Cooperation Tested

The economic situation looked grim in 1947. Forty-four countries had agreed to international economic cooperation at Bretton Woods, but the IMF and the World Bank were not yet in a position to provide the needed expertise and financial assistance. Would countries return to the unilateral beggar-thy-neighbor policies of high tariffs and competitive devaluations?

Potential Solution

Many hoped that the United States would provide economic aid to help resolve the crisis. In contrast to the other combatants, the United States ended the war as the world’s greatest creditor, with most of the world’s gold, a substantial balance of payments surplus, and virtually no physical damage to its own land. Would the United States offer additional dollar aid? Could the European countries cooperate with one another and the United States to solve their persistent problems and return to prosperity?

Limited Options for Economic Recovery

• Exporting more than they imported (balance of trade surplus)
• Private investments or loans from the United States
• U.S. government aid or loans

However, the devastation caused by the war eliminated any hope of a trade surplus. Chaos and uncertainty in the European economies discouraged private US investments. It seemed that only additional government aid or loans could work.