USM Open Source History Text: The World at War: World History 1914-1945

The Power of the United States

After WWI, the role of the United States in the world economy was becoming increasingly important. The United States led the world as creditor, advancing $10 billion more in 1929 than it took in from foreign sources. The business community pressed for access to world markets at the same time as it insisted on protections at home. Economically speaking, the United States started penetrating deep into Latin America, creating the conditions for an economic imperialism that still plays a large role in the relationship between Latin America and the United States today. But the days of gunboat diplomacy and military intervention were over for now. With the rejection of the Versailles Treaty and the League of Nations, the United States signaled that it was hesitant to participate in international political and diplomatic affairs, an ominous sign for world security and economic growth. The basic problem with this strategy was that the postwar configuration in Europe was even less stable than its prewar predecessor. If the United States had guaranteed Polish borders, for example, and had been ready to mobilize quickly to defend them, it is unlikely that German would have risked invasion in 1939. The only robust engagement that the United States had in the foreign policy arena in the 1920s was on the issue of German reparation payments and the connected issue of British and French debt to the United States. These negotiations produced temporary successes like the Dawes’ Plan, which approved U.S. private loans to Germany. Germany would then use the money to pay France and Britain reparations for the war. France and Britain would, in turn, repay their debts to U.S private firms. In sum, by pushing self-serving economic policies while standing on the political and diplomatic sidelines, the United States added greatly to global insecurity in the years between 1919 and 1929.

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