Young Plan
The Young Plan was an international agreement formulated in 1929 to settle the German reparations issue following World War I. It was named after the American banker Owen D. Young, who chaired the committee that developed the plan.
Background
After World War I, Germany was required to pay reparations to the Allied countries under the terms of the Treaty of Versailles. The initial reparations plan, known as the Dawes Plan of 1924, was seen as a temporary solution and by the late 1920s, it became clear that a more permanent arrangement was needed due to the economic pressures on Germany and the need for stabilization in Europe.
Formation of the Plan
- Committee: A committee under the leadership of Owen D. Young was established to review and reformulate the reparations issue. Other notable members included J. P. Morgan Jr. from the U.S., and representatives from various European countries.
- Negotiations: The committee met for several months, conducting detailed financial analysis and negotiations to come up with a feasible reparations schedule.
Key Provisions
- Reduction of Payments: The total reparations amount was reduced from the previously agreed upon 132 billion gold marks to 112 billion gold marks, payable over 59 years.
- Payment Schedule: The plan established a fixed annuity payment of 2 billion gold marks per year from 1930 to 1965, with an initial lower payment in the first few years to ease the burden on Germany's economy.
- Currency Stabilization: Efforts were made to stabilize the German currency to prevent hyperinflation, which had previously devastated the economy.
- International Control: An international bank, the Bank for International Settlements, was established to oversee the payment and management of reparations.
Implementation and Impact
The Young Plan was ratified by the German government in 1930, but it faced significant opposition:
- Political Opposition: In Germany, nationalist and right-wing groups opposed the plan, arguing it still imposed an undue burden on the country. This opposition culminated in the creation of the Harzburg Front, a coalition of right-wing parties.
- Economic Effects: While it provided some economic relief to Germany by reducing the immediate financial pressure, the onset of the Great Depression made even the reduced payments difficult to sustain.
End of the Plan
The Young Plan was effectively nullified with the rise of the Nazi Party in Germany. After Adolf Hitler came to power in 1933, he unilaterally ceased reparations payments, and the plan was no longer enforced.
References
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