Between 1946 and 1952, Albert Hirschman worked as an economist in charge of the Western European desk of the research branch of the Board of Governors of the Federal Reserve System in Washington, DC. In this position he wrote extensively on patterns of European postwar reconstruction and the creation of a new world economic order. Given his deep knowledge and prewar experiences, Italy and France were his first areas of specialization, although Hirschman soon contributed to the analysis of the Marshall Plan, the shaping of the European Payments Union, and the problem of the dollar shortage. This article provides a comprehensive interpretation of this early stage of Hirschman's intellectual biography, including a discussion of an unpublished proposal for the creation of a new European Monetary Authority developed under the auspices of Paul Hoffman and the Economic Cooperation Administration. In addition to highlighting Hirschman's contributions to several technical aspects of European reconstruction and the restoration of multilateralism, the article shows that during the Fed years, he sharpened his ability to examine processes of policymaking in difficult times. In particular, he rejected prefabricated recipes, developing a sensitivity for inverted sequential processes, inducement mechanisms, and apparently paradoxical solutions in an uncertain environment. This sensitivity is at the basis of what has been described as a distinctively “Hirschmanesque” style of thought.

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