Reparations: The Dawes and the Young Plan
In early 1923 France had invaded the Ruhr area to make Germany pay reparations. Sending soldiers into the Ruhr solved nothing. The use of force did not make the Germans pay up. In November 1923 France was forced to agree to take part in a review of the reparations organized by an American banker Charles Dawes. The Dawes Plan was agreed in April 1924.
The Terms of the Dawes Plan
• There was to be a 2 year freeze on the payment of reparations.
• The level of German payments was scaled down.
• The USA offered huge loans to Germany.
• The French agreed to get their forces out of the Ruhr.
The consequences of the Dawes Plan
During the following five years the Germans paid a reparations bill of about $1 billion. and received American loans of about $2 billion; Germany did well out of the Dawes Plan. Much of the money from the American loans was spent on building new German factories.
The French had wanted reparations in order to make Germany weak. The Dawes Plan helped Germany to become even stronger. As a result of the occupation of the Ruhr the Treaty of Versailles had been significantly altered in Germanys favor.
The Young Plan: 1929
The German government continued to complain at the level of reparations. The question of reparations was reviewed in 1929 by a committee led by an American called Owen Young. The committee produced the Young Plan. This considerably reduced the amount of reparations.
The Young Plan was a considerable achievement for the German Foreign Minister Stresemann. However it did not bring peace and harmony to Germany. Extreme nationalists objected to the payment of any reparations and bitterly denounced the Young Plan.
After 1929 the Great Depression led to a great rise in unemployment in Germany and reparations effectively came to an end. In 1932 the participants in the Young Plan met to agree a conclusion to the sorry story of reparations. After a three-year freeze Germany was supposed to make a final payment. This payment was never made.
The spirit of Locarno
In the 1920s there was much discussion and debate among the most powerful countries of the world. A number of international treaties were signed.