The reparations required by the treaties, along with international debts on both sides of the conflict, created unstable circumstances, as various nations found themselves with crushing payment schedules, some of which were simply impossible. If there were significant defaults, or if there were refusals to negotiate the terms, economic tensions could morph into the resumption of armed combat.
President Calvin Coolidge was determined to reduce these strains and maintain international peace. A group of his appointees focused on the European economies: Andrew Mellon, Charles Dawes, Frank Kellogg, and others. Among the others was Seymour Parker Gilbert, whose career included a stint in the Treasury Department before he dealt with the European situation, as the New York Times reported in February 1927. The Times explained that Parker Gilbert was the person to have the title of Under-Secretary of the Treasury:
It is a comparatively new office. Secretary Mellon created it in 1921 to give added dignity and authority to his brilliant young aide, S. Parker Gilbert, now Agent General for Reparations. The elderly Secretary, unfamiliar at first with the organization of the Treasury and with public life in Washington, found in Gilbert, then less than 30 years of age, a veritable tower of strength, and promoted him to sit at his right hand.
Gilbert stayed in that position until 1924. Then he became Agent General for Reparations. His task was to monitor reparations payments, mainly those from Germany. He also was in a position to point out when it was time to renegotiate the terms of the reparation payment schedules, and to advise in those negotiations. Ensuring reasonable and smooth renegotiations of the payment schedules was central in keeping the peace in Europe.
The Dawes Plan, implemented in 1924 under the leadership of Charles Dawes, initiated the first round of refinancings among the European nations, but it was also conceived as merely the first step in the process of bringing about realistic refinancing. The Dawes Plan did not consider itself to be the definitive answer to the situation, but rather merely a first step. Parker Gilbert would take the next step, as historian Erich Eyck writes:
Dafür, daß die Reparationsfrage jetzt akut wurde, ist in erster Linie der Reparationsagent Parker Gilbert verantwortlich. Der Dawes-Plan hatte ausdrücklich auf eine definitive Lösung verzichtet und sich nur das beschränkte Ziel gesetzt, einen Übergangszustand zu schaffen, in dem die deutsche Wirtschaft wieder aufgebaut und das Vertrauen zu ihr wiederhergestellt werden konnte. Diese Aufgabe war nach Parker Gilberts Ansicht gelöst; nun war nach seiner Meinung der Zeitpunkt für die endgültige Lösung gekommen, wobei Deutschland seine Aufgabe „unter eigener Verantwortung ohne ausländische Überwachung und ohne Transferschutz zu erfüllen hat”.
Gilbert remained active in the European finance scene for a number of years, constantly engaged in diplomacy, as the New York Times reported in December 1928:
In an effort to straighten out the remaining difficulties in the way of summoning the experts’ commission for the final settlement of Germany’s reparations debt, Parker Gilbert, the Agent General, had a conference lasting one and one-half hours with Premier Poincare today.
Parker Gilbert brought the Dawes Plan to its expected culmination, and worked on developing some plan that would be the next step in resolving Europe’s financial situation, as journalist Catherine Bowen reported in February 1929:
For four years Seymour Parker Gilbert, the Agent General of Reparations, directed the Workings of the Dawes Plan to a conclusion that certainly cannot fall far short of the highest hopes of its founders.
One central point in the discussions of debts and reparations was that several European nations were eager to press Germany to make the payments required of it; the Treaty of Versailles and various other treaties had demanded impossible sums of money from Germany. Reparations were also initially demanded from Austria, Hungary, Bulgaria, and Turkey; those demands were later dropped, and Germany alone remained to be tortured by an unrealistic payment schedule.
Part of the Dawes Plan had included loan guarantees for Germany; Germany could borrow the money needed for reparations payments. Lenders were willing to loan the money to Germany once the Dawes Plan had guaranteed that the money would be repaid.
Catherine Bowen noted:
As Mr. Gilbert foresaw, the Dawes plan has played its full part, and it is about to be replaced by a new agreement. An experts committee, recently appointed, is to make a complete and definite settlement of Germany’s reparations debt.
But these same nations, demanding from German strict compliance with an unachievable payment schedule, were themselves loath to repay their own debts. France, for example, had borrowed huge sums from the United States.
As Charles Dawes and Parker Gilbert adjusted Germany’s payment schedules, Andrew Mellon began negotiating France’s repayment of the money it had borrowed from the United States.
Parker Gilbert worked with Hjalmar Schacht, the president of the German central bank, and with Julius Curtius, Germany’s minister of economics. On the French side, there was at least a bit of enthusiasm for any plan which would ensure payments from Germany: the French hoped that the reparations payments would act as a sort of economic stimulus in France, an idea first promoted at a conference in the town of Thoiry in 1926. That conference included Gustav Stresemann and Aristide Briand, among others, as Erich Eyck reports:
Übrigens stand Schacht durchaus nicht allein in Deutschland. Aus der Wirtschaftsminister Curtius setzte sich dafür ein, Gilberts Anregung aufzunehmen, und auch in der Öffentlichkeit wurden viele Stimmen dafür laut, allerdings auch manche dagegen. Der Reparationsagent bemühte sich indessen, bei den Regierungen der Ententeländer Stimmung für eine endgültige Regelung der Frage zu machen. Für den wichtigsten Gläbiger, Frankreich, hatte sie besonders deswegen einen Reiz, weil dies bei Wegfall des Transfersschutzes hoffen konnte, einen Teil der deutschen Reparationsschuld zu kapitalisieren und zu kommerzialisieren, mit anderen Worten auf das Programm von Thoiry zurückzukommen. Außerdem stand es vor der Notwendigkeit, das Mellon-Berenger’sche Abkommen über die Zahlungen an die Vereinigten Staaten bis zum 1. August 1929 zu ratifizieren, da es sonst vierhundert Millionen Dollar sofort bar bezahlen mußte.
The Mellon-Berenger Agreement reduced the amount of money which France owed to the United States, and eased the payment schedules. While France was demanding reparations from Germany, it wanted its debt to the United States canceled, not reduced.