Assess the view that the Golden Age of the global economy was due solely to

the US from 1945 to 1973.

The Golden Age of the Global Economy occurred from 1945 to 1973. The US
was largely responsible for the Golden Age, especially from 1948 to 1973. On the
other hand, there were also factors independent of the US that caused the Golden
Age to occur, such as cheap price of raw materials. While it is a stretch to claim that
the US was solely responsible for the Golden Age from 1945 to 1973, it cannot be
denied that the US did indeed play a big and significant role as it was one of the
greatest contributors to the global economy.
The US was largely responsible for the Golden Age as it led the world
into a climate of stability within the international trading arena during its
period of economic hegemony. After the World War II, the global economy was in
chaos and it was the US that stepped up and led the world by leading the new
economic world order. This referred to the Bretton Woods system which established
a fixed exchange rate system into place, where exchange rates were only allowed to
fluctuate within a narrow band +/- 7% within parity. The US also pegged the price of
1oz of gold to a fixed price of US$35. This was only made possible due to the large
amount of gold reserves that the US had to support their decision. The US had
owned $26billion worth gold out of the $33 billion worth of gold owned by the world.
This allowed them to maintain the gold standard as well as the fixed exchange rate
system. When the US gold reserves dropped to $10 billion worth, lesser than the
USD$80 billion currency they had floating in the market, the Bretton Wood system
failed and fixed exchange rates ceased. This highlights the importance of the US role
in maintaining trade stability. Fixed exchange rates were desirable as it removed an
element of risk from trading and thus encouraged trading and by extension,
production. It was a large reason that caused the Golden Age as it provided people
and counties with the confidence to trade more and hence enjoy economic growth.
Hence, the US hold large responsibility, if not all, for the golden age as it was the
main driver behind all economic growth that occurred due to stability.
The US was also partially responsible for the recovery of the production
and consumption centres, mainly Western Europe, after the destruction of war.
After the war, Western Europe suffered badly in terms of infrastructure and
resources. They were stuck in a dollar shortage, a type of trade imbalance that
occurred due to their lack of resources. They were importing much more than they
were exporting. It was a severe problem that greatly threatened Western Europe
until the appearance of the US together with their gigantic largesse of Marshall aid in
1948, which came in the form of goods and equipment worth $17million. It was only
with the fund that Western Europe managed to pick themselves up and get back into
the trading of the world economy. However, the speedy recovery of Western Europe
was not entirely due to the US. Western Europe had engaged innate advantages
such as social and industrial discipline. Their workers were skilled and ready to work
anytime. This allowed the Western European countries to recover quickly and

contribute to the golden age of the world economy. Hence, the US was only partially
responsible for the golden age of the global economy. However, it is important to
note that the initial trouble faced by Western Europe was a severe one that could
only be solved by the US at that point of time, and hence while the US might not hold
complete responsibility of causing the golden age, it played an extremely significant
role.
The US was also largely responsible for the golden age as it had
managed the international financial institutions and agreement well. After the
war, two international financial institutions was formed, namely the IMF and World
Bank. They were supposed to give out loans for capital investment purposed and
consumption purposes respectively. While they were independent form the US
officially from 1945 1947, they faced many troubles that required the US to
intervene and help. The World Bank was supposed to aid in reparation of the
damaged Western European countries but they had limited starting capital of only
$570 million. However, Britain alone needed $6.75 billion for reconstruction. It was
the US that provided the money to Britain in the form of $3 billion relief fund and
$3.75 billion loan eventually. Similarly, the IMF was supposed to give loans to fill the
gap between imports and exports but in 1947, exports amounted to $20.2 billion
while imports were only worth $13.1 billion. The initial funding of $8.8 billion of IMF
was only enough to use for one year in 1947. After the deemed failure of both
institutes after 1947, the US stepped in and started managing both institutes,
allowing it to flourish. Furthermore, the objectives of the General agreement on
Tariffs and Trade (GATT) were also determined by the US. The GATT encouraged
free trade and removed trade barriers such as tariffs and helped to facilitate
international trade. Hence, it can be said that the US was largely responsible for the
Golden Age because it had provided a conducive environment for more capital
injection through loans which jumpstarted the economies of many countries affected
by World War II, and enabled them to participate in global free trade, leading up to
the flourishing of the global economy.
On the other hand, there are factors independent of the US that helped
the global economy achieve golden age, such ascheap price of raw materials,
in particular oil. Oil was heavily used in industries for production and the low price
of oil prior to 1973, evident in the price index of oil rising 5 times from 146.3 in 1972
to 751.1 in 1994, lowered cost of production. Hence, suppliers were more willing and
able to produce, leading to the economy to continuously grow and contribute to the
Golden Age, where trade volume increased from 1947 to 1960. Hence, such factors
independent of the US did contribute to the Golden Age.
Additionally, the favourable innate attributes of Western Europe and
Japan contributed to the increased efficiency of the economic system and
hence the Golden Age. Mutually exclusive of the US, Western Europe had intrinsic
strengths such as industrial and social discipline they could latch upon to accelerate
their economic recovery. Similarly, Japan was already a relatively advanced

industrial nation even before the war and had vast knowledge of being an industrial
state following the Meiji Restoration, with its people educated and possessing
industrial and social discipline. Hence, the Golden Age cannot be entirely attributed
to the role of the US despite having provided monetary aid to Western Europe and
Japan, as the existence of favourable socio-economic conditions in the two countries
was what conditioned them to be able to make full use of the aid provided. This is in
contrast to the US giving an equivalent of the Marshall Plan aid to Latin America in
the 1960s, where the Latin Americans fell short of progressing economically due to
the lack of such a workforce bearing the characteristics of industrial and social
discipline.
Ultimately, the US played a large role in contributing to the golden age. While
it was not solely responsible, it was largely significant throughout 1945 to 1973, in
particular 1948 to 1971 where it aided the Western European economy to get back
on track and was hence able to contribute to the global economy and also officially
led the world by managing key international agreements and financial institutes.
Without the USs leadership and continuous efforts, the golden age might have
ended earlier or even not happened at all. Even with other factors such as cheap oil,
a lack of capital and aid militarily would ensure that the Western Europe countries
economies would not be able to function and contribute to the global economy.