1.3.6

Reducing Reparation: The Dawes Plan

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Reducing Reparations: The Dawes Plan

The Dawes Plan revised German reparations in 1924 to ease economic strain, ending France's resource seizures and stabilizing Germany after WWI.

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Background

  • The Treaty of Versailles required Germany to pay reparations after WWI.
  • France took German resources like coal during 1923 to enforce payments.
  • Germany's economy suffered hugely under these reparations and resource losses.
  • Germany faced hyperinflation and unemployment partly triggered by reparations.
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Revising reparations

  • Allies recognized that Germany could not pay reparations without economic collapse.
  • French occupation of the Ruhr worsened tensions and hurt German industry.
  • The US and Britain pushed for a plan to prevent further instability in Germany.
    • The revision aimed to balance reparations and Germany's capacity to pay.
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The Dawes Plan overview

  • The Dawes Plan was agreed in 1924, led by American banker Charles G. Dawes.
    • The plan restructured reparations payments into affordable annual sums.
  • France agreed to end occupation of the Ruhr and stop taking German resources.
  • The US provided loans to Germany to help revive its economy.
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Key features of the Dawes Plan

  • Germany's reparations payments started small and increased gradually.
  • Reparations were expected to reach 2.5 billion marks per year by 1928.
  • The plan created a schedule that considered Germany's economic health.
  • International control of reparations payments improved Allied cooperation.
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Effects of the Dawes Plan

  • Germany's economy stabilized and hyperinflation ended by 1924.
  • France withdrew troops from the Ruhr by 1925, reducing tensions.
  • Germany regained foreign investment and rebuilt industries.
  • The plan improved relations between Germany and the Allies temporarily.
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Limitations of the Dawes Plan

  • The plan depended heavily on US loans, making Germany vulnerable to global markets.
    • Some Germans opposed reparations still and nationalist groups criticized the plan.
  • The Dawes Plan was only a temporary solution until the Young Plan of 1929.
  • The Great Depression exposed weaknesses in the reparations system.

Jump to other topics

1Was the Treaty of Versailles Fair?

2Was the League of Nations a Success?

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6How was USSR's Control Over Eastern Europe?

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