The Marshall Plan

The Marshall Plan (1948–52) was the largest and most successful program of foreign assistance ever undertaken by the U.S. government.The harsh winter of 1946–47 underlined the inability of European countries to achieve a sustained economic recovery from the dislocations and destruction of World War II. Following the proclamation of the Truman Doctrine in March 1947, and the failure of the Moscow Conference that April to reach agreement on German reparations, Secretary of State George C. Marshall came to believe that “The patient is sinking while the doctors deliberate.” American leaders feared that poverty and hunger would make Western European countries vulnerable to Communist appeals. Marshall's speech at Harvard University's commencement in June offered American funding for a cooperative European recovery program, including Germany. Marshall even invited the Soviet Union to participate, arguing that “our policy is directed not against any country or doctrine but against hunger, poverty, desperation, and chaos.” The Soviet Union, however, refused, since Josef Stalin feared that the Americans intended to use their economic strength to undermine Soviet control in Eastern Europe. The Soviet Union responded to the plan by further tightening its control over Eastern Europe, a reaction that encouraged Western European countries to seek a formal political and military alliance with the United States. The Marshall Plan, with its huge commitment of American prestige and treasure in Western Europe, laid the foundations for NATO and the Atlantic alliance.

Between 1948 and 1951, the Congress authorized more than $13 billion for the European Recovery Program, approximately 10 percent of the annual federal budget. Although some contemporaries may have exaggerated the importance of Marshall Plan assistance in Europe's reconstruction, there is little question that the aid helped overcome bottlenecks within the European economy and created a basis for rapid economic growth. Western European production rose rapidly, and by 1950 it had topped the prewar level by 25 percent.

Although the Marshall Plan was presented as part of the “containment” of Soviet expansionism, Congress initially prohibited the use of Marshall Plan assistance for military supplies. (This did not prevent colonial powers such as the French from indirect use of such assistance to continue their war in Indochina.) After the outbreak of the Korean War in June 1950, the United States reversed this policy and encouraged the use of Marshall Plan assistance to provide for the rearmament of Western Europe within the NATO alliance. At the end of 1951, this change in emphasis became official when the Economic Cooperation Administration was renamed the Mutual Security Administration.
[See also Cold War: External Course; Cold War: Domestic Course.]

Bibliography

Michael J. Hogan , The Marshall Plan: America, Britain, and the Reconstruction of Western Europe, 1987.
Charles S. Maier and Günter Bischof, eds., The Marshall Plan and Germany, 1991.

Thomas A. Schwartz