The Dollar Gap And The Cold War

While America did not like Communism from an ideological standpoint and they threat of Soviet atomic nukes played a role in leading to the Cold War. The dollar gap played a much bigger role in the Cold War because the Soviet Union would gain more power if the European economies did not improve. America needed Europe to trade with them to keep their capitalist economy going, and both America and the Soviet Union needed Europe to support their economic plans post World War II.

With America promoting capitalism and needing Europe to participate in trades to make their economy work. If the American plan to promote European economies through capitalist ideological plans did not work, there would be a good chance that European countries turn to Communist countries to save themselves. Economic stagnation in Europe might strengthen Communist parties and motivate European governments to form closer ties with the Soviet Union (Kershaw, 2018. Lecture). If the European countries turned away from Americas economic plans and became cooperative to the Soviet Union’s economic plan, this would most likely result in cutting off trades with America.

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During World War II America’s economy was booming. The war raised demand for US exports from $1.6 billion in 1932 to $12.8 billion in 1943 and $14.3 billion in 1944 (Kernshaw, 2018. Lecture). The war also lifted a lot of people in the United States out of unemployment, War industries and the war itself absorbed large number of unemployed workers into either industry or military service (Kernshaw, 2018). However, while America was becoming more assure of a victory for the allies, growing concerns of industries being over-built for what was needed during peacetime. Lowering production would have resulted in mass unemployment, America needed a plan for post-World War II that could serve America’s ability to mass produce and keep their employment levels high.

To make sure the United States economy did not slip back into where it was before World War II, the great depression era, Europe needed to buy American products to match the production that the U.S. would be producing. With a fear of going back to economic depression America’s plan was to use foreign aid to seek trade and reforming the world economy to fit the United State’s needs to achieve economic prosperity (Kolko).

The American government plan to give money to countries who did not have a lot of production or money to buy American goods and this plan was called The Marshall plan. Free trade is the basis of capitalism, there must be an exchange of free trade between parties to make the economy work. Having outside entities to purchase American goods that would be just surplus if trade only remained inside the United States was very important to the post World War II economic plans.

America’s plan requires that they are at the head of reforming the world’s economy, and they felt that the Soviets as well as communism was a threat to their plan. A Soviet rise to power would put America’s plans of running the world economy at risk. The Soviets saw that America wanted to control the world economy and since Soviets are not capitalists they do not fit into this world economy.

A Soviet ambassador said while analyzing the United States policy goals for Post World War II, The foreign policy of the United States, which reflects the imperialist tendencies of American monopolistic capital, is characterized in the post-war period by a striving for world supremacy (Novikov, 1946). The Soviets viewed the United States post-war actions as a plan for world domination through economic policies.

Another factor leading to the Cold War was the death of United States President Franklin D. Roosevelt. Stalin reportedly wrote that he hoped nothing would happen to Roosevelt because they would never do business with somebody like Roosevelt again (Kernshaw, 2018. Lecture). Roosevelt’s health was declining during World War II so Stalin was obviously worried about him no longer being president and that the person who took over would not be as friendly to Stalin’s ideas. If Roosevelt had not died, he was much better at dealing with Stalin, even with the differences between the Soviets and United States the Cold War could have been prevented.

There was also a possible threat of atomic nuclear war from the Soviets which raised tensions between them and the United States. The U.S. wanted to seek a policy with the U.N. that any country developing nuclear weapons and not submitting to the UN for effective international control is committing an act of war and that by creating this policy would gain the moral support of the world and be able to lead the ‘free world’ against the soviets (Acheson – A Question of Preventive War, Pg. 188-189). This did not play as big of a role as the dollar gap, because the track record for the Soviets not taking risks when it came to war. They were not going to go into warfare with the United States because the risk involved, and it would turn other countries especially in Europe against them.

In conclusion, the dollar gap played a significant role in leading to the Cold War between the United States and the Soviet Union. America needed world cooperation into capitalism to make the economic plans work, and the soviets were not pleased and saw it as trying to dominate with economic policy. The passing of then president Franklin D. Roosevelt was also a factor leading to the cold war, as these policies could have been dealt with and better accepted from the Soviets had Roosevelt still been involved. The nuclear threat was not a big factor, as a nuclear war or open warfare would have made dealings with the rest of Europe very difficult for the Soviets.

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