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Marshall Plan

Marshall Plan or European Recovery Program, project instituted at the Paris Economic Conference (July, 1947) to foster economic recovery in certain European countries after World War II. The Marshall Plan took form when U.S. Secretary of State George C. Marshall urged (June 5, 1947) that European countries decide on their economic needs so that material and financial aid from the United States could be integrated on a broad scale. In Apr., 1948, President Truman signed the act establishing the Economic Cooperation Administration (ECA) to administer the program.

The ECA was created to promote European production, to bolster European currency, and to facilitate international trade. Another object was the containment of growing Soviet influence (through national Communist parties), especially in Czechoslovakia, France, and Italy. Paul G. Hoffman was named (Apr., 1948) economic cooperation administrator, and in the same year the participating countries (Austria, Belgium, Denmark, France, West Germany, Great Britain, Greece, Iceland, Italy, Luxembourg, the Netherlands, Norway, Sweden, Switzerland, Turkey, and the United States) signed an accord establishing the Organization for European Economic Cooperation (later called the Organization for Economic Cooperation and Development) as the master coordinating agency.

The ECA functioned until 1951, when its activities were transferred to the Mutual Security Agency. Over $12 billion was dispersed (1948–51) under the program. From the start the Soviet Union strongly opposed the Marshall Plan while the various countries in Eastern Europe denounced or ignored it. Completed in 1952, the Marshall Plan was one aspect of the foreign aid program of the United States and greatly contributed to the economic recovery of Europe.

See S. E. Harris, ed., Foreign Economic Policy for the United States (1948, repr. 1968); H. B. Price, The Marshall Plan and Its Meaning (1955); J. B. DeLong and B. Eichengreen, The Marshall Plan (1991); G. Behrman, The Most Noble Adventure (2007).

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Marshall Plan

MARSHALL PLAN

After world war ii, Europe was devastated and urgently needed an organized plan for reconstruction and economic and technical aid. The Marshall Plan was initiated in 1947 to meet this need.

The originator of the plan, U.S. Secretary of State George C. Marshall, introduced it in a speech at Harvard University on June 5, 1947. He pointed out two basic reasons for providing aid to Europe: the United States sought the reestablishment of the European countries as independent nations capable of conducting valuable trade with the United States; and the threat of a Communist takeover was more prevalent in countries that were suffering economic depression.

In 1947 a preliminary conference to discuss the terms of the program convened in Paris. The Soviet Union was invited to attend but subsequently withdrew from the program, as did other Soviet countries.

Sixteen European countries eventually participated, and, in July 1947, the Committee for European Economic Cooperation was established to allow representatives from member countries to draft a report that listed their requirements for food, supplies, and technical assistance for a four-year period.

The Committee for European Economic Cooperation subsequently became the Organization of European Economic Cooperation, an expanded and permanent organization that was responsible for submitting petitions for aid. In 1948, Congress passed the Economic Cooperation Act (62 Stat. 137), establishing funds for the Marshall Plan to be administered under the Economic Cooperation Administration, which was directed by Paul G. Hoffman.

Between 1948 and 1952, the sixteen-member countries received more than $13 billion dollars in aid under the Marshall Plan. The plan was generally regarded as a success that led to industrial and agricultural production, while stifling the Communist movement. The plan was not without its critics, however, and many Europeans believed the cold war hostilities between the Soviet nations and the free world were aggravated by it.

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Marshall Plan

MARSHALL PLAN

MARSHALL PLAN, formally called the European Recovery Program (ERP) even though it was later extended to Japan and (southern) Korea, was named after Secretary of State George C. Marshall, who announced it in a speech at Harvard University on 5 June 1947. The plan was unique, offering U.S. assistance for recovery efforts designed and implemented by the still war-ravaged nations of Europe.

Historians continue to argue the main thrust of the plan. The main arguments are that the plan was (1) humanitarian in seeking to ameliorate postwar economic suffering; (2) anti-communist in that it sought to rebuild the economies of western European countries to resist communism; and (3) designed to help the American economy since participating nations had to spend these dollar-denominated grants in the United States (and later Canada) for purchases of goods and services.

Regardless of the motives behind it, the ERP, which lasted from 1948 to 1952, was a phenomenal success. The Soviet Union and its eastern European satellites declined to participate, but the Marshall Plan provided approximately $13.5 billion in economic assistance to seventeen countries, including Great Britain, France, Italy, and western Germany, and resulted in a 25 percent increase in western European GNP.

BIBLIOGRAPHY

Donovan, Robert J. The Second Victory: The Marshall Plan and thePostwar Revival of Europe. New York: Madison Books, 1987.

Killick, John. The United States and European Reconstruction, 1945–1960. Edinburgh: Keele University Press, 1997.

Schain, Martin, ed. The Marshall Plan: Fifty Years After. New York: Palgrave, 2001.

Charles M.Dobbs

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Marshall Plan

Marshall Plan US programme of economic aid to European countries after World War II. Promoted by US Secretary of State General Marshall, its purpose was to repair war damage and promote trade within Europe, while securing political stability. The Soviet Union and e European countries declined to participate. Between 1948 and 1951, 16 countries received a total of US$12,000 million under the plan.

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Marshall Plan

Marshall Plan a programme of financial aid and other initiatives, sponsored by the US, designed to boost the economies of western European countries after the Second World War. It was originally advocated by Secretary of State George C. Marshall and passed by Congress in 1948.

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Marshall Plan

MARSHALL PLAN


Between 1948 and 1951 the European Recovery Programor as it is commonly called, the Marshall Planrestored post-war Western Europe's agricultural and industrial productivity by providing nearly $15 billion in U.S. economic assistance. The plan is named after Secretary of State George C. Marshall, who proposed it in a commencement speech at Harvard University on June 5, 1947.

George C. Marshall (18801959) gained military recognition in World War I (19141918) as the chief tactical officer of the first American division to go into action in France. He was named chief of staff of the U.S. Army in 1939, making him a four star general and the head of the army throughout World War II (19391945). During the war, he planned the amphibious invasions of North Africa and of Normandy, France; his achievements were heralded by the leaders of the United States and its allies. Marshall retired from the army in November 1945, but in 1947 President Harry S. Truman appointed him secretary of state.


Shortly after his appointment, Marshall attended a conference in Moscow with British, French, and Soviet leaders to discuss Germany and Austria's future. Europe was physically and economically devastated in the wake of World War II; food, fuel and raw materials for production were in desperately short supply. Businesses had been destroyed through loss of capital, nationalization, or physical obliteration, and confidence in local currencies was badly shaken. Observing the economic collapse of Europe and recognizing the Soviet Union's intention to take advantage of that collapse to spread communism across Europe, Marshall returned from the conference determined to restore the European economy.

On June 5, 1947, during a commencement address at Harvard University, Marshall stated, "It is logical that the United States should do whatever it is able to do to assist in the return of nominal economic health in the world, without which there can be no political stability and no assured peace. Our policy is directed not against any country or doctrine but against hunger, poverty, desperation and chaos. Its purpose should be the revival of a working economy in the world so as to permit the emergence of political and social conditions in which free institutions can exist." Marshall proposed that European nations determine their needs and suggest a plan for American economic assistance for their recovery.

In response to Marshall's announcement, sixteen Western European countries met in Paris a month later to form the Organization for European Economic Cooperation and to assess and agree on their needs. Although Marshall had claimed that the plan was "not directed against any country or doctrine," from the start the United States attached conditions to their aid that would be unacceptable to the Soviet Union. Thus, while the Soviet Union and the Eastern Europe countries under its control were invited to participate, the Soviet Foreign Minister walked out of the talks. The Western European nations eventually drafted a request for $16 to $22 billion to stimulate economic recovery by 1951.

Back in the United States, the Marshall Plan was debated in Congress. To ensure its passage, Marshall worked closely with congressional committees and made promotional speeches throughout the United States. Congress agreed to Truman's $17 billion request to aid Europe. In April, 1948, Truman signed an act that established the Economic Cooperation Administration (ECA) to administer the program. The ECA's primary goals were to elevate European economic production, support European currency, and assist with international trade. Its other intention was to restrain the spreading Soviet influence in Czechoslovakia, France, and Italy. Paul G. Hoffman (18911974) was appointed ECA's chief administrator. Later that year the participating countriesAustria, Belgium, Denmark, France, West Germany, Great Britain, Greece, Iceland, Italy, Luxembourg, the Netherlands, Norway, Sweden, Switzerland, Turkey, and the United States signed the agreement that instituted the Organization for European Economic Cooperation (later called the Organization for Economic Cooperation and Development) as the head coordinating agency.

The Soviet Union strongly opposed the Marshall Plan and refused to participate; a few other Eastern European countries criticized or ignored it. The Soviets prevented Poland and Czechoslovakia from participating, despite their desire to do so. Stalin accused the United States of trying to use its money to lure Eastern European nations away from Soviet influence. He ordered all Communists to resist U.S. imperialism and established the Cominform, an international Communist information bureau. Stalin's most drastic response to West Germany's participation in the Marshall Plan was the 19481949 Berlin blockade, an unsuccessful attempt to force the United States and its allies to evacuate West Berlin.

Completed in 1951, the Marshall Plan greatly contributed to the economic restoration of Europe. At its end, nearly $15 billion in recovery aid had been channeled into Western Europe. Many countries' agricultural and industrial productivity was higher than they had been before World War II. His efforts in preventing famine and political chaos through the Marshall Plan earned George C. Marshall a Nobel Peace Prize in 1953.

Some revisionist historians have contested that the Marshall Plan did not demonstrate American altruism, arguing that assistance to Europe prevented the United States from falling into its own economic decline by providing a market for U.S. capital goods. According to revisionists, the Marshall Plan also let the United States rebuild the Western European economy to mirror the American economy, providing a more compatible environment for U.S. investment.


FURTHER READING

The Columbia Encyclopedia, New York: Columbia University Press, 1993, s.v. "Marshall Plan."

"June 5th, 1947: U.S. announcement of the Marshall Plan." History Today, June 1997.

"Marshall Plan Memories." The New Leader, June30, 1997.

"The Marshall Plan,"[cited July 6, 1999] available from the World Wide Web @ www.nara.gov/exhall/featured-document/marshall/marshall.html/.

Morrow, Lance. "George C. Marshall: the Last Great American." Smithsonian, August 1997.

The Reader's Companion to American History, Boston: Houghton-Mifflin, 1991, s.v. "Marshall Plan."

Harvard University commencement speech,History Today,June 5, 1947">

it is logical that the united states should do whatever it is able to do to assist in the return of nominal economic health in the world, without which there can be no political stability and no assured peace.

george c. marshall, harvard university commencement speech, history today, june 5, 1947

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Marshall Plan

Marshall Plan

In 1947, Europe was still devastated from the ravages of World War II (1939–45). In addition, the previous winter had been one of the worst in European history. Eighteen million soldiers and an even larger number of civilians had been murdered or died, and life for the survivors was one of starvation and desperation.

As part of a graduation speech at Harvard University in June 1947, Secretary of State George C. Marshall (1880–1959) outlined what became known as the Marshall Plan, or the European Recovery Plan. It was one of the most generous financial aid programs in world history. The United States was prepared to offer the equivalent of $109 billion in aid if the European nations could develop a plan on how the money would be used.

The Marshall Plan forced the European nations to act as a single economic unit for the first time ever. Marshall even offered aid to the Soviet Union (modern-day Russia), but dictator Joseph Stalin (1879–1953) refused to accept the offer, calling it a trick. In hindsight, it was probably Stalin's refusal that allowed for the passage of the Marshall Plan. The United States and the Soviet Union were competing superpowers; they looked upon one another as the enemy. Had the Soviet Union participated in the program, it is likely that Congress would not have passed the plan.

A conference was held in Paris in 1947, and sixteen European nations agreed to participate in the four-year program. In April 1948, President Harry S. Truman (1884–1972; served 1945–53) signed the first check, written for more than $5 billion. By the end of the plan in 1951, industrial production in western Europe had increased by an amazing 30 percent since the beginning of World War II.

The Marshall Plan benefited the economy of the United States as well. All the goods bought by Europe with the donated money came from America and had to be shipped overseas on American merchant vessels.

Although the Marshall Plan was actually President Truman's idea, Truman's popularity among the public was so low (mostly related to the war) by 1947 that he knew no program with his name on it would ever get the support of Congress. Marshall had a solid reputation as a war general and a diplomat with integrity and honor. So while Marshall is the man who gets most of the credit for the program, Truman was the silent partner who came up with the original idea.

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Marshall Plan

MARSHALL PLAN

At the Harvard University commencement exercises on June 5, 1947, Secretary of State George C. Marshall proposed that the United States undertake a vast program of postwar economic aid to assist the countries of Europe to rebuild from world war ii. Neither Secretary Marshall nor President harry s. truman offered any constitutional authority for such a program, although some members of Congress, led by Senator robert a. taft of Ohio, contended that the expenditure could not be justified under either the foreign affairs power or the taxing and spending power. Acting on the initiative of the United States, sixteen European nations formed the Organization of European Economic Cooperation (OEEC) which in turn issued a report setting forth Europe's collective needs and resources. The Soviet Union and other East European countries were invited to participate, but declined. Thereafter, on April 3, 1948, following the Soviet-sponsored coup in Czechoslovakia, which turned the tide of congressional opinion and caused the Marshall Plan expenditures to be justified as a national defense measure, the United States Congress passed the Economic Cooperation Act, to be administered by the Economic Cooperation Administration. Within four years and after the expenditure of $12-$13 billion in American loans and grants-in-aid, Europe made tremendous strides toward economic recovery. Coupled with increased military security (evidenced primarily in the signing of the north atlantic treaty in 1949 and formation of the North Atlantic Alliance), this extensive economic recovery helped quell fears of Soviet expansion into Western Europe. The Marshall Plan and the OEEC resulting from it also created a precedent for further economic integration among the participating states of Western Europe.

Burns H. Weston
(1986)

Bibliography

Price, Harry Bayard 1955 The Marshall Plan and Its Meaning. Ithaca, N.Y.: Cornell University Press.

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Marshall Plan

MARSHALL PLAN

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 percent below 1938 levels; in Germany it was 55 percent lower. American output, in startling contrast, was 65 percent higher. Signs of permanent stagnation were pervasive throughout Europe, coupled with growing frustration and pessimism about the future. Millions of refugees lived in squalid camps. Britain had won the war and 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 to expand Soviet influence and control. By 1946 Churchill warned that the Soviet Union had drawn an "iron curtain" that divided

Europe between rival alliances and ideologies. Sensing that his dreaded enemy capitalism was collapsing, Stalin ordered the Communist parties in every country to fight the class enemy. In 1947 the Truman Doctrine of military support kept Greece and Turkey out of the Soviet orbit, but Americans feared that the communists had a good chance to seize political power in Italy and France.

State department official Will Clayton found the solution, formally named the European Recovery Program (ERP). He envisioned American gifts and loans of billions of dollars combined with specific European initiatives that would put the continent's industry, transportation, finance, and farming on a sound basis. Such aid would promote free trade and a healthy environment for economic and political freedoms, and in the long run, lead to peace and unity within Europe.

Success in establishing the plan required the use of Secretary of State George Marshall's enormous prestige, evident in his speech at Harvard University in June 1947. Even more essential was close collaboration with the Republicans who controlled Congress, especially their foreign policy leader, Senator Arthur Vandenberg. 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. 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 that rebuilding Europe quickly 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 that time was running out. Although the ERP invited the Soviet Union to participate, Stalin refused. 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 Soviet economy.

When proposing aid, Marshall stated that the United States should not impose a plan for economic recovery. Rather, "the program should be a joint one" initiated by the Europeans. They were to devise plans to put their financial houses in order with taxes, monetary policies and spending policies geared primarily to restoring a market economy. The plans had to be integrated with one another. The United States provided $13.4 billion over four years, which included over a billion dollars in loans that were repaid. The money went much farther than might be imagined 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 Europe's shattered railroad network, and modernized factories, usually with new machines purchased from American companies. Rebuilding Europe's economy benefited American business in both the short and the long run. The Marshall Plan also promoted America's interests by helping to restore political stability in Western Europe, thereby reducing the appeal of Communism. Western Europe, encouraged by the Marshall Plan, expanded its economic cooperation and integration. In 1951, guided by French Foreign Minister Robert Schuman, France, Italy, Germany, Belgium, Luxembourg, and the Netherlands formed the European Coal and Steel Community to foster economic cooperation. This was the beginning of the European Economic Community (known as the Common Market) and of today's European Union.

The establishment of 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 the victory of democracy over totalitarianism in the Cold War (1947–1991).

bibliography

Donovan, Robert J. The Second Victory: The Marshall Plan and the Postwar Revival of Europe. New York: Madison Books, 1987.

Hogan, Michael J. The Marshall Plan: America, Britain, and the Reconstruction of Western Europe, 1947–1952. New York: Cambridge University Press, 1987.

Internet Resources

"Establishing the Marshall Plan." Truman Presidential Museum & Library. Available from <www.trumanlibrary.org/whistlestop/study_collections/marshall/large/marshall.htm>.

"The Marshall Plan." Marshall Foundation. Available from <www.marshallfoundation.org/about_gcm/marshall_plan.htm>.

"The Marshall Plan and the Future of U.S.-European Relations (1972)." Library of Congress. Available from <lcweb.loc.gov/exhibits/marshall/m1a.html>.

D'Ann Campbell

See also:Marshall, George C.

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Marshall Plan

MARSHALL PLAN.

CONTEXT
SCOPE
REACTIONS
EFFECTS
BIBLIOGRAPHY

The Marshall Plan—officially known as the European Recovery Program (ERP)—was an ambitious and far-reaching U.S. initiative to sponsor the recovery and reconstruction of western and southern Europe in the aftermath of World War II. The plan was named after one of its creators, George Marshall (1880–1959), the U.S. secretary of state. Marshall first announced this scheme for the rehabilitation of European economies at the Harvard University commencement on 5 June 1947. The Marshall Plan was formally launched on 2 April 1948, when the U.S. Congress passed the Economic Cooperation Act. Over the next four years, roughly $13 billion of aid was distributed to sixteen European recipient countries, who organized themselves into the Organisation for European Economic Cooperation (OEEC) for this purpose. Great Britain, France, Italy, the Federal Republic of Germany, and the Netherlands received the largest sums.

The Marshall Plan has received significant interest, both because of its far-reaching objectives and its pivotal role in the intensifying Cold War between the former wartime allies, the United States and the Soviet Union. Debate among historians and economists has revolved primarily around three issues. First, scholars have disagreed about what U.S. motivations had given rise to the program. A second point of debate concerns the way in which the ERP was assessed in Europe, particularly by the Soviet authorities. Finally, the economic and political effects and long-term implications of the Marshall Plan remain in dispute.

CONTEXT

When World War II finally came to a close, it had left behind a trail of destruction and devastation throughout Europe. It seemed clear to observers that the extent of damage was much more serious than it had been in 1918. Widespread destruction of factories together with shortages in raw materials and food, so it was argued, had not only psychological but also lasting economic effects. Restricted industrial production severely limited what could be achieved in national reconstruction programs. Stagnation and crisis seemed unavoidable.

Historians have since suggested that the extent of the postwar crisis was exaggerated. Physical destruction was less severe than it seemed at first, and in most countries infrastructures could be repaired relatively quickly. By 1947, overall European industrial production had already risen to 87 percent of what it had been in 1938. Nonetheless, there were of course real problems ahead. Recovery was driven by national spending on the repair and extension of industrial capacities. But European countries produced only a small amount of the capital goods they needed to keep this process going. Importing these goods from the United States was made unfeasible by the largely exhausted European dollar reserves. Governments needed money to pay for imports, but their capacity to earn dollars through exports was limited. It was a vicious circle, which gave rise to large trade and payments deficits. Moreover, classical free trade solutions were made impossible by governments' continued strict control of prices and trade. Political uncertainty produced further doom and gloom.

Several different priorities shaped policymaking on the U.S. side. On one hand, the administration sought to end its financial commitments in Europe. Already in August 1945 all lend-lease arrangements had been terminated, primarily to reassure Congress that the financial burdens of the war years were now finally over. Other funding programs, such as the United Nations Relief and Rehabilitation Administration, were canceled by 1947. On the other hand, these assessments were modified by growing political concerns. Already in February 1946, George Kennan at the U.S. embassy in Moscow expressed concern about the Soviet authorities' aggressive hostility toward the Western world. Just a month later, Winston Churchill warned that as a result of expansionist Soviet policies an Iron Curtain had descended across Europe, against which Western democracies had to stand firm. Concerns about Soviet expansion were further fueled by the electoral successes of the Italian and French Communist parties.

The 1946 midterm elections brought both the U.S. Senate and House under the control of the Republican Party, an influential wing of which argued that the reconstruction of Western Europe had to take priority, if only temporarily, over retreat into isolationism. Democratic President Harry S. Truman cooperated closely with Republicans in questions of foreign policy. In his speech to Congress on 12 March 1947, Truman argued (in what was later known as the Truman Doctrine) that the United States had to support actively countries struggling against communism, and he proposed military and economic aid to Greece and Turkey to this end.

Marshall developed these ideas further. He was concerned that communists in Western Europe would take advantage of popular discontent, stirred by plummeting living standards. As the State Department moved toward a policy of active intervention in Europe, the notion that without U.S. support a European economic collapse was imminent and would, in turn, have serious consequences for the U.S. economy, proved useful to mobilizing political support. When Marshall announced the scheme to aid European recovery, this could thus be justified with established logic: it would not only salvage Europe but also protect the future of U.S. society and its economy.

SCOPE

While the Marshall Plan itself did not explicitly distinguish between Western and Eastern spheres, the logic behind it undoubtedly did. In fact, the plan developed a number of assumptions. First, the mistakes of World War I were not to be repeated. The inadequacy of the Treaty of Versailles was directly linked to the subsequent economic collapse, the rise of fascism and Nazism, and World War II. Second, the biggest threat to Western Europe came from the famished and disillusioned Europeans who brought their Communist parties into power (through elections or revolt), which would then be subservient to Moscow. Third, Germany had to be rearmed and prevented from falling under Soviet rule. In the face of strong French opposition, the best way of achieving this was by transforming Germany into a prosperous democratic nation. Fourth, Marshall Plan aid would not only help to jump-start European economies and remove the material basis of discontent, but also restore self-confidence in capitalist democracy and thereby provide a strong alternative to communism.

The ERP was designed to enable Western European countries to buy American exports, which would both expand the market for U.S. products and reduce the cost of aid to Europe. ERP planners' goal was to achieve 30 percent growth in industrial production. The program also sought to integrate Western Europe into a single economic and political area. Apart from trade benefits, integration had the important function of reconciling France to a revived and rearmed Germany. French reconstruction plans had until then focused on shifting the center of European heavy industry from Germany to France, and thus prioritized access to German coal and steel resources. The Marshall Plan now assured France both that Germany was locked safely into Europe and that if it dropped its claims on German reparations it would be rewarded with Marshall Plan aid.

The ERP was directed by the Economic Cooperation Administration (ECA) in Washington, with an office in each receiving country. Because aid was made conditional on intra-European cooperation, a new body—the OEEC—was formed to coordinate the distribution of funds. Each country signed a bilateral treaty with the United States, committing itself to strong production, financial stability, and an expansion of foreign trade. Funds were provided in the form of dollar credits. European governments acted as purchasers of imports from the dollar area, which were then resold to consumers in their countries. Because consumers paid for these products in their national currencies, governments built up large balances of nondollar currencies—so-called counterpart funds—which could then be used for a range of purposes subject to the ECA's approval.

REACTIONS

Historians long assumed that the postwar division of Europe had been an inevitable result of expansionist Soviet policies, and that the Iron Curtain had been more or less in place by 1945. More recent assessments have suggested otherwise. Soviet policy in the immediate postwar period was more often reactive than proactively expansionist. Until 1947, the Soviet Union pursued a relatively moderate foreign policy. Popular Front–like coalition governments held power in most Eastern European states under Red Army control. In Germany, Soviet authorities maintained that the German problem could best be dealt with through multilateral Allied action. Scholars have argued that the Marshall Plan then changed Soviet calculations. The Soviet leadership identified the scheme as a U.S. attempt not just to consolidate the Western European bloc economically and politically, but also to intrude into its own sphere of influence, the buffer zone around the USSR, and thus to threaten Soviet security. As a result, Soviet policy shifted radically to contain and prevent American influence.

At any rate, the sincerity of the Western powers' offer for Soviet participation is questionable. Although Ernest Bevin and Georges Bidault, the foreign ministers of Britain and France, respectively, invited their Soviet counterpart Vyacheslav Molotov to discuss Marshall's scheme, this invitation was largely to preempt domestic criticism about excluding the Soviet Union. The Soviet leadership, in turn, hoped the scheme might be turned to their advantage. Molotov tried to gain agreement from other participants to forestall European integration and instead implement the recovery plan on a country-by-country basis. He failed, and the Soviet Union subsequently withdrew from the Paris Economic Conference and put pressure on the Eastern European countries that had been keen to benefit from the ERP. The Polish and Czechoslovak delegations soon gave in. Subsequently, the Soviet authorities developed more effective means of control over their Eastern European satellites. Joseph Stalin's reactions, in turn, persuaded the U.S. Congress that its assessment of the Soviet threat had been correct.

EFFECTS

The Marshall Plan's effects have been debated at length: to what degree did it contribute to the revival and reconstruction of Western Europe? At the height of the Cold War, scholars argued that the scheme was an act of U.S. benevolence in the face of the Soviet threat and the single most important cause of European economic recovery. Revisionist historians subsequently argued that the Marshall Plan was evidence of the imperialist policies of the United States in its efforts to turn Western European countries into economic and political satellites. Their assessment, however, did not actually revise earlier views of the plan's economic importance. For both orthodox and revisionist scholars, the ERP formed an indispensable starting point for Western European recovery from the brink of chaos and collapse.

Since the mid-1980s, several historians have argued that the ERP's direct impact on European developments has been overstated, as recovery was already well under way by the time ERP aid first arrived. Between 1948 and 1951, Marshall Plan aid amounted to only about 2 percent of the gross domestic product of recipient countries. As a result, the ERP did not give the United States sufficient leverage over the political reconstruction of Western Europe. Some historians also question the older emphasis on a homogenous impact of Marshall Plan aid and suggest instead that Western Europe was a patchwork of distinct national programs and ways of using Marshall funds. Different European governments found different strategies to neutralize or ignore specific U.S. requirements.

The Marshall Plan had several different results. Although its direct economic impact has been exaggerated, it seems clear that without this aid the speed of recovery would have been impeded. The Marshall Plan together with other U.S. aid programs reduced Europe's current account deficit with the United States, and allowed a much higher level of imports from the dollar area than would have been possible otherwise. The initial goal of 30 percent growth in industrial production was surpassed by a substantial margin. By 1951 the large dollar deficits had mostly disappeared, and projects for liberalizing trade could again be put on the agenda.

It also seems clear that the impact of the ERP cannot be understood in strictly quantitative terms. Even if the program was not as crucial to Americanization as had been claimed, it did appeal to forces within Europe who were eager to use U.S. aid as a lever to achieve their own objectives. The Marshall Plan also changed European attitudes toward production. Its "politics of productivity" (so called by Charles S. Maier) served as a new ideological yardstick for uniting a centrist political leadership and justifying a reliance on the private economy for growth. With the removal of communists from governing coalitions, the Marshall Plan helped to seal a division within the European labor movement between communist and noncommunist unions. The plan's psychological effects on the war-weary populations of Europe were perhaps most important of all. At a time of despair and uncertainty, it left no room for doubt about the commitment of the United States to the security of Western Europe.

See alsoOrganisation for European Economic Cooperation (OEEC).

BIBLIOGRAPHY

Primary Sources

Acheson, Dean. Present at the Creation: My Years in the State Department. New York, 1969.

Hoffman, Paul G. Peace Can Be Won. Garden City, N.Y., 1951.

Kindleberger, Charles P. Marshall Plan Days. Boston, 1987.

Marshall, George. "Speech by the United States Secretary of State, General Marshall, at Harvard University: The Marshall Plan, 5 June 1947." Foreign Relations of United States 3 (1947): 237–239. Reprinted in Department of State Bulletin 16, no. 415 (15 June 1947): 1159–1160.

Secondary Sources

Cox, Michael, and Caroline Kennedy-Pipe. "The Tragedy of American Diplomacy? Rethinking the Marshall Plan." Journal of Cold War Studies 7, no. 1 (2005): 97–134.

Crafts, Nicholas, and Gianni Toniolo, eds. Economic Growth in Europe since 1945. Cambridge, U.K., 1996.

De Long, J. Bradford, and Barry Eichengreen. "The Marshall Plan: History's Most Successful Structural Adjustment Program." In Postwar Economic Reconstruction and Lessons for the East Today, edited by Rudiger Dornbusch, Wilhelm Nölling, and Richard Layard, 189–230. Cambridge, Mass., 1993.

Eichengreen, Barry, ed. Europe's Post-war Recovery. Cambridge, U.K., 1995.

Ellwood, David W. Rebuilding Europe: Western Europe, America, and Postwar Reconstruction. London, 1992.

Gaddis, John Lewis. The Cold War: A New History. New York, 2005.

Gimbel, John. The Origins of the Marshall Plan. Stanford, Calif., 1976.

Hoffmann, Stanley, and Charles Maier, eds. The Marshall Plan: A Retrospective. Boulder, Colo., 1984.

Hogan, Michael J. The Marshall Plan: America, Britain, and the Reconstruction of Western Europe, 1947–1952. Cambridge, U.K., 1987.

Maier, Charles S., ed. The Cold War in Europe: Era of a Divided Continent. 2nd ed. Princeton, N.J., 1996.

Milward, Alan S. The Reconstruction of Western Europe, 1945–1951. London, 1984.

Wexler, Imanuel. The Marshall Plan Revisited: The European Recovery Program in Economic Perspective. Westport, Conn., 1983.

Jessica Reinisch

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