Throughout the period from 1945 to 1950 the Attlee government worked for the establishment of a world economy in which full employment could be reconciled with multilateral trade . But Anglo-American attempts at the restoration of multilateral trade after 1945 were bedevilled by the dollar shortage . The first attempt broke down in the 1947 convertibility crisis , which revealed a basic connection between the health of the British economy and the viability of the sterling area. The second attempt was centred on the Marshall Plan , which aimed to construct an integrated Europe of which Britain would be the leader. Most histories of post-war European integration , and of British policy towards it , are characterized by two basic assumptions. First , the Marshall Plan not only saved West­ ern Europe from political and economic ruin after 1947 by helping it to overcome the dollar shortage , but created the conditions for international expansion . Secondly , the British held aloof from the development of an integrated Europe out of an antiquated determination to play an imperial role in the post-war world . 1

This article challenges those assumptions . I t i s true that after 1947 Britain placed the maintenance of its world role at the centre of the sterling area before any irreversible commitment to European integra­ tion. British imperialism did not perish with decolonization in South Asia : but the invocation of folie de grandeur does not explain its survival . Britain's experience in the convertibility crisis led it to believe that Europe's dollar problem was part of a world-wide disequilibrium with which the Marshall Plan was inadequate to cope . Further, the liberal model of European integration implicit in the Marshall Pla"n threatened sterling area viability . In consequence Britain worked for inter­ governmental European co-operation and argued that sterling-dollar partnership to stimulate international expansion would be the most effec­ tive way of restoring multilateralism .