The Young Plan of 1929
The Young Plan was formulated in 1929. The Young Plan was an attempt by former wartime allies to support the government of Weimar Germany. In 1924, the Dawes Plan had been introduced to bring Weimar out of hyperinflation and to stabilise its economy. It appeared to have succeeded as 1924 to mid-1929 are viewed by historians as Weimar’s ‘golden years’. However, reparation payments remained a major issue and even before the October 1929 Wall Street Crash, Germany was in no position to fulfil her financial requirements. After the ‘Crash’, her position became untenable.
The Treaty of Versailles (June 1919) had introduced mandatory reparation payments. While the people of Weimar Germany may have been appalled by the sheer scale of reparation payments, there was very little they could do such was Germany’s military weakness. The 1924 Dawes Plan re-structured the 1919 reparations figure and the Young Plan reduced payments still further.
The committee that assessed the reparations issue was headed by Owen Young – hence the plan’s title. In fact, it was a committee that had been appointed by the Allied Reparations Committee. Within the committee the Americans were very dominant – a reflection of the USA’s status as the world’s richest nation. J P Morgan, one of the world’s leading bankers, was a member of the US team.
The final plan was a generous attempt to support German through her financial pain. The Young Plan further reduced reparations to 112 billion Gold Marks – then equal to about $8 billion. The money was set to be paid over 59 years with the equivalent of $473 million paid each year.
Another aspect of the Young Plan designed to support Germany was the actual requirement of repayment per year. Germany had to pay a third of the sum required each year as part of a mandatory agreement – about $157 million. However, the other two-thirds only had to be paid if Germany could afford to do so in a manner that would not harm her economic development.
The UK’s representatives on the committee felt that the terms were too generous but the committee presented the terms in June 1929 and they were officially accepted in January 1930. Prior to the Wall Street Crash and America’s reversion to isolationism, there had been a desire by the US to see Weimar Germany develop as an economic entity. Businessmen in America saw two benefits in this. First, Germany could become a valuable trading partner with the US. Secondly, there was the constant fear that communism might spread from the USSR. Therefore if the German people could see the benefits of capitalism, they would embrace the ideology and turn their backs on the ‘plague from the east’. In the UK there was still a lot of bitterness over the war – the huge memorial at Thiepval had been started in 1928 and was not finished by the time the Young Plan was signed. The Menin Gate in Ypres was only finished in July 1927. So the scars of World War One were still very raw in the UK and with an election due in 1929 no one political party wanted to be seen as being ‘soft’ on Germany. However, the persuasive pull of the USA was strong – hence why the plan was adopted.
However, between the presentation of the Young Plan and its formal adoption, the Wall Street Crashoccurred. Any form of financial support for Weimar was all but impossible as the US turned inwards on itself. In June 1931, the Allies agreed to suspend all forms of reparation payments that Germany was meant to have paid as it was clear that Germany was in no state where she could make any form of payment. In January 1933, Hitler was appointed Chancellor and he had no desire to even discuss the issue of reparations let alone pay them. By the time of his appointment the Young Plan was dead – even if it had not been beforehand.