ABSTRACT

Three clusters of economic facts were of great significance. First, the Soviet Union was devastated by war and hoped for economic assistance from the US. The Soviets were disappointed when the US abruptly stopped Lend-Lease aid after victory in Europe. This was required by American law, but the Soviets saw it as an unfriendly prelude to US demands for political concessions in return for aid: a tactic that President Truman did indeed pursue. Second, the US had become the world’s economic colossus in the war. How to sustain that was of deep concern to US planners. They did not want a post-war recession resulting in the kind of social and political unrest that had fostered totalitarianism in the 1930s. The US wanted to internationalise New Deal reforms to make the face of capitalism acceptable and its performance more stable and accountable by exercising US management through the IMF and the General Agreement on Tariffs and Trade (GATT). Unfortunately, this economic vision was not compatible with that of the Soviets and, by 1946, they had rejected participation in the US grand capitalist design. Third, Europe needed economic reconstruction to promote self-help, otherwise the US would lose important markets and have to pour in endless resources to feed, house and clothe people. As Germany had the potential to be the economic powerhouse of Europe, logic dictated that its economy had to be revived. As most of it was in the West, its revival would unavoidably be perceived as a threat by the Soviets. However, the alternative for the US was an unacceptable dollar and humanitarian cost and a possible rerun of the inter-war tragedy if economic poverty and social unrest delivered Europe into the hands of political extremists.