Chapter 8 looks at the famous case of German World War I reparations. Had Germany defaulted already in 1929, it would have saved two years worth of interest payments and entered autarky at the same time, as market access was by then de facto gone. At this point, the European nations did not have the ability to enforce debt contracts and the United States agreed to a de facto cancellation of reparations. The German sovereign default in the 1930s was on debt issued to pay reparations, but it also had several effects on other state liabilities, with loans offering different kinds of creditor protection. Germany in the 1920s had high levels of reparations, but was able to borrow, because it offered de facto seniority to new loans. Creditors were willing to lend into a large debt stock because they thought they would rank senior to reparations. The German default on its sovereign debt was special because it was allowed by its politically weak creditors, who were unable to enforce debt contracts in the 1930s.

Chapter 24 shows how the Atlantic peace order of the 1920s was consolidated and developed to a remarkable degree in the era of London and Locarno (1926–1929), which witnessed a revitalisation of the League of Nations after Germany’s entry in 1926, advances towards an Atlantic concert which found expression in the war-renunciation pact of 1928, and concerted efforts to pursue a pacification and accommodation process between the western powers – notably France – and Germany. It analyses the forces and reorientations that buttressed this incipient transformation and examines its impact on Europe, the United States and the world. Yet it also, finally, sheds new light on the question of why the nascent Pax Atlantica of the post-World War I era disintegrated so rapidly under the impact of the World Economic Crisis.

This chapter, devoted to the events of 1929–30, opens three chapters – Chapters 3–5 – which analyse collectively the Morgan role in the coming and development of the Depression between 1929 and 1933. Chapter 3 has as its centrepiece the Morgan effort to end what the partners saw as postwar economic warfare that was undermining European and, by extension, American prosperity. The concrete form that this took was the Young Plan (1929) that revised reparation as well as the establishment of the Bank for International Settlements, conceived as a forum to allow central banks to overcome pressing international questions. The Wall Street Crash, which surprised the Morgan partners – they did not see it coming – was, in the Morgan view, ephemeral. This stance helps us understand why Wall Street was slow to appreciate the downturn. The chapter argues that there was division among the Morgan partners as 1930 progressed on the state of the American and global economy. Leffingwell, the partnership economist, was pessimistic by the summer of 1930. In contrast Lamont continued to evince an optimistic outlook, driven in part by his desire to remain in step with the Hoover administration.

Chapter 15 covers the period from the fall of 1928 to the summer of 1929 with particular emphasis on the resurgence of the radical Right and the quest for right-wing unity culminating in the campaign against the Young Plan. What this reveals is a heated conflict between the DNVP and Stahlhelm for the leadership of the “national opposition” that was resolved only when the latter agreed to postpone its plans for a referendum to revise the Weimar Constitution so that Hugenberg could proceed with his own plans for a referendum against the Young Plan. But Hugenberg’s efforts to unify the German Right behind his crusade against the Young Plan ran into strong opposition from right-wing moderates who denounced a provision in the so-called “Freedom Law” that threatened government officials, including Hindenburg, who were responsible for negotiating the plan with imprisonment. Hugenberg’s refusal to drop the imprisonment paragraph reflected his determination to retain the support of Hitler and the NSDAP at the risk of alienating the RLB and more moderate elements in the referendum alliance. In the final analysis, the campaign against the Young Plan did not strengthen right-wing unity but only revealed how elusive that unity was.