The problem of how much Germany shall pay in war reparations seemed in a fair way to be solved last week by a new American proposal intended to break the Dawes Committee deadlock between France and Germany.
Two weeks ago all negotiations were abruptly broken off and the committee prepared to disband after a demand upon Germany for 28 billion dollars over 58 years was met by the Chief German negotiator, Dr. Hjalmar Schacht, with an absolute refusal to pay more than 15 billion over 37 years. The Allies were particularly incensed by the fact that Germany made a portion of their offer conditional upon the return of certain territory and colonies which she gave up by ratifying the Treaty of Versailles. Blamed by all the Allied delegates for derailing the committee, Dr. Schacht left Paris in late April for a five-day visit to Berlin.
While Dr. Schacht was telling German correspondents that further negotiations would be useless, an entirely new plan was drafted in Paris by Chairman Owen D. Young, chief US negotiator, in consultation with senior US delegate, J. Pierpont Morgan. When Dr. Schacht returned to Paris, he was met at the French frontier by three subordinates of the German delegation, bearing copies of the Young Plan. Three hours later Dr. Schacht reached Paris, and for two hours was closeted with Mr. Young. Quickly a special meeting of the Second Dawes Committee was called by Chairman Young, who then said: "The American delegates have prepared certain figures for annuities which we have shown to Dr. Schacht and he has informed us that he will be prepared to accept those figures if the creditor Powers will accept them." After these words he gave a brief exposition of the proposed plan, and almost at once Japan's Kenjo Mori rose to voice warm approval. Within a few moments it was evident that Britain's Sir Josiah Stamp would also back the Young Plan. Only the French and their Continental Allies seemed hesitant.
The key points of the Young Plan were summarized as:
1) Germany to pay 18 billion dollars over 37 years.
2) The annual payments to average $487,600,000, and of this $165,900,000 to be paid unconditionally, with payment of the rest conditioned on German capacity to pay without impairing the value of the mark—a protection which the Fatherland already enjoys under the so-called "transfer clause" of the Dawes Plan.
3) Bonds to be issued against the unconditional portion of Germany's pledge to pay, and sold to the world public, the proceeds to go at once into the treasuries of the creditor Powers.
4) The bond transaction to be carried on through an international bank of settlement.
5) Profits from the operation of the bank are expected to be so huge, according to the Mr. Young and Dr. Schacht, that after the 37th year accrued and accruing profits and interest will pay off in 21 more years the full total of the German debt.
Two additional conditions were attached by Dr. Schacht to his acceptance of this plan:
1) That all profits from the international bank must go toward extinguishing the German debt.
2) That if the sum expected to be derived from profits and interest thereon does not materialize it shall be deducted from what Germany owes.
Whether or not the Young Plan would be approved seemed to depend, almost entirely on the attitude of France and more especially on that of her chief delegate, M. Emile Moreau, governor of the Bank of France. Vexation was general when it appeared that M. Moreau was "out of town" getting re-elected as mayor of a tiny provincial village whose chief magistrate has always been a Moreau. Until this "family matter" could be attended to the Second Dawes Committee and the world were obliged to wait.