The Dollar Gap

Abstract

To MOST AMERICANS, the news that our dollar was in danger came as a great shock. During the early postwar years, we heard about dollar shortages, and various economic difficulties that other, once prosperous, nations were having; but it seemed incredible that one day we too might be faced with similar difficulties, though on a much smaller scale. The American Government and people, seeing the danger of chaos to the civilized world, started the most generous and ambitious plan to help to rebuild the rest of the world by pouring out billions of dollars. This aid was given in the form of grants and loans of much foodstuffs, raw materials, industrial equipment, and technical assistance. The results were more than rewarding. Any American travelling through Western Europe today, and seeing the thriving economic activity must certainly feel gratified that his hard earned tax money was well spent, and was mostly responsible for this healthy resurgent economy. It is not intended to belittle the tremendous effort made by these nations, and yet everybody will agree that without American aid, these fantastic achievements could never have taken place in so short a time. Most Americans considered the achievements of the West European nations as interesting economic developments, and watched them with sympathy and condescendence. However, a few months ago a very rude awakening came: Gold that had travelled to America during a generation was now running away; thus our dollar was in danger. Although the nation's economists had been mentioning this fact for sometime, the general public was quite unaware of it. The trip of our ex-Secretary of Treasury to Bonn, to reduce our dollar commitments abroad, and former President Eisenhower's directive, now rescinded, to bring the dependents of our servicemen home, to save dollars, shook the man in the street both in the States and abroad.