Marshall Plan

The Marshall Plan (officially the European Recovery Program or ERP) was a system of American economic aid to Western Europe after World War II that played a major role in the economic recovery, modernization, and unification of Europe. In 1948-51 the ERP gave away $12 billion (1% of US GDP) for rebuilding the industrial, military and human capital of war-torn Europe, including Britain, Germany, France and Italy. The money was not a loan and there was no repayment. Washington spent such vast sums because it thought it was cheaper than the rearmament that isolationism or rollback would entail. In the long run, the logic went, a prosperous Europe would be more peaceful, and would make its main trading partner, the US, more prosperous.

When the Joseph Stalin, dictator of the Soviet Union refused to participate or allow any of his satellites in eastern Europe participate, the plan became exclusive to western Europe, It led to the Cold War and the Truman Doctrine, NATO military Alliance]] in 1949 and, eventually, to the European Union. Named after U.S. Secretary of State George Marshall, the plan was designed and operated by State Department officials, especially Dean Acheson.

Origins

Six years of “total war” in Europe, 1939-1945, brought destruction and economic ruin to both victors and vanquished. Only the United States emerged from World War II without domestic damage and stronger economically than before the war. The armadas of huge bombers that night and day had blasted every industrial area and transportation center in Europe had done a thorough job; recovery was painfully slow. Economic output in 1948 was 13% below 1938 levels; in Germany it was 55% lower. America, in startling contrast, was 65% higher. Signs of permanent stagnation were pervasive, coupled with growing frustration and pessimism about the future. Millions of refugees lived in squalid camps. Britain had won the war, and it had received billions of dollars in postwar loans, but its economy was shattered; bread had to be rationed. Winston Churchill said Europe was “a rubble-heap, a charnel house, a breeding ground of pestilence and hate.” Conditions were even worse in the Soviet Union, but Stalin’s army and secret police were everywhere and he used the vacuum in eastern Europe expand Soviet his domains influence and control. By 1946 Winston Churchill warned that the Soviet Union had drawn an “iron curtain” which divided Europe between rival alliances and ideologies. Sensing that his dreaded enemy capitalism was collapsing, he Stalin ordered the Communist parties in every country to shift to the left and fight the class enemy. The danger he saw was that America the American juggernaut would impose its hated values, promoting liberalism, free speech, free elections, and capitalism. In 1947 the Truman Doctrine of military support saved Greece from a Communist takeover (and aided Turkey too) , but Americans feared that the Communists had a good chance to seize political power in Italy and France, shutting out American trade, cultural exchanges and political values in a victory for totalitarianism over democracy.

State department official Will Clayton found the solution, named the “European Recovery Program” or ERP. He envisioned gigantic American gifts of billions of dollars that would never have to be repaid, combined with specific European initiatives that would put the continent’s industry, transportation, finance and farming on a sound basis. That would promote free trade and a healthy environment for economic and political freedoms, and in the long run, lead to the sort of unity that was eventually reached by the European Union.

Building support

Success required the use of Secretary of State George Marshall’s enormous prestige, evident in his speech at Harvard University in June 1947 and of course in the informal name of the whole program. Even more essential was close collaboration with the Republicans who controlled Congress, especially their foreign policy leader, Senator Arthur Vandenberg. Vandenberg, who had shepherded the Truman Plan through Congress in 1947, was a critical supporter and won Congressional approval for the much more expensive Marshall Plan.

American and European newspapers, political parties, businesses, labor unions, and intellectuals supported a massive promotional campaign that warned that the isolationist mistakes following World War I must not be repeated. In the United States some critics complained about a "global WPA" (wee WPA) but little organized opposition emerged, apart from far-left elements in some labor unions. Most Americans were exhausted from war and wanted to return to domestic concerns, and reduce heavy wartime taxes; vast new spending programs threatened these goals. ERP supporters answered that America’s national security was at stake, and rebuilding Europe now would be far cheaper than fighting a third world war. The isolationism among conservative Republicans crumbled when the Stalinist seizure of Czechoslovakia in February 1948 showed time was running out. Although the ERP invited the Soviet Union, Stalin refused to participate. Communist parties mobilized anti-American sentiments across western Europe in a futile effort to stop the ERP. Stalin also forbade his satellites in eastern Europe to accept the American invitation to join the ERP. Instead he imposed the “Molotov Plan” that integrated eastern Europe into the poverty-stricken Soviet economy. The inevitable result was that year by year the eastern bloc fell further behind economically, a trend especially visible when comparing West Germany and Communist East Germany.

Washington demanded that recipients devise plans to put their financial houses in order with taxes, monetary policies and spending policies geared primarily to recovery, rather than partisan politics. The plans had to be integrated with one another and be so specific that Americans experts could examine and approve the details. Europe did so, asking $29 billion over four years. The United States finally gave $13.4 billion over four years; each year it was about 1 percent of the American Gross Domestic Product. It was the equivalent of $600 billion in 2005 dollars, but the money went much farther because Europe did not start from scratch—it had enormous reservoirs of human talent and organizational skills, and a large but broken infrastructure that could be fixed.

ERP projects increased agricultural and mining output, repaired the shattered railroad network, and modernized factories (usually with new machines purchased from American companies). Each country increased its exports so its prosperity would be self-sustaining, and they all joined together to reduce tariffs and trade barriers. Europeans came to admire and eventually copy American managerial techniques, oriented toward efficiency rather than traditionalism. Traditionalists grumbled that their old culture would be steamrollered by the Yankees. The results were quickly apparent as each economy began to soar. Germans, the most grateful recipients, still speak of their “economic miracle.” Most important, Europeans recovered the self-confidence that they could create peaceful and prosperous economies, closely aligned with the United States. The Marshall Plan marked a fundamental shift in American culture, from isolationism to internationalism, and from a minor role in world affairs to world leadership. The Marshall Plan made a significant contribution to victory of democracy over totalitarianism in the Cold War (1947-1991). The European Union (EU) can trace its origins to the policy and philosophy of the Marshall Plan.

In America the term “Marshall Plan” became a metaphor used to describe a proposed very expensive government program to solve a major problem.

Bibliography

• Bischof, Günter, Anton Pelinka, and Dieter Stiefel, eds. The Marshall Plan in Austria (2000) essays by Austrian scholars
• Burk, Kathleen. "The Marshall Plan: Filling in Some of the Blanks," Contemporary European History, Vol. 10, No. 2 (July 2001), pp.267-294.
• Cox, Michael, and Caroline Kennedy-Pipe. "The Tragedy of American Diplomacy? Rethinking the Marshall Plan," Journal of Cold War Studies 7.1 (2005) 97-134 in Project Muse, a very broad article with stress on Soviet Union's response
• Cromwell, William. "The Marshall Plan, Britain and the Cold War," Review of International Studies, Vol. 8, No. 4 (October 1982), pp.233-249.
• Donovan, Robert J. The Second Victory: The Marshall Plan and the Post War Revival of Europe (1988).
• Grose, Peter, ed., The Marshall Plan and Its Legacy (1997), essays by American scholars
• Hoffmann, Stanley, and Charles S. Maier, eds. The Marshall Plan: A Retrospective (1984), essays by scholars
• Hogan, Michael J. The Marshall Plan: America, Britain, and the Reconstruction of Western Europe, 1947-1952 (1989) major history, with diplomatic emphasis excerpt and text search
• Leffler, Melvyn P. "The United States and the Strategic Dimensions of the Marshall Plan," Diplomatic History, Vol. 12, No. 3 (July 1998), pp.277-306.
• Milward, Alan. The Reconstruction of Western Europe, 1945-1951 (1984). Says the economic recovery probably would have happened anyway
• Pelling, Henry. Britain and the Marshall Plan (1988)
• Roberts, Geoffrey. "Moscow and the Marshall Plan: Politics, Ideology and the Onset of Cold War, 1947," Europe-Asia Studies, Vol. 46, No. 8 (December 1994), pp.1371-1386
• Schain, Martin, and Tony Judt, eds. The Marshall Plan: Fifty Years After (2001). essays by scholars excerpt and text search
• Whelan, Bernadette. Ireland and the Marshall Plan 1947-1957 (2000).

Primary sources

• Acheson, Dean. Present at the Creation: My Years in the State Department (1969), esp pp.226-235.
• Kindleberger, Charles P. Marshall Plan Days (1987), memoir by American official
• Parrish, Scott, and Mikhail M. Narisnky, eds. "New Evidence on the Soviet Rejection of the Marshall Plan, 1947: Two Reports," Working Paper No. 9, Cold War International History Project, Washington, DC, March 1994;
• "The Marshall Plan and the Future of U.S. European Relations" (1972)
• "The Marshall Plan" from Truman Library

External links

• Marshall Foundation