1924: the Dawes Plan
The Dawes Plan of 1924
The Dawes Plan of 1924 was formulated to take Weimar Germany out of hyperinflation and to return Weimar’s economy to some form of stability. The Dawes Plan got its name as the man who headed the committee was an American called Charles Dawes. The Treaty of Versailles had imposed huge reparation payments on Weimar Germany to pay for the damage caused by World War One. It soon became clear that Weimar Germany was simply incapable of paying out the instalments required by Versailles. This ended in 1923 with French and Belgian troops occupying the Ruhr – Germany’s most productive industrial area. The workers there went on strike which simply exacerbated Weimar Germany’s economic standing. By 1924, the country was in dire financial straits. This left the victorious powers with a major problem. Did they let Weimar Germany economically implode on itself? Many in the UK and France would have got some sort of satisfaction out of this but it was not as simple as this. After 1918, Germany was no longer the enemy. The Russian Revolution and the subsequent murder of the ruling Romanov family in 1918 had pushed Russia to hold the title ‘Public Enemy Number One’. There was a very real fear that the ‘plague in the east’ would spread west. It was believed that if Germany was reduced to total impoverishment it might just provoke a German revolution that put a communist government in place. While Russia was in every sense on the periphery of Europe, Weimar Germany was at the very heart of Europe. So while many citizens of France, Belgium and the UK would have endorsed a policy of real punishment – letting Weimar Germany fall into rack and ruin – this was not a view shared by many politicians. Hence the desire to do what was possible to support Germany – even if World War One had been over for just six years. The five nations represented on the Dawes Committee were USA, UK, Italy, Belgium and France. Each nation forwarded two experts in finance.
The Dawes Plan of 1924 was formulated to take Weimar Germany out of hyperinflation and to return Weimar’s economy to some form of stability. The Dawes Plan got its name as the man who headed the committee was an American called Charles Dawes. The Treaty of Versailles had imposed huge reparation payments on Weimar Germany to pay for the damage caused by World War One. It soon became clear that Weimar Germany was simply incapable of paying out the instalments required by Versailles. This ended in 1923 with French and Belgian troops occupying the Ruhr – Germany’s most productive industrial area. The workers there went on strike which simply exacerbated Weimar Germany’s economic standing. By 1924, the country was in dire financial straits. This left the victorious powers with a major problem. Did they let Weimar Germany economically implode on itself? Many in the UK and France would have got some sort of satisfaction out of this but it was not as simple as this. After 1918, Germany was no longer the enemy. The Russian Revolution and the subsequent murder of the ruling Romanov family in 1918 had pushed Russia to hold the title ‘Public Enemy Number One’. There was a very real fear that the ‘plague in the east’ would spread west. It was believed that if Germany was reduced to total impoverishment it might just provoke a German revolution that put a communist government in place. While Russia was in every sense on the periphery of Europe, Weimar Germany was at the very heart of Europe. So while many citizens of France, Belgium and the UK would have endorsed a policy of real punishment – letting Weimar Germany fall into rack and ruin – this was not a view shared by many politicians. Hence the desire to do what was possible to support Germany – even if World War One had been over for just six years. The five nations represented on the Dawes Committee were USA, UK, Italy, Belgium and France. Each nation forwarded two experts in finance.