Dawes Plan

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  Germany

  A Companion to German Studies

  • Jethro Bithell(Author)
  • 2019(Publication Date)
  • Routledge

    (Publisher)

  The first most important movement towards the political restoration of Europe after five years of folly, such as we have described, was the Report of the Dawes and McKenna Committees appointed by the Reparations Commission on the 3rd November 1923 to study methods of balancing the Budget and stabilizing German currency and to suggest plans for repatriating capital which had flown out of Germany since the conclusion of the war. The proposals of those Committees are summarized later in this chapter as belonging to economic development; but, as some part of them required a change in the German constitution, they had important political repercussions. In the election which took place after the publication of the Dawes Plan the Nationalists obtained 106 seats as against 67 in the previous Parliament, while the Government Parties all lost ground: the Centre Party from 68 to 65; the People’s Party from 66 to 44; the Democrats from 39 to 28; and the Bavarian People’s Party from 20 to 16. The Communists won 62 seats, and the Socialists lost 73, their representation being now only 100. In spite of this the Dawes Plan was accepted on 29th August by the Government, and the new period of stabilized economic and political conditions set in.

  A further critical stage in German politics took place at the end of February 1925, when Ebert the President died suddenly. In the resultant elections the candidate put forward by the Nationalists, Field-Marshal von Hindenburg, was successful, and it was felt that the transition to Monarchism was now only a matter of time; but the election of Hindenburg meant the complete defeat of Nationalism owing to the qualities of character and of resolution possessed by Hindenburg himself. The extremists had not counted on a sense of duty which would consider loyalty to the Republic as an act of faith and an act of honour, and which could not be qualified by any suggestion of disloyalty; and so, during its most critical period, 1925–31, the German Republic found its greatest strength and its worthiest commendation in the character and the policy of the Field-Marshal who had striven most bitterly in the war to carry out the Imperialistic aims of the old Imperial regime.

  Through the Dawes Plan Germany obtained some measure of liquidation of international financial difficulties and could look forward to a programme of industrial and financial reconstruction without interference from France. It was essential now to obtain in the political sphere some small measure of consolidation and stabilization. Such a measure would be based on international arrangements similar in inspiration to that of the Dawes Plan – arrangements which would meet the French desire for security and allow Germany to take once more its proper position as one of the leading European Powers represented in the League of Nations.

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  The Reconstruction of Western Europe 1945-1951

  • Alan S. Milward(Author)
  • 2013(Publication Date)
  • Routledge

    (Publisher)

  The Economic Consequences of the Peace (London, 1919), p. 14.

  2 There are numerous accounts of these plans: J. Bariéty, Les Relations franco-allemandes après la première guerre mondiale (Paris, 1977); S.A. Schaker, The End of French Predominance in Europe: The Financial Crisis of 1924 and the Adoption of the Dawes Plan (Chapel Hill, 1976); M. Trachtenberg, Reparation in World Politics. France and European Economic Diplomacy, 1916–1923 (New York, 1980).

  The success of their efforts in 1940 showed how useless all French policies after 1918 had been in providing any reasonable form of national security. The unconditional surrender of Germany in 1945 was seen therefore as an opportunity which must not be missed. Germany was to be permanently weakened by being turned once more into a weak confederation of states with no central institutions. One of these states, which would embrace the Ruhr area, would have a different status; it would be ‘internationalized’ so that its resources were at the disposal of other European economies as well as Germany.

  Although these plans already formed the basis of foreign policy towards Germany under the provisional government they found no hearing at Potsdam where France took no part in the formulation of the first basic decisions between the occupying powers on the future of Germany. In one sense the decisions taken there did not seem too far removed from French wishes, especially the agreement to enforce very low levels of output on the German economy, to extract reparations, and to restrict the German standard of living so as to use Germany’s resources for the reconstruction of Europe’s other economies. The consequences for the German economy and population were in fact even more severe than intended, partly because of the ruthless seizure of resources by the occupying powers and partly because of the failure to implement properly the corollary of these agreements, that Germany should be treated as one economy. In effect, the four occupation zones were run from the outset like separate independent economies and one consequence was that before 1948 neither output nor the standard of living in Germany had even attained the harsh upper limits set for them. In another sense, however, the Potsdam agreements ran directly counter to French wishes. Whatever happened in practice, the principle had been established there that Germany was to be treated and governed as an economic entity. The reparations which were to be paid to the Soviet Union, for example, were to be provided not merely from the Soviet zone of occupation but from the western zones as well. The American wish to proceed to a comprehensive settlement with the Soviet Union, starting from the basis of the Potsdam agreements and the Russian wish to maintain the authority of the Allied Control Council as, at least, the guarantee of future reparations payments, were likely to be formidable barriers to any further infringements of German territorial integrity. As for the Ruhr itself, it had passed under British occupation and there seemed no good reason why the British should give up to international control the most important part of their occupation zone.

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  The Fall of the House of Speyer

  The Story of a Banking Dynasty

  • George W. Liebmann(Author)
  • 2015(Publication Date)
  • I.B. Tauris

    (Publisher)

  It was estimated that Germany paid in all 22.9 billion marks in reparations: 10.5 billion marks before the Dawes Plan, 7.6 billion under the Dawes Plan and 3.7 billion under the Young Plan, plus 1.1 billion as corrections, including deliveries in kind. ‘By and large American and Allied creditors and investors paid German reparations. It was only reasonable, Germany did not have the money and they had. The Dawes Plan did not solve the transfer payments, Germany was never permitted to develop trade surpluses that would have given her the excess funds to finance real payments. In fact, Germany’s trade balance was passive. She simply lacked the money, but she had to pay it. She solved the problem by paying interest rates of up to 9 per cent, double those of other countries. This solution worked on the principle of the classic swindle, which attracts victims by offering returns greater than those of a sound business. The disproportionate returns bring in new waves of investors whose money and not the profits is used to finance the large payments to the original investors. Eventually something awakens doubt; new investors are frightened away, the old ones try to sell out, and the operation collapses. This is what happened to Germany during the Depression and Bruning’s chancellorship.’

  This is a slight overstatement, at least as to the interest payments, which almost never exceeded 7.5 per cent.

  The younger Morgan’s anti-Semitism was certainly robust. ‘[E]xcept for his attitude toward the Jews, which I consider wholesome, the new Dictator of Germany seems to me very much like the old Kaiser,’ he said in 1933. The Morgan bank was instrumental in excluding Speyer from the Dawes Plan loan to the German national government in 1924:

  Morgan drew the line at Speyer and Co. who had been excluded from the Morgan syndicates since 1905 after allegedly violating the boundaries of the gentlemen’s code. The partners in New York [Morrow, Leffingwell and others] felt the [Speyer] firm should be included in the German loan. That did not ‘mean that we desire or intend to establish personal relationships with Speyers which would be obnoxious to all of us’.

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  The Elusive Quest

  America's Pursuit of European Stability and French Security, 1919-1933

  • Melvyn P. Leffler(Author)
  • 2017(Publication Date)
  • The University of North Carolina Press

    (Publisher)

  5

  Activating the Capacity-to-pay Formula

  The signing of the London accords on reparations in August 1924 convinced American officials that the time was right to pressure the French into refunding their war debts and balancing their budget, essential prerequisites of currency stabilization. On 20 September 1924 Arthur N. Young, economic adviser in the Department of State, wrote Secretary of State Hughes that the Dawes Plan paved the way for a settlement of the war debts. The reparations accord, he insisted, clarified France’s fiscal position and her future capacity to pay war debts. Further delays in initiating debt negotiations, he argued, might not only discourage French efforts to undertake necessary financial reforms but also induce a feeling that the wartime obligations were not to be taken seriously. A debt settlement with France, Young emphasized, would establish an essential precedent for similar accords with other European nations, lower taxes within the United States, and reduce the national debt.6

  Since President Coolidge had already stated his willingness to submit to Congress any plan recommended by the WDC ,7 that organization’s immediate task was to establish a satisfactory basis for conducting the debt negotiations. Within the WDC the factors that had influenced policymaking in 1922 and early 1923 still applied. Fiscal demands, popular pressures, and legislative restrictions called for a rigid bargaining posture; commercial imperatives, international financial considerations, and foreign outcries demanded American flexibility and generosity. But the importance of each of these factors had been modified by events. Ratification of the British debt settlement indicated that the legislative branch of government might acquiesce to certain deviations from the original congressional enactment. Moreover, Republican victories in the 1924 elections engendered hopes that the Sixty-ninth Congress might be more responsive to the administration’s initiatives than had been the Sixty-eighth. Furthermore, internal developments in 1924, including the passage of the bonus bill, the reduction of taxes, the appearance of budgetary surpluses, and the decrease in the long-term public debt, had altered the domestic situation and opened up the possibility of a more conciliatory Congress on the question of war debts.8

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  German Liberalism and the Dissolution of the Weimar Party System, 1918-1933

  • Larry Eugene Jones(Author)
  • 2017(Publication Date)
  • The University of North Carolina Press

    (Publisher)

  18

  When the Nationalist delegation split by a 52–48 margin in the decisive vote on 29 August and thereby assured ratification of the Dawes Plan by the necessary two-thirds majority, Stresemann found himself under heavy pressure from the DVP’s right wing to honor the commitment the party’s Reichstag delegation had made to the Nationalists. But the fact that those Nationalists who supported ratification of the Dawes Plan had come under heavy attack from the DNVP’s state and local organizations made Stresemann extremely reluctant to pursue the matter until the situation within the DNVP had been clarified.19 Consequently, it was not until the end of September that the leaders of the DVP Reichstag delegation resumed their efforts to bring the Nationalists into the government.20 Even then, Marx was still extremely apprehensive about the diplomatic implications of the DNVP’s entry into the government, and at a ministerial conference on 1 October he announced that he intended to invite not only the DNVP but also the Social Democrats to participate in negotiations aimed at broadening the basis of his governmental coalition. But the Nationalists, who clearly preferred remaining in opposition to joining a coalition with the Social Democrats, were conveniently spared the public onus for the collapse of negotiations when on 9 October the leaders of the SPD Reichstag delegation rejected the idea of a coalition government stretching from their party to the DNVP and withdrew from further deliberations. This cleared the way for an accommodation with the Nationalists, who on the following day agreed not only to recognize the Weimar Constitution as legally binding upon themselves and their party but also to accept the Dawes Plan and all of its provisions as irrevocable facts of Germany’s political life. At this point, only an unresolved difference of opinion regarding Germany’s bid for membership in the League of Nations seemed to stand in the way of the DNVP’s entry into the government.21

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