Secretary of State George K. Marshall Plan, aka European Recovery Program (ERP) This plan was announced by its author in June 5th 1947 in Harvard University. In general, the Marshall Plan (officially the European Recovery Program, ERP) was the primary program, 1947–51, of the US for rebuilding and creating a stronger economic foundation for the countries of Europe. The total amount of funds that were involved in this program was about $13 Billion. Great Britain, France, Italy, Germany and Netherlands received the major part of this help. What was the reason for this plan? As we’ve said, after WWII, the European economy was effectively destroyed; nearly all of the gold reserves of European countries had been spent on different military purchases. In one word, European nations had not even one single strong currency to reestablish international trade, and no machines, plants and factories to restart domestic industrial production. Last, but not least, it had no money to buy all any of these items from other countries. This situation also was absolutely unwelcome for US and Canada, because they had demand only from domestic markets and couldn’t sell their goods internationally. These were the reasons the ERP had come to life. According to the ERP, the US provided $13 billion during 4 years that could be spent by European countries for purchasing different US made goods, machines and equipment – all that was necessary to develop each nation’s own industrial production. As a result Europe has received the necessary equipment and the US gained an additional international market where it could offer its own goods. This stimulated the US national economic growth and simultaneously promoted more international trade without any additional limitations. European countries that were involved received the funds were called The Organization for European Economic Cooperation. But money used for the ERP program was not just a gift to different European countries - it should be repaid. American suppliers sold their goods for USD that had been credited against the ERP funds which was provided to a particular country. Then, this country had to repay this credit, but in its national currency. This amount in local currency was transferred into a counterpart fund. This fund could be used for further different investment programs by ERP countries. As a result, the Europe economy grew 35% during the ERP time. The international transactions and trade had become simpler and had fewer limitations than before WWII. Europe has raised their own economy and the US has received new international markets in which to sell their own goods. This also stimulated the US national economy. Bretton Woods, then, created a system of triangular trade: the United States would use the convertible financial system to trade at a tremendous profit with developing nations, expanding industry and acquiring raw materials. It would use this surplus to send dollars to Europe, which would then be used to rebuild their economies, and make the United States the market for their products. This would allow the other industrialized nations to purchase products from the Third World, which reinforced the American role as the guarantor of stability. When this triangle became destabilized, Bretton Woods entered a period of crisis that ultimately led to its collapse. But for us, the major conclusion is that the US Dollar became and still is the dominate currency in international trading. Think about it – all funds used in the ERP were provided in US Dollars. European countries bought US goods for US Dollars. The USD started to dominate in the world economy already in 1940s-50s. Besides, the US had the largest gold reserves. There were just no real rivals to it.