What is the Purpose of Dawes Plan?
The Dawes Plan was a plan that was made in 1924 that settled the matter of reparations for the 1st World War that Germany was required to pay. The Dawes Plan was introduced by Charles G. Dawes. He chaired it and the Dawes Committee proposed it. This plan resulted in a crisis in the diplomacy of Europe after the 1st World War besides the Treaty of Versailles. As the Dawes Plan solved a severe international crisis, in 1925, Charles Dawes shared the Nobel Peace Prize for his contributions. Now that you know the Dawes plan definition, it’s time to know the history and impact it had on people.
Dawes Plan History
On the 16th of August, 1924, the Dawes Plan came forward and it was signed in Paris. This was accomplished under Gustav Stresemann, the Foreign Secy. of Germany. Stresemann had the charge of getting back Germany its global reputation. Nonetheless, in November 1923, he resigned from the post of Chancellor but continued to remain as Foreign Secretary of Germany. This happened to be an interim measure and so became unworkable. In 1929, the Young Plan Stresemann was adopted to replace it.
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Dawes Plan and Young Plan
In late 1923, the Reparation Commission with the stalemate of European powers over the reparation of Germany formed a committee and this was done for reviewing the situation. Under the Dawes and Young plan, the yearly reparation payments of Germany were lessened; however, the full amount that needs to be paid remains undecided. In Berlin, economic policymaking was rearranged under a novice currency and foreign supervision and in this circumstance, the Reichsmark, the new currency, was adopted.
Belgium and France abandoned the Ruhr and various foreign banks loaned the government of Germany $200 million to encourage economic stabilization. J.P. Morgan, the US financier, floated the loan on the market of the US and it was oversubscribed fast. In the next 4 years, US banks lent Germany sufficient money so that it could meet its different repayment payments to some nations, like the UK and France. In turn, these nations utilized their reparation payments from a country like Germany for servicing their war debts to the US.
The Young Plan
In 1928, the experts formed another committee for devising a final settlement to the reparations problem of Germany. In 1929, Owen D. Young chaired the committee. He provided a plan that lessened the total sum of reparations that were demanded of Germany. Another loan was floated in the foreign market and this one totalled an amount of $300 million. The Young Plan was also called for establishing a Bank for International Settlements and it was designed for facilitating the reparations’ payment.
Both Dawes and Young Plan happened to be vital US efforts that left lasting results. However, the Young Plan had a long-lasting effect. The BIS (Bank for Int'l. Settlements) continue to operate in the form of a forum for cooperation and consultation of a central bank. The experience of the US with inter-allied war debts too continued to affect its foreign policy and this effect became proven in the 1934 Johnson Act, the Lend-Lease Program that happened during World War II, and the Neutrality Acts.
Significance of the Dawes Plan
The Dawes Act authorized the federal govt. to break up different tribal lands and it did it by partitioning them into several individual plots. Only the Native Americans who did accept the individual allotments were permitted to turn into citizens of the US. Dawes Plan facts proved that Dawes Act assimilated Native Americans into mainstream United States society as it annihilated their social and cultural traditions. Due to the Dawes Act, more than 90 million acres of land that belonged to the tribals were stripped from the Native Americans before they were sold to the non-natives. It’s potentially the most vital factor in the Dawes plan history.
Dawes Plan Summary
The Dawes Plan treated the stabilization of currency as well as balancing of budgets in the form of interdependence, although provisionally separable for tests. Additionally, it holds that currency stability can be maintained if the budget is balanced normally whereas the budget can be balanced when a reliable and stable currency does exist. Both are required for enabling Germany to meet its internal needs and treaty payments.
Dawes Plan loan amount began at one billion gold marks and that too in the 1st year and it rose to 2.5 billion by the year 1928.
Dawes Plan facts and significance
Dawes Plan economic growth was abundant. It allotted vocational training, land, divine intervention, and education.
The majority of the Native Americans weren’t trained for being farmers.
Every Native head of the American family was provided three hundred and twenty acres of grazing land. If they happened to be single, then they were provided eighty acres.
Before the Dawes and Young Plan, one hundred and fifty million acres did belong to the Native Americans. After two decades, 2/3rds of this land belonged to these Native Americans.
Despite the good intentions of its creator, the Dawes Act turned into highly disastrous legislation regarding Native Americans.
Even so, the Dawes and Young Plan were significant U.S. efforts that had lasting consequences.
FAQs on Dawes Plan
1. How far was Charles Dawes Plan successful?
Initially, the Dawes Plan was hugely successful. The currency was made stable and inflation too was brought under control. Again, huge loans were elevated in the US. This investment was reflected in the decrease in unemployment. Again, Germany too could meet its obligations for the subsequent five years due to the Treaty of Versailles. German politicians, such as Alfred Hugenberg and Adolf Hilter opposed the Dawes Plan as it didn’t lessen the reparations total. Again, they also hated the notion that foreigners will have control over the economy of Germany. The Wall Street Crash posed several problems for the economy of Germany and so a novice commission under Owen Young, another banker, was set up to consider reparations in 1929.
2. What were the causes and effects of the Dawes Plan?
The Vital Causes of Dawes Plan are:
Germany required assistance in paying reparations because they were unfeasible and very expensive.
The economy of Germany was recovering from the Ruhr crisis and hyperinflation.
Stresemann met with the allies to get a loan of eight hundred million marks for making the economy sustainable.
The Major Effects of Dawes Plan are:
Germany resumed the reparations payments.
The French left the Ruhr.
The output of coal rose to 350 million tons in the year 1929 from 275 million tons in the year 1924.
The recovery of the German economy was felt.
Unemployment was at the lowest.
3. What made Italians assume that they didn’t accomplish anything from the Treaty of Versailles?
To gain territories of Germany and Turkey, Italy accompanied Allies in the 1st World War. However, the Treaty of Versailles didn’t grant Italy all the territories except Trentino and Southern Tyrol besides the coastal regions of Dalmatia. And this made Italy believe that they did not gain anything worthwhile from the Treaty of Versailles.
