Dawes plan;

              Bulletin HASKINS & SELLS 95
The Dawes Plan
MANY problems of considerable magni­tude
confronted the nations of the
world at the close of the Great War in
their efforts to regain normality and in
arranging the settlement of various mat­ters.
One by one these were disposed of as
the years went by. Probably the two
questions which will be with us the longest
for discussion and debate are those of
interallied debts and Germany's reparation
payments. The solution to both of these
is of vital concern to the welfare of the
United States.
With the adoption of the Dawes plan
in 1924, substantial progress had been
made with respect to the reparation debt.
Certain matters were agreed upon and a
tentative program mapped out for the an­nual
payments Germany was to make. At
that time, and until the present day, there
has been some doubt as to the efficacy of
the plan. One school of thought, which
has always had a more or less popular
following, is of the belief that it is economic­ally
impossible for the debt payments to
be made and, therefore, favors cancellation
either in whole or in part. So far, Ger­many
has been able to meet its annual
payments of increasing amounts each year,
as specified under the plan, but a crisis is
expected in 1928 when the maximum of
$625,000,000 a year first goes into effect.
Mr. George P. Auld, of our New York
Broad Street office, has written a book
recently entitled "The Dawes Plan and the
New Economics" (Doubleday, Page &
Company) which presents a practical view
of the situation and takes exception to the
thought expressed by many theoretical
economists. Mr. Auld served during the
war as chief accounting officer of the
United States Navy. In 1919 he was
attached to the American Commission to
Negotiate Peace as an assistant financial
adviser. From 1920 to 1924 he was Ac­countant
General of the Reparation Com­mission
and in the latter year he assisted
Mr. Owen D. Young in installing the
Dawes plan. He has been associated with
Haskins & Sells since March, 1924.
Just as the economists who thought a war
of the magnitude of the late war impossible
were wrong, so Mr. Auld believes that those
economists who predict that the Dawes
plan will break down because of Germany's
incapacity to pay and who believe that the
mechanics of exchange will prevent the
transfer of the reparation payments to the
creditor nations, also are mistaken. As
for the safety of American foreign loans,
Mr. Auld states further that there is no
need for worry, so long as each loan is
sound in itself. "The Dawes Plan and the
New Economics" expresses an optimistic