Lesson 16 Core Notes

Why were reparations still an issue and what was the Young Plan?

Introduction:

● `1924 Dawes Plan only ever intended to be temporary settlement of reparations issue.

● Although French and Belgians left Ruhr by 1925, Allied forces remained in occupation of Rhineland + French wouldn’t agree to withdraw these forces until final settlement of reparations issue had been agreed.

● Therefore Stresemann, who had continued to serve as Foreign Minister after his own coalition govt. Collapsed, agreed that the issue should be considered by international committee headed by American businessman Owen Young.

● Committee met in Paris in 1929, with Schacht as one of Germany’s representatives, and produced report on final settlement of reparations issue.

● Owen Young (1874-1962): lawyer by profession but became leading businessman. President of General Electric and founded RCA - Radio Corporation of America. Had helped in the writing of the Dawes Plan in 1924.

The Young Plan:

● Young Plan obliged Germany to continue paying reparations until 1988 but the final sum was reduced to ¼ of the figure demanded in 1921.

● Total reparations bill was considerably reduced, with Germany being required to pay £1.8 billion instead of the original sum of £6.6 billion, but the annual payment Germany was required to make increased.

● All foreign control over reparations was ended and responsibility for paying reparations was placed solely on the German govt.

● In return, Britain and France agreed to remove their troops from the Rhineland by June 1930.

● After negotiation, the German government, shortly before Stresemann’s death, accepted the Young Plan.

Responses to the Young Plan:

● Despite containing a no. of concessions to Germany, the Young Plan nevertheless inflamed nationalist opinion in Germany.

● In German right-wing circles, Stresemann’s diplomacy was seen as another betrayal of national interests → in their view, any payment of reparations was based upon the ‘lie’ of the war guilt clause.

● New leader of right-wing DNVP, Alfred Hugenberg, launched nationwide campaign against plan, involving other conserative groups including Hitler and the Nazis, ‘Stahlhelm’ (the largest ex-servicemen’s organisation) led by Franz Seldte and the Pan-German League.

● Alfred Hugenberg (1865-1951): had been civil servant, then banker, before the war. Owned newspapers and film companies as well as being a deputy in the Reichstag, representing conservative DNVP. After he became leader of DNVP in 1928, party became more extreme in hostility to democratic govt. + his money and media influence provided crucial support for campaign against Young Plan. in 1933, Hugenberg was appointed Minister for Economics and Food in the Nazi government.

● Campaign group known as ‘the National Opposition’ drew up the draft of a law - the so-called ‘freedom law’ or ‘Law Against the Enslavement of the German People’ which they demanded should be submitted to national referendum.

● The law required the government to repudiate the war-guilt clause of the Treaty of Versailles, to demand immediate evacuation of the occupied areas and declared that any minister who signed a treaty that involved acceptance of war guilt would be tried for treason.

● Hugenberg’s group launched petition in support of their ‘freedom law’ and attracted 4, 135, 000 signatures, enough to ensure that it would have to be debated by the Reichstag and put to referendum.

● In the Reichstag debate, ‘freedom law’ decisively defeated and also rejected in referendum - 5. 8 million votes, when 21 million required by constitution.

● On the other hand, the fact that 5, 825, 000 or 13.8% of the electorate had voted for the ‘freedom law’ was an indication of depth of support for right-wing nationalism.

● Moreover, Hitler’s leading role in the campaign, financed by Hugenberg, enabled him to make decisive breakthrough as national political figure.

● For Hitler, the campaign showed clear-cut benefits:

i) party membership grew to 130,000 by end of 1929

ii) Nazism gained national standing for first time

iii) main party rally at Nuremberg, on much grander scale than ever before, had been a great success.

iv) Hitler made influential political contacts on extreme right-wing

v) brought the opportunity of having access to Hugenberg’s media empire.

Conclusion:

● After trauma of hyperinflation in 1923, German economy became more stable in years 1924-9.

● Inflation brought under control with issue of new currency, and diplomatic efforts to resolve reparations issue helped Germany attract foreign loans to rebuild economy.

● Parts of German industry boomed during these years and many Germans experienced increasing prosperity.

● But this was not the experience of all Germans

● Farmers faced v. difficult trading conditions and many lost their livelihoods.

● Mittelstand, particularly white-collar workers, found living standards didn’t improve and didn’t have access to range of welfare benefits available to industrial workers.

● Reliance on short-term foreign loans to finance industrial investment left Germany highly vulnerable to changes in world economic climate.