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Lessons for Merchants from the End of World War II

Posted by Kevin Walli | Sat, Apr 26, 2014 @ 10:00 AM

Rosie the RiveterPhoto: Rosie the Riveter Museum

In 1945 most of Europe lay in ruins. The war devastated cities, bankrupted economies, and left the returning soldiers to adjust to civilian life in hardship. Europe contrasted sharply to conditions in the United States, which had established itself as the dominant world power and was set to lead the world’s economies for decades to come.

Three factors contributed heavily to the establishment of the U.S. as the political and economic leader of the free world. 

Rebuilding vs Reparations 

First, the threat of Chinese and Soviet Communism compelled the U.S. to rebuild post-war Europe and Japan. The U.S. had learned from past mistakes, because following World War I the Treaty of Versailles sought to punish the nations responsible for the conflict. That treaty led to political instability in Germany, the rise of Adolf Hitler’s National Socialist Party, and the start of World War II. The U.S. and her allies did not want to see that history repeat itself. 

Following 1945, European nations once again suffered from food shortages, unemployment, a lack of housing, strikes and political unrest. But this time the U.S. implemented the Marshall Plan, named after the Secretary of State George Marshall, which worked to rebuild the factories and infrastructure of the defeated nations to prevent their Communist parties from gaining influence as a result of turmoil. The threat of Communist expansion was made all too real with the 1950-1953 Korean War and with the Soviets assuming ironclad control of most of Berlin and the eastern half of Germany. 

In contrast, from 1948 to 1954 the United States provided sixteen Western European nations $17 billion worth of grants ($221 billion in today’s dollars) to begin rebuilding their shattered nations, and provided another $5.9 billion ($76 billion today) to Japan and other countries in Asia. By rebuilding Germany, Japan and Italy instead of demanding reparations, the Communist threat was averted and, over time, these nations became thriving democracies. 

G.I. Bill, Baby Boom and Highways Equal Big Opportunities 

Second, domestically the G.I Bill was established to transition returning veterans into civilian life. College tuition was provided to former soldiers to help them gain civilian job skills and to thank them for the service they provided to a grateful nation. Low cost home loans helped them settle down and start families, resulting in the “Baby Boom” and a great migration from the nation’s cities to newly formed suburbs.

Building all those suburban houses spurred construction and resulted in a rapid rise in demand for furnishings and other products for the home. Perhaps more significantly, new car sales and the businesses needed to sell and service the rising number of automobiles also vastly expanded. To encourage all of this, President Eisenhower proposed the Federal-Aid Highway Act of 1956 that paved the way for building our interstate freeway system, opening up the country to increased mobility and interstate trade, creating even more economic opportunity. 

Make the World Revolve Around You 

And third, the United States alone was able to exert control over the world’s economy. In July, 1944 at the Mount Washington Hotel in Bretton Woods, New Hampshire, delegates from forty-four Allied nations gathered to plan how to best manage the chaos that was sure to follow the Allied victory. The United States hosted the conference and was the nation most capable of standing strong financially to lead the global rebuilding effort. The U.S. spearheaded the development of the IMF (International Monetary Fund) and later, the World Bank as well. Both institutions were designed to ensure that the international economy would be capitalist. 

The participants also agreed to fix exchange rates to stabilize the world’s trade markets. And the currency used to base the trade agreements was the U.S. dollar -- which at that time was backed by gold at the rate of $35 per ounce. U.S. dominance led to the dollar supplanting the British Pound as the world’s primary currency. European nations suffering from the damaging effects of the war traded their stocks of gold for U.S. dollars to rebuild their economies. This agreement made it unlikely that any government could manipulate its currency (or any others’) and destabilize the new international system. 

Because of all this, there was a sense of financial security in the post war years. In a world turned upside down, the victorious U.S. embraced those looking for a safe, secure currency. The dollar was “Good as Gold.” 

Our "Good as Gold" Guarantee 

As history has shown, making smart financial investments is best paired with a secure method to protect those investments. For merchants in today’s market, finding a safe, secure method of payment can be confusing. The recent (fill in the blank) data security leak justifies merchant worries over the theft of credit card information. In fact, large business-to-business payments are still best done using the tried and true method of checks. Don’t stop there though. Employing a check processing service that has check guarantee removes all doubt as to the reliability of the payments received and keeps you moving forward in uncertain times. Download our check guarantee guide for more information:

 

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Written by Kevin Walli

Kevin Walli is an award-winning graphic designer with 18-plus years of experience in graphic design, web design and photography. Flexible and creative with an excellent sense of humor, Kevin enjoys spending time with his family, photography, reading, music and sports.