EESTI 1919. AASTA SÕJAVÕLG AMEERIKA ÜHENDRIIKIDELE JA SELLE KUSTUTAMINE
ESTONIA’S WAR DEBT OF 1919 TO THE UNITED STATES AND DEBT REPAYMENT

Summary/Abstract: This paper discusses the Estonian debt obligations arising during the War of Independence. The paper will try to answer the question why the young Republic of Estonia needed to apply for a loan from the USA and how the loan affected Estonia’s economic development. Negotiations with the United States on a repayment plan and the terms of the agreement on funding the Estonian war debts in 1925 will also be examined. Attention will be paid to Estonia’s ability to make the payments and Estonia’s effort to meet its international obligations. After armistice, which ended the First World War, Estonia had to fight for its independence because of the invasion of Soviet Russia. The Estonian government badly needed credits to solve urgent economic problems: to supply the army with provisions, to overcome the shortage in food supply, to start industrial production and trade. For that time the most important creditor in the world was the United States of America, who directed additional credits to relief and reconstruction efforts of both the Allies and the new European nations, among which were the Baltic States, including Estonia. The Estonian government had to accept the loan terms because there was no other possibility of obtaining a loan of such a scale. European countries that had been at war for four years needed to apply for loans themselves. The northern neighbour Finland was Estonia’s first creditor, but the Finnish financial resources were limited, and for solving the food problem, the Estonian government like other European governments had to borrow money from the USA. Seed corn purchased by the Estonian government made possible the sowing operations in the spring of 1919. Large amounts of food, footwear, medicines and technical equipment were given over to the army fighting against Bolsheviks for Estonian independence. The purchases also helped to cut the shortage of food and consumer goods of Estonian citizens. The obtained machinery and equipment were necessary to set the industry on its feet.

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