The devastated countries needed gold or U.S. dollars (the only currency considered to be "as good as gold") to pay for imports and make debt payments. However, both dollars and gold were alarmingly scarce in the war-scarred countries.



Many countries retreated from the market. Communist Eastern Europe abandoned it altogether. The world’s multilateral financial and trading system faced a serious threat. Only the United States had emerged from the war with the strength and resources to help. But would it step forward?









credits Worldwide Gold Shortage By 1947, the United States had accumulated 70% of the world’s gold reserves. The United Kingdom had gone from being the world’s greatest creditor to the world’s greatest debtor. Countries had sold off most of their gold and dollar reserves, as well as their foreign investments, to pay for the war. What few reserves remained were now quickly running out. Trade deficits meant there was little hope of replenishing them. Five cigarettes for an egg?

A carton of cigarettes for a piano? Severe inflation plagued the weakened economies. By 1948, wholesale prices were 200% higher in Austria, 1,820% higher in France, and a massive 10,100% higher in Japan than they had been before the war. In 1948, the French government devalued the franc by 80%, making a 5,000 franc note practically worthless. In some countries like Germany, the monetary system collapsed. People resorted to barter, often using cigarettes as money.