After the November 1932 election of Franklin D. At the Lausanne Conference in 1932, European nations agreed to cancel their reparation claims against Germany, save for a final payment. In 1931, as the world sunk ever deeper into depression, a one-year moratorium on all debt and reparation payments was declared at the behest of President Herbert Hoover an effort to renew the moratorium the following year failed. banks had helped prop up the German economy until 1928 when these loans dried up, Germany's economy floundered. The advent of the Great Depression doomed the Young Plan from the start. The Young Plan also called for the establishment of a Bank for International Settlements, designed to facilitate the payment of reparations. Foreign supervision of German finances would cease and the last of the occupying troops would leave German soil. Another loan would be floated in foreign markets, this one totaling $300 million. Young, the head of General Electric and a member of the Dawes committee, proposed a plan that reduced the total amount of reparations demanded of Germany to 121 billion gold marks, almost $29 million, payable over 58 years. In 1929, the committee, under the chairmanship of Owen D. In the autumn of 1928, another committee of experts was formed, this one to devise a final settlement of the German reparations problem. These countries, in turn, used their reparation payments from Germany to service their war debts to the United States. banks continued to lend Germany enough money to enable it to meet its reparation payments to countries such as France and the United Kingdom. market, which was quickly oversubscribed. France and Belgium would evacuate the Ruhr and foreign banks would loan the German government $200 million to help encourage economic stabilization. Economic policy making in Berlin would be reorganized under foreign supervision and a new currency, the Reichsmark, adopted. Under the Dawes Plan, Germany's annual reparation payments would be reduced, increasing over time as its economy improved the full amount to be paid, however, was left undetermined. Dawes, the committee presented its proposal in April 1924. In late 1923, with the European powers stalemated over German reparations, the Reparation Commission struck a committee to review the situation. That same year, Congress created the United States War Debt Commission to negotiate repayment plans, on concessionary terms, with the 17 countries that had borrowed money from the United States. In 1922, London made this link explicit in the Balfour Note, which stated that it would seek reparations and wartime debt repayments from its European allies equal to its debt to the United States. Time and again, Washington rejected calls to cancel these debts in the name of the common wartime cause it also resisted efforts to link reparations to inter-allied war debts. While the United States had little interest in collecting reparations from Germany, it was determined to secure repayment of the more than $10 billion it had loaned to the Allies over the course of the war. Meanwhile, a second wartime financial issue was causing tension among the former co-belligerents. The value of the German currency collapsed the battle over reparations had reached an impasse. Inflation in Germany, which had begun to accelerate in 1922, spiraled into hyperinflation. When Germany defaulted on a payment in January 1923, France and Belgium occupied the Ruhr in an effort to make it pay instead, they met a government-backed campaign of passive resistance. In the spring of 1921, the Commission set the final bill at 132 billion gold marks, approximately $31.5 billion. Unable to agree upon the amount that Germany should pay at the Paris Peace Conference in 1919, the United States, the United Kingdom, France, and the other Allies established a Reparation Commission to settle the question. The American-sponsored Dawes and Young Plans offered a possible solution to these challenges.Īt the end of the First World War, the victorious European powers demanded that Germany compensate them for the devastation wrought by the four-year conflict, for which they held Germany and its allies responsible. In the years following the First World War, issues of debt repayment and reparations troubled relations between the Allies and the now defeated Germany. The Dawes Plan, the Young Plan, German Reparations, and Inter-allied War Debts
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