Dawes Plan

a reparations plan for Germany worked out by an international committee of experts under the chairmanship of the American banker C. Dawes; it was approved on Aug. 16, 1924, at a London conference of representatives of the victorious powers in World War I and was accepted by Germany.

The Dawes Plan was supposed to ensure the continuation of Germany’s reparations payments to the victorious powers and to facilitate the penetration of American capital into Germany for the seizure of key sectors of the German economy. In this way, the American monopolies would obtain high profits in the form of interest percentages on loans as well as dividends from direct investments in industry. The Dawes Plan was directed at restoring Germany’s military-industrial potential and at strengthening the economic and political positions of German imperialism, which was intended to play an important role in the struggle against the Soviet Union and the revolutionary movement in Europe. The authors of the Dawes Plan calculated that it would reinforce the capitalist system in Western Europe and assist in creating an anti-Soviet coalition of imperialist powers. The Dawes Plan provided that Germany would be granted a loan of $200 million (including $110 million by American banks) in order to stabilize the mark; it set the amounts of Germany’s payments for the first five years at 1–1.75 billion marks per year and then at 2.5 billion marks per year. The payment of reparations was to be carried out in goods as well as in ready money in the form of foreign currency.

In order to guarantee payments, an allied control was to be established to supervise the German state budget, monetary circulation and credit, and railroads. This control was exercised by a special committee of experts, which was headed by a general agent for reparations. This post was occupied by the US representative, at first O. Young and subsequently P. Gilbert. German capitalists, by intensifying their exploitation of the workers, shifted the principal burden of reparations onto them. The increase in the prices of basic consumer goods seriously affected the position of the toiling masses. In connection with the adoption of the Dawes Plan, France and Belgium on the one hand and Germany on the other concluded an agreement on the evacuation of French and Belgian troops from the Ruhr, which they had occupied in 1923. The authors of the Dawes Plan calculated that in order to pay its reparations Germany would need new sales markets, which it could find in the Soviet Union, and that a stepped-up shipment of German industrial goods into the Soviet Union would undermine socialist industrialization and weaken the defensive capability of the USSR.

The regularization of the reparations question and the elimination of the Ruhr conflict of 1922–23 created favorable conditions for the import of foreign capital into Germany. By September 1930 the total sum of foreign capital investments (for the most part, American) in Germany amounted to between 26 and 27 billion marks, whereas the total sum of German reparations payments during this same period was somewhat less than 10 billion marks. These capital investments facilitated the restoration of industrial production in Germany, which had already reached its prewar level by 1927. Germany’s share in world exports increased from 5.7 percent in 1924 to 9.79 percent in 1929.

The implementation of the Dawes Plan led to the rapid growth of Germany’s military-industrial potential, one of the most important factors assisting that country in preparing for World War II, which it unleashed in 1939. After strengthening their own economic and military positions, the German monopolies began to actively struggle against the Dawes Plan, which to a certain degree was undermining their competitive capabilities in the world market. The hopes of the authors of the Dawes Plan for an economic suffocation of the Soviet Union suffered a complete failure. In 1929 the USA, fearing that Germany might abrogate the Dawes Plan by a unilateral act, showed the initiative in working out the next agreement between Germany and its creditors, the Young Plan.