Mass., 1937. Classic multicultural examination of the subject.

Pisani, Sallie. The CIA and the Marshall Plan. Lawrence, Kans., 1991.

Rhodes, Benjamin D. "Reassessing 'Uncle Shylock': The United States and the French War Debt, 1917–1929." Journal of American History 55 (1969): 787–803.

β€”β€”. "Herbert Hoover and the War Debts, 1919–33." Prologue 6 (1974): 130–144. Discusses that settlement of World War I debts revolved around the person of Herbert Hoover.

Schuker, Stephen A. American "Reparations" to Germany, 1919–33: Implications for the Third World Debt Crisis. Princeton, N.J., 1988.

Silverman, Dan P. Reconstructing Europe after the Great War. Cambridge, Mass., 1982. A persuasive account of events.

Siracusa, Joseph M. Safe for Democracy: A History of America, 1914–1945. Claremont, Calif., 1993. A good survey of the interwar period from an American perspective.

Siracusa, Joseph M., ed. The American Diplomatic Revolution: A Documentary History of the Cold War, 1941–1947. New York, 1976. Provides a good discussion of the background leading up to the Truman Doctrine and the Marshall Plan.

Trachtenberg, Marc. Reparation in World Politics: France and European Economic Diplomacy, 1916–1923. New York, 1980. Argues that French efforts to use reparations claims to shift costs of war and reconstruction to other countries were repeatedly rebuffed by the other major powers.

Van Tuyll, Hubert P. Feeding the Bear: American Aid to the Soviet Union, 1941–1945. New York, 1989.

Wertman, Patricia A. Lend-Lease: An Historical Overview and Repayment Issues. Washington, D.C., 1985.

Williams, Benjamin H. Economic Foreign Policy of the United States. New York, 1929. Perceptive and fair-minded contemporary account.

Wood, Robert E. From Marshall Plan to Debt Crisis: Foreign Aid and Development Choices in the World Economy . Berkeley, Calif., 1986.

Yielding, Thomas D. United States Lend-Lease Policy in Latin America. Denton, Tex., 1983.

See also Dollar Diplomacy ; Economic Policy and Theory ; Foreign Aid ; International Monetary Fund and World Bank ; Intervention and Nonintervention ; Open Door Policy ; Reparations ; Wilsonian Missionary Diplomacy .

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