In prefaces to the other Books of this volume we have looked at the outside world as background for the American scene in which Coolidge moved. In the period following 1923-24, however, it seems well to present developments in the United States as background for the whole world picture.
We had retained our economic strength and financial stability, and above all, our sound gold currency. The free gold of the world was coming to us, because the outside world knew the gold would be returned without loss, from the United States and from no other great country. On our financial and economic policies, the rest of the world pivoted, even though we refused to take international political responsibility. We had refused to enter the League of Nations. Neither Harding nor Coolidge had the remotest conception of the immensity of our economic and financial power, or of the extent of our responsibilities. We did accomplish a naval limitation treaty in 1922. Our government did timidly and indirectly assist in the making of the Dawes Plan in 1924. But the iniquities of the Versailles Treaty, which we might have helped to ameliorate in time had we been in the League of Nations, remained to poison the future.
The German inflation and general chaos continued pogressively worse until the Dawes Plan of 1924. Under this Plan, Germany and the governments to whom she owed reparations undertook to restore German currency and credit, and to put Germany in a position to pay reparations. The Plan had intrinsic merit. Its basic error was that scheduled payments were much too high. But safeguards in the Plan under which transfers of payments should not be made provided that if the German currency or her economic life were to be endangered thereby, then the accumulations of reparation money in Germany were to be discontinued unless they could be safely transferred. The fatal error came in the Young Plan which superseded the Dawes Plan in 1929, under which these safeguards were removed.
The nations of Europe which had borrowed from the United States during the war undertook to refund their debts to us. Most of them obtained heavy concessions in the settlements that were made, though Britain