Young Plan was a program for settling German reparations debts
World War I
World War I written in August 1929 and formally adopted in 1930.
It was presented by the committee headed (1929–30) by American
industrialist Owen D. Young, creator and ex-first chairman of the
Radio Corporation of America
Radio Corporation of America (RCA), who, at the time, concurrently
served at board of trustees of the Rockefeller Foundation, and also
had been one of the representatives involved in previous war
reparations restructuring arrangement – the
Dawes Plan of 1924. The
Inter-Allied Reparations Commission
Inter-Allied Reparations Commission established the German reparation
sum at a theoretical total of 132 billion, but a practical total of 50
billion gold marks. After the
Dawes Plan was put into operation in
1924, it became apparent that
Germany would not willingly[citation
needed] meet the annual payments over an indefinite period of
time. The
Young Plan reduced further payments by
about 20 percent. Although the theoretical total was 112 billion Gold
Marks, equivalent to US ca. $27 billion in 1929 (US$ 114 billion in
2018) over a period of 58 years, which would end in 1988, few
expected the plan to last for much more than a decade. In addition,
Young Plan divided the annual payment, set at two billion Gold
Marks, US $473 million, into two components: one unconditional part,
equal to one third of the sum, and a postponable part, equal to the
remaining two-thirds, which would incur interest and be financed by a
consortium of American investment banks coordinated by J.P. Morgan
1 The Plan
2 Subsequent events
3 Opposition to war reparations: the "Liberty Law"
5 Further reading
Owen Young, 1924
The Committee, which had been appointed by the Allied Reparations
Committee, met in the first half of 1929, and submitted its first
report on June 7 of that year. In addition to Young, the United States
was represented by J. P. Morgan, Jr., the prominent banker, and his
partner, Thomas W. Lamont. The report met with great objections from
United Kingdom but, after a first Conference in The Hague, a plan
was finalised on August 31. The plan was formally adopted at a second
Hague Conference, in January 1930.
Amongst other provisions, the plan called for an international bank of
settlements to handle the reparations transfers. The resulting Bank
for International Settlements was duly established at the Hague
Conference in January.
Between agreement and adoption of the plan came the Wall Street Crash
of 1929, of which the main consequences were twofold. The American
banking system had to recall money from Europe, and cancel the credits
that made the
Young Plan possible. Moreover, the downfall of imports
and exports affected the rest of the world. By 1933, almost two-thirds
of world trade had vanished. A new trade policy was set with the
Smoot–Hawley Tariff Act. The latter was influenced by nationalism
and the adopted economic policy. Unemployment soared to 33.7% in 1931
in Germany, and 40% in 1932. Under such circumstances, U.S. President
Herbert Hoover issued a public statement that proposed a one-year
moratorium on the payments. He managed to assemble support for the
moratorium from 15 nations by July 1931. But the adoption of the
moratorium did little to slow economic decline in Europe.
gripped by a major banking crisis. A final effort was made at the
Lausanne Conference of 1932. Here, representatives from Great Britain,
France, Italy, Belgium,
Germany and Japan gathered to come to an
agreement. By that time it was clear that the deepening depression had
made it impossible for
Germany to resume its reparations payments.
Not to press
Germany for immediate payments.
To reduce indebtedness by nearly 90% and require
Germany to prepare
for the issuance of bonds. This provision was close to cancellation,
reducing the German obligation from the original $32.3 billion to $713
It was also informally agreed among the delegates that these
provisions would be ineffective unless the US government agreed to the
cancellation of war debts owed by the Allied governments.
Hoover made the obligatory public statement about the lack of any
connection between reparations and war debts, however 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 did not resume
payments. Once the National Socialist government consolidated power,
the debt was repudiated and
Germany made no further payments. By 1933,
Germany had made
World War I reparations
World War I reparations of only one eighth of the sum
required under the Treaty of Versailles, and owing to the repudiated
American loans the United States in effect paid "reparations" to
Germany. The plan ultimately failed, not because of the U.S. Congress'
refusal to go along, but because it became irrelevant upon Hitler's
rise to power.
After Germany’s defeat in World War II, an international conference
(London Agreement on German External Debts, 1953) decided that Germany
would pay the remaining debt only after the country was reunified.
Germany paid off the principal by 1980; then in
1995, after reunification, the new German government announced it
would resume payments of the interest.
Germany was due to pay off the
interest to the United States in 2010, and to other countries in
2020. In 2010, Time reported that
Germany made "final
reparations-related payment for the Great War on Oct. 3, nearly 92
years after the country's defeat by the Allies." 
This agreement had been preceded by bitter diplomatic struggles, and
its acceptance aroused nationalist passions and resentment. It also
weakened, rather than helped, the advocates of a policy of
Opposition to war reparations: the "Liberty Law"
Main article: German referendum, 1929
Although the Young plan had effectively reduced Germany's obligations,
it was opposed by parts of the political spectrum in Germany.
Conservative groups had been most outspoken in opposition to
reparations and seized on opposition to the
Young Plan as an issue. A
coalition was formed of various conservative groups under the
leadership of Alfred Hugenberg, the head of the German National
People's Party. One of the groups that joined this coalition was Adolf
Hitler and the National Socialist German Workers Party.
The coalition's goal was the enactment of the Freiheitsgesetz
("Liberty Law"). This law would renounce all reparations and make it a
criminal offense for any German official to cooperate in their
collection. It would also renounce the German acknowledgement of "war
guilt" and the occupation of German territory which were also terms of
the Treaty of Versailles.
Under the terms of the German constitution, if ten percent of the
eligible voters in the country signed a petition in favor of a
proposed law, the Reichstag had to put the matter to a vote. If the
Reichstag voted against the law, the proposal would automatically be
put to a national referendum. If fifty percent of the people voted in
favor of it, it would become a law.
The Liberty Law proposal was officially put forth on October 16, 1928.
The National Socialists and other groups held large public rallies to
collect signatures. The government opposed the Liberty Law and staged
demonstrations against it. However, the coalition succeeded in
collecting enough names to put the proposal before the Reichstag. The
Reichstag voted the bill down by a 318-82 margin. In the subsequent
popular vote on December 22, the Liberty Law referendum only received
13.8 percent of the votes in its favor.
While the Liberty Law was not enacted in 1929, the campaign for it was
a major factor in bringing Hitler and the National Socialists into the
political mainstream. Following the defeat, Hitler denounced Hugenberg
and said the loss was a result of his poor leadership. Hugenberg and
many other conservatives soon found themselves being eclipsed by the
National Socialists. Hitler would later enact by decree most of the
proposals of the Liberty Law after achieving power.
United Nations portal
^ Dunlap, Annette B. (2016). Charles Gates Dawes: A Life. Evanston,
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^ Willoughby 2000, p. 72
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^ Suddath, Claire (October 4, 2010). "Why Did
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World War I Just End?".
^ Stäbler, Wolfgang. "Young-Plan, 1929/30-1932". Historisches Lexikon
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^ "Die große Koalition 1928-1930", in: Jasper, Gotthard. Die Weimarer
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Paris Peace Conference, 1919
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