The Dawes Plan:
America’s former allies had difficulty making the payments of their immense war debts.
High American tariffs hampered their economic recovery by making it difficult to sell their products in the US.
This meant they could not acquire the money to pay off their war debts.
These countries also were receiving reparations—huge cash payments Germany was required to make as punishment for starting the war.
These payments however, were crippling the German economy.
It was vital for the US that European economies be healthy so that the Europeans could buy American exports and repay their debts.
Thus, in 1924, American diplomat Charles Dawes negotiated an agreement with France, Britain, and Germany by which American banks would make loans to Germany that would enable it to make reparations payments.
In exchange, Britain and France would accept less in reparations and pay back more on their war debts.