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4 - The Dollar Gap and Its Discontents

Published online by Cambridge University Press:  05 July 2011

Curt Cardwell
Affiliation:
Drake University, Iowa
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Summary

It is all too easy to see what would happen if aid were cut off in the middle of the [Marshall Plan] program. The European countries would simply have to slash drastically their imports from us.

Averell Harriman testimony before the House Committee on Foreign Affairs, February 22, 1950

MR. MANSFIELD: Is it the contention of the State Department that by 1952 western Europe … would be in a position to stand on its own feet and carry on economic relations with the rest of the world?

SECRETARY ACHESON: No; I do not think I would say that it is the contention that that would be so. As I said, it all depends upon the success which we will have in dealing with the dollar-gap problem.

Dean Acheson testimony before the House Committee on Foreign Affairs, February 21, 1950

As we saw in Chapter 3, in the immediate postwar years Truman administration foreign policy officials' efforts to cope with the dollar gap focused on providing loans and grants to cover the gap on the premise that such aid would buy time for western Europe to recover to the point that it could earn dollars at a high level of trade through the normal processes of trade. The European Recovery Program (ERP), or the Marshall Plan, was the principal program set up to accomplish this goal.

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Publisher: Cambridge University Press
Print publication year: 2011

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References

Freeland, Richard, The Truman Doctrine and the Origins of McCarthyism: Foreign Policy, Domestic Politics, and Internal Security, 1946–1948 (New York: Schocken Books, 1974)
Gaddis, John Lewis, The United States and the Origins of the Cold War, 1941–1947 (New York: Columbia University Press, 1972)
Gardner, Richard N., Sterling-Dollar Diplomacy: Anglo-American Collaboration in the Reconstruction of Multilateral Trade (New York: Oxford University Press, 1956)

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