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1921: Reparation Commission. Article 233 of the Treaty of Versailles set up a Reparation Commission to consider claims, fix a sum, and draw up a schedule of payments (which we call 'reparations' - the word used in the Treaty was 'restitution'). It argued for months about: the total sum (claims came to £13bn, and suggested figures ranged from the German offer of £1.5bn, to £12.5bn) - France wanted the highest sum, the British the least; how much each county would get (in the end, France came away with about half the total). In the end, the Belgians brokered a compromise ('the London Schedule'): A total was set at £6.6bn; The Germans HAD to pay the first £50 million each year - the rest as the German economy was able to afford; Payment could be in kind (mostly coal).
1921 and 1923: Invasions of the Ruhr. After the war, the value of the German mark began to fall, which increased the burden of payments. In addition, public opinion in Germany was determined not to pay. Payments all-but-stopped after 1921. In 1921 (May-September) French, Belgians and British forces - and again in January 1923, French and Belgian forces - invaded the Ruhr (the coal-producing area of Germany) to take the reparations due. The German miners went on strike (the French barely managed to seize enough coal to pay the cost of their invasion). The German economy collapsed, and 1923 saw hyperinflation and rebellions in Germany.
1924: The Dawes Plan. Germany was about to collapse, the French franc was beginning to fall in value, and the world economy was teetering. In the meantime, the conciliatory Gustav Stresemann had become Chancellor of Germany. The USA and the UK set up a Committee under US Budget Director Charles Dawes. The Dawes Plan calmed the crisis: The Reparation Commission was downsized and payments overseen instead by a 'Transfer Committee'; Payment was not to be made if doing so endangered the value of the German mark; Payments were to be set which Germany could afford, based on an agreed 'prosperity index'; The term was extended indefinitely; The US gave Germany a loan equivalent to £800 million. Germany agreed and kept to the agreement, the French withdrew, the German economy boomed, and Dawes won the Nobel Peace Prize!
1929: The Young Plan. TThe Dawes Plan had not set a date or a total sum, so in 1928 Germany requested that the matter be finally settled. A Committee met (Feb-June 1929) under American banker Owen D Young: The Young Plan came into force in May 1930: The final total sum would be £5.6bn; A schedule of payments was agreed which would end in 1988; The yearly payment was the equivalent of 7% of the German government's yearly revenue; A 'Young Bond' was floated, which provided a loan to Germany. The Reparation Commission was disbanded - i.e. the League of Nations' involvement with reparations ended; It is worth noting that the German government LOST a public referendum on whether to accept the Plan, and only overturned it on a technicality.
Epilogue - 1932: Lausanne Conference. In 1929, Wall Street crashed, and the world economy went into a deep economic depression. German's government fell into chaos, and Hitler's Nazi Party grew rapidly. The German government was neither able nor willing to pay reparations. In June 1930, President Hoover of the US suggested a moratorium on reparations, and in June 1932 the Lausanne Conference proposed to abolish reparations on receipt of a final sum of £150 million, subject to an agreement regarding Britain and France's war debts to the USA. Since that agreement never happened, the Lausanne Treaty was never ratified, and Hitler's Germany stopped paying all reparations anyway. |
Going DeeperThe following links will help you widen your knowledge: |
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