The United States allies, who consisted of all of the European countries, including the Central Powers owed excessive amounts of money to American banks. Unfortunately, the European nations’ devastated economies could not cover the debt. Therefore, the American banks provided larger loans to cover these obligations but it contributed to the crisis by piling up yet new and greater debts. American tariffs were also making it impossible for Europeans to trade their goods in American markets, one such tariff – the Hawley Smoot Tariff - established high import duties and contributed to the disintegrating chain of world trade. Consequently, the European nations began to default on their loans due to the lack of foreign exchange to repay
The United States allies, who consisted of all of the European countries, including the Central Powers owed excessive amounts of money to American banks. Unfortunately, the European nations’ devastated economies could not cover the debt. Therefore, the American banks provided larger loans to cover these obligations but it contributed to the crisis by piling up yet new and greater debts. American tariffs were also making it impossible for Europeans to trade their goods in American markets, one such tariff – the Hawley Smoot Tariff - established high import duties and contributed to the disintegrating chain of world trade. Consequently, the European nations began to default on their loans due to the lack of foreign exchange to repay