"Labour under the Marshall Plan: The Politics of Productivity and the Marketing ofManagement Science" by Andrew Carew, Wayne State University Press, Detroit Michigan, 1987. (p13)

One of the major potential sources of American influence over the domestic polices of particpating countries was through control over what were termed 'counterpart funds'. These were sums of money in local currency, equivelent to the dollar value of exports provided by the ECA. A European importer who bought American goods under the programme had to deposit with his government an amount in local currency equivalent to the dollar price. The ECA shared authority with the national government in question in determining the use to which the bulk of the counterpart fund was put. It might be used to finance public projects or loaned for investment purposes. In an inflationary situation other options were to immobilise the fund or use it to retire government debt. Ninety-five per cent of counterpart was jointly controlled in this way. The remaining 5 per cent was paid over direct to the ECA for its exclusive use in covering administrative costs, stockpiling strategic materials and other miscellaneous expenditures. And part of the 5 per cent was available fo use by the Administrator himself on a secret basis, without need for public disclosure.

Th Americans were reluctant to spell out the various purposes to which counterpart would be put, since that involved delicate policy deision, But two basic objectives were listed in the Marshall Plan legislation-- the stimulation of production and the promotion of monetary stability. The value of counterpart to the United States as a means of exerting pressure on participating countries was contested within the ECA. In France, where the ECA applied strong pressure to force deflationary policies on the government, the Americans were forced to soft-pedal their approach from time to time of risk the collapse of the French government and its replacement by one hostile to the United States. In Britain, where the ECA would have preferred to spend the money on specific investment programmes, it was forced to settle for using 99 per cent of it-- some $1-4 billion -- for debt retirement, a means for reducing liquidity and, in American eyes, forcing a measure of anti-inflationary discipline on the Labour government. Counterpart was not released to assist any British welfare or social programmes, and this helped to reduce the resources available for consumption by the Labour government, In 1945-6 over a quarter of the budgetary resources available for domestic use had been consumed by the government. The figure was down to 18.2 per cent in 1948, and the ECA expected it to be down to 16.8 per cent by 1951 following cuts in housing, health and educational programmes. Officials still complained that the British government deliberatiely created a type of official debt which they then retired with counterpart. The policy of using the fund for theis purpose was strongly criticised by the Deputy ECA Administrator, Richard Bissell, who argued that the United States had thereby passed an opportunity to exert maximum pressure on European countries. However, he later modified his view and agreed that counterpart had sometimes been very successful in influencing monetary and fiscal policy.