We explain what the Young Plan was and what its objective was. Also, the historical context and the problems for its application.
What was the Young Plan?
The Young Plan was a renegotiation of the payment of war reparations that Germany owed to the countries that won the First World War (1914-1918). It was drawn up in 1929 by a committee chaired by the American businessman and lawyer Owen D. Young and came into force in 1930.
The Young Plan replaced the Dawes Plan implemented in 1924. Reduced the amount owed by Germany and suspended the control of the winning countries over the German economy. However, the Great Depression that broke out in 1929 and lasted through the 1930s interrupted Germany's ability to pay and made the plan impossible to execute.
In 1931, US President Herbert Hoover proposed a one-year moratorium on war debt and reparation payments (known as the Hoover Moratorium).
In 1932, the European powers decided at the Lausanne Conference to end German war reparations and achieve a reduction in the debts that the United Kingdom, France and other countries owed to the United States. The US Congress voted against it, which meant maintaining the Young Plan in force. However, Economic difficulties in Germany made it impossible to resume payments and encouraged the rise of Nazism.
Frequently asked questions
What was the objective of the Young Plan?
The Young Plan was a renegotiation of the war reparations that Germany owed to the countries that had won the First World War. It was a revision of the Dawes Plan implemented since 1924 and had the objective of reducing the total sum owed by Germany, facilitating payments and ending Allied control over the German economy.
When was the Young Plan applied?
The Young Plan was approved in August 1929 and came into effect in 1930. The 1930s crisis collapsed Germany's ability to pay and led to the Hoover Moratorium being implemented in 1931 and payments subsequently being suspended by Germany.
Who developed the Young Plan?
The Young Plan was prepared by a committee of experts chaired by the American businessman and lawyer Owen Young. The committee began meeting in Paris in February 1929 and presented its first report on June 7, 1929. The Young Plan received some modifications and was approved in August 1929.
What was the impact of the Young Plan?
The Young Plan was accepted by Germany and this motivated the Allied countries to withdraw their troops from the Rhineland in 1930, five years before the deadline set in the Treaty of Versailles. However, the global economic crisis of the 1930s interrupted the implementation of the plan. Germany's economic collapse made it impossible to meet payments, and the German rejection of reparations contributed to the rise of Nazism.
The historical context
After the First World War, Germany was forced by the Treaty of Versailles (1919) to pay war reparations to the winning countries.. In 1920 the percentage that each country should receive was determined.
The two countries that had to obtain the most from Germany were France and the United Kingdom, which also had to pay war debts to the United States. At a conference held in London in 1921, the amount owed by Germany was set at 132 billion gold marks.
Germany's difficulties in paying led to the Franco-Belgian occupation of the Ruhr basin in 1923.a German mining and industrial area. This in turn caused an economic crisis that led to hyperinflation in Germany and a significant currency devaluation in France.
Finally, the Dawes Plan, drawn up in 1924 by a committee chaired by the American banker Charles Dawes, motivated the Franco-Belgian withdrawal from the Ruhr and allowed Germany to pay reparations through a financial reorganization and payment plan.
The Dawes Plan extended the deadline to make paymentswhich made it possible to reduce the annual sums that Germany had to pay. In addition, supervision of the German central bank by the Allied powers was established.
These measures stabilized the German economy and guaranteed reparation payments from Germany to France and the United Kingdom. This in turn allowed inter-allied debts to be settled, that is, those maintained by the allied powers among themselves (mainly France and the United Kingdom with the United States).
The success of the Dawes Plan, the new climate of international cooperation after the signing of the Treaties of Locarno (1925) and the recognition that Germany could never pay all the reparations motivated the meeting of a new committee in 1929 with the objective of develop a new plan for the payment of war reparations.
The Young Plan and the problems of its application
The committee to renegotiate the payment of German war reparations began meeting in Paris in February 1929. It was chaired by the American businessman and lawyer Owen D. Young and presented its report on June 7, 1929. After some modifications , the so-called Young Plan was accepted in August 1929 and came into force in 1930.
Through the Young Plan, Germany committed to deliver annual quantities through a newly created International Settlements Bank, headquartered in Basel (Switzerland). The total amount was reduced and it was established that payments would continue until 1988 and would be increased gradually during the first 36 years.
An unconditional annuity (that is, one that Germany could not avoid paying) of 660 million marks was set and its payment was secured by a mortgage on the German state railways.
The plan was accepted by Germany in August 1929 and The reward was the early evacuation of the Allied troops based in the Rhineland.which was finalized before June 1930 (five years before the deadline set in the Treaty of Versailles).
The outbreak of the economic crisis that followed the stock market crash of 1929 rendered this plan void.. The Hoover Moratorium, proposed by United States President Herbert Hoover, established in 1931 a one-year extension of reparations and war debt payments.
In 1932, a conference in Lausanne proposed ending German war reparations in exchange for a one-time payment of three billion marks and reducing debts held by France, the United Kingdom, and other countries allied to the United States.
The refusal of the US Congress to accept the proposal of the European powers marked a return to the Young Plan. In practice, This implied the definitive end of the payment of war reparations by Germany.. The context of economic crisis and the rejection of war reparations encouraged the rise of Nazism and the arrival of Adolf Hitler to the position of chancellor of Germany in 1933.
References
- Aldcroft, D. H. (2003). History of the European economy 1914-2000. Criticism.
- Britannica, Encyclopaedia (2022). Owen D. Young. Encyclopedia Britannica. https://www.britannica.com/
- Britannica, Encyclopaedia (2022). Young Plan. Encyclopedia Britannica. https://www.britannica.com/
- Cabrera, M., Juliá, S. & Martín Aceña, P. (comps.) (1991). Europe in crisis. 1919-1939. Pablo Iglesias Editorial.
- Sevillano Calero, F. (2020). Europe between the wars. The disrupted order. Synthesis.
