Dawes Plan
In 1924, he worked for a reduction in German reparations; in this he agreed with John Maynard Keynes, whose book, "The Economic Consequences of the Peace", had been published in 1919. German finances had been devastated by hyper-inflation. The Dawes Committee, for which McFadyean was secretary, instituted the Dawes Plan, which proposed that reparations should be paid, but without distorting rates of exchange. The payment of reparations was rescheduled, and they were met by raising taxes in Germany as its economy recovered. The German currency, the Reichsmark, would be stabilised on gold, thus bringing about a restoration of confidence and enabling an international loan to be raised to cover the instalment for the first year. Reparations were to be held in a fund. Conversion of this fund into other currencies would not be permitted if this brought about a depreciation of the Reichsmark. He became one of four allied controllers supervising payments under the Dawes Plan, and he was based in Berlin as commissioner for controlled revenues. McFadyean was knighted in 1925. In 1929 the Dawes Plan was replaced by the Young Plan, with which he had no direct part, and this aimed at a final settlement of reparations.