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| ==Background== | ==Background== | ||
| After six years of war much of the European continent was devastated. Battles had been fought throughout the continent, covering a far larger area than in the ]. |
After six years of war much of the European continent was devastated. Battles had been fought throughout the continent, covering a far larger area than in the ]. Air bombardment meant that most of the major cities had been badly damaged, with industrial production especially hard hit. Many of the continent's greatest cities, including ] and ] were in ruins, and others, such as ], were severely damaged. The economies of the region were ruined, millions were homeless, and the destruction of agriculture had led to conditions nearing starvation in much of the continent. Especially damaged was the transportation industry as railways, bridges, and roads had been heavily targeted by airstrikes, while many merchant shipping boats had been sunk. None of these problems could be easily fixed, as the nations engaged in the war had exhausted their treasuries in its prosecution. | ||
| After the First World War the European economy had also been greatly damaged, and a ] lasted well into the 1920s leading to instability and a general global downturn. The United States, despite a resurgence of ], had attempted to promote European growth, mainly through partnerships with the major American banks. When Germany was unable to pay its ] the Americans intervened by extending a large loan to Germany, a debt the Americans were left with when war was declared. | |||
| ⚫ | |||
| ⚫ | ] | ||
| ⚫ | ==The |
||
| It was widely viewed that the events after the First World War should not be repeated. The State Department under Truman were dedicated to pursuing an activist foreign policy, but the congress was far less interested in the state of Europe. Originally, it was hoped that little would need to be done to rebuild Europe. It was hoped that the ] and ], with the help of their colonies, would quickly rebuild their economies. By 1947 there was still little progress, however. Drought in 1947 and a cold winter in 1947-48 aggravated an already poor situation. The European economies did not seem to be growing as high unemployment and food shortages led to strikes and unrest in several nations. The two major shortages were in coal and in grain. Before the war Western Europe had depended on the large food surpluses of Eastern Europe, but these routes were largely cut off. The situation was especially bad in Germany where in 1946-47 the average ] intake per day was only 1800, an insufficient amount for long-term health. ] reported to Washington that "millions of people are slowly starving." As important for the overall economy was the shortage of coal, aggravated by the cold winter of 1947-48. In Germany homes went unheated and hundreds froze to death. In Britain the situation was not as severe but domestic demand meant that industrial production came to a halt. The humanitarian need to end these problems was one motivation for the plan. | |||
| Secretary of State Marshall was in ] meeting with the ] when ] declared the ] on ], ]. It amounted to a declaration of ], promising to support ''"... free peoples who are resisting attempted subjugation by armed minorites or outside pressures."'' | |||
| One of the strongest motivating factors, and an important difference from the post-WWI era, was the beginning of the ]. The American government had grown very suspicious of ] actions and concerned about possible ] domination of Europe. In both France and ] the poverty of the post-war era had provided fuel for the communist parties, who had also played central roles in the resistance movements of the war. These parties had saw significant electoral success in the post-war elections with the Communists becoming the largest single party in France. Though today most historians feel the threat of France and Italy falling to the communists was remote{{ref|Gaddis}}, it was regarded as a very real possibility by American policy makers at the time. The American government of ] began to be aware of these problems in 1946. The emerging doctrine of ] argued that the United States needed to substantially aid non-communist countries to stop the spread of Soviet influence. There was also some hope that the Eastern European nations would join the plan, and thus pulled out of the emerging Soviet bloc. | |||
| But what were they to do about ], now divided into ], ], ] and ] zones of occupation? Marshall's translator ] made the following observations: | |||
| ⚫ | The only major power whose infrastructure had not been significantly harmed was the United States. It had entered the war later than most European countries and had been attacked only twice during the conflict, the surprise attack on Pearl Harbor in ] and a diversionary attack on the Aleutian Islands of Alaska. The American gold reserves were still intact as was its massive agricultural and manufacturing base, and the country was enjoying a robust economy. | ||
| :''During our visit ... ] took a relaxed attitude ...'' | |||
| ==Early ideas== | |||
| :''Stalin's seeming indifference to what was happening in Germany made a deep impression on Marshall. ... Economic conditions were bad. Europe was recovering slowly ... Little had been done to rebuild ... Unemployment was widespread. Millions of people were on short rations. There was danger of epidemics. This was the kind of crisis ] thrived on. , Marshall talked of the importance of finding some initiative to prevent the complete breakdown of Western Europe.'' | |||
| ⚫ | Long before Marshall's speech a number of figures had raised the notion of a reconstruction plan for Europe. US Secretary of State ] presented and early version of the plan during a speech held at the ] Opera House (Germany) on September 6, 1946. In addition, General ] asked industrialist ] to inspect post-war Germany and draft "]" in 1947, containing basic facts relating to the problems in Germany, with recommendations for reconstruction. ] had made a major speech on the issue, that had mostly been ignored, and Vice President ] had also raised the idea. | ||
| The main alternative to large quantities of American aid was to take it from Germany. This notion became known as the ], named after US Treasury Secretary ] It advocated extracting massive ] from Germany to help rebuild those countries it had attacked, and also to prevent Germany from ever being rebuilt. Closely related was the ] of ] that proposed giving France control over the German coal areas of the ] and ] and using these resources to bring France to 150% of pre-war industrial production. These plans were rejected, however, as many drew parallels between German dissonance due to reparation claims following ] and allowing for the rise of ]. By April 1947 Truman, Marshall and Undersecretary of State ] were convinced of the need for substantial quantities of aid from the United States. | |||
| ==Debate== | |||
| ⚫ | ] | ||
| ⚫ | ==The speech== | ||
| Originally, it was hoped that little would need to be done to rebuild Europe. It was hoped that the ] and ], with the help of their colonies, would quickly rebuild their economies. By 1947 there was still little progress, however. Drought in 1947 and a cold winter in 1947-48 aggravated an already poor situation. | |||
| The earlier discussions of the plan had largely been ignored as it was not clear that it was establishing official administration policy. It was decided that all doubt must be removed by a major address by ] ]. Marshall gave the address to the graduating class of ] on ], ]. Standing on the steps of th church in ]e he outlined the US government's preparedness to contribute to European recovery. The speech was written by ], who had also done the one for the ]. The speech contained virtually no details and no numbers. The most important element of the speech was the call for the Europeans to meet and create their own plan for rebuilding Europe, and that the United States would then fund this plan. | |||
| The administration felt that the plan would likely be unpopular among many Americans, and the speech was mainly directed at a European audience. In an attempt to keep the speech out of American papers jounralists were not contacted, and on the same day Truman called a press conference to take away headlines. By contrast Acheson was dispatched to contact the European, especially British media, and the speech was read in its entirety on the BBC. | |||
| One of the strongest motivating factors was the beginning of the ]. The American government had grown very suspicious of ] actions and concerned about possible ] domination of Europe. In both France and ] the poverty of the post-war era had provided fuel for the communist parties who had seen significant electoral success. Furthermore, in both those countries, Communists had fought the German occupation and fascist governments, while much of the right had been discredited by policies of collaboration. | |||
| ==Negotiations== | |||
| The American government of ] began to be aware of these problems in 1946. The emerging doctrine of ] argued that the United States needed to substantially aid non-communist countries to stop the spread of Soviet influence. | |||
| ⚫ | After Marshall's speech a meeting was convened in Paris on ]. The states of the future ], and even the ], were invited; only Czechoslovakia and Poland agreed to attend, but were prevented from doing so by the Soviets. The plan was rejected by Stalin owing to US insistence on economic liberalization and pan-European coordination of recovery efforts. Stalin soon ordered the leaders of its European ]s not to continue with negotiations, which could in the long run weaken Soviet influence over those countries. His order, backed up with constant ] scrutiny and the ever-present threat of ] intervention, made those governments abandon the negotiations. This became one of the reasons why communist economies of those countries have fallen further and further behind, compared to Western capitalist economies. | ||
| ⚫ | The Europeans asked for $22 billion in aid. Truman cut this to $17 billion in a bill he put to Congress. The ], who controlled Congress, was still unconvinced and worked to limit the amount of aid advocating a more ] policy. The shock of the overthrow of the democratic government of ] in February ] spurred Congress to pass a bill granting $12.4 billion in aid. Truman signed the Marshall Plan into law on ], ], establishing the ] (ECA) to administer the program. ECA was headed by economic cooperation administrator, ]. 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 ] (later called the Organization for Economic Cooperation and Development, OECD) as the master coordinating agency. | ||
| ⚫ | |||
| ⚫ | ==Implementation== | ||
| The first substantial aid went to ] and ] in January of 1947, who were seen as being on the front lines of the battle against communist expansion. Initally UK supported the anti-communist factions in those countries but due to its economical condition, it requested US to continue its efforts. In February Britain desperately requested aid from the States to shore up its economy. | The first substantial aid went to ] and ] in January of 1947, who were seen as being on the front lines of the battle against communist expansion. Initally UK supported the anti-communist factions in those countries but due to its economical condition, it requested US to continue its efforts. In February Britain desperately requested aid from the States to shore up its economy. | ||
| The main alternative to large quantities of American aid was to take it from Germany. This notion became known as the ], named after US Treasury Secretary ] It advocated extracting massive ] from Germany to help rebuild those countries it had attacked, and also to prevent Germany from ever being rebuilt. | |||
| This plan was rejected, however, as many drew parallels between German dissonance due to reparation claims following ] and allowing for the rise of ]. By April 1947 Truman, Marshall and Undersecretary of State ] were convinced of the need for substantial quantities of aid from the United States. | |||
| The final plan was announced by Marshall in a speech at ] on ], ] where he outlined the US government's preparedness to contribute to European recovery. | |||
| ⚫ | ==Implementation== | ||
| ⚫ | After Marshall's speech a meeting was convened in Paris on ]. The states of the future ], and even the ], were invited; only Czechoslovakia and Poland |
||
| ⚫ | The Europeans asked for $22 billion in aid. Truman cut this to $17 billion in a bill he put to Congress. The ], who controlled Congress, was still unconvinced and worked to limit the amount of aid advocating a more ] policy. The shock of the overthrow of the democratic government of ] in February ] spurred Congress to pass a bill granting $12.4 billion in aid. Truman signed the Marshall Plan into law on ], ], establishing the ] (ECA) to administer the program. ECA was headed by economic cooperation administrator, ]. 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 ] (later called the Organization for Economic Cooperation and Development, OECD) as the master coordinating agency. | ||
| The official ] of ECA was to give a boost to the Europe economy: to promote European production, to bolster European currency, and to facilitate international trade, especially with United States, whose very economic interest required Europe to became wealthy enough to import US goods if US economy were to keep on growing. Another, unofficial goal of ECA (and of Marshall Plan) was the containment of growing Soviet influence in Europe, evident especially in growing strength of ] in Czechoslovakia, France, and Italy. | The official ] of ECA was to give a boost to the Europe economy: to promote European production, to bolster European currency, and to facilitate international trade, especially with United States, whose very economic interest required Europe to became wealthy enough to import US goods if US economy were to keep on growing. Another, unofficial goal of ECA (and of Marshall Plan) was the containment of growing Soviet influence in Europe, evident especially in growing strength of ] in Czechoslovakia, France, and Italy. | ||
Revision as of 20:58, 29 July 2005
The Marshall Plan, known officially following its enactment as the European Recovery Program (ERP), was the main plan of the United States for the reconstruction of Europe following World War II. The initiative was named for United States Secretary of State George Marshall and was also the basis for the United Kingdom's creation of the Marshall Scholarships for the United States.
Between 1948 and 1951, the United States contributed more than $13 billion (equivalent to nearly $100 billion in 2005 when adjusted for inflation) of economic and technical assistance toward the recovery of 16 European countries which had joined in the Organization for European Economic Cooperation (OEEC, forerunner to today's OECD) in response to Marshall's call for a joint scheme for European reconstruction.
Background
After six years of war much of the European continent was devastated. Battles had been fought throughout the continent, covering a far larger area than in the First World War. Air bombardment meant that most of the major cities had been badly damaged, with industrial production especially hard hit. Many of the continent's greatest cities, including Warsaw and Berlin were in ruins, and others, such as London, were severely damaged. The economies of the region were ruined, millions were homeless, and the destruction of agriculture had led to conditions nearing starvation in much of the continent. Especially damaged was the transportation industry as railways, bridges, and roads had been heavily targeted by airstrikes, while many merchant shipping boats had been sunk. None of these problems could be easily fixed, as the nations engaged in the war had exhausted their treasuries in its prosecution.
After the First World War the European economy had also been greatly damaged, and a deep recession lasted well into the 1920s leading to instability and a general global downturn. The United States, despite a resurgence of isolationism, had attempted to promote European growth, mainly through partnerships with the major American banks. When Germany was unable to pay its reparations the Americans intervened by extending a large loan to Germany, a debt the Americans were left with when war was declared.
It was widely viewed that the events after the First World War should not be repeated. The State Department under Truman were dedicated to pursuing an activist foreign policy, but the congress was far less interested in the state of Europe. Originally, it was hoped that little would need to be done to rebuild Europe. It was hoped that the United Kingdom and France, with the help of their colonies, would quickly rebuild their economies. By 1947 there was still little progress, however. Drought in 1947 and a cold winter in 1947-48 aggravated an already poor situation. The European economies did not seem to be growing as high unemployment and food shortages led to strikes and unrest in several nations. The two major shortages were in coal and in grain. Before the war Western Europe had depended on the large food surpluses of Eastern Europe, but these routes were largely cut off. The situation was especially bad in Germany where in 1946-47 the average calorie intake per day was only 1800, an insufficient amount for long-term health. William Clayton reported to Washington that "millions of people are slowly starving." As important for the overall economy was the shortage of coal, aggravated by the cold winter of 1947-48. In Germany homes went unheated and hundreds froze to death. In Britain the situation was not as severe but domestic demand meant that industrial production came to a halt. The humanitarian need to end these problems was one motivation for the plan.
One of the strongest motivating factors, and an important difference from the post-WWI era, was the beginning of the Cold War. The American government had grown very suspicious of Soviet actions and concerned about possible communist domination of Europe. In both France and Italy the poverty of the post-war era had provided fuel for the communist parties, who had also played central roles in the resistance movements of the war. These parties had saw significant electoral success in the post-war elections with the Communists becoming the largest single party in France. Though today most historians feel the threat of France and Italy falling to the communists was remote, it was regarded as a very real possibility by American policy makers at the time. The American government of Harry Truman began to be aware of these problems in 1946. The emerging doctrine of containment argued that the United States needed to substantially aid non-communist countries to stop the spread of Soviet influence. There was also some hope that the Eastern European nations would join the plan, and thus pulled out of the emerging Soviet bloc.
The only major power whose infrastructure had not been significantly harmed was the United States. It had entered the war later than most European countries and had been attacked only twice during the conflict, the surprise attack on Pearl Harbor in Hawaii and a diversionary attack on the Aleutian Islands of Alaska. The American gold reserves were still intact as was its massive agricultural and manufacturing base, and the country was enjoying a robust economy.
Early ideas
Long before Marshall's speech a number of figures had raised the notion of a reconstruction plan for Europe. US Secretary of State James F. Byrnes presented and early version of the plan during a speech held at the Stuttgart Opera House (Germany) on September 6, 1946. In addition, General Lucius D. Clay asked industrialist Lewis H. Brown to inspect post-war Germany and draft "A Report on Germany" in 1947, containing basic facts relating to the problems in Germany, with recommendations for reconstruction. Dean Acheson had made a major speech on the issue, that had mostly been ignored, and Vice President Alben W. Barkley had also raised the idea.
The main alternative to large quantities of American aid was to take it from Germany. This notion became known as the Morgenthau plan, named after US Treasury Secretary Henry Morgenthau, Jr. It advocated extracting massive war reparations from Germany to help rebuild those countries it had attacked, and also to prevent Germany from ever being rebuilt. Closely related was the Monnet plan of Jean Monnet that proposed giving France control over the German coal areas of the Ruhr and Saar and using these resources to bring France to 150% of pre-war industrial production. These plans were rejected, however, as many drew parallels between German dissonance due to reparation claims following World War I and allowing for the rise of Nazism. By April 1947 Truman, Marshall and Undersecretary of State Dean Acheson were convinced of the need for substantial quantities of aid from the United States.
The speech
The earlier discussions of the plan had largely been ignored as it was not clear that it was establishing official administration policy. It was decided that all doubt must be removed by a major address by Secretary of State George Marshall. Marshall gave the address to the graduating class of Harvard University on June 5, 1947. Standing on the steps of th church in Harvard Yarde he outlined the US government's preparedness to contribute to European recovery. The speech was written by Joseph Jones, who had also done the one for the Truman Doctrine. The speech contained virtually no details and no numbers. The most important element of the speech was the call for the Europeans to meet and create their own plan for rebuilding Europe, and that the United States would then fund this plan.
The administration felt that the plan would likely be unpopular among many Americans, and the speech was mainly directed at a European audience. In an attempt to keep the speech out of American papers jounralists were not contacted, and on the same day Truman called a press conference to take away headlines. By contrast Acheson was dispatched to contact the European, especially British media, and the speech was read in its entirety on the BBC.
Negotiations
After Marshall's speech a meeting was convened in Paris on July 12. The states of the future Eastern Bloc, and even the Soviet Union, were invited; only Czechoslovakia and Poland agreed to attend, but were prevented from doing so by the Soviets. The plan was rejected by Stalin owing to US insistence on economic liberalization and pan-European coordination of recovery efforts. Stalin soon ordered the leaders of its European satellite states not to continue with negotiations, which could in the long run weaken Soviet influence over those countries. His order, backed up with constant NKVD scrutiny and the ever-present threat of Red Army intervention, made those governments abandon the negotiations. This became one of the reasons why communist economies of those countries have fallen further and further behind, compared to Western capitalist economies.
The Europeans asked for $22 billion in aid. Truman cut this to $17 billion in a bill he put to Congress. The Republican Party, who controlled Congress, was still unconvinced and worked to limit the amount of aid advocating a more isolationist policy. The shock of the overthrow of the democratic government of Czechoslovakia in February 1948 spurred Congress to pass a bill granting $12.4 billion in aid. Truman signed the Marshall Plan into law on April 3, 1948, establishing the Economic Cooperation Administration (ECA) to administer the program. ECA was headed by economic cooperation administrator, Paul G. Hoffman. 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, OECD) as the master coordinating agency.
Implementation
The first substantial aid went to Greece and Turkey in January of 1947, who were seen as being on the front lines of the battle against communist expansion. Initally UK supported the anti-communist factions in those countries but due to its economical condition, it requested US to continue its efforts. In February Britain desperately requested aid from the States to shore up its economy.
The official mission statement of ECA was to give a boost to the Europe economy: to promote European production, to bolster European currency, and to facilitate international trade, especially with United States, whose very economic interest required Europe to became wealthy enough to import US goods if US economy were to keep on growing. Another, unofficial goal of ECA (and of Marshall Plan) was the containment of growing Soviet influence in Europe, evident especially in growing strength of communist parties in Czechoslovakia, France, and Italy.
Expenditures
Economic assistance provided April 3, 1948 to June 30, 1952 according to the Statistics and Reports division of the Agency for International Development as of November 17, 1975, (in millions of dollars).
| COUNTRY | Total | Grants | Loans |
| Austria | 677.8 | 677.8 | -- |
| Belgium-Luxembourg | 559.3 | 491.3 | 68.0 |
| Denmark | 273.0 | 239.7 | 33.3 |
| France | 2,713.6 | 2,488.0 | 225.6 |
| Germany, Federal Republic of | 1,390.6 | 1,173.7 | 216.9 |
| Greece | 706.7 | 706.7 | -- |
| Iceland | 29.3 | 24.0 | 5.3 |
| Ireland | 147.5 | 19.3 | 128.2 |
| Italy (including Trieste) | 1,508.8 | 1,413.2 | 95.6 |
| Netherlands (*East Indies) | 1,083.5 | 916.8 | 166.7 |
| Norway | 255.3 | 216.1 | 39.2 |
| Portugal | 51.2 | 15.1 | 36.1 |
| Sweden | 107.3 | 86.9 | 20.4 |
| Turkey | 225.1 | 140.1 | 85.0 |
| United Kingdom | 3,189.8 | 2,805.0 | 384.8 |
| Regional | 407.0 | 407.0 | -- |
| Total for all countries | $13,325.8 | $11,820.7 | $1,505.1 |
Notes:
- Loan total includes $65.0 million for Belgium and $3.0 million for Luxembourg: grant detail between the two countries cannot be identified.
- Includes an original loan figure of $16.9 million, plus $200.0 million representing a pro-rated share of grants converted to loans under an agreement signed February 27, 1953.
- Marshall Plan aid to the Netherlands East Indies (now Indonesia) was extended through the Netherlands prior to transfer of sovereignty on December 30, 1949. The aid totals for the Netherlands East Indies are as follows:
Total $101.4 million, Grants $84.2 million, Loans $17.2 million. - Includes US contribution to the European Payments Union (EPU) capital fund, $361.4 million; General Freight Account, $33.5 million; and European Technical Assistance Authorizations (multi-country or regional), $12.1 million.
Effects
The effects of the Marshall Plan were surprising to even its most optimistic of supporters. The years 1948 to 1952 saw the fastest period of growth in European history. Industrial production increased by 35%. Agriculture had substantially surpassed pre-war levels. The poverty and starvation of the immediate post-war years disappeared and Western Europe embarked upon an unprecedented two decades of growth that saw standards of living increase dramatically. The communist threat to western Europe was greatly reduced as throughout the region the communist parties faded in popularity.
The plan was thus implemented by the states of Western Europe acting in concert. This cooperation gave important impetus to the formation in the west of the North Atlantic Treaty Organization and later to the European Economic Community and today's European Union.
The free trade between the nations involved in the plan led to the introduction of the modern international system of finance with the General Agreement on Tariffs and Trade.
Historiography
The early students of the Marshall Plan saw it as an unmitigated success of American generosity. Criticism of the Marshall Plan became prominent among historians of the revisionist school during the 1960s and 1970s, however. They argued that the plan was American economic imperialism, and that it was an attempt to gain control over Western Europe just as the Soviets controlled Eastern Europe. This school agreed that the plan was highly effective.
In the 1980s, some historians began to argue that the Marshall Plan might not have played as decisive a role in Europe's recovery as was previously believed. The first person to make this argument was the economic historian Alan S. Milward. These critics have pointed out that growth in many European countries revived before the large-scale arrival of US aid, and was fastest among some of the lesser recipients. While aid from the Marshall Plan eased immediate difficulties and contributed to the recovery of some key sectors, growth from the post-war nadir was largely an independent process. European socialists argue that a similar amount of reconstruction money could have been obtained by nationalizing the holdings of wealthy Europeans who deposited their money in US banks during World War II.
Today the general consensus has reverted to the earliest argument. It is acknowledged that the United States was acting in its own self-interest by aiding western Europe, but most believe the plan had an immensely beneficial effect on both Western Europe and the United States.
Because of its success, the Marshall Plan has often been cited as an example of how massive economic assistance can reduce poverty and how post war generosity by the victors on their defeated enemies can be more beneficial for all concerned. However, some have pointed out that post-war reconstruction of Europe was a far easier problem than the development or reconstruction of areas in today's Third World. In the case of Europe, despite being devastated by war, there was still significant physical infrastructure along with technical skill in the population. In the case of the Third World, the infrastructure and technical skills do not exist to the same extent.