THE FIRST INTRA-EUROPEAN PAYMENTS AGREEMENT, 1948-49
WHEN Marshall Aid began to flow, the OEEC devised a new payments agreement linking intra-European trade with American help. The central feature of the new agreement was the creation of "drawing rights," a device by which European debtor countries could obtain a certain amount of imports free from some of the other members of the OEEC. The drawing rights helped increase intra-European trade and, in effect, made a supplementary distribution of American aid. There were, however, a number of weaknesses in the new agreement: it rested on very dubious predictions about the course of trade; it did not give debtors strong incentives to balance their intra-European accounts; and it did little to break down the bilateral regulation of trade. This chapter describes the agreement in some detail, summarizes the use made of drawing rights, and discusses the main weaknesses of the new arrangement.
The OEEC's efforts to work out a new and effective payments agreement in the summer of 1948 were coupled with the biggest job it had undertaken, the allocation of American aid for the fiscal year 1949. Participating countries sub' mitted national economic programs which were, in effect, their applications for a share of dollar aid. Not unexpectedly, the total applications considerably exceeded the ECA's appropriations. The OEEC thereupon appointed a Committee of Four (delegates who were temporarily detached from their