The Hague conference on reparations
Outside of the formal Young Plan discussions, France agreed to an early withdrawal of the troops occupying the Rhineland in exchange for German concessions on reparations.
The second session, which took place after the Wall Street crash of October 1929, set up the Bank for International Settlements to handle the transfer of payments between countries and settled the remaining Young Plan issues despite sometimes furious objections from Germany's Hjalmar Schacht.
The 1924 Dawes Plan set up a framework that stabilized the German currency and made it possible for Germany to access capital markets in the United States for loans that it could then use to make reparations payments under a more favourable schedule than previously.
Following extensive diplomatic consultations during the autumn meeting of the League of Nations, the six interested powers – Germany, France, Great Britain, Belgium, Italy and Japan – agreed on 16 September 1928 to set up an international commission of experts under the leadership of American economist Owen D. Young to settle the reparations question and at the same time to begin negotiations on the evacuation of foreign troops from the Rhineland.
For domestic political reasons, Briand, who had become prime minister for the eleventh time, refused to set a date for the evacuation before an agreement had been reached on the reparations issue.
In order to interest the Germans in mobilising the reparations, he proposed that part of the Young bond, as the new financial product was called, be paid out to Germany.
[6] This, and the fact that another foreign bond of the German government was included in the treaty, made its creditworthiness abroad closely linked to punctual payment of reparations.
At the same time, the new foreign minister, Julius Curtius, had to solemnly affirm the finality of the Young Plan and promise that Germany would not make light use of the possibilities to postpone reparations payments.
After it had been made even more disadvantageous to Germany at the first Hague discussions, he began opposing the German government and blocked a foreign loan that Finance Minister Hilferding needed to cover gaps in the budget.
[10] A compromise was eventually agreed on under which the creditor powers would regain their "full freedom of action" if the International Court of Justice found that Germany was in the process of "tearing up" the Young Plan.
The French read into it the chance to fall back on the robust sanction possibilities of the Versailles Treaty, while the Germans recognised in it merely the freedom of action to which every sovereign state is entitled under international law.
The world-wide financial crisis that followed the Wall Street crash made it impossible for Germany to meet the reparations payments set up in the Young Plan.
[13] In 1931 President Herbert Hoover of the United States convinced 15 other nations to participate in a one year moratorium on reparations and war debt payments.
