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27 Cards in this Set

  • Front
  • Back
Standoff between isolationism and
internationalism in the United States
- Differing views of the cause of the
* Isolationists – American economy dragged
down by disintegration of global economy
* Internationalists – American economy of
the 1920s insufficiently internationalized
The 1930s Reversal of Globalization
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)
The Second World War
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
The Second World War (continued)
- War also generated intensive U.S. effort to obtain and control overseas sources of raw
- 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
The Second World War (continued)
- 1944. Gold-dollar standard system
- International Monetary Fund (IMF)
- World Bank (IBRD)
- General Agreement on Tariffs and Trade
Bretton Woods System
- 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
Gold-Dollar Standard
____ 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
Harry Dexter White (American Side) and British side - John Maynard Keynes.
"Governments need to be more active to even out cycles"
Harry Dexter White
and John Maynard
Keynes at Bretton
Woods Conference
Long-term loans for development. Usually to governments to help develop big infastrucre
World Bank Building, Washington, D.C.
- 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
Bretton Woods System
- 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
Long Boom, 1950-1973
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.
Cartoon Depicting the Soviet Threat to Western Europe
Europe was wiped out
Bomb Damaged Buildings in Berlin, 1946
- 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.
The Cold War
- 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
Crisis Within the Capitalist System
Republican Party majority in
Congress opposed increasing aid or political commitments

Senator Robert A. Taft (R-OH)
“Mr. Republican”
New Republican Congress, 1946
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.”
Dean Acheson – “Present at the Creation”.

Dean Acheson, February 1947
"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
Truman Doctrine (1947)
Chevron partnership (4) partners in new joint venture, MArch 12, 1947
ARAMCO Oil Exploration, 1955
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”
Truman Doctrine Quote from Time
Secretary of State, Truman Administration
General George C. Marshall
- 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
The Marshall Plan (1948)
- 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
The Marshall Plan Aid
2 big events:
1) The soviets testing of nuclear device
2) The Chinese Communist Revolution 1949

Recovery stalled in Europe and Japan
Renewed Crisis in 1949
- Soviets exploded an atomic bomb.
- Chinese communist revolution
- Continued resistance of
Republican Congress to
expanded overseas commitments
Renewed Crisis in 1949
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
Map of Asia
- 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
- 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
Revival of World Economy