Dawes Plan

Just after the World War I, a plan was made by the Dawes committee which was chaired by Charles G. Dawes. It was called the Dawes Plan. It was formed as a sign of negotiation between the US government and Germany. It was a kind of arrangement where it was declared that Germany would be the one who would be responsible for the reparations to the Allies. This Plan was first agreed upon in the year 1924 and there are several reasons as to why it was proposed and that is what the article is about. Given below is the proper definition which and also what are the factors which led to the proposal of this Plan.

When and Why

Before going into the details as to what was the Dawes Plan, let us first try and understand why was it signed in the first place. Just after the end of World War One, the Triple Entente (alliance between Britain, France, Russia and the Third Republic), had signed the Treaty of Versailles, a peace treaty between the Allied Powers and Germany, on 1919. In this Treaty it was written that the defeated nation, Germany, had to pay for all the losses that the Allied nation had suffered during the war. This was a kind of war guilt that Germany had to pay as they were being blamed for the war and all the loss that others suffered. The total amount that Germany was asked to pay was around 226 billion German Gold Marks. This whole thing was signed in the year 1921. But, just 2 years after the whole thing was decided upon, Germany declared that they could not pay the money as Germany was economically strained. A solution was asked for by the Allied Reparations Commission, and the solution came in the form of this plan in the year 1924.

What is It

When Germany declared that they were not being able to pay the resurrection, the Dawes Committee was approached. This committee was started by both Britain and United States and there were 10 members in this committee; 2 members each from Belgium, Britain, United States, France and Italy and this committee was headed by Charles G. Dawes. According to this Plan, it was decided that Germany would take loans from United States so that they could pay back Britain and France. The main points this Plan focused on were:

• The Reichbank will have to be reorganized under the supervision of the Allies.
• The Allied occupation troops had to evacuate the Ruhr area as it was another reason for the economic strain on Germany.
• The reparation payment would begin at 1 billion mark on the first year and then it would increase up to 2 and a half billion, after 5 years, annually.
• The last condition was that the main source of the reparation money will be the excise, the custom taxes as well as transportation.

This Plan was however good news for Germany as it kind of lessened their burden of reparation, but on the other hand this made them more dependent on foreign market as well as economies. As a result, if the US economy suffered, Germany was also affected.

Dawes Plan and Young Plan

After this plan was introduced, it became obvious that Germany would take time to pay back all the loans as well as the loss that had occurred due to the war. Hence in the year 1929, the Young Plan was introduced and this Plan was put into effect on 1930. This committee was headed by the second member of United States, in the Dawes committee, Owen D. Young. This Plan further reduced the payment to around 112 billion Gold Marks.

Thus, now you know about the Dawes Plan which was signed in the year 1924, just after the First World War. It was a major event in the American history as well as the world history.