Saving International Capitalism during the Early Truman Presidency: The National Advisory Council on International Monetary and Financial Problems

Abstract

From the earliest days of World War II, U.S. planners devoted a great deal of thought to how international economic relations should be reordered in the postwar world. This attention reflected their understanding of how the war began in the first place. To their mind, the Great Depression ushered in economic nationalism, as countries installed trade barriers and monetary controls, devalued their currencies, formed trading blocs, and granted imperial preferences, all in an effort to protect foreign reserves, gain access to raw materials, and create trade surpluses. To most, there was a causal link between those so-called beggarthy-neighbor policies and war. The collapse of the liberal economic order produced economic nationalism; economic nationalism led to dictatorships; and dictators unleashed global conflagration. According to that view, the Great Depression itself had its roots in the American failure effectively to confront the massive economic problems that emerged from World War I, namely, wartime debt, reparations, massive reconstruction needs, the destruction of traditional trade, and a chaotic, unstable international monetary system. Roosevelt and early Truman administration officials vowed to prevent history from repeating itself and strove to create an open, nondis-criminatory, and multilateral trading system, with convertible currencies and the free flow of capital, upheld by strong international institutions.