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The Dawes Report (1924)

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We have approached our task as business men anxious to obtain effective results. We have been concerned with the technical, not the political aspects of the problem presented to us. We have recognized, indeed, that political considerations necessarily set certain limits within which the solution must be found if it is to have any chance of acceptance. To this extent, and this extent only, we have borne them in mind.

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The committee has had to consider to what extent the balancing of the budget and stabilization of the currency could be re-established permanently in Germany as she actually is at the present moment, with limitations as to her fiscal and economic rights over a part of her area.

We should say at the outset we have been unable to find any practical means for insuring permanent stability in the budget of currency under these conditions, and we think it unlikely that such means exist. The solution of the double problem submitted to us implies, indeed, restoration of Germany’s credit, both externally and internally, and it has appeared to us impossible to provide for this restoration under the conditions mentioned. We have therefore been compelled to make the assumption that the fiscal and economic unity of the Reich will be restored. Our whole report is based on this hypothesis.

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The task would be hopeless if the present situation in Germany accurately reflected her potential capacity. Proceeds from Germany’s national production could not in that case enable her both to meet her national needs and insure payment of her foreign debts.

But Germany’s growing and industrious population, her great technical skill, the wealth of her material resources, the development of her agriculture on progressive lines, her eminence in industrial science, all these factors enable us to be hopeful with regard to her future production. Further, since 1919 the country has been improving its plant equipment. Experts specially appointed to examine the railways have shown in their report that expense has not been spared in improving the German railway system. Telephone and telegraph communications have been assured with the help of the most modern appliances. Harbors and canals have likewise been developed. Lastly, the industrialists have been enabled further to increase the entirely modern plants which now are adapted in many industries to produce a greater output than before the war.

Germany therefore is well equipped with the resources she possesses and the means of exploiting them on a large scale. When the present credit shortage has been overcome she will be able to resume a favored position of activity in a world where normal conditions of exchange gradually are being restored. Without undue optimism it may be anticipated that Germany’s production will enable her to satisfy her own requirements and to raise the amounts contemplated in this plan for reparation obligations. The restoration of her financial situation and her currency, as well as the world’s return to a sound economic position, seem to us the essential but adequate conditions for obtaining this result.

We propose to deal in the first place with the currency problem. The present financial and currency position of Germany is stated in Part II. It will be seen that by means of the rentenmark stability has been attained for a few months, but on a basis which in the absence of other measures can only be temporary. The committee proposes the establishment of a new bank of issue in Germany or, alternatively, a reorganization of the Reichsbank as an essential agency for creating in Germany a unified and stable currency. Such a currency, the committee believes, is necessary for the rehabilitation of Germany’s finances, balancing of her budget and restoration of her foreign credit.

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