U.S. intentions with the Dawes-Plan toward Germany


Term Paper, 2010

9 Pages, Grade: 1,0


Excerpt

U.S. President Calvin Coolidge used magniloquent words in a message to the Congress, dated only about four months after the implementation of the Dawes-Plan, when he said that the U.S. “desire to see Europe restored [which then] may resume its productivity in the increase of industry and its support in the advance of civilization.” The Dawes-Plan would be the hopeful prospect for achieving this aim. It would bring peace, the leading principle of all American foreign relations, to Europe.1 With the Dawes-Plan, the reconstruction of Germany was given priority. In fact, American capital and initiative was putting Germany once more on the map of international financial relations and eased the reparation conflict, which dominated international relations since the Treaty of Versailles. The economic contacts and corporations between the United States and Germany intensified and the transatlantic transfer of bonds and technologies had a deep impact on German society. But why did the U.S. invest so much in their former wartime enemy? What was the aim of U.S. foreign politics in this time? By ex- amining official documents of the American government, this paper wants to reveal the inten- tions of the American economic policies with the Dawes-Plan toward Germany.

In 1923, the events with the most dramatic impact on the following years occurred with the hyperinflation in Germany, the outright breakdown of the reparation arrangements, and the occupation of the Ruhr. These events completed the collapse of Germany’s financial system. Published in 1925, the report on European Currency and Finance of the Senatorial Commis- sion of Gold and Silver Inquiry stated that the defeat, demobilization, and the reparations in particular would have proven its disturbing factor on the German budget, the German foreign trade, and the general economic position of the country in general. The constant changes of the settlement of the reparation question were seen as the reason for the depreciation of the gold mark and its rapid downward course since 1921. With so many uncertain factors it would have simply been impossible for the German treasury to prepare a proper budget and cover all expenditures. Mounting deficits were described as the logical result.2

Other circumstances were listed, which would have made it even harder for Germany to meet the deficit in her international account. It had to import bulky commodities, which she formerly exported, such as coal or sugar. Reparations of coal were delivered by imports of coal. These imports increased largely after the Ruhr occupation, when Germany was cut off from its largest coal mines.3 Additionally, Germany lost most of her income from invisibles (e.g. shipping services, German capital abroad, and other foreign investments) and German property was seized and sequestrated in enemy countries.4 The Senatorial Commission of Gold and Silver Inquiry described how the huge depreciation of the gold mark in 1923 was responsible that the German currency almost lost its value in foreign and domestic trade. The resulting uncertainties would have influenced the German trade heavily. Business would have become very speculative.5

The U.S. wanted to avoid a complete de-stabilization of Central Europe. The main function of the Dawes commission was to stabilize the German budget by fiscal and monetary means. The stabilization and a medium-term calculability of the German currency as well as the set- tlement of the reparations became decisive American economic interests. American financial experts had already supervised the radical financial reform and the successful introduction of the Rentenmark. Additionally, new loans were depicted as the best means to stabilize the Ren- tenmark.6 U.S. Secretary of State Charles Evans Hughes appointed an independent commis- sion of experts under the direction of the financial consultant and later vice president Charles Gates Dawes. The Dawes-Plan managed the reorganization of the Reichsbank and scheduled the reparation payments, which should be paid by Germany with higher taxes and special charges on its railroads and industry. Hughes declared that the objective of the London Confe- rence of 1924 would be the promotion of the recuperation and recovery of the German econ- omy, without unnecessary claims and sanctions as in the Treaty of Versailles.7

The U.S. government praised the Dawes-Plan as a perfect means to put all conflicts on an expert level. The American ambassador to Great Britain, Frank Billings Kellogg, wrote in a letter to Hughes that “the Dawes report has placed the problem of German reparations on a more expert and a more practicable basis.”8 Hughes agreed and replied that political contro- versies should be left aside, because they could jeopardize the new reparation plan. Choosing economic experts, “although not disregardful of political conditions and the attitude of the several Governments,” would be the right approach.9 President Coolidge praised the “com- mittee of experts” and its key members who were American citizens: the chairman Charles G. and exported 34.6 million tons of coal. In 1923, Germany exported only 1.2 million tons, when it imported 25.2 million tons of coal. Latter amount contributed over 53 percent of the total volume of imports.

Dawes, Owen D. Young, and Henry M. Robinson. They would have provided a comprehen- sive plan of economic reconstruction, which made Germany able to meet all her obligations.10 An often claimed aim of the American government was the reduction of political tensions viz. the ensuring of peaceful contentment between Germany and France, which were still bit-ter enemies. France was determined to keep her traditional enemy weak while extracting money for rebuilding her war-devastated provinces. Hughes declared that the U.S. should “participate in the financing of works of peace in Europe.” It would be a humanitarian re-quirement and a duty to help the peace process. “A final adjustment for the liquidation of re-parations ought to be the beginning of a new era of peace and good will.”11 The Dawes-Plan should broaden the reconstruction issue from the bilateral power struggle between Germany and France to one that concerned all of Europe. Hughes proposals were insofar correct, that the American policies of the Dawes-Plan prevented more de-stabilizing reparation claims, which could have further imperiled the German economics. But there were other, less altruis-tic reasons for the implementation of the Dawes-Plan.

One of the most important issues for the U.S. government and her citizens were the finan- cial claims toward Germany. Secretary of the Treasury Andrew William Mellon emphasized that the United States had to take care that Germany will pay the American mixed claims, compensating private American losses and the army of occupation costs, set by the Paris agreement. For that reason, the Mixed Claims Commission managed American claims toward Germany between 1922 and 1929. As security, the U.S. held private German property, worth 300 million US-$, for the payment of the private American mixed claims. Although the Trea- sury was highly interested in quick German payments, she was opposed to the confiscation of German property as a pressurizing medium. Mellon said that this would have been inconsis- tent with historical American policies and wrong in morals. Even retaining the property would be virtual confiscation, because, as the Dawes Plan indicated, it would take 80 years for Ger- many to pay the American claims with interest. Otherwise, it would not be in the interest for U.S. citizen to simply return the property, thus having no security left. It would prompt justice to the German citizens to do so, but “it would be depriving American citizens of their rights.”12

[...]


1 Message of the President of the United States to the Congress, sent on December 3, 1924, in: U.S. Department of State: Papers relating to the foreign relations of the United States, Vol. 1, 1924, p. xx.

2 Senatorial Commission of Gold and Silver Inquiry (Ed.): European Currency and Finance, Vol. 1 (=Commission of Gold and Silver Inquiry Serial No. 9), 1925, p. 393, p. 416.

3 Senatorial Commission of Gold and Silver Inquiry (Ed.): European Currency and Finance, p. 404. The contrast between the figures of 1913 and 1923 are described as striking. In 1913, Germany imported 10.5 million tons.

4 Senatorial Commission of Gold and Silver Inquiry (Ed.): European Currency and Finance, p. 409f.

5 Senatorial Commission of Gold and Silver Inquiry (Ed.): European Currency and Finance, p. 418.

6 Senatorial Commission of Gold and Silver Inquiry (Ed.): European Currency and Finance, p. 427.

7 The Secretary of State to the Ambassador in Great Britain (Kellogg), sent on June 27, 1924, in: U.S. Department of State: Papers relating to the foreign relations of the United States, Vol. 2, 1924, p. 33.

8 The Ambassador in Great Britain (Kellogg) to the Secretary of State, sent on June 24, 1924, in: U.S. Department of State: Papers relating to the foreign relations of the United States, Vol. 2, 1924, p. 30.

9 The Secretary of State to the Ambassador in Great Britain (Kellogg), sent on June 27, 1924, in: U.S. Department of State: Papers relating to the foreign relations of the United States, p. 33.

10 Coolidge, Calvin: Message from the President of the United States transmitting a report from the Secretary of State in response to Senate resolution of January 20 (calendar day, January 21), 1925, requesting a copy of the agreement signed by Messrs. Kellogg, Herrick, and Logan relating to the Dawes plan and payment of reparations by Germany, together with information respecting the negotiations, issued on February 3, 1925, p.2

11 The Secretary of State to the Ambassador in France (Herrick), sent on April 23, 1924, in: U.S. Department of State: Papers relating to the foreign relations of the United States, Vol. 2, 1924, p. 14.

12 Press statement by Secretary Mellon concerning factors in the settlement of German property held by the alien property custodian and the payment of mixed claims, held on April 19, 1926, in: Annual Report of the Secretary.

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Details

Title
U.S. intentions with the Dawes-Plan toward Germany
College
University of Oregon
Grade
1,0
Author
Year
2010
Pages
9
Catalog Number
V179627
ISBN (eBook)
9783656019534
ISBN (Book)
9783656019589
File size
615 KB
Language
English
Tags
Deutsch-Amerikanische Beziehungen, Wirtschaftskrise, Versailler Vertrag
Quote paper
Bachelor of Arts Christopher Reichow (Author), 2010, U.S. intentions with the Dawes-Plan toward Germany, Munich, GRIN Verlag, https://www.grin.com/document/179627

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