chapter  VI
20 Pages

Foreign Trade and Payments and European Reconstru ction

The ERP was thus thought of at first as an emergency measure, which, by ensuring Western Europe's economic recovery, would by increasing European dollar earnings enable the Bretton Woods agreements, the basis of the world­ wide peace settlement, to be brought into operation in their full panoply in spite of the setback of 1 947, even though the communist bloc would be excluded. With full economic recovery in Western Europe would come a payments equilibrium between Western Europe and North America, the dollar would cease to be in such excess demand in international payments and the IMF could begin to function fully as a regulatory agency of a world-wide multilateral payments system. It was therefore inherent to the ERP that European countries should use Marshall Aid from the outset to move towards a multilateral system of trade and payments and away from the methods by which they had increasingly been trading since 1 929. Otherwise, if this

American analysis were correct, the IMF could only be brought into operation for intra-European trade.