YOUNG PLAN

Young Plan: translation

a program for the settlement of German reparations.* By 1928 it was clear that Germany could not meet the annuities of 2.5 billion marks specified by the 1924 Dawes Plan.* At the behest of Parker Gilbert, America's reparations agent, the League of Nations named a Conference of Experts to review the issue. Participating powers (Belgium, France, Germany, Great Brit-ain, Italy, Japan, and the United States) were represented on the committee. Germany s principal delegates were Hjalmar Schacht,* Reichsbank President, and Albert Vogler,*Generaldirektorof United Steel Works; Carl Melchior* and Ludwig Kastl* were alternates. When talks opened in Paris on 11 February 1929, Owen D. Young, an American lawyer and corporate official, was selected chairman; thereafter the group was known as the Young Committee. Negotia-tions were tedious because the Allies refused to compromise on their figures, which the Germans insisted far exceeded their ability to pay. Difficulties stemmed largely from a greater focus on Allied indebtedness to the United States than from a genuine desire to find a reparations settlement. Exceeding his com-mission in April, Schacht proposed that Germany might manage a 1.6-billion-mark annuity for thirty-seven years if its prewar sources of raw materials, both colonial and in the Polish Corridor, were returned. It required all of Young s skills to prevent Schacht s remarks from ruining the meeting. Another crisis occurred on 22 May when Vogler quit the committee (he was replaced by Kastl); in a report to the German cabinet he claimed that the talks were largely an American attempt to reinforce the framework of Allied indebtedness at German expense. Indeed, the bulk of the "present value" of the reparations—thirty-two billion of thirty-nine billion marks—was earmarked for the United States.

On 7 June 1929 the Young Plan was signed. The first instance in which reparations were clearly defined, it set a total bill of about 112 billion marks ($26.35 billion) to be paid over fifty-nine years.Annuities would begin at 1.8 billion marks (about $425 million) and end in 1966 at 2.4 billion marks (about $565 million), averaging 1.99 billion marks for thirty-seven years. Smaller pay-ments, covering Allied debts, would follow until 1988. To protect Germany against unforeseen problems, the delegates divided annuities into two categories: an "unconditional" part (one-third of the total) had to be paid; a "postponable" part could be withheld for up to two years. The Young Committee abolished Allied controls over German banks and railroads, but proposed creation of a Bank for International Settlements* to administer reparations.

Although the Young Plan reduced the Dawes annuities by 20 percent and dismantled external controls, its fifty-nine-year payment scheme made it vul-nerable to those who labeled it a plan to enslave Germany for two generations. When the plan was adopted on 31 August 1929 at the first Hague Conference* (days before Gustav Stresemann s* death), it also called for an early end to military occupation, a fact that drew favorable German reaction. But the DNVP and the NSDAP soon organized a campaign to defeat the YoungDiktat. After a divisive battle, including defeat of an anti-Young plebiscite on 22 December, the Reichstag* approved the plan in March 1930. Yet by 17 May 1930, when it was activated, Germany was fully enmeshed in the depression.* Decreased revenue and rising unemployment soon undermined the plan s viability. In June 1931 Herbert Hoover proposed a moratorium for the 1931-1932 annuity, and in July 1932, at the Lausanne Conference,* the plan was scrapped.