While theoretically the "demand" of individuals in the Allied coun tries will be so increased by relief in taxation that it could, in amount, absorb a new supply of German goods, the demand will not fully coincide in kind with the goods which are offered. There may be, in consequence of this maladjustment, important reactions in price which will make the burden greater for Germany to discharge, make full transfers difficult, and induce unduly severe competition in certain markets. Moreover, vested industrial interests in both capital and labour in the Allied countries may be adversely affected, and, for various reasons, if the whole question is left to uncontrolled economic forces political difficulties will arise.
We have certain suggestions to make for co-ordinated and system atic international action which, while it may not affect a large sum in relation to the whole reparation annuity, may be of great im portance in assisting a settlement of this residual problem. We con ceive that there is everything to be gained by systematic study and the existence of a "safety valve" in the event of normal channels being inadequate for the purpose, to relieve the concentrated competition, and also to prevent the consequences of accumulation of reparation payments in Germany. Our proposal would tend to prevent existing channels of German trade being flooded by excessive supplies and by a prepared plan irrigate, without disaster and with ultimate profit to the world, a wider area than could otherwise be open.
The International Chamber decided to prosecute the idea of assisted schemes, but formed no organization to aid them. (J. S.) FINAL SETTLEMENT The Dawes plan did not settle the total amount to be demanded from Germany in the form of Reparations, nor did it fix the duration of annuity payments. It was simply an arrangement which permitted the beginning of payments at once without wait ing for a final solution of an extremely complicated problem.
However, to postpone a final settlement for long was impossible. Under a decision taken at Geneva in 1928 a new commission of experts was appointed. Owen D. Young (q.v.), one of the two unofficial representatives from the United States was appointed chairman. Hjalmer Schacht (q.v.), head of the Reichsbank, was the chief German negotiator. The committee began its meetings at Paris in Feb., 1929, and brought them to a successful close early in June. Ratification of the Paris agreement by the parliaments of the various nations concerned still remained necessary.
The new annuities were to be less than under the Dawes Plan and payments were to continue for a fixed period only so that the highest amount for which Germany would be held responsible was definite. The Dawes Plan annuities had reached £123,000,000 at which level they were to continue. The Young Plan called for an nuities averaging LIoI,000,000 for 37 years, and then for annui ties averaging £85,700,000 until the 59th year when all payments were to cease. With the adoption of the new program the machinery of the Dawes Plan was to be discarded, and the Repa rations Commission would cease to exist. To supersede the corn mission plans were worked out for a Bank for International Settlements (q.v.) to handle all Reparations transactions. The bank was to be governed by a board with representatives from each nation.
But even this apparently was beyond the power of the German Government, which was obliged to default payment in 1931 ; and the following year a still more lenient arrangement, known as the Lausanne Agreement, was drafted and signed. The allied powers refused to ratify this settlement unless the United States would correspondingly reduce its war claims against them. And in the meantime Germany was permitted to continue its suspension of payments under an indefinite moratorium.