Marshall Plan

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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).

Marshall, George C.

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.

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

"The Marshall Plan." Marshall Foundation. Available from <www.marshallfoundation.org/abou t_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>.

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