LAUSANNE CONFERENCE

(16 June-9 July 1932)

In December 1931 the Special Advisory Committee of the Bank for International Settlements* rec-ommended deferral of German reparations* as specified by the Young Plan's* payment schedule. The action upheld the Hoover Moratorium (President Hoo-ver's proposed one-year deferral of international reparation and debt payments) of June 1931. Since the committee, which included Germany's Carl Melchior,* urged an international meeting to formalize the action, France and Britain pro-posed a January 1932 conference at Lausanne. German domestic politics delayed the so-called Lausanne Conference on the Permanent Settlement of the Repa-rations Question until June 1932.Meanwhile, the Hoover Moratorium was ex-tended for a second year.

Meeting under the chairmanship of British Prime Minister Ramsay MacDon-ald, the conference included delegates from Germany, Great Britain, France, Italy, and Belgium. Franz von Papen* and Konstantin von Neurath,* who had recently displaced Heinrich Brüning* as Chancellor and Foreign Minister re-spectively (Brüning had held both offices), led a German contingent that in-cluded Finance Minister Lutz Schwerin* von Krosigk, Economics Minister Hermann Warmbold,* Foreign Office Secretary Bernhard von Bülow,* and Mel-chior. As Brüning enjoyed broad respect for his stringent domestic policies, the change in government was poorly received by the other delegations. Yet Papen made a good first impression by proposing to Premier Edouard Herriot, in im-peccable French, an Eastern Locarno* and a Franco-German alliance against communism. When it became evident that Papen was maneuvering to link rep-arations with the disarmament* talks occurring concurrently in Geneva, his rep-utation waned. Although Germany's former enemies would not yield to Papen's plea for total annulment, they did agree to reduce Young Plan obligations to a final sum of three billion marks (only 20 percent more than the annuity paid in 1929). While this payment was required in the form of 5 percent bonds deliv-erable to the Bank for International Settlements, the bonds could not be sold for three years. German credit was thereby given three years to recover its strength.

The Lausanne Agreement, signed on 9 July 1932, was to replace the Young Plan upon ratification, but it was never ratified. Approval in Britain, France, Italy, and Belgium was tied to war-debt relief from the United States; however, as Hoover refused to admit a reparations-debt connection, such relief was not forthcoming. Most Germans, meanwhile, opposed paying any further repara-tions. Thus, while Lausanne marked an Allied consensus to renounce almost 90 percent of prior claims on Germany, Papen returned to Berlin a perceived fail-ure: unable to gain compromise on rearmament, he had committed Germany to further reparations. In fact, Germany never made another payment.