Part 2: Reparations Agent
The Dawes Plan of 1924 was the cornerstone achievement of American stabilization policy in Europe, the keystone of efforts to promote peaceful political change and renewed economic growth. It revised the Versailles Treaty by restricting France’s ability to use reparations as a club to use against Germany’s resurgence. Ostensibly the work of expert businessmen and bankers, it nonetheless had the backing of the Coolidge administration. Depsite the administrations claims of non-involvement, Secretaries Hughes and Mellon, as well as Ambassador Kellogg, mediated between bankers, delegates and diplomats while on supposedly private trips to London. Mellon in particular staked his considerable prestige as head of a private economic empire and as chief financial officer of the U.S. by recommending the crucial loan portion of the plan to Morgan partner Thomas Lamont. President Coolidge repeatedly endorsed the plan and was prepared to offer arbitration by Chief Justic Taft in case the London Conference deadlocked.
The Dawes Plan transferred reparations control from the Allies-dominated Reparations Commission to the newly created U.S.-dominated agent general’s office. Some wrangling ensued over which person was going to fill this crucial post. The House of Morgan in particular attached great importance to the selection of an agent general who would be sympathetic to their concerns, effectively vetoing the names of Owen D. Young and James A. Logan. Coolidge in turn vetoed Morgan’s initial candidate, Morgan partner (and Coolidge friend) Dwight Morrow, because he feared that appointment would fuel Robert La Follette’s progressive presidential campaign against Wall Street influence. After intensive consultations between Lamont and Mellon in London, and Morrow and Coolidge in Washington, the administration fully endorsed Morgan and Company’s eventual candidate, S. Parker Gilbert. As we have seen in Part 1, Gilbert had been undersecretary of the Treasury in 1921-22 and had developed an excellent rapport with Mellon before departing government to resume his legal practice.