The Dawes Plan (as proposed by the Dawes Committee, led by Charles G. Dawes) was a preliminary plan in 1924 to complete the World War I repayment to be paid by Germany, which had strained diplomacy after the World War I and the Treaty of Versailles.
The occupation of the Ruhr industrial zone by France and Belgium contributed to the hyperinflation crisis in Germany, partly because of its crippling effect on the German economy. The plan was given to end the occupation of the Allies, and a staggered payment plan for the payment of German war reparations. Because the Plan solves a serious international crisis, Dawes shared the Nobel Peace Prize in 1925 for his work.
It was a temporary measure and proved unworkable. The Young Plan was adopted in 1929 to replace him.
Video Dawes Plan
Background: World War I Europe
Default early German debt
At the end of World War I, Allied and Associate Powers belonged to the Treaty of Versailles, a plan for reparations to be paid by Germany. Germany is required to pay 20 billion gold marks, as a temporary measure, while the final amount is decided. In 1921, the London Payout Schedule set a German reparation rate of 132 billion gold marks (divided into various classes, requiring only 50 billion gold marks to be paid). Meanwhile, the industrialists of the German Ruhr Valley, who had lost their factory in Lorraine (Germany had taken Lorraine in 1870 and returned to France after World War I), demanded hundreds of millions of marks as compensation from the German government. Despite having a great obligation under the Treaty of Versailles, the German government paid the industrialists of the Ruhr Valley for their loss. This contributes significantly to the hyperinflation that is followed.
During the first five years after WW1, coal is scarce in Europe. France is looking for coal for steelmakers from Germany. But Germany needs coal for home heating and for their own steel industry, having lost many of their steel mills in Lorraine to France. As a means of protecting their own developing German steel industry, German coal producers - whose directors also sit on the boards of German railway companies and German steel companies - are beginning to raise the high cost despite the rate of coal export shipments to France.
In early 1923, Germany failed to pay for war reparations and German coal producers refused to send more coal across the border. In response to this, French and Belgian troops occupied the Ruhr River valley within the German border to force the German government to continue delivering coal and coke in the amount requested by the Versailles Treaty, which, Germany characterized as a heavy burden under its post-war conditions (60 % of what Germany had sent to the same area before the war began).
This occupation by the French military from Ruhr, the center of the German coal and steel industry angered the German people. They passively resist the occupation, and the economy suffers, contributing further to German hyperinflation.
The established Barclay School Committee
To simultaneously alleviate this situation and increase Germany's chances of continuing reparation payments, the Allied Reparations Commission asked Dawes to find a solution quickly. The Dawes Committee, which was pushed into action by the United Kingdom and the United States, comprised ten representatives of informal experts, two from Belgium (Baron Maurice Houtart, Emile Francqui), French (Jean Parmentier, Edgard Allix), English (Sir Josiah C Cap, Sir Robert M. Kindersley), Italy (Alberto Pirelli, Federico Flora), and United States (Dawes and Owen D. Young, designated by Trade Minister Herbert Hoover). It was entrusted with finding a solution for the collection of German reparations debt, which was set to 132 billion gold marks, and stated that America would lend to Germany, so that they could make reparations payments to Britain. Country, England and France.
Maps Dawes Plan
The main point of Dawes Plan
In an agreement in August 1924, the main points of The Dawes Plan are:
- The Ruhr region must be evacuated by foreign troops
- Repayment payments will begin on the first billion mark of the year, increasing annually to two and a half billion marks after five years
- The Reichsbank will be reset under Allied control
- Sources for reparations include transportation, excise, and customs taxes
- Germany will lend about $ 200 million, primarily through the issue of Wall Street bonds in the United States
The issue of bonds is overseen by a consortium of American investment banks, led by J.P. Morgan & amp; Co. under the supervision of the US State Department. Germany greatly benefited from the entry of foreign capital. Dawes' plan came into force in September 1924. Dawes and Sir Austen Chamberlain shared the Nobel Peace Prize.
The German economy began to recover during the mid-1920s and the country continued payments for reparations - now funded by large-scale American capital inflows. However, the Dawes Plan is considered by Germany as a temporary measure and they expect a revised solution in the future. In 1928, German Foreign Minister Gustav Stresemann called for a final plan to be established, and the Young Plan was enacted in 1929.
Results from Dawes Plan
Dawes' plan resulted in the French troops leaving the Ruhr Valley. It provided huge capital flows to the German industry, which continued to rebuild and expand. The currently available capital for German industry is functionally diverting the burden of German war reparations from German government and industry to American bond investors. The Dawes plan is also the beginning of the relationship between the German industry and the American investment bank.
The occupation of Ruhr resulted in a victory for the German steel industry and German war weapons program. By reducing the supply of coal to France, which relies on German coal, German industrialists managed to pedal the French steel industry, while rebuilding itself. In 1926, the German steel industry was dominant in Europe and this dominance only increased in the years leading up to World War II.
See also
- World War I
- Triple Entente
- World War II
- Industrial plan for Germany
- The Morgenthau Plan, 1945-47
- Marshall Plan, 1948-51
- Treaty on German Foreign Debt, debt agreement, 1953
References
Further reading
- Gilbert, Felix (1970). End of European Era: 1890 to date . New York: Norton. ISBNÃ, 0-393-05413-6 Ã,
- McKercher, B. J. C. (1990). Anglo-American Relations in the 1920s: The Struggle for Supremacy . Edmonton: University of Alberta Press. ISBNÃ, 0-88864-224-5 Ã ,
- Schuker, Stephen A. (1976). End of French Precision in Europe: 1924 Financial Crisis and Adoption of Dawes Plan . Chapel Hill: University of North Carolina Press. ISBNÃ, 0-8078-1253-6
External links
Media related to Dawes' Plan on Wikimedia Commons
- The Dawes Plan detailed in The Columbia Encyclopedia, Sixth Edition
- The Dawes Plan (very short) in EncyclopÃÆ'Â|dia Britannica
- Department of Foreign Affairs, Office of the Historian
Source of the article : Wikipedia
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