Marshall Plan

Marshall Plan. The European Recovery Program (ERP), popularly known as the Marshall Plan, America's most successful foreign‐aid program, was a landmark in the struggle to contain communism abroad and isolationism at home. The plan was fueled by a humanitarian impulse to rebuild war‐ravaged Europe and by fears that Depression conditions might return in the United States.

The Marshall Plan addressed three post–World War II crises: the collapse of Britain's imperial role in the world balance of power; the instability of France and Italy; and West Germany's economic and moral deterioration. Interim aid programs by the United Nations and the U.S. Army in Germany and Austria failed to bring economic recovery, and by early 1946 U.S. elite circles were discussing a long‐term European recovery program, including occupied Germany. The severe Winter of 1946–1947 brought Western Europe's economy to a standstill. The announcement of President Harry S. Truman's containment doctrine and the East‐West deadlock over German reparations at the Moscow foreign‐ministers' meeting in early 1947 deepened the sense of crisis. In this setting, the principal advisors of Secretary of State George Marshall developed an aid program that Marshall announced at Harvard University on 5 June 1947. Promising aid to all European nations willing to help themselves, Marshall encouraged the Europeans to take the initiative.

Led by Ernest Bevin and Georges Bidault, the British and French foreign ministers, the Europeans responded enthusiastically and met in Paris late in June. A Soviet delegation initially participated but stormed out of the meeting. Moscow forbade its satellites to participate and attacked the United States for building an anti‐Soviet bloc and dividing Europe. While sixteen European nations asked for $28 billion in U.S. aid, Truman set up three committees led by prominent citizens to sell the Marshall Plan to the American public. After the communist coup in Prague in 1948, Congress passed a four‐year aid package.

Between 1948 and 1952, some thirteen billion dollars in economic assistance poured into Western Europe. The aid was designed to bring in food, machinery, raw materials, and capital investments to stimulate production and trade. European exports, it was hoped, would pay for future imports. The sale of American products in Europe generated “counterpart funds” that participating countries used in different ways. France and Italy used their counterpart funds to combat inflation and enforce budgetary restraint. The British and Norwegians retired state debts; the Austrians invested in state‐owned steel and electrical industries. The Belgians imported machinery and steel products; the Germans, Austrians, and Italians bought food. Initially fueling economic recovery, the Marshall Plan subsequently funded military rearmament and fostered Western European integration by financing intra‐European trade through the European Payments Union. By 1950, prewar production levels had been exceeded by 25 percent, dollar deficits had sunk, inflation and unemployment had decreased, and intergovernmental cooperation had grown, especially between France and West Germany.

Traditional Cold War historians depict the Marshall Plan as a humanitarian effort to revive Western Europe and alleviate suffering. Revisionists interpret it as Washington's attempt to rescue liberal capitalism and defeat socialism. Corporatists stress its role in exporting American‐style scientific management and mass‐production techniques. Economic historians argue that Western Europe was already recovering by 1947 without ERP funds. Others portray the plan as solving a severe “marketing crisis” by restoring financial stability and liberalizing production and prices.
See also Acheson, Dean; Anticommunism; Foreign Relations: U.S. Relations with Europe; Foreign Trade, U.S.

Bibliography

Harry B. Price , The Marshall Plan and Its Meaning, 1955.
Alan S. Milward , The Reconstruction of Western Europe 1945–51, 1984.
Charles S. Maier , In Search of Stability, 1987.
Michael J. Hogan , The Marshall Plan, 1987.
Barry Eichengreen, ed., Europe's Postwar Recovery, 1995.

Günter Bischof