necessary, and for as long as needed—national gain for international advantage, in the confidence of ultimate pay-off.
It could afford to do so, because after the war, as before it, the measure of American power—now not simply economic, but military and political—was still far in excess of the reach of American banks and corporations. There was a lot of slack available for the concessions to subaltern states, and their ruling groups, essential for the construction of a hegemonic system. Their consent to the new order was not bought only with these: they had as much reason to fear the common enemy as the superordinate state that now became their shield. They too needed the armed force that is inseparable from any hegemony. A new kind of war was under way, requiring the strong nerves of a superpower. The strategic means and ends of the American empire to come were resumed by Forrestal: ‘As long as we can outproduce the world, can control the sea and can strike inland with the atomic bomb, we can assume certain risks otherwise unacceptable in an effort to restore world trade, to restore the balance of power—military power—and to eliminate some of the conditions which breed war’.6 In that agenda, restoring the balance of power belonged to the same lexicon of euphemisms as containment: as Spykman had noted, ‘states are only interested in a balance in their favour’. That was understood in Moscow as well as Washington, and in neither capital was there by then any illusion as to what it implied. Capitalism and communism were incompatible orders of society, as their rulers knew, each bent on bringing—sooner or later: sooner for the first, much later for the second—the other to an end. So long as the conflict between them lasted, the hegemony of America in the camp of capital was assured.
II
At the outset, the overriding task for Washington was to make sure that the two advanced industrial regions that lay between the US and the USSR, and had detonated the war, did not fall into the hands of Communism. Their historically high levels of economic and scientific development made Western Europe and Japan the great prizes in any calculus of postwar power. Reconstruction of them under American guidance and protection was thus the top priority of containment. Stripped of their conquests, the former Axis powers needed to be rebuilt with US aid as prosperous bulwarks of the Free World and forward emplacements of American military might; and the former Allied powers, less damaged by the war, supported in their return to normal economic life. Western Europe, the larger of the two trophies, and vulnerable to land attack by the Red Army as insular Japan was not, required most attention and assistance. This was, Acheson explained to Congress, ‘the keystone of the world’.7
In 1946–47 Britain became the proving ground for the abrupt alterations of American policy demanded by the Cold War. Financially bankrupted by its second struggle against Germany, the UK was forced in mid-1946 to submit to draconian conditions for an American loan to keep itself afloat: not only interest payments against which it protested, but the scrapping of import controls and full convertibility within a year. With American prices rising, the British import bill soared, plunging the country into a massive balance of payments crisis. The Attlee government was forced to suspend convertibility within a few weeks of introducing it.8 Hull’s free-trade maximalism had overshot its imperial objectives, and become counterproductive. There was no point in ruining a former ally if it was to become a viable protectorate. A fortiori the more precarious countries of Western Europe, above all France and Italy, yet weaker economically than Britain, and less secure politically. By 1947, the dollar gap between Europe’s imports from the US and its ability to pay for them was yawning, and a change of course indicated. The Marshall Plan funnelled some $13 billion into counterpart funds for European recovery—controlled by US corporate executives and tied to purchase of American goods—dropping insistence on immediate abolition of tariffs and exchange controls, and instead bringing pressure to bear for fiscal retrenchment and European integration.9 The corollary did not wait long. Marshall funds brought economic succour, NATO a military buckler. The Atlantic Pact was signed in the spring of 1949.
Germany, divided between four occupying powers, with a third of the country under Soviet control, could not be handled in quite the same way. The Western zone, covering the Ruhr, was too valuable a holding to be foregone in any unification in which Moscow would have a say. In mid-1947 Washington made it clear that Russia could expect no reparations for the vast destruction visited on it by the Third Reich, while the US had been luxuriating in its wartime boom, and that the Western zone was scheduled for separation from the Eastern zone as a new German polity within Anglo-American jurisdiction.10 But even in reduced form as the Federal Republic, Germany remained an object of fear to its neighbours as Japan did not. Rebuilding it as a bastion of freedom thus required not just American aid and armour, but its integration into a European system of mutual security, within which German industrial might could help revive neighbouring economies, and German rearmament strengthen barriers to the Red Army. Washington was thus from the start a patron of every step towards European unity. Once its most favoured version—the military project of a European Defence Community—was blocked in France in 1954, it brought West Germany into NATO. But economic integration remained a key objective, giving State and Defense no reason to quibble over the tariffs set up around the Common Market by the Treaty of Rome, despite protests from the Commerce Department. The imperatives of free trade had not been neglected as the Cold War set in—GATT was signed soon after the Marshall Plan, the Kennedy Round followed in due course—but were no longer the main front. Derogations from them had to be accepted in the interests of assuring the stability of capitalism in the major industrial centres at each end of Eurasia.
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