The Young Plan was discussed by representatives of the governments concerned meeting at The Hague in August 1929 and January 1930 and was eventually adopted by all of them. It was hoped that this would be a permanent settlement, but events had changed everything within a year. The Young Plan looked forward to Germany building up an export surplus during an assumed general expansion of world trade; instead Germany continued to meet her obligations by foreign borrowing at a high rate of interest. Germany was the first country to be hit by the depression; she reached her post-war industrial peak in 1929. With her large population and the rationalisation of industry that put people out of work, she already had two million unemployed in 1929, which grew to six million by the end of 1931.

Loss of confidence in Germany and the general world depression led to the withdrawal of her foreign loans; she was unable to renew them to make payments, and gold drained out of the country. Early in June 1931 the Briining government issued a declaration that Germany was making every possible sacrifice to meet her obligations. This had the effect of making all her creditors very nervous, particularly in the United States, her largest source of capital.

On Sunday, 21 June 1931, President Hoover took action and proposed a moratorium of one year on all inter-governmental payments. With the exception of France, all the interested governments accepted.