Post War Design and Emergence of the Cold War
I. Designing the Peace
A. In general terms, the
US had one main objective in designing the post-WWII world—avoid the
mistakes that had been made in settling WWI. The basic vision of the
post-war order was outlined in The
Atlantic Charter, drafted by Roosevelt and Churchill in 1941. The
Atlantic Charter envisioned a world in which nations abandoned balance
of power politics, with shifting military alliances and spheres of
influence. Instead, the world would govern itself through democratic
processes, with an international organization serving to arbitrate
disputes. All peoples would enjoy the right of choosing their own form
B. The post war order was
discussed at five conferences held during the war: Casablanca, Teheran,
Yalta, Potsdam, and Bretton Woods
1. The Casablanca (Jan, 1943) meeting was supposed to include Roosevelt,
Churchill, and Stalin, but Stalin failed to appear. Roosevelt and
Churchill did not meet Stalin’s demand that a second front against
Germany be opened, but they did assure Stalin that the West would not
accept anything less that the unconditional surrender of the Axis Powers
(they would not agree to a separate peace).
2. At Teheran (Nov.,
1943), Stalin agreed to a request by Roosevelt that Russia would
enter the war in the Pacific after the war in Europe was over, while
Roosevelt finally assured Stalin that a Second Frond would be opened in
Europe within 6 months. The Teheran conference exposed some weaknesses
in the alliance—in particular, the US and Britain were demanding
influence in establishing post-war governments in Eastern Europe, but
refused to consider Russian demands for similar influence in Western
Europe or elsewhere (e.g. Italy and Greece).
3. The conference in Yalta
(Jan, 1945) followed a private meeting between Churchill and Stalin
in which the two secretly planned the division of Eastern Europe into
spheres of influence. Roosevelt objected strongly to the arrangement.
Yalta agreements included:
a. Russia would enter the
war against Japan and in return would receive territories it had lost to
Japan in the war of 1904. It would also be able to influence events in
b. The basic plan for the
United Nations—negotiated the previous summer in Washington DC-- was
c. Yalta failed to
resolve a number of issues—chief among which was what to do with
i. Basically, Stalin
wanted Eastern Europe, particularly Poland, to serve as pro-Soviet
buffer states to prevent the possibility of another invasion from
Europe. Churchill was willing to meet some of Russia’s concerns, but
Roosevelt insisted on self-determination.
ii. The problem was that by the time of Yalta, Stalin had already put in place a pro-Soviet government there. Moreover, Soviet troops were in physical possession of the countries of Eastern Europe.
d. The question of what
to do with Germany was also unsettled. Stalin wanted huge reparations
($20 billion) while the British and US wanted to de-militarize and even
de-industrialize Germany. At Yalta, Roosevelt changed his mind,
realizing that if Germany was forced to pay reparations, she would need
industry to generate the income necessary to do so.
i. in addition, Russia
wanted to dismember Germany permanently while the US and British wanted
to keep it together.
e. Following Yalta,
Stalin proceeded to setup pro-communist governments throughout Eastern
Europe where his troops were in control on the ground. Roosevelt was
furious, but he believed that he could eventually negotiate with Stalin.
II. Roosevelt died of a massive heart attack
shortly after Yalta, however (12 April 1945) and was replaced by his new
vice-president,, Harry S. Truman.
A. This was a huge
development in the shaping of the post-war order—personality
differences, differences in outlook, lack of experience, mistrust of
1. However, he had no
“or else.” The Russians were in control on the ground in Poland and
elsewhere, and the US was still occupied in Asia.
2. At Potsdam (immediately after the fall of Germany) Truman was forced to
give up on Poland and the leaders agreed to split Germany into four
pieces—but he refused to accept Russian claims for reparations from
the Western-controlled areas. This meant in effect that Germany would be
divided indefinitely, as Stalin immediately began extracting reparations
from the area of Germany he controlled.
C. The Potsdam meeting was
the end of the One World vision of the Atlantic Charter. Rather than
attempting to create a new world order in America’s image, the focus
shifted to trying to stop further expansion of Soviet influence. The
word “containment” emerged to describe the new policy after crises with
the Soviets in Greece and Turkey (the Soviet-backed Communist party
tried to take control there), and particularly after George Kennan, an expert on the Soviet Union, insisted that the
modus operandi of the Soviet Union was to push relentlessly in every
direction and fill every void with communism.
D. On 12 March 1947,
Truman, on the advise of Kennan, formally announced that it would
henceforth be the policy of the US to contain further expansion of
Soviet influence world wide.
1. The Containment Doctrine would dominate US policy for the next 40
2. Following Truman’s
1947 speech, the US Congress began to re-organize the US defense and
military system to get it ready for the new world reality—a world
split into two competing political and economic systems.
a. The National Security Act (1948) created the Department of Defense, which consolidated the old Departments of the
Army and Navy into one organization. It also created the CIA and the National Security
Counsel to advise the President on national security.
3. Partly in response to
the actions of the US, Stalin took the bold step of closing the road
from western-controlled Germany to the western-controlled areas of
a. There was nothing in
the Potsdam or earlier agreements that guaranteed the West the right of
passage across Russian-controlled area of Germany.
b. The resulted in the
first of several “Berlin Crises.”
The US responded by mounting a food airlift campaign that brought food
and other supplies into the western controlled area of Berlin for over
10 months. Berlin became the ultimate symbol of the Cold War. The
Berlin Crisis did more than anything to inspire the creation of NATO--the
North Atlantic Treaty Organization, in April 1949.
The Berlin Crisis did more than anything to inspire the creation of NATO--the North Atlantic Treaty Organization, in April 1949.
III. In planning the economic side of the post-war
world, Russia was deliberately excluded.
1. The experience of the 1930s convinced US planners that the new economic order should be based on a system of fixed exchange rates. Bretton Woods planners decided that, all national currencies were to be based on gold at a fixed rate, and countries pledged to maintain exchange rates based on this value.
2. The Bretton Woods Conference also set up the major international
economic institutions of the post war world—the World Bank
(International Bank for Reconstruction and Development), the IMF
(International Monetary Fund), and an outline for a post-war trading
system based on non-discrimination and free trade.
a. The World Bank was envisioned as the primary vehicle for post-war reconstruction, a reservoir of capital that could be tapped by countries to speed up their post-war reconstruction. Thinking at first that other countries would be quick to recover and contribute to the Bank, the US deposited a paltry $570 million to get the bank started.
b. The International Monetary Fund was actually intended to be the more important of the two Bretton Woods institutions. Voting rights in the IMF were to be based on national contributions and because the US contributed most, it would have a de facto veto power within the agency. The IMF was to be the rule-keeper of the system, with the primary mission of ensuring that countries follow the exchange rate rules agreed upon. The plan was that all exchange rate changes would have to be approved by the IMF. It was also intended to give advise on monetary policy to countries and, in emergencies, to extend short-term loans to countries experiencing payments deficits. The IMF was supposed to have $8.8 dollars in gold and various national currencies, but only the US met its quota for the first several years of the IMF's existence.
i. The Havana Charter included two elements: a set rules that were to
govern international trade (known as the General Agreement on Trade and
Tariffs or GATT) and an
organization that would oversee the rules (the International Trade
ii. The US eventually
opposed the ITO, but it accepted the GATT.
iii. Eventually, of course, in 1995, the WTO was created.
3. The Bretton Woods
negotiators proved to be over-confident in the ability of the world to
recover after the war. Europe and Japan were devastated and their needs
were simply too great. Neither the World Bank nor the IMF were able to
function as designed. When the British tried (and failed) to stabilize
the pound (after receiving $3.75 billion) from the US, the US realized
it was going to have to manage the world economy unilaterally. It was
clear that only the dollar was stable enough to be tied to gold at a
fixed rate. The US thus became the Central
Banker for the entire world and t
The US thus became the Central Banker for the entire world and the Bretton Woods system could not be fully implemented until the end of the 1950s.
a. The basic problem that
remained was that because the US economy was the only economy that was
healthy, the US was running huge trade surpluses with everyone. The
European industrial base had been destroyed and they needed everything.
This meant that instead of flowing out (revitalizing the economies of
Europe and Asia), dollars were flowing in t o the US.
o the US.
b. The US thus had to
find ways to export dollars. A key vehicle for
this was the Marshall Plan (The European Recovery Program--1948).
c. In addition to
the Marshall Plan, the Truman Plan (for assistance to Greece and Turkey) ,
economic aid to Japan, US expenditures in Europe for NATO, and for
the Korean War were all part of an effort to get the world economy back
on track. In addition to direct aid, the US allowed Europe and Japan to
ignore the GATT trading system that was also part of the Bretton Woods
system. Thus, protecting domestic industries, these countries were able
to establish trade surpluses with the US.
, economic aid to Japan, US expenditures in Europe for NATO, and for the Korean War were all part of an effort to get the world economy back on track. In addition to direct aid, the US allowed Europe and Japan to ignore the GATT trading system that was also part of the Bretton Woods system. Thus, protecting domestic industries, these countries were able to establish trade surpluses with the US.
i. it worked very well, and by 1950, European industrial production had risen 64%. Real recovery didn't really allow the full implementation of the Bretton Woods system, however, until 1960.
(sorry, but this site has music in the background)