Money
Matters: An IMF Exhibit -- The Importance of Global Cooperation
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Destruction
and Reconstruction (1945-1958)
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Part
2 of 6
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Cooperation
Tested
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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?
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Potential
Solution
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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?
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Limited
Options for Economic Recovery
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Desperate
countries could gain the dollars they needed only through:
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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.
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