• The first world war ended in 1918. It produced far reaching impacts around the world. 
• Over 10 million people lost their lives or were injured in the war. 
• Economic dominance of Europe diminished. 
• Poverty, unemployment and inflation increased.
• Liberation movements in Asia and Africa strengthened agriculture, industry and com munication systems were destroyed.
• In a bid to bring about peace in the world, the league of nations was formed.

In 1919 a peace conference was convened at paris to discuss post war situation under the leadership of winning allies, Britain and fiance. They signed different treaties with defeated nations. The Versailles Treaty signed with Germany in 1919 was the most important one. According to this treaty, German colonies were divided among victorious powers and Germany was forced to pay a huge amount as war indemnity. The allies occupied the rich mines of Germany.

Europe was the focal point of first world war and it had to bear the major brunt. Hence economically and politically, the European nations suffered serious setbacks. Ruling dynasties like Romanov in Russia , Hohenzollern in Germany and Hapsburg in Austria Hungary lost power.

The United states of America was not affected by war. Hence European countries was not affected by war. Hence european nations managed to get loans from the USA. Consequently American dollar overtook british pound on the basis of foreign exchange holding.