Houghton, having studied in prewar Germany, admired German culture and understood German politics. His appointment was approved by the U.S. Senate and well received by the
Weimar Republic. On February 28, 1922, Houghton resigned his House seat to accept appointment from
President Warren G. Harding as the
U.S. Ambassador to Germany. Houghton believed that world peace, European stability, and American prosperity depended upon a reconstruction of Europe's economy and political system. He saw his role as promoting American political engagement with Europe. He overcame domestic opposition, and disinterest in Washington. He quickly realized that the central issues of the day were all entangled in economics, especially war debts owed by the Allies to the United States, reparations owed by Germany to the Allies, worldwide inflation, and international trade and investment. Solutions, he believed, required new policies by Washington and close cooperation with Britain and Germany. He was a leading promoter of the
Dawes Plan. On February 24, 1925,
President Calvin Coolidge appointed Houghton as the
U.S. Ambassador to Great Britain. Houghton assumed the post on April 6, 1925, and served until April 27, 1929. Houghton's service in both Germany and England gave him a unique ability to address the issue of the
war reparations Germany owed to its World War I opponents, England being one of them. Houghton laid some of the groundwork for the
Dawes Plan, named after then U.S. Vice President
Charles G. Dawes, who would be Houghton's successor as Ambassador to Great Britain. In
1928, Houghton ran for the
U.S. Senate from New York against first-term incumbent
Royal S. Copeland, a Democrat. Houghton lost by just over one percentage point. ==Death and legacy==