During the early stretch of the twentieth century, the United States was a "debtor nation," saddled with $3 billion in loans from foreign creditors. But World War I helped transform the U.S. into a creditor nation: by 1919, a number of European nations had racked up roughly $10 billion in debts to the American government. Suddenly freed from its reliance on foreign loans, the U.S. government set about solidifying its new position as a global economic force. However, under the rule of President Warren G. Harding, and his successor, Calvin Coolidge, the U.S. adopted fiscal policies, including high tariffs and other barriers to foreign trade, which made it nearly impossible for Europe to repay its loans. Nevertheless, the White House steadfastly refused to wipe any portion of Europe's debts off the books, despite European leaders' attempts to persuade the U.S to reconsider its unwieldy fiscal policy. Finally, in the mid-1920s, Coolidge relented and made arrangements to reduce, though not entirely scuttle, Europe's debts. Indeed, on this day in 1926, the U.S. and France sealed a deal that eventually wiped away sixty percent of the French debt. France, who owed the U.S. in the neighborhood of $4 billion, also agreed to a sixty-two-year term, at 1.6 percent interest, for the repayment of its debt.
-Source: www.history.com
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