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German industry had survived Allied bombing largely unscathed. Currency reform was necessary to provide incentives for capital owners and labor to produce. The abundance of old Reichsmarks had to be curtailed to a scarce supply of Deutschmarks that users would expect to retain value. It was Edward A. Tenenbaum, currency expert of US military government in Berlin since 1946, who managed the exceptionally successful currency reform in West Germany 1948, which was implemented by the legislative powers of the three Western Allies against opposition from West German financial experts. It was the foundation of West Germany's 'economic miracle.' The West German currency conversion is part of the founding myth of the Federal Republic of Germany. Yet Tenenbaum's pivotal role is largely unknown among the German public. Besides providing a full-blown biography of the true father of the currency reform, this book elevates Tenenbaum to his proper place in German history.
Understanding Stalin's foreign policy requires examining his shifting approach to the unfolding Cold War. Up until 1945, he sought great power cooperation in Europe, but later rejected compromise with the United States for fear of exposing Soviet weakness. Stalin’s failed gambit for influence in Iran and Turkey showed the limitations of heavy-handed bullying of neighboring countries: in both cases, he had to retreat and retrench. Meanwhile, in Greece, Stalin shifted opportunistically from a cautious noninvolvement to increasing support for the Communist insurgency. But his Balkan strategy was complicated by an unexpected quarrel with Yugoslavia’s Josip Broz Tito, fueled by Stalin’s jealousy and mistrust. Stalin’s realization in 1947 that left-leaning coalitions that he sponsored across Eastern Europe were not electable marked a turning point towards confrontation with the West. Stalin began to prioritize security over legitimacy. This logic led him towards an attempt to dislodge the Allies from divided Berlin, resulting, by 1949, in a complete division of Europe.
As of this chapter the book turns to the period from the run-up to the take-off of European integration, the years 1947 to 1951. Against the backdrop of the emerging Cold War, the Americans, the British, and the Western Europeans get their hands dirty in actions of institution-building aimed at making a more stable and just post-war European order, centred around new and deeper forms of European and international cooperation. In fact, this was what one could call the unfolding of European integration. Moreover, this second part of the book tries to uncover deeper layers (of psychology and belief) in this history through three crucial sub-histories. This chapter deals with the first of these sub-histories. It traces how the coming about and the workings of the Marshall Plan gradually illuminated an institutional, economic, and political pathway for integration in Western Europe.
Chapter 11 looks at the much smaller World War II reparations to the Allies. The Allies had learnt from previous reparations disasters and focused on the de-industrialisation of Germany and Japan. Only small reparations were actually paid, and the transfers were offset by US loans from the Marshall Plan. I show how even though reparations were agreed, they were not necessarily paid, using a case study of German reparations to Denmark.
The scale of the Great Depression and the obvious need for federal intervention mooted laissez-faire arguments. Nevertheless, the continuing vitality of laissez-faire sparked debates in law, economics, and public policy about the proper role of government that, in important ways, continue to the present. The chapter locates the rise of infrastructure as a common term within modernization theory and development economics, which provide the post-World War II with a western-centered model of capitalist growth. Modernization theory drew on social science, economics, and political theory to map society and economy as reciprocal systems that were amenable to policy intervention. Infrastructure” begins to circulate in the early 1950s as a novel concept among staffers at the World Bank and later in Congressional debates over the Marshall Plan. It first takes on a narrow meaning of military facilities and the resources that supported those facilities. From there, it becomes a portable concept that development economists could use to predict the “take off” or stagnation of emerging societies measured by rates of growth, GDP, social stability, and technological advance. We see our contemporary sense of infrastructure crystallize in the 1950s and 1960s as the material precondition for a flourishing modern capitalist democracy.
The First Session of the Fiscal Commission proceeds in a seemingly cooperative atmosphere with grand ambitions for the body’s future work. Behind the scenes, however, relations between the superpowers, and between the United States and Latin America, are fast unravelling.The United States presses for the promotion of double tax agreements to further free trade and private enterprise. The developing countries and the Fiscal Division begin to express discontentment with prevailing international tax rules and the League’s model tax conventions.
This chapter details the cracks in the consensus that began to emerge as tension boiled over in France with the expulsion of the PCF from the governing coalition and the communist-directed strikes that paralyzed the nation at the end of the year. Italian, Spanish and French intelligence, US embassy officials in Paris, U.S. military intelligence, and Central Intelligence Group current intelligence reports kept up the drumbeat, warning of growing anti-Americanism, communist power grabs and the PCF’s role in a larger, global communist conspiracy. Their analysis formed the core of the intelligence sent to President Truman and his senior advisors. However darkly uniform the analysis of the preceding year had been, some French officials, experts in the Office of Intelligence and Research (OIR) and a few mid-level analysts in the CIA expressed growing concern about the type and quality of intelligence. OIR analysts who complained that some CIA officials failed to account for French agency raised one of the most serious shortcomings of American analysis. Beyond their entreaties for American aid, French sources also played a role in the development of U.S. interference in France and its pro-colonial turn.
Two main factors allowed the much wiser Marshall Plan to supplant the vindictive Morgenthau Plan. The first stemmed from an enlightened self-interest. Occupation was proving exceedingly expensive. The costs would be lessened if the German economy were revived. But the second factor stemmed from empathy. The scale of child deaths from malnutrition was growing increasingly difficult for American observers to stomach. Elderly Germans as well could scarcely withstand the freezing winters without heat or fuel, nor the near starvation rations that Hoover and his team were struggling to raise. This chapter follows Will Clayton, the unsung hero and arguably the true father of the Marshall Plan, as he experienced a change of heart. Initially supporting aspects of the harsh Morgenthau Plan, he now reversed course and persuaded his country to do the same.
The final three substantive chapters of this book focus on the ways in which the Americo-Liberian elite leveraged Liberia’s sovereignty during the twentieth century to generate rents which helped sustain their rule over the indigenous majority. Chapter 8 examines the flow of foreign aid to Liberia beginning during World War II. During the 1940s, Liberia became one of the leading recipients of American aid, beginning with Lend-Lease in 1942. In scale, its aid was comparable in per capita terms to Asian countries like Korea or Marshall Plan recipients like the United Kingdom. As in other countries, what began as military aid through Lend-Lease to support the development of an airfield and a port to be used by US forces became a larger aid program and an important part of American economic diplomacy after the war. Histories of American policies during this period are generally told from the perspective of the US government. The history of Liberia offers the opportunity to view the rise of foreign aid from the perspective of the recipient country. The chapter shows that while Liberian officials often bristled at American interference, they continued to solicit aid as part of efforts to expand service provision while at the same time restricting political competition.
Building on the discussion of the Belt and Road Initiative, the chapter offers a comprehensive inquiry into China’s economic statecraft. It first argues that the analogy often drawn between the BRI and the Marshall Plan misconstrues contemporary China’s economic statecraft. It then examines how the interest communities and partnership diplomacy serve as mechanisms for China’s economic influence. The next section considers how, with Chinese economic ascendancy in Asia, a semblance of Chinese centrality in Asia is emerging. The following section looks at China’s global influence effect in terms of the international discourse on its great-power standing as well as its drive for technical standard-setting in key industries. Lastly, the chapter discusses the built-in limits of the BRI and broad limitations of the Chinese economic statecraft in the twenty-first century.
War service completed Kindleberger’s intellectual formation, establishing him as fundamentally an intelligence analyst. First in London as Chief of the Enemy Objectives Unit, then on the Continent as advisor to General Bradley, and then after the war at the State Department working first under William Clayton on the reconstruction of Germany and then under George Marshall on the reconstruction of Europe, Kindleberger’s government service career provides a staffer’s eye view of the dramatic events of war and reconstruction.
The conclusion offers new perspectives on how after the crises of the 1930s and the even more horrific Second World War a more durable Atlantic order for the “long” 20th century could be created – an order that was founded as a western system led by the new American superpower and rested on the Marshall Plan, the European Recovery Program and the North Atlantic Treaty Organisation. Reappraising the global significance of these developments, it emphasises that what the principal American and west European decision-makers constructed was not just propelled by the escalating cold war with the Soviet Union but rather, on a deeper level, the outgrowth of longer-term learning processes: attempts to draw deeper lessons not only from the rise of National Socialism, authoritarianism and Stalinism and the Second World War but also from the earlier crises and catastrophes of the “long” 20th century, particularly the First World War and the deficient or unfinished efforts to create a modern international system in its aftermath. Finally, it reflects on the challenges of preserving a functioning and legitimate Atlantic and global order in the early 21st century.
Chapter 2 addresses the diverse ways American diplomats employed their ideas of modernization when crafting policy and propaganda for Turkey. While Americans’ general understanding of what it meant to be modern remained consistently democratic, it was sufficiently malleable that it could accommodate contradictory conclusions about Turkish democracy as US interests shifted. State Department documents also reveal how American ideas about modernity were, with the cooperation of the Turkish government, consciously transformed into propaganda aimed both at encouraging Turkish modernization and advertising America’s modernity.
OECD projections for European countries imply that the crisis will have no long-term effect on trend growth. An historical perspective says this is too optimistic. Not only is the legacy of public debt and its requirement for fiscal consolidation unfavourable but the experience of the 1930s suggests that much needed supply-side reforms are now less probable – indeed policy may well become less growth friendly. Whereas the 1940s saw the Bretton Woods agreement and the Marshall Plan pave the way for the ‘Golden Age’, it is unlikely that anything similar will rescue Europe this time around.
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