REPARATION COMMISSION. In accordance with Articles 231–235 of the Treaty of Versailles, the Reparation Commission was directed to estimate damage done by Germany to Allied civilians and their property during World War I and to formulate methods of collecting assessments. The Reparation Commission fixed German liability at 132 billion gold marks (equivalent to $10.3 trillion in 2002) to be paid in annual installments. The German people and national politicians were outraged by the size of the payments. Massive inflation and growing unemployment forced the German government to default on its reparations by the early 1920s.
Charles G. Dawes, an American banker, was asked by the Allied Reparation Commission to investigate the problems of payments. His report, published in April 1924, proposed that annual payments of reparations be paid on a fixed scale. The Dawes Plan was initially a great success because it stabilized the currency, brought inflation under control, and lowered unemployment in Germany.
The crash of the U.S. stock market in October 1929 created another financial crisis for the German economy and so another commission, under a banker named Owen Young, was set up to consider reparations. The Allies adopted the Young Plan which reduced Germany's liability to $3.1 trillion with installments paid annually until 1988. When the payments started in May 1930, the Reparation Commission ceased to exist.
Dawes, Rufus Cutler. The Dawes Plan in the Making. Indianapolis, Ind.: Bobbs-Merrill, 1925.
Keynes, John Maynard. The Economic Consequences of the Peace. New York: Penguin, 1988.
Reparations Commission. Record Group 43, Series 56–57, Boxes 1–3, Records of International Conferences, Commissions and Expositions, National Archives.
Von Strandmann, Hartmut P., ed. Walter Rathenau: Industrialist, Banker, Intellectual, and Politician: Notes and Diaries 1907– 1922. Translated by Hilary Von Strandmann. New York: Oxford University Press, 1987.