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The Dawes Plan (as proposed by the Dawes Committee, chaired by
Charles G. Dawes Charles Gates Dawes (August 27, 1865 – April 23, 1951) was an American banker, general, diplomat, composer, and Republican politician who was the 30th vice president of the United States from 1925 to 1929 under Calvin Coolidge. He was a co-reci ...
) was a plan in 1924 that successfully resolved the issue of
World War I reparations Following the ratification of article 231 of the Treaty of Versailles at the conclusion of World War I, the Central Powers were made to give war reparations to the Allied Powers. Each of the defeated powers was required to make payments in eith ...
that Germany had to pay. It ended a crisis in European diplomacy following
World War I World War I (28 July 1914 11 November 1918), often abbreviated as WWI, was one of the deadliest global conflicts in history. Belligerents included much of Europe, the Russian Empire, the United States, and the Ottoman Empire, with fightin ...
and the
Treaty of Versailles The Treaty of Versailles (french: Traité de Versailles; german: Versailler Vertrag, ) was the most important of the peace treaties of World War I. It ended the state of war between Germany and the Allied Powers. It was signed on 28 June ...
. The plan provided for an end to the Franco-Belgian occupation of the Ruhr, and a staggered payment plan for Germany's payment of
war reparations War reparations are compensation payments made after a war by one side to the other. They are intended to cover damage or injury inflicted during a war. History Making one party pay a war indemnity is a common practice with a long history. ...
. Because the Plan resolved a serious international crisis, Dawes shared the
Nobel Peace Prize The Nobel Peace Prize is one of the five Nobel Prizes established by the will of Swedish industrialist, inventor and armaments (military weapons and equipment) manufacturer Alfred Nobel, along with the prizes in Nobel Prize in Chemistry, Chemi ...
in 1925 for his work. The Dawes Plan was put forward and was signed in Paris on August 16, 1924. This was done under the Foreign Secretary of Germany,
Gustav Stresemann Gustav Ernst Stresemann (; 10 May 1878 – 3 October 1929) was a German statesman who served as chancellor in 1923 (for 102 days) and as foreign minister from 1923 to 1929, during the Weimar Republic. His most notable achievement was the reconci ...
. Stresemann was Chancellor after the Hyperinflation Crisis of 1923 and was in charge of getting Germany back to its global reputation for being a fighting force. However, he resigned from his position as Chancellor in November 1923 while remaining Foreign Secretary of Germany.


Background: World War I Europe


The initial German debt defaults

At the conclusion of World War I, the Allied and Associate Powers included in the
Treaty of Versailles The Treaty of Versailles (french: Traité de Versailles; german: Versailler Vertrag, ) was the most important of the peace treaties of World War I. It ended the state of war between Germany and the Allied Powers. It was signed on 28 June ...
a plan for
reparations Reparation(s) may refer to: Christianity * Restitution (theology), the Christian doctrine calling for reparation * Acts of reparation, prayers for repairing the damages of sin History *War reparations **World War I reparations, made from G ...
to be paid by Germany; 20 billion gold marks was to be paid while the final figure was decided. In 1921, the London Schedule of Payments established the German reparation figure at 132 billion gold marks (separated into various classes, of which only 50 billion gold marks was required to be paid). German industrialists in the Ruhr Valley, who had lost factories in Lorraine which went back to France after the war, demanded hundreds of millions of marks compensation from the German government. Despite its obligations under the Versailles Treaty, the German government paid the Ruhr Valley industrialists, which contributed significantly to the
hyperinflation In economics, hyperinflation is a very high and typically accelerating inflation. It quickly erodes the real value of the local currency, as the prices of all goods increase. This causes people to minimize their holdings in that currency as t ...
that followed. For the first five years after the war, coal was scarce in Europe and France sought coal exports from Germany for its steel industry. The Germans needed coal for home heating and for domestic steel production, having lost the steel plants of Lorraine to the French. To protect the growing German steel industry, German coal producers—whose directors also sat on the boards of the German state railways and German steel companies—began to increase shipping rates on coal exports to France. In early 1923, Germany defaulted on its reparations and German coal producers refused to ship any more coal across the border. French and
Belgian Belgian may refer to: * Something of, or related to, Belgium * Belgians, people from Belgium or of Belgian descent * Languages of Belgium, languages spoken in Belgium, such as Dutch, French, and German *Ancient Belgian language, an extinct languag ...
troops conducted the Occupation of the Ruhr to compel the German government to resume shipments of coal and steel. Germany characterized the demands as onerous under its post war condition (60 per cent of what Germany had been shipping into the same area before the war began). This occupation of the Ruhr, the centre of the German coal and steel industries, outraged many German people. There was passive resistance to the occupation and the economy suffered, contributing further to the German
hyperinflation In economics, hyperinflation is a very high and typically accelerating inflation. It quickly erodes the real value of the local currency, as the prices of all goods increase. This causes people to minimize their holdings in that currency as t ...
.Noakes, Jeremy. ''Documents on Nazism, 1919–1945'', p. 53


Dawes committee

To simultaneously defuse this situation and increase the chances of Germany resuming reparation payments, the Allied
Reparations Reparation(s) may refer to: Christianity * Restitution (theology), the Christian doctrine calling for reparation * Acts of reparation, prayers for repairing the damages of sin History *War reparations **World War I reparations, made from G ...
Commission asked Dawes to find a solution fast. The Dawes committee, which urged into action by Britain and the United States, consisted of ten informal expert representatives, two each from Belgium (Baron
Maurice Houtart Baron Maurice Jules Marie Emmanuel Eleuthère Houtart (1866–1939) was a Belgian politician. Family Maurice was born the son of Baron Jules Houtart (1844-1928). He married Marcelle Jooris (1878-1924), daughter of Emile Jooris, the mayor of Vard ...
,
Emile Francqui Emil or Emile may refer to: Literature *'' Emile, or On Education'' (1762), a treatise on education by Jean-Jacques Rousseau * ''Émile'' (novel) (1827), an autobiographical novel based on Émile de Girardin's early life *'' Emil and the Detecti ...
), France (Jean Parmentier, Edgard Allix),
Britain Britain most often refers to: * The United Kingdom, a sovereign state in Europe comprising the island of Great Britain, the north-eastern part of the island of Ireland and many smaller islands * Great Britain, the largest island in the United King ...
(Sir Josiah C. Stamp, Sir Robert M. Kindersley),
Italy Italy ( it, Italia ), officially the Italian Republic, ) or the Republic of Italy, is a country in Southern Europe. It is located in the middle of the Mediterranean Sea, and its territory largely coincides with the homonymous geographical re ...
(Alberto Pirelli, Federico Flora), and the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
(Dawes and Owen D. Young, who were appointed by Commerce Secretary
Herbert Hoover Herbert Clark Hoover (August 10, 1874 – October 20, 1964) was an American politician who served as the 31st president of the United States from 1929 to 1933 and a member of the Republican Party, holding office during the onset of the Gr ...
). It was entrusted with finding a solution for the collection of the German reparations debt, which was determined to be 132 billion gold marks, as well as declaring that America would provide loans to the Germans, in order that they could make reparations payments to the United States, Britain and France.


Main points of the Dawes Plan

In an agreement of August 1924, the main points of the Dawes Plan were: # The Ruhr area was to be evacuated by foreign troops # Reparation payments would begin at one billion marks the first year, increasing annually to two and a half billion marks after five years # The ''
Reichsbank The ''Reichsbank'' (; 'Bank of the Reich, Bank of the Realm') was the central bank of the German Reich from 1876 until 1945. History until 1933 The Reichsbank was founded on 1 January 1876, shortly after the establishment of the German Empi ...
'' would be re-organized under Allied supervision # The sources for the reparation money would include
transport Transport (in British English), or transportation (in American English), is the intentional movement of humans, animals, and goods from one location to another. Modes of transport include air, land (rail and road), water, cable, pipeline, an ...
ation,
excise file:Lincoln Beer Stamp 1871.JPG, upright=1.2, 1871 U.S. Revenue stamp for 1/6 barrel of beer. Brewers would receive the stamp sheets, cut them into individual stamps, cancel them, and paste them over the Bunghole, bung of the beer barrel so when ...
, and customs taxes # Germany would be loaned about $200 million, primarily through Wall Street bond issues in the United States The bond issues were overseen by a consortium of American investment banks, led by J.P. Morgan & Co. under the supervision of the US State Department. Germany benefitted enormously from the influx of foreign capital. The Dawes Plan went into effect in September 1924. Dawes and Sir
Austen Chamberlain Sir Joseph Austen Chamberlain (16 October 1863 – 16 March 1937) was a British statesman, son of Joseph Chamberlain and older half-brother of Prime Minister Neville Chamberlain. He served as Chancellor of the Exchequer (twice) and was briefly ...
shared the
Nobel Peace Prize The Nobel Peace Prize is one of the five Nobel Prizes established by the will of Swedish industrialist, inventor and armaments (military weapons and equipment) manufacturer Alfred Nobel, along with the prizes in Nobel Prize in Chemistry, Chemi ...
. The economy of Germany began to rebound during the mid-1920s and the country continued with the payment of reparations—now funded by the large scale influx of American capital. However, the Dawes Plan was considered by the Germans as a temporary measure and they expected 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 The Young Plan was a program for settling Germany's World War I reparations. It was written in August 1929 and formally adopted in 1930. It was presented by the committee headed (1929–30) by American industrialist Owen D. Young, founder and for ...
was enacted in 1929.


Results of the Dawes Plan

The Dawes Plan resulted in French troops leaving the Ruhr Valley. It provided a large capital influx to German industry, which continued to rebuild and expand. The capital now available to German industry functionally transferred the burdens of Germany's war reparations from German government and industry to American bond investors. The Dawes Plan was also the beginning of the ties between German industry and American investment banks. The Ruhr occupation resulted in a victory for the German steel industry and the German re-armament program. By reducing the supplies of coal to France, which was dependent on German coal, German industrialists managed to hobble France's steel industry, while getting their own rebuilt. By 1926, the German steel industry was dominant in Europe and this dominance only increased in the years leading to WWII.Martin, James Stewart. "All Honorable Men", p. 46.


See also

*World War I **
Article 231 of the Treaty of Versailles Article often refers to: * Article (grammar), a grammatical element used to indicate definiteness or indefiniteness * Article (publishing), a piece of nonfictional prose that is an independent part of a publication Article may also refer to: G ...
**
Historiography of the causes of World War I Historians writing about the origins of World War I have differed over the relative emphasis they place upon the factors involved. Changes in historical arguments over time are in part related to the delayed availability of classified historical a ...
**
Triple Entente The Triple Entente (from French '' entente'' meaning "friendship, understanding, agreement") describes the informal understanding between the Russian Empire, the French Third Republic, and the United Kingdom of Great Britain and Ireland as well a ...
**
War guilt question The war guilt question (german: Kriegsschuldfrage) is the public debate that took place in Germany for the most part during the Weimar Republic, to establish Germany's share of responsibility in the causes of the First World War. Structured in ...
*World War II **
Allied plans for German industry after World War II The industrial plans for Germany were designs the Allies considered imposing on Germany in the Aftermath of World War II to reduce and manage Germany's industrial capacity. Background At the Potsdam conference (July–August 1945), with the US ...
**
Morgenthau Plan The Morgenthau Plan was a proposal to eliminate Germany following World War II and eliminating its arms industry and removing or destroying other key industries basic to military strength. This included the removal or destruction of all industr ...
, 1945–1947 **
Marshall Plan The Marshall Plan (officially the European Recovery Program, ERP) was an American initiative enacted in 1948 to provide foreign aid to Western Europe. The United States transferred over $13 billion (equivalent of about $ in ) in economic re ...
, 1948–1951 **
London Agreement on German External Debts The London Agreement on German External Debts, also known as the London Debt Agreement (German: ''Londoner Schuldenabkommen''), was a debt relief treaty between the Federal Republic of Germany and creditor nations. The Agreement was signed in L ...
, debt agreement, 1953


References


Further reading

* * *


External links


The Dawes Plan detailed at The Columbia Encyclopedia, Sixth Edition
*
State Department, Office of the Historian
{{Authority control Aftermath of World War I in Germany Economic history of France Economic history of Belgium French Third Republic 1924 in Belgium History of the foreign relations of the United States 1924 in the United States Reparations 1924 in economics 1924 in Germany