Money Matters: An IMF Exhibit -- The Importance of Global Cooperation

Destruction and Reconstruction (1945-1958)

Part 3 of 6

Conflict &
Cooperation
(1871 - 1944)

Destruction &
Reconstruction
(1945 - 1958)
The System
in Crisis

(1959 - 1971)
Reinventing
the System

(1972 - 1981)
Debt &
Transition

(1981 - 1989)
Globalization and Integration
(1989 - 1999)
 
 

Cooperation

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Trade Links Encourage Expansion:

  1. The United States gives dollars to Country A.
  2. Country A uses dollars to increase domestic production and pay for imports.
  3. Country A’s economy expands by selling more domestic products to, and buying more imports from, other countries.
  4. Other economies (including the U.S. economy) expand by selling more domestic products to, and buying more imports from, Country A.

Noncooperation

Without Trade Links, Economies Miss Out on Expansion:

  1. The United States does not provide dollars to Country A.
  2. Country A is unable to increase domestic production and unable to afford imports.
  3. Country A’s economy fails to expand, with few products to export and little foreign exchange to buy imports.
  4. Other economies (including the US economy) fail to expand, unable to sell domestic products to, or buy imports from, Country A.

War equals peace

credits

US Decision

The Case Against
Over $9 billion had been spent already on aid to Europe in the immediate postwar period:
  • The United States could not afford to give away more money to other countries. There were pressing needs at home.
  • Existing shortages in the United States would be exacerbated and wholesale prices would rise, causing inflation.
  • If the United States did nothing, Europe would solve its own economic problems.

 

The Case For
The United States must act for security, humanitarian, and economic reasons:
  • If the United States did not help, Soviet-supported Communists could make inroads into vulnerable Western European countries.
  • Innocent people in Europe were suffering from shortages of basic necessities.
  • The United States could lose its main export markets if Europe could not find dollars or gold to purchase US products.

 

"And yet the whole world of the future hangs on a proper judgment...
What are sufferings?
What is needed?
What must be done?"


George C. Marshall,
US Secretary of State
Harvard University,
June 5, 1947

 

 
The Post War World Cooperation Tested Cooperation
     
Cooperation for Recovery: The Marshall Plan U.S. Dollars: Fueling
the Economy
Economic Miracles
in the 1950s

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