Economic: The Young Plan of 1929

 

In 1924 the Dawes Plan was created, it was attempted to deal with the inflation, the unemployment in Germany and all the damage that had been caused by the reparations order of the Treaty of Versailles after losing the World War I.

But when the stock market crashed, it created major problems for the economy in Germany. Because of this, the Allied Reparations Committee agree that they needed another plan or solutions to solve this big problem, so in 1929 they asked and American well known banker, Owen D. Young, to investigate the situation and help them get to a solution. 
After analyzing the problems and making a report of the situation, Owen Young suggested a lot of points and recommendations:

·         That the total amount of reparations should be reduced by three quarters, to be exact at $26350000000, and that Germany should make annual payments for 58 years until 1988.

·         That the amount of the annual payment, demanded from Germany, would be reduced to $473 million. And this amount could be postponed with approval.

·         New tax programs were going to be introduced in Germany.

·         They would establish a bank for international settlements and to collect and distribute reparations payments.

·         Existent forms of Allied control over the German economy would be removed.

·         And finally there was a possibility, if the United States agrees, of the reduction of the Germans obligation.

But years after that, the unemployment continued to grow in the German nations, and in 1931 it was decided to suspend all the payments of reparations. On the following year, there was a conference of creditors, who decided to cancel the reparations. By the time it was all canceled, Germany had only paid one eighth of the original amount demanded.

This new plan was called the Young Plan. Although the Young Plan had effectively reduced Germany’s obligations, it was criticized and opposed by people in the political area of Germany. Many conservatives groups spoke in opposition to the Plan and to make the reparations and comply with the Treaty of Versailles. 

One of the people who opposed and formed oppositional groups was Adolf Hitler and the National Socialist German Workers Party.

These oppositional groups wanted the proposal of the Liberty Law. This law said that the German people must renounce to all reparations and if they keep cooperating it would be an offense for Germany and for any German officer. It would also renounce to the feeling of “war guilt” in Germany and to the occupation of German territory, which also was one of the terms in the Treaty of Versailles.

The Liberty Law proposal was officially established in 1928, and although the government opposed, the law had enough votes to make it work.

In 1929, while the Liberty Law was not enacted yet, the campaigns for it brought Hitler and the Nazis into the political area.