Dawes Plan: Difference between revisions

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===The initial German debt default===
At the conclusion of World War I, the [[Allies of World War I|Allied and Associate Powers]] included in the [[Treaty of Versailles]] a plan for [[World War I reparations|reparations to be paid by Germany]]. Germany was required to pay 20 billion gold marks, as an interim measure, while a final amount was decided upon. In 1921, the London Schedule of Payments established the German reparation figure at 132 billion gold marks (separated into various classes, of which only 50 billion gold marks was required to be paid). Meanwhile, the industrialists of Germany's Ruhr Valley, who had lost their factories in Lorraine (Germany had seized Lorraine in 1870 and it went back to France after WW1WWI), demanded hundreds of millions of marks as compensation from the German government. Despite having large obligations under the Versailles Treaty, the German government paid the Ruhr Valley industrialists for their losses. This contributed significantly to the [[Hyperinflation in the Weimar Republic|hyperinflation]] that followed.<ref>Martin, James Stewart. "All Honorable Men", p 30.</ref>
During the first five years after WW1the War, coal was scarce in Europe. France sought coal for its steelmakers from Germany. But the Germans needed coal for home heating and for their own steel industry, having lost many of their steel plants in Lorraine to the French. As a means of protecting their own growing German steel industry, the German coal producers—whose directors also sat on the boards of the German state railways and German steel companies—began to leverage high costs though shipping rates on coal exports to France.<ref>Martin, James Stewart. "All Honorable Men", p. 31.</ref>
In early 1923, Germany defaulted on its war reparations payments and German coal producers refused to ship any more coal across the border. In response to this, [[France|French]] and [[Belgium|Belgian]] troops [[Occupation of the Ruhr|occupied the Ruhr River valley]] inside the borders of Germany in order to compel the German government to continue to ship coal and coke in the quantities demanded by the Versailles Treaty which Germany characterized as onerous under its post war condition (60% of what Germany had been shipping into the same area before the war began).<ref>Martin, James Stewart. "All Honorable Men", p. 32.</ref>