How to fill a dollar gap? Observations on the liberalisation of West Germany's external trade and payments 1947-1958

The first attempt at European economic reconstruction after 1945 culminated in the economic crisis of 1947 (Tumlir, La Haye 1981). Due to state control over prices and production and the lack of sound money for both internal and external transactions, Europe had, to a large extent, returned to the stage of barter trade. This paper addresses the strategies chosen to overcome the shortage of international liquidity, the so-called dollar gap, during the second and successful attempt at European economic reconstruction from 1947 onwards. It focuses on those aspects which relate directly to the transition from bilateral barter to multilateral trade involving money, i.e. on the liberalisation of trade and payments. Since most early steps to remove restrictions on external trade and payments in Germany and Europe were initiated by the U.S. and implemented on a Western European level, this paper discusses these first measures in a European context before the emphasis shifts to the question why West Germany became a genuine pacemaker for the liberalisation of cross-border transactions from 1953 onwards. As a first step towards a more ambitious study, this paper provides an - admittedly theory-laden - description of some major aspects of the chosen subject rather than an in-depth theoretical analysis or a thorough evaluation of all historical evidence available.