The Reconstruction Of The Global Economy. Ppt

Front 1

Standoff between isolationism and
internationalism in the United States
- Differing views of the cause of the
Depression:
* Isolationists – American economy dragged
down by disintegration of global economy
* Internationalists – American economy of
the 1920s insufficiently internationalized

Back 1

The 1930s Reversal of Globalization

Front 2

WWII important for understanding economy. Lack of resources led Germany and Japan to
undertake military conquest; and also led
to their defeat (See “The Prize”, Clip 4, for
this week)

Back 2

The Second World War

Front 3

Aviation technology during WW11 gave U.S. pioneered civilian aviation during the war; radar, sonar, atomic energy. all instrumental that bound U.S. together petrochemicals, plastics,synthetic rubber, 20th centruy for the American democracy

Back 3

The Second World War (continued)

Front 4

- War also generated intensive U.S. effort to obtain and control overseas sources of raw
materials
- Technologies vital to late 20th century; globalization: digital computing; aviation;
telecommunications; petrochemicals
- Henry Luce declaration of “American Century” (Life, February 17, 1941) – announced defeat of isolationism in the U.S. and intention (unlike in the 1920s and 1930s) to assume leadership role in world
political and economic affairs

Back 4

The Second World War (continued)

Front 5

- 1944. Gold-dollar standard system
- International Monetary Fund (IMF)
- World Bank (IBRD)
- General Agreement on Tariffs and Trade
(GATT)

Back 5

Bretton Woods System

Front 6

- Every currency fixed in terms of dollars
- Dollar fixed in terms of gold at $35/ounce
- In practice, a dollar standard system
- Financial flows restricted by nationalcontrols over short-term capital
- Nations given more flexibility than under gold standard to run trade deficits, increase money supply, pursue Keynesian policies

Back 6

Gold-Dollar Standard

Front 7

____ oversaw the Dollar-Gold Standard and wwas also a provider of short-term loans to countries. Would be international bank and would provide bail out moments. Get them through cyclical swings

Back 7

IMF

Front 8

Harry Dexter White (American Side) and British side - John Maynard Keynes.
"Governments need to be more active to even out cycles"

Back 8

Harry Dexter White
and John Maynard
Keynes at Bretton
Woods Conference

Front 9

Long-term loans for development. Usually to governments to help develop big infastrucre

Back 9

World Bank Building, Washington, D.C.

Front 10

- Poorly equipped to help rebuild the world economy in the late 1940s
- IMF and World Bank too new and undercapitalized
- During 1950s and 1960s, however, BWS would become mechanism for increasing
production in capitalist nations and trade between those nations
- BW institutions (IMF, World Bank) would live
on as enforcers of late 20th century globalization

Back 10

Bretton Woods System

Front 11

- Annual 5% real GDP growth in developed market economies; no major recessions
- Nationally based economic expansion
- Economic integration on a regional basis
- Key international trade links established, especially between raw materials producers and consumers
- But, getting ahead of the story

Back 11

Long Boom, 1950-1973

Front 12

1947-1948 Truman Admin Crisis from the Cold War. competition between Soviet Communism. Stalin, Western Europe and U.S.
- Millitarily USSR posed no threat and economically it was outside our system. Crisis was inside the capitalist system.

Back 12

Cartoon Depicting the Soviet Threat to Western Europe

Front 13

Europe was wiped out

Back 13

Bomb Damaged Buildings in Berlin, 1946

Front 14

- Post-WWII crisis
* Secondary crisis: Soviet expansionism
- Primary Crisis: THE DOLLAR GAP. In order to restore Gremany and Europe they needed infastructure and reconstruction. The problem is Europe had no money. (There was a hige Dollar Gap)
- The World Bank was inderfunided an djust started so it was too small.

Back 14

The Cold War

Front 15

- Western Europe had limited means to pay for imported factors of production – they lacked hard currency dollars
- Could not print money – already high inflation
after the war
- BW institutions too new and undercapitalized to
provide needed lending
- Major European nations could not rely on colonies and overseas territories – independence movements across Asia; remaining Latin
American investments sold off to pay for war

Back 15

Crisis Within the Capitalist System

Front 16

Republican Party majority in
Congress opposed increasing aid or political commitments
abroad.

Senator Robert A. Taft (R-OH)
“Mr. Republican”

Back 16

New Republican Congress, 1946

Front 17

Chief architect of
the Cold War.

"There are only two powers left. The British are finished, they are through. And the trouble is that this hits us too soon, before we are ready for it. We are having a lot of trouble getting money out of Congress.”

Back 17

Dean Acheson – “Present at the Creation”.

Dean Acheson, February 1947

Front 18

"Containment Doctrine"
- $400 million in military and economic aid to
Greece and Turkey
- Proclaimed U.S. intention to “contain”
communism everywhere in the world
- Rhetoric of “supporting free peoples” and
democracy, and anticommunism
- Underlying strategy: easing the dollar drain
from most valued U.S. trading partner (Great Britain) and taking over as regional policeman in the Middle East

Back 18

Truman Doctrine (1947)

Front 19

Chevron partnership (4) partners in new joint venture, MArch 12, 1947

Back 19

ARAMCO Oil Exploration, 1955

Front 20

Time Magazine, March 1947, on the Truman Doctrine:
“The loud talk was all of Greece and Turkey, but the
whispers behind the talk were of the ocean of oil
to the south.”

In order to get money out of Congress, Truman officials felt they needed to “scare the hell of out the American people” (Republican Senator Arthur Vandenburg)

Long-term domestic repercussions: anticommunist
hysteria, use of fear to achieve consent for foreign
policy objectives; “military industrial complex”

Back 20

Truman Doctrine Quote from Time

Front 21

Secretary of State, Truman Administration
(1947-1949)

Back 21

General George C. Marshall

Front 22

- Scaring the hell out of the American people allowed Truman Administration
to sell the Marshall Plan (1948 –Czech coup, Berlin blockade)
- $17 billion in aid to European nations for postwar recovery and reconstruction
- Gave American officials say in European domestic policies, undercut appeal of
leftists parties and sustained Western
alliance

Back 22

The Marshall Plan (1948)

Front 23

- Main purpose: shifting
Europe from coal-based
to oil-based energy
- 20% of Marshall Plan
funds used to buy oil
supplied by American
oil companies from the
Middle East
- Mixed success – did not
affect general European
recovery

Back 23

The Marshall Plan Aid

Front 24

2 big events:
1) The soviets testing of nuclear device
2) The Chinese Communist Revolution 1949

Recovery stalled in Europe and Japan

Back 24

Renewed Crisis in 1949

Front 25

- Soviets exploded an atomic bomb.
- Chinese communist revolution
- Continued resistance of
Republican Congress to
expanded overseas commitments

Back 25

Renewed Crisis in 1949

Front 26

U.S. had to remillitarize. June 25th 1950's - The Korean War allowed U.S to provide more money because it showed the world the "Global threat of Communism" and how it was expanding

Back 26

Map of Asia

Front 27

- Acheson: “Korea came along and saved us.”
- Staggering reorientation of American foreign policy
in 1950; massive militarization under NSC-68
(Defense budget increased from $13 billion to $50
billion)
- Japan, Germany – key regional industrial centers
Remilitarization of Germany under NATO auspices
jump-started the German economy, which became
the anchor of Western European economic revival
- U.S. military and economic commitments to East
and Southeast Asia helped foster Asia-Pacific
regional integration linked to Japan
- “Military Keynesianism” – U.S. foreign aid in a
politically palatable form; “priming the pump” of the global economy

Back 27

Revival of World Economy