The Dawes Plan was formed in 1924 when an international committee funded by the United States of America and England tried to save Germany's failing economy after the crushing reparations put upon it at the end of World War I. The Dawes Plan, named after American financier Charles G. Dawes, recommended that Germany begin paying 1,000,000,000 gold marks in the first year and increasing to 2,500,000,000 by 1928. It also called for a loan of 800,000,000 marks ($200 million) to Germany. The Dawes Plan ignored the original reparations set by the Treaty of Versailles. By 1929 the Dawes Plan was considered a big success and financial controls over Germany were relaxed. Germany factories were producing again at prewar levels and inflation was no longer a big problem. The Dawes Plan of 1924 had brought recovery and stable money back to Europe and western Europe. However the plan could not stand up during the Great Depression that began in 1929.
The Dawes Plan was an attempt to collect war reparation debts from defeated post-World War I Germany. American banker Charles G. Dawes chaired the committee that headed up this proposal. Dawes was elected Vice president of the United States and won the Nobel Peace prize for his work.
In 1929 the Dawes plan failed and the Young Plan replaced it in 1929. The plans collapsed in 1931 as payments in all directions were suspended and never restarted. The debts owed the U.S. have been forgotten.
The main points of the Dawes Plan were:
1.The Ruhr area of Germany was to be evacuated by Allied occupation troops.
2.Reparation payments would 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.
3.The German Reich bank would be reorganized under Allied supervision.
4.Foreign loans (primarily from the United States) would be made available to Germany.
5.The sources for the reparation money should include transportation, excise, and custom taxes.
- S.A. Schuker. End of French Predominance in Europe: The Financial Crisis of 1924 and the Adoption ofthe Dawes Plan (1976)