In 1924 an international committee of financial experts headed by American banker Charles G. Dawes met to re-examine reparations. The resulting Dawes Plan (1924) was accepted by France, Germany, and Britain. Germany’s yearly reparations were reduced and linked to the level of German economic prosperity. Germany would also receive large loans from the United States to promote German recovery, as well as to pay reparations to France and Britain, thus enabling those countries to repay the large sums they owed the United States.

This circular flow of international payments was complicated and risky, but it worked for a while. Germany experienced a spectacular economic recovery. With continual inflows of American capital, Germany paid about $1.3 billion in reparations in 1927 and 1928, enabling France and Britain to pay the United States. Thus the Americans belatedly played a part in the general economic settlement that facilitated the worldwide recovery of the late 1920s.

This economic settlement was matched by a political settlement. In 1925 European leaders met in Locarno, Switzerland. Germany and France solemnly pledged to accept their common border, and both Britain and Italy agreed to fight either France or Germany if one invaded the other. Stresemann also agreed to settle boundary disputes with Poland and Czechoslovakia by peaceful means, and France promised those countries military aid if Germany attacked them. For years a “spirit of Locarno” gave Europeans a sense of growing security and stability in international affairs.

Other developments also strengthened hopes for international peace. In 1926 Germany joined the League of Nations, and in 1928 fifteen countries signed the Kellogg-Briand Pact, initiated by French prime minister Aristide Briand and American secretary of state Frank B. Kellogg. The signing nations “condemned and renounced war as an instrument of national policy.” The pact fostered the cautious optimism of the late 1920s and also encouraged the hope that the United States would accept its international responsibilities.