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Germany: Dawes and Young Plan Bonds Paid Off

(Oct. 28, 2010) On October 1, 2010, Germany paid off the last residual interest payments of the bond issues through which the Dawes and Young plans were privatized, thereby making its last payments on reparations imposed after World War I (Die letzte Rate von Versailles – Deutschland hat abbezahlt, FRANKFURTER ALLGEMEINE ZEITUNG, Oct. 2, 2010, at 2). The Treaty of Versailles imposed reparations on Germany following World War I (Treaty of Peace with Germany, June 28, 1919, 231-247, and Annexes, reprinted in 2 TREATIES AND OTHER INTERNATIONAL AGREEMENTS OF THE UNITED STATES OF AMERICA, 1776-1949 (“Bevans”) 43 (Washington, D.C., Government Printing Office, 1968-1976). The Dawes Plan of 1924 and the Young Plan of 1930 reduced the reparation obligations and privatized them through the issuance of German bonds that were sold on the international capital markets, many of them in the United States. (Richard Buxbaum, A Legal History of International Reparations, 23 BERKELEY JOURNAL OF INTERNATIONAL LAW 314-320 (2005); David Wohner, How War Debts, High Tariffs, and Competitive Devaluation Led to War, THE BUSINESS INSIDER (Oct. 8, 2010), LEXISs/NEXIS, News Library, Allnews File.)

Payments on the Dawes and Young plan bonds were suspended from 1932 through 1953 (Jörg Jaeckel, Verpflichtungen aus Vorkriegsanleihen (“Schattenquoten”), Zeitschrift für Wirtschafts- und Bankrecht 1738 (1990)). In 1953, the London Debt Agreement between Germany and the Allied Powers renegotiated the Dawes and Young bond issues, to be repaid except for interest accrued between 1945 and 1953, which was to be repaid only after the conclusion of a peace treaty with Germany (Agreement on German External Debts, Feb. 27, 1953, 4 U.S.T. 443, T.I.A.S. 2792, 333 U.N.T.S. 3, arts. 4 & 5, Annex I). The obligation to make the residual interest payments revived in 1990, when Germany became unified and the Allied Powers concluded a final settlement treaty with Germany (Treaty on the Final Settlement with Respect to Germany, Sept. 12, 1990, T.I.A.S., 290 I.L.M. 1186 (1990)).