Dawes Plan - Main Points of The Dawes Plan

Main Points of The Dawes Plan

In an agreement of August 1924, the main points of The Dawes Plan were:

  1. The Ruhr area was to be evacuated by Allied occupation troops.
  2. Reparation payments would begin at “one billion marks the first year, increasing to two and a half billion marks annually after five years" (Merrill 93).
  3. The Reichsbank would be reorganized under Allied supervision.
  4. The sources for the reparation money would include transportation, excise, and custom taxes.

The Dawes Plan relied on capital lent to Germany by a consortium of American investment banks, led by the Morgan Guarantee Trust Company, under supervision by the US State Department. The German economic state was precarious. The Dawes plan was based on the help of loans from the US that were unrelated to the previous war.

The plan was accepted by Germany, which was in no position to refuse, and by the Triple Entente, and went into effect in September 1924. German business began to rebound during the mid-1920s and it made prompt reparation payments. Regulators realized that the German economy could not long sustain the enormous annual payments, which the Allies had deliberately set at a crushing level. As a result, the Young Plan was substituted in 1929.

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