The Dawes Plan was a plan released in 1924 to resolve the issue of World War I reparations that Germany had to cover. The program got its name from the American banker Charles Dawes.
When the World War I came to an end, Germany was made to pay reparations; however, it declared a default. In response to this situation, Belgian and French soldiers occupied the Ruhr River valley inside Germany; therefore, the population of the country started passively rioting, which eventually affected the economics.
The main idea behind the Dawes Plan was to mitigate the amount of money Germany was to pay, so the Allied Reparations Committee asked Charles Dawes to resolve this issue. Thus, the Dawes committee tried to return German reparations in the amount of 132 billion gold marks; moreover, America was to give loans to Germany so that they could make payments to France, Britain, and inevitably to the United States.
There were some crucial details of the plan. Firstly, foreign soldiers were to evacuate the Ruhr River valley. Secondly, the reparations’ payment would start with the amount of one billion marks consistently increasing the amount annually, Thirdly, customs, excise, and transportation taxes would be the sources for the reparations. Finally, 200$ million would be loaned to Germany from the issued bonds of the United States.
As a result, French troops left the Ruhr area, which contributed to the rebuilding and expansion of German economics. The Dawes Plan was the reason for the German industry to establish a relationship with American banks. Because of the Ruhr’s occupation, the German steel industry became predominant around Europe by the year of 1926 and continued to be it before World War II.