Weimar Republic bonds in dispute

Stephen Beard Sep 9, 2010

Weimar Republic bonds in dispute

Stephen Beard Sep 9, 2010


Kai Ryssdal: The basic concept behind a bond is pretty simple: You borrow money, you pay it back with interest, even with more than 80 years of interest. Some American investors have taken Germany to court over some really old German government bonds.

From the Marketplace European Desk in London, Stephen Beard reports.

Stephen Beard: The bonds have a rocky past: Issued by the so-called Weimar Republic in the 1920s, canceled by Hitler, they became apparently worthless, consigned to the dustbin of history.

But not according to Miami-based attorney Sam Dubbin.

Dubbin: Any government — German or any other government — needs to understand that if it’s going to borrow from people who put up money in good faith, the government will be held responsible for what it promised to do.

Dubbin’s client is an American company that’s bought hundreds of these Weimar bonds with a face value of millions of dollars. The company wants that cash and that’s why it’s suing the German government.

Dubbin: People who invest in government bonds deserve to be paid back, and that’s what this litigation is intending to vindicate.

The German government, however, says the claim is baseless.

Ingrid Jaeger: They were paid already and the bonds have no value anymore.

Ingrid Jaeger is with the Federal Office for Unresolved Property Issues in Berlin. She says Germany repaid most of the bonds back in the 1950s, including all of those that are now held by American litigants.

Jaeger: There was a deadline in 1958 and all these bonds were paid.

Beard: You’re going to fight this case then? You’re not going to pay up?

Jaeger: No, we won’t.

It’s a complicated case involving Russian soldiers and stolen bond certificates. The German government has support from a surprising quarter.

Tim Leunig: Sometimes people have to accept that the past has happened and it’s best just to leave it alone.

That, believe it or not, is an economic historian, Tim Leunig of the London School of Economics. He says raking over ancient property rights is pointless.

Leunig: Certainly, when it’s some really dramatic event like the Great Depression, Hitler, the Second World War and then the post-war German settlement. That’s enough history to accept that the past is the past.

He says the American litigants are just out for a quick buck and have no moral claim against today’s government in Berlin. But a court in Miami disagrees — it’s ruled that Germany does have a case to answer.

In London, this is Stephen Beard for Marketplace.

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