A moratorium had been placed on the war reparations payments in 1931 and a year later the delegates to the Lausanne Conference realized that the deepening world financial crisis in the Great Depression made it nearly impossible for Germany to resume its payments. However, Britain and France and other Allies had borrowed heavily to fight the war and in particular, France and Belgium were struggling after having had their infrastructure severely damaged by the fighting and by the deliberate destruction and plundering from retreating German forces as the war drew to a close. Therefore, the delegates came to an informal understanding that the permanent elimination of Germany's debt and war reparations would be subject to reaching an agreement with the United States with respect to their outstanding war debts.
In December 1932, the U.S. Congress rejected the Allied war debt reduction plan, which technically meant that the war reparations and debt reverted to the debt reduction previously granted Germany by the 1929 Young Plan. However, the system had collapsed, and Germany made no further payments. By 1933, Germany had made World War I reparations of only one eighth of the sum required under the Treaty of Versailles.