From Dawes to Young

This chapter deals with the 1924-29 Dawes reparations arrangement. The Dawes Plan was an Anglo-American sponsored bankers’ bail out of Germany after the chaos of hyperinflation and Ruhr occupation. Germany was put in ‘receivership’, headed by an American, as Reparations Agent-General. The rescue package involved ‘transfer protection’, international supervision of German finances, railways and revenues. Germany resumed reparation payments on the basis of a partial moratorium and reduced annual payments for four years with the aid of an international pump-priming loan of $200 million. Germany recovered with further private loans, mainly from the United States. For five years Germany paid reparations with American money that returned to the United States as Britain and France used the reparation receipts to service their American war debts. That ‘virtuous’ circle ended when American loans stopped in 1928 and Germany was left with a foreign-debt mountain. A revised reparations scheme (the 1929 Young Plan) came to the rescue; but it was too late, as Germany succumbed early to the Great Depression.