Dawes Plan (1924)
The Dawes Plan was influenced by the report and ideas of Charles G. Dawes while in Germany. Stabilizing Germany’s economic status and providing assistance to help Germany pay the reparations for World War One were the essential goals of this plan. This plan first started when the allies recognized the large amount of reparation that Germany was required to pay and so the Allied Reparations Committee of 1921 requested Charles G. Dawes to file a report about Germany’s economy. As an American banker, Mr. Dawes had many innovative ideas that would soon lead to Germany’s economic improvement. The report of Charles included the main points of: A) reforming finance in Germany and building gold reserves. B) Creating various new taxes in Germany. C) Paying the reparations in annual installments as opposed to paying it all at once. D) Giving large amounts of loans to Germany to pay off the reparations. In order to help Germany pay the reparations, Mr. Dawes also believed that a moratorium was needed to suspend the reparations of Germany. After Mr. Dawes gave his proposal to the ten representatives of Belgium, France, Britain, Italy and the United States, they agreed on the Dawes Plan. Adolf Hitler and Alfred Hugenburg disliked the Dawes Plan as it didn’t decrease the amount of reparations of Germany and it gave foreigners control of Germany’s economy. But in the German parliament, foreign minister Gustav Stresemann had 2/3 of the people in the parliament agree with the Dawes Plan mainly with the support of the Social Democrats. In August 27, 1924, the Dawes Plan came into effect and with it along with cooperation of the allies the following actions were put into effect. The French and Belgian troops were to immediately withdraw from the Ruhr in 1925, Germany’s reparation payments start form 1 billion in the 1st year and increases at 2.5 billion marks annually, the German Reichsbank was to be under Allied supervision, reparation money would be spent on transportation, excise taxes (tax charged on goods made in that country) and custom taxes (tax charged on goods imported or exported). These renovations for Germany allowed Germany to have its currency stabilized, it allowed for an increase in foreign investments and loans to Germany and a fall in unemployment. Mr.Dawes was also given the Nobel Peace Prize in 1925 for the development of this plan. Unfortunately, there were also many consequences associated with the Dawes Plan. Some of these consequences included the fact that Germany now depended solely on foreign markets, especially that of America in order to keep their economy running. This deeply-linked connection between Germany and foreign countries meant that in a case of an economic crisis in any of the countries, all of the countries would also be economically affected. Another problem that was present was that the Dawes Plan didn’t decrease the amount of reparations Germany needed to pay. But in 1929, this problem is solved when Owen Young introduces the Young Plan.
Concepts Surrounding the Dawes Plan
The concepts surrounding the Dawes Plan include cooperation of the foreign countries to help Germany stabilize its economy, internationalism is also involved as the United States is involved in helping Germany provide loans and paying the reparations, nationalism of the Germans is increasing as their economy is slowly being improved with new and stable currencies, the national security of Germany is being protected thanks to the Dawes Plan putting an end to France occupying the Rhineland, global collective security of the European nations in an attempt to help restrengthen Germany's economy, regional security of the Rhineland is being restored, the economic security of Germany is being restored, and conflicts between countries are decreasing.
How the Dawes Plan Contributed to European Tensions
Although the Dawes Plan seems to have helped Germany out and allowed for more cooperation among major powers, it is still contributed to the escalation of tension leading to WWII. This is because the Dawes Plan links the economies of many foreign countries together so an economic crisis in one country leads to a global economic crisis. Since Germany is lending loans from the United States for payments of the reparation, a depression in the United States would lead to a recession in Germany since all of the money needed to pay for the reparations came from the loans of the US. This would then lead to a recession in the other countries of Europe as well. Other than this reason, the Dawes Plan was to an extent effective in removing tensions leading to WWII as it created cooperation between foreign countries.