By the end of World War I, the United States had begun to replace England as the financial center of the world economy, because it was the only country from which short- and long-term capital could be obtained. In the 1920s, American industry and agriculture grew at a rapid pace and entered a period of prosperity and expansion. This was in contrast to Germany, which, under the terms of the Treaty of Versailles and after being forced to return Alsace-Lorraine to France, part of West Prussia, and the mining region of Upper Silesia to Poland, had to give up all of its colonies and most of its fleet, and was forced to bear the cost of war reparations to the victors, which were particularly punitive and heavy, and constituted a major brake on economic recovery and the hoped-for but unrealized improvement in the social situation. The payment of war reparations and the difficulties of reconstruction and industrial conversion led to an economic crisis that peaked between 1922 and 1923.
At the end of 1923, Germany embarked on a strict monetary stabilization program to halt inflation, which had reached unsustainable levels. To help Germany, and not only Germany, substantial international aid arrived, mainly from the United States, and especially from its banks, which were attracted by the high interest rates involved, while U.S. traders imposed free movement of goods and capital on both their own government and Europe. The world economy recovered and returned to pre-World War I levels in a relatively short time. The economies of France and England grew steadily, and American industry and agriculture exported much of their production to Europe. Beginning in 1925, as the situation in Germany also began to improve, markets began to become saturated due to overproduction, especially of agricultural products. Prices began to fall and protectionism returned with the imposition of cross tariffs.