In his farewell speech, George Washington advised that the United States should steer clear of permanent alliances with any portion of the foreign world. Isolationism had been the US policy up until WWI when Germany forced President Wilson’s hand with the sinking of the Lusitania. Well before the end of the war, Wilson began planning for a new world order after the war with the US playing a key role. The American people represented by US Senators chose to follow Washington’s advice and opted for a policy of Isolationism. The Senate would not ratify the Treaty of Versailles nor join the League of Nations. When WWII began, Isolationism was again what the majority of the American people wanted. Despite the threat Germany posed to the free world, FDR could not convince the Senate/American people to enter the War on Great Britain’s side. Even so, in the summer of 1941, FDR put his advisors to work planning for the post world order. FDR assumed the US would enter the War, would be victorious, and would play a key role in establishing a new world order that would prevent future world wars and would provide for long term American prosperity.
The planners’ biggest concern was how to avoid a post war depression. The Great Depression did not end because of the New Deal policies; it was the War that put everyone to work producing war materials and later fighting in it. What would happen when the soldiers came home? Who would buy the goods produced by all the new factories. They considered implementing a planned economy like the Soviet Union, or they could go for broke with a liberal capitalist system. For the liberal capitalist system to work, they knew two things would have to happen – lower tariffs worldwide so the US could sell its goods to other countries and that the US would have to provide the funding for the ravaged countries to rebuild.
The General Agreement on Tariff and Trade (GATT which later became the World Trade Organization was created in 1947 to lower tariffs and this proved to be a huge benefit to the United States. But it also proved vital to keep “have not” countries like Germany and Japan from again resorting to war to the get the raw materials they needed for their industries and the food for their people. At Bretton Woods in 1944, the World Bank and International Monetary Fund were created to provide funding for developing nations and to stabilize currencies. However, they could not meet the huge need for immediate capital to rebuild war-ravaged countries.
Via the Marshall Plan, the United States’ taxpayers provided $13 billion to rehabilitate the economies of 17 western and southern European countries in order to create stable conditions in which democratic institutions could survive. It worked exceptionally well. The European economies recovered quickly and were soon able to buy American exports (tariff free). We created a rising tide which lifted all boats – especially ours. It kept these countries from choosing Communism/Soviet Union. And it established America as being a Good and Great Nation.
One other thing the US planners realized was that for a post war world to be stable, empires needed to cease. And the biggest empire in the history of the world was US’s closest friend – Great Britain. One reason had to do with trade and the other with the belief in democracy. FDR and his advisors shared Wilson’s belief that the world would be safer and more stable if people groups could form their own governments, and those governments represented the will of the people. On the trade side, empires had low or no tariffs between the countries within the empire and high tariffs when dealing with other countries. We wanted to be able to trade with Australia and Canada without having to pay high tariffs. The British were totally opposed to this. FDR and later Truman persisted. When GATT was created, Canada was a member. In time, nearly all member states of the British Empire, became free and independent democratic countries.
The Next essay will focus on the UN and NATO.