Book contents
- Frontmatter
- 1 The age of European domination
- 2 The Great War and American neutrality
- 3 The United States at war
- 4 The Versailles peace
- 5 The 1920s: the security aspect
- 6 The 1920s: the economic aspect
- 7 The 1920s: the cultural aspect
- 8 The collapse of international order
- 9 Totalitarianism and the survival of democracy
- 10 The emergence of geopolitics
- 11 The road to Pearl Harbor
- 12 The global conflict
- Bibliographic Essay
- Index
- THE CAMBRIDGE HISTORY OF AMERICAN FOREIGN RELATIONS
- References
6 - The 1920s: the economic aspect
Published online by Cambridge University Press: 28 March 2008
- Frontmatter
- 1 The age of European domination
- 2 The Great War and American neutrality
- 3 The United States at war
- 4 The Versailles peace
- 5 The 1920s: the security aspect
- 6 The 1920s: the economic aspect
- 7 The 1920s: the cultural aspect
- 8 The collapse of international order
- 9 Totalitarianism and the survival of democracy
- 10 The emergence of geopolitics
- 11 The road to Pearl Harbor
- 12 The global conflict
- Bibliographic Essay
- Index
- THE CAMBRIDGE HISTORY OF AMERICAN FOREIGN RELATIONS
- References
Summary
The diplomacy of the dollar
Any stable system of international relations must be built on economic foundations, and the situation in the 1920s was no exception. Indeed, given the devastation brought upon the European economies, no postwar order could be conceived that did not include an economic agenda. How to restore the European economies and, through them, reestablish stable international economic relations was a key issue of the postwar period, the more so since, as noted earlier, the Versailles peace treaty had failed to address the issue squarely.
The Great War had cost Europe dearly; 9 million of its youths had died in war, another 20 million had been wounded, and more than $400 billion had been expended on battle. Inevitably, the European countries, victors and vanquished alike, suffered from a decline in industrial and agricultural production, which, combined with a severe inflation, caused social and political instability. Moreover, foreign exchange mechanisms remained confused. The system of multilateral trade and investment that had functioned before the war had been based on the gold standard and the principle of currency convertibility, both of which had been given up during the war and could not be automatically restored when the peace came. (Only the United States lifted the ban on gold shipments right after the war.)
- Type
- Chapter
- Information
- The Cambridge History of American Foreign Relations , pp. 88 - 102Publisher: Cambridge University PressPrint publication year: 1993