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Dawes Plan

DAWES PLAN

DAWES PLAN, which was adopted in August 1924, resulted from Germany's failure to pay its World War I reparations. Germany began defaulting on its payments in January 1923 as a consequence of its refusing to raise taxes and allowing spiraling inflation to destroy the value of the mark. Beginning in January 1924, a group of business experts headed by the Chicago banker Charles G. Dawes devised a system for currency stabilization and payment reductions. Under the Dawes Plan, American and British bankers provided loans to enable Germany to expand production and make reparations payments to the Allies; these payments rose gradually until 1929, when the Young Plan again reduced the final amount owed. But with the onset of the Great Depression, Germany ceased reparations payments, and in 1932 the Allies canceled them altogether. Germany transferred a total of 16.8 billion marks to the Allies while receiving 44.7 billion in speculative mark purchases and loans, resulting in investors paying "reverse reparations."

BIBLIOGRAPHY

Kent, Bruce. The Spoils of War: The Politics, Economics, and Diplomacy of Reparations, 1918–1932. Oxford: Clarendon Press, 1989.

McNeil, William C. American Money and the Weimar Republic: Economics and Politics on the Eve of the Great Depression. New York: Columbia University Press, 1986.

Parrini, Carl P. Heir to Empire: United States Economic Diplomacy, 1916–1923. Pittsburgh, Pa.: University of Pittsburgh Press, 1969.

Schuker, Stephen A. American "Reparations" to Germany, 1919– 33: Implications for the Third-World Debt Crisis. Princeton, N.J.: Princeton University Press, 1988.

Trachtenberg, Marc. Reparation in World Politics: France and European Economic Diplomacy, 1916–1923. New York: Columbia University Press, 1980.

James I.Matray

See alsoYoung Plan .

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Dawes Plan

Dawes Plan, presented in 1924 by the committee headed (1923–24) by Charles G. Dawes to the Reparations Commission of the Allied nations. It was accepted the same year by Germany and the Allies. The Dawes committee consisted of ten representatives, two each from Belgium, France, Great Britain, Italy, and the United States; it was entrusted with finding a solution for the collection of the German reparations debt, set at almost 20 billion marks. Germany had been lagging in payment of this obligation, and the Dawes Plan provided that the Ruhr area be evacuated by Allied occupation troops, that reparation payment should begin at 1 billion marks for the first year and should rise over a period of four years to 2.5 billion marks per year, that the German Reichsbank be reorganized under Allied supervision, and that the sources for the reparation money should include transportation, excise, and custom taxes. The plan went into effect in Sept., 1924. Although German business picked up and reparations payments were made promptly, it became obvious that Germany could not long continue those huge annual payments. As a result, the Young Plan was substituted in 1929.

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Dawes Plan

Dawes Plan (1924) Measure devised by a committee chaired by Charles Dawes to collect and distribute German reparations after World War I. It established a schedule of payments and arranged for a loan of 800 million marks by US banks to stabilize the German currency.

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