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.