The Young Plan

Foreign Affairs, Hoover and Foreign Affairs, 1929

German reparation payments stemming from World War I had been modified by international agreement under the terms of the U.S.-inspired Dawes Plan in 1924. By late in the decade, however, it was becoming increasingly difficult for the defeated nation to meet its obligations.

The United States, which was not a direct recipient of reparations, again dispatched an expert to help salvage the threatened payments and avert an international crisis. Owen D. Young, an American financier, headed a committee that tried to remove ambiguities from the existing system. The following recommendations were made:

• The amount of the annual payment demanded from Germany was reduced sharply to $473 million, a portion of which could be postponed with prior approval;

• the total amount due was set at $26.36 billion or 121 billion Reichsmarks, payable over a term of 58 and a half years;

• new tax programs were to be introduced in Germany as a means to generate revenue;

• a bank for international settlements was to be established to collect and disburse reparations payments;

• other forms of Allied control over the German economy were to be removed;

• further reduction of the German obligation was held out as a possibility if the United States were to agree to the scaling back of war debts owed to it by its former allies.

In all, more than $4.5 billion in reparations was collected by the Allies from Germany.

See other foreign affairs issues during the Hoover administration.