AMERICAN LOANS TO 
GERMANY 
CHAPTER 1 
INTRODUCTION 
Inflation destroyed the sound monetary system of Germany 
and exhausted all the domestic credit sources based on savings. 
But throughout the inflation period the Reichsbank freely 
granted credits both to the German government and to German 
industries, thus enabling them to function after a fashion. 
With the introduction of the rentenmark (November 135, 1923), 
the Reichsbank ceased to subsidize the German government, 
which compelled the latter to balance its budget through taxa- 
tion. But the Reichsbank for many months continued to grant 
credits to German industries and this constant extension of arti- 
ficial credits was threatening a new breakdown of the currency 
system. To prevent such a disaster, the Reichsbank passed 
its famous credit restriction resolution which—as inflation had 
dried up the resources of all other domestic credit agencies—left 
to the German credit seekers practically no other alternative 
than to borrow abroad. 
The government, therefore, created the Gold-Discount-Bank 
which commenced operations on April 7, 1924, the very same 
day that the credit restriction resolution went into force. This 
Bank negotiated rediscount credits in the United States and in 
Great Britain ($25,000,000 through the International Accept- 
ance Bank in New York and £5.000,000 through English banks) 
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