Marshall Plan: Wikis


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Labeling used on aid packages

The Marshall Plan (from its enactment, officially the European Recovery Program, ERP) was the primary program, 1948–51, of the United States for rebuilding and creating a stronger economic foundation for the countries of Western Europe, and repelling the threat of internal communism after World War II. The initiative was named for Secretary of State George Marshall and was largely the creation of State Department officials, especially William L. Clayton and George F. Kennan. George Marshall spoke of the administration's desire to help European recovery in his address at Harvard University in June 1947.[1]

The reconstruction plan, developed at a meeting of the participating European states, was established on June 5, 1947. It offered the same aid to the USSR and its allies, but they did not accept it.[2][3] The plan was in operation for four years beginning in April 1948. During that period some US$13 billion in economic and technical assistance were given to help the recovery of the European countries that had joined in the Organization for European Economic Co-operation. This $13 billion was in the context of a U.S. GDP of $258 billion in 1948, and was on top of $12 billion in American aid to Europe between the end of the war and the start of the Plan.[4]

The ERP addressed each of the obstacles to postwar recovery. The plan looked to the future, and did not focus on the destruction caused by the war. Much more important were efforts to modernize European industrial and business practices using high-efficiency American models, reduce artificial trade barriers, and instill a sense of hope and self-reliance.[5]

By 1952 as the funding ended, the economy of every participant state had surpassed pre-war levels; for all Marshall plan recipients, output in 1951 was 35% higher than in 1938.[6] Over the next two decades, Western Europe enjoyed unprecedented growth and prosperity, but economists are not sure what proportion was due directly to the ERP, what proportion indirectly, and how much would have happened without it. The Marshall Plan was one of the first elements of European integration, as it erased trade barriers and set up institutions to coordinate the economy on a continental level—that is, it stimulated the total political reconstruction of western Europe.[7]

Belgian economic historian Herman Van der Wee concludes the Marshall Plan was a "great success":

"It gave a new impetus to reconstruction in Western Europe and made a decisive contribution to the renewal of the transport system, the modernization of industrial and agricultural equipment, the resumption of normal production, the raising of productivity, and the facilitating of intra-European trade."[8]


Wartime European concerns

Burned-out buildings after the bombing of Hamburg

European war destruction

By the end of World War II much of Europe was devastated. A large portion of the 60 million deaths among World War II casualties were residents of Europe. Fighting had occurred throughout much of the continent, encompassing an area far larger than that in World War I. Sustained aerial bombardment meant that most major cities had been badly damaged, with industrial production especially hard-hit. Many of the continent's greatest cities, including Warsaw and Berlin, lay in ruins. Others, such as London and Rotterdam, had been severely damaged. The region's economic structure was ruined, and millions had been made homeless. Although the Dutch famine of 1944 had abated with an influx of aid, the general devastation of agriculture had led to conditions of starvation in several parts of the continent, which was to be exacerbated by the particularly harsh winter of 1946–1947 in northwestern Europe. Especially damaged was transportation infrastructure, as railways, bridges, and roads had all been heavily targeted by air strikes, while much merchant shipping had been sunk. Although most small towns and villages in Western Europe had not suffered as much damage, the destruction of transportation left them economically isolated. None of these problems could be easily remedied, as most nations engaged in the war had exhausted their treasuries in its execution.

1960 German stamp with portrait of Marshall

The only major power whose infrastructure had not been significantly harmed in World War II was the United States. It had entered the war later than the other powers, and did not suffer damage or destruction of significant consequence to its own territory. American gold reserves were still intact as was its massive agricultural and manufacturing base, the country enjoying a robust economy. The war years had seen the fastest period of economic growth in the nation's history, as American factories supported both its own war effort and that of its allies. After the war, these plants quickly retooled to produce consumer goods, and the scarcity of the war years was replaced by a boom in consumer spending. Exports were a small factor in the American economy; much of the Marshall Plan aid would be used by the Europeans to buy manufactured goods and raw materials from the United States.

Wartime conferences

The Allies had different ideas regarding post-war Europe,[9] The Soviet Union had sustained immense damage by the German invasion that was unprecedented both in terms of death toll (est. 27 million) and the extent of destruction,[10] and had historically suffered greatly from invasions from the West.[11] Accordingly, Moscow was committed to ensuring that the new order in Europe would guarantee Soviet security for the long term and sought to eliminate the chance of a hostile government reappearing along the USSR's western border by controlling the internal affairs of these countries.[9] At the Yalta Conference in February 1945, the Allies attempted to define the framework for a post-war settlement in Europe but failed to reach a firm consensus.[12] After Germany's surrender, at the Potsdam Conference, starting in late July, serious differences emerged over the future development of Germany and Eastern Europe.[13]

Initial post-war events

Creation of the Eastern Bloc

EasternBloc BorderChange38-48.svg

Following the Allied victory in May, the Soviets effectively occupied Eastern Europe.[12] During the final stages of the war, the Soviet Union began the creation of the Eastern Bloc by annexing several countries as Soviet Socialist Republics that were originally effectively ceded to it by Nazi Germany in the Molotov-Ribbentrop Pact. These included Eastern Poland (incorporated into two different SSRs),[14] Latvia (became Latvia SSR),[15][16] Estonia (became Estonian SSR)[15][16] Lithuania (became Lithuania SSR),[15][16] part of eastern Finland (became Karelo-Finnish SSR)[17] and northern Romania (became the Moldavian SSR).[18][19] Other states were converted into Soviet Satellite states, such as the People's Republic of Poland, the People's Republic of Hungary,[20] the Czechoslovak Socialist Republic,[21] the People's Republic of Romania, the People's Republic of Albania,[22] and later East Germany from the Soviet zone of German occupation.[23] The mineral-rich industrial centers Saar and Silesia were removed from Germany, a number of civilian industries were destroyed in order to limit production, and the Ruhr Area was in danger of being removed as late as 1947.

Slow recovery in Germany

The zone of Germany occupied by the Soviets produced much of Germany's food supply, while the British and American zones had to rely on food imports even before the war.[24] In addition, Soviet leader Joseph Stalin ordered the incorporation of part of eastern Poland into the Soviet Union, while compensating what remained of Poland by ceding to it a large portion of Germany that lay east of the Oder-Neisse line that contained much of Germany's fertile land.[24]

The shortage of food was one of the most acute problems. Before the war, Western Europe had depended on the large food surpluses of Eastern Europe, but these routes were largely cut off by the Iron Curtain.[citation needed] The situation was especially bad in Germany where according to Alan S. Milward in 1946–47 the average kilocalorie intake per day was only 1,800, an amount insufficient for long-term health.[25] Other sources state that the kilocalorie intake in those years varied between as low as 1,000 and 1,500 (see Rheinwiesenlager). William Clayton reported to Washington that "millions of people are slowly starving".[26] As important for the overall economy was the shortage of coal, aggravated by the cold winter of 1946–47. A series of cold winters aggravated an already poor situation.

Europe's economies were recovering very slowly, as unemployment and food shortages led to strikes and unrest in several nations. In 1947 the European economies were still well below their pre-war levels and were showing few signs of growth. Agricultural production was 83% of 1938 levels, industrial production was 88%, and exports only 59%.[27] In Germany, homes went unheated and hundreds froze to death. In Britain the situation was not as severe. Germany received many offers from Western European nations to trade food for desperately needed coal and steel. The Allies were however not willing to let the Germans trade.[28]

In addition, the power and popularity of indigenous communist parties in several Western European states worried the United States. In both France and Italy, the crisis of the postwar era had provided fuel for their Communist Parties, which had become well organized in the resistance movements of the war. These parties had seen significant electoral success in the postwar elections. Though today many historians feel the threat of France and Italy falling to the communists was remote,[29] it was regarded as a very real possibility by American policy makers at the time. The American government of Harry Truman began to believe this possibility in 1946, notably with Churchill's Iron Curtain speech, given in Truman's presence. In their minds, the United States needed to adopt a definite position on the world scene or fear losing credibility. 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 be pulled out of the emerging Soviet bloc.

Former U.S. President Herbert Hoover in one of his reports from Germany in March 1947 argued for a change in US occupation policy, amongst other things stating:

"There is the illusion that the New Germany left after the annexations can be reduced to a 'pastoral state'. It cannot be done unless we exterminate or move 25,000,000 people out of it."[30]

Hoover also noted that "The whole economy of Europe is interlinked with German economy through the exchange of raw materials and manufactured goods. The productivity of Europe cannot be restored without the restoration of Germany as a contributor to that productivity."[31] Hoover's report led to a realization amongst US leadership that a new policy was needed; ""almost any action would be an improvement" on current policy."[32] In Washington, the Joint Chiefs declared that the "complete revival of Germany industry, particularly coal mining" was now of "primary importance" to American security.[33] In January 1947, Truman appointed retired General George Marshall as Secretary of State, in July 1947 he scrapped JCS 1067 which had decreed "take no steps looking toward the economic rehabilitation of Germany [or] designed to maintain or strengthen the German economy." and supplanted it with JCS 1779, which decreed that "an orderly and prosperous Europe requires the economic contributions of a stable and productive Germany".[33] The restrictions placed on German heavy industry production were partly ameliorated, permitted steel production levels were raised from 25% of pre-war capacity to a new limit placed at 50% of pre-war capacity.[34]

The United States was already spending a great deal to help Europe recover. Over $14 billion was spent or loaned during the postwar period through the end of 1947. Much of this aid was designed to restore infrastructure and help refugees. Britain, for example, received an emergency loan of $3.75 billion.[35] A number of bilateral aid agreements had been signed, notably the Truman Doctrine's pledge to provide military assistance to Greece and Turkey. The United Nations also launched a series of humanitarian and relief efforts almost wholly funded by the United States. These efforts had important effects, but they lacked any central organization and planning, and failed to meet many of Europe's more fundamental needs.[36] Already in 1943, the United Nations Relief and Rehabilitation Administration (UNRRA) was founded to provide relief to areas liberated from Axis powers after World War II. UNRRA provided billions of dollars of rehabilitation aid, and helped about 8 million refugees. It ceased operations in the DP camps of Europe in 1947; many of its functions were transferred to several UN agencies.

The Soviet zone

At the direction of Stalin, in the Soviet-occupied zone of Germany, Soviet authorities forcibly unified the Communist Party of Germany and Social Democratic Party in the Socialist Unity Party ("SED"), claiming at the time that it would not have a Marxist-Leninist or Soviet orientation.[23] The SED won a first narrow election victory in Soviet-zone elections in 1946, though Soviet authorities oppressed political opponents and even prevented many competing parties from participating in rural areas.[37] In the more open local elections across the Soviet zone in October 1946, the SED was thoroughly rejected in favor of the Social Democrats, which gained two and a half times more votes than the SED.[38] Thereafter, the Soviets implemented restrictive laws, such as a tight system of censorship restricting access to print and electronic media,[39] an elaborate political police apparatus that kept the population under close surveillance,[39] punishment of communist opponents by the Soviet SMERSH secret police[23] and the institution of a compulsory Marxist-Leninist school curricula that resulted in many professors and students fleeing to the west.[39] In a June 1945 meeting, Stalin told German communist leaders in the Soviet zone that he expected to slowly undermine the British position within their occupation zone, that the United States would withdraw within a year or two and that nothing then would stand in the way of a united Germany under communist control within the Soviet orbit.[40]

Soviet negotiations

After Marshall's appointment in January 1947, administration officials met with Soviet Foreign Minister Vyacheslav Molotov and others to press for an economically self-sufficient Germany, including a detailed accounting of the industrial plants, goods and infrastructure already removed by the Soviets in their occupied zone.[41][42] During the Moscow session of the Council of Foreign Ministers in March and April 1947, it became clear that decisions on a future central government and an eventual final peace treaty with a re-formed Germany depended on solving economic issues.[42] The United States, Britain and France sought a common basis for reconstruction and long-term demilitarization; Soviet-bloc countries were welcome to participate but Marshall thought their involvement was unlikely because they would have to set aside secrecy and disclose economic records to join.[43][44] The Soviets took a punitive approach, looked forward to delaying rather than accelerating economic rehabilitation, demanded unconditional fulfillment of all prior reparation claims and wanted progress toward nationwide socioeconomic transformation.[44]

Marshall and British Foreign Secretary Ernest Bevin wanted accords on food deliveries to their zones, higher levels of industry, joint management of export and imports, priority for both payment of imports and maintenance of a minimum living standard, termination of production equipment removals, limitation of Soviet reparation claims and free movement of people, goods, and ideas across zonal borders.[44] They pushed for a German economy under quadripartite control, including the Soviet zone and the Ruhr region.[44] After six weeks of negotiations, Molotov rejected all of these requests.[41][44] He blamed the British and Americans for having violated the Potsdam obligations for economic unity by merging their zones.[44]

Molotov also rejected the counter-offer to scrap the British-American "Bizonia" and to include the Soviet zone within the newly constructed Germany.[44] Marshall and Bevin proposed that the western powers would agree to permit the Soviets to take reparations from current German production (contrary to Potsdam agreements) if the Soviets would accept the higher level of industry, allowing those higher industrial levels to essentially pay for the additional reparations, along with political unity under a democratic government with guarantees of human rights and fundamental freedoms.[44] Molotov was prepared to begin to discuss the proposal only if "decartelization" eliminating private ownership of industry occurred, land reforms were enacted, "economic disarmament" occurred, and all "other" demands allegedly agreed upon at Potsdam would be fulfilled before Soviet troop withdrawals, which essentially meant that no compromise would be made on levels of industry or reparations.[45]

Thereafter, the Moscow talks were adjourned.[41][45] Marshall was particularly discouraged after personally meeting with Stalin to explain that the United States could not possibly abandon its position on Germany, while Stalin expressed little interest in a solution to German economic problems.[41][44]

The speech

After the adjournment of the Moscow conference following six weeks of failed discussions with the Soviets regarding a potential German reconstruction, the United States concluded that a solution could not wait any longer.[41] In addition, earlier public discussions of the need for reconstruction 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 Memorial Church in Harvard Yard, he offered American aid to promote European recovery and reconstruction. The speech described the dysfunction of the European economy and presented a rationale for US aid.

The modern system of the division of labor upon which the exchange of products is based is in danger of breaking down. . . . Aside from the demoralizing effect on the world at large and the possibilities of disturbances arising as a result of the desperation of the people concerned, the consequences to the economy of the United States should be apparent to all. It is logical that the United States should do whatever it is able to do to assist in the return of normal economic health to the world, without which there can be no political stability and no assured peace. Our policy is not directed against any country, but against hunger, poverty, desperation and chaos. Any government that is willing to assist in recovery will find full co-operation on the part of the U.S.A. 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 was convinced that economic stability would provide political stability in Europe. He offered aid, but the European countries had to organise the programme themselves.

The speech, written by Charles Bohlen, 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 journalists 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 media, especially the British media, and the speech was read in its entirety on the BBC.[46][47]

Rejection by the Soviets

British Foreign Secretary Ernest Bevin heard Marshall's radio broadcast speech and immediately contacted French Foreign Minister Georges Bidault to begin preparing a quick European response to (and acceptance of) the offer. The two agreed that it would be necessary to invite the Soviets as the other major allied power. Marshall's speech had explicitly included an invitation to the Soviets, feeling that excluding them would have been too clear a sign of distrust. State Department officials, however, knew that Stalin would almost certainly not participate, and that any plan that would send large amounts of aid to the Soviets was unlikely to be approved by Congress.

Initial reactions

While the Soviet ambassador in Washington saw the Plan as creating an anti-Soviet bloc, Stalin felt that the Soviets should take the offer.[48] Stalin directed that, in negotiations to be held in Paris regarding the aid, countries in the Eastern Bloc must not agree to accepting economic conditions.[48] Stalin changed his outlook when he learned that credits would be extended only on willingness to accept economic cooperation and that Germany would also be extended aid, which he thought would retard the Soviets' ability to exercise influence in western Germany.[48]

Initially, Stalin planned to attempt to kill, or at a minimum hamper, the Plan through destructive participation in the Paris talks regarding conditions.[48] However, he quickly realized that this would be impossible when Molotov reported after his July 1947 arrival in Paris that no major modifications were negotiable in accepting the credit.[48] Looming as just as large a concern was the Czechoslovak eagerness to accept the aid, as well as indications of a similar Polish attitude.[48] Stalin suspected a possibility that these Eastern Bloc countries might defy Soviet directives not to accept the aid, potentially causing a loss of control in the Eastern Bloc.[48] In addition, the most important condition was that every country to join the plan would need to have its economic situation independently assessed, scrutiny to which the Soviets could not agree. Bevin and Bidault also insisted that any aid be accompanied by the creation of a unified European economy, something incompatible with the strict Soviet command economy.

Compulsory Eastern Bloc rejection

Molotov left Paris, rejecting the plan.[49] Thereafter, statements were made suggesting a future confrontation with the west, calling the United States both a "fascizing" power and the "center of worldwide reaction and anti-Soviet activity", with all countries aligned with it being branded enemies.[49] The Soviets also then blamed the United States for communist losses in elections in Belgium, France and Italy months earlier, in the spring of 1947.[49] It claimed that "marshallization" must be resisted and prevented by any means, and that French and Italian communist parties were to take maximum efforts to sabotage the implementation of the Plan.[49] In addition, western embassies in Moscow were isolated, with their personnel being denied contact with Soviet officials.[49]

On July 12, a larger meeting was convened in Paris. Every country of Europe was invited, with the exceptions of Spain (a World War II neutral that had sympathized with Axis powers) and the small states of Andorra, San Marino, Monaco, and Liechtenstein. The Soviet Union was invited with the understanding that it would likely refuse. The states of the future Eastern Bloc were also approached, and Czechoslovakia and Poland agreed to attend. In one of the clearest signs of Soviet control over the region, the Czechoslovakian foreign minister, Jan Masaryk, was summoned to Moscow and berated by Stalin for thinking of joining the Marshall Plan. Polish Prime minister Josef Cyrankiewicz was rewarded by Stalin for the Polish rejection of the Plan. Russia rewarded Poland with a huge 5 year trade agreement, the equivalent of 450 million 1948 dollars in credit, 200,000 tons of grain, heavy machinery and factories.[50] The Marshall Plan participants were not surprised when the Czechoslovakian and Polish delegations were prevented from attending the Paris meeting. The other Eastern European states immediately rejected the offer.[51] Finland also declined in order to avoid antagonizing the Soviets (see also Finlandization). The Soviet Union's "alternative" to the Marshall plan, which was purported to involve Soviet subsidies and trade with western Europe, became known as the Molotov Plan, and later, the COMECON. In a 1947 speech to the United Nations, Soviet deputy foreign minister Andrei Vyshinsky said that the Marshall Plan violated the principles of the United Nations. He accused the United States of attempting to impose its will on other independent states, while at the same time using economic resources distributed as relief to needy nations as an instrument of political pressure.[52]

Stalin sought to immediately take stronger control over the Eastern Bloc countries, abandoning the prior appearance of democratic institutions.[53] When it appeared that, in spite of heavy pressure, non-communist parties might receive in excess of 40% of the vote in the August 1947 Hungarian elections, an all-out repression was instituted to liquidate any independent political forces.[53] In that same month, total annihilation of the opposition in Bulgaria began on the basis of continuing instructions by Soviet cadres.[53][54]

Szklarska Poręba meeting

In late September, the Soviet Union called a meeting of nine European Communist parties in southwest Poland.[55] A Communist Party of the Soviet Union (CPSU) report was read at the outset to set the heavily anti-western tone, stating now that "international politics is dominated by the ruling clique of the American imperialists" which have embarked upon the "enslavement of the weakened capitalist countries of Europe".[56] Parties were to struggle against the U.S. presence in Europe by any means necessary, including sabotage.[57] It further claimed that "reactionary imperialist elements throughout the world, particularly in the U.S.A., in Britain and France, had put particular hope on Germany and Japan, primarily on Hitlerite Germany—first as a force most capable of striking a blow at the Soviet Union".[58] Referring to the Eastern Bloc, it stated that "the Red Army's liberating role was complemented by an upsurge of the freedom-loving peoples' liberation struggle against the fascist predators and their hirelings".[58] It argued that "the bosses of Wall Street" were "tak[ing] the place of Germany, Japan and Italy".[58] The Marshall plan was described as "the American plan for the enslavement of Europe".[58] It described the world now breaking down "into basically two camps—the imperialist and antidemocratic camp on the one hand, and the antiimperialist and democratic camp on the other".[58]

Although the Eastern Bloc countries except Czechoslovakia had immediately rejected Marshall Plan aid, Eastern Bloc communist parties were blamed for permitting even minor influence by non-communists in their respective countries during the run up to the Marshall Plan.[53] The meeting's chair, Andreia Zhadanov, who was in permanent radio contact with the Kremlin from whom he received instructions,[56] also castigated communist parties in France and Italy for collaboration with those countries' domestic agendas.[59] Zhadanov warned that if they continued to fail to maintain international contact with Moscow to consult on all matters, "extremely harmful consequences for the development of the brother parties' work" would result.[59] The Italian and French communist leaders were prevented by party rules from pointing out that it was actually Stalin who had directed them not to take opposition stances in 1944.[59] The French communist party, as others, was then to redirect its mission to "destroy capitalist economy" and that the Soviet Communist Information Bureau (Cominform) would take control of the French Communist Party's activities to oppose the Marshall Plan.[57] When they asked Zhadanov if they should prepare for armed revolt when they returned home, he did not answer.[57] In a follow up conversation with Stalin, he explained that an armed struggle would be impossible and that the struggle against the Marshall Plan was to be waged under the slogan of national independence.[60]


Turning the plan into reality required negotiations among the participating nations, and to get the plan through the United States Congress. Sixteen nations met in Paris to determine what form the American aid would take, and how it would be divided. The negotiations were long and complex, with each nation having its own interests. France's major concern was that Germany not be rebuilt to its previous threatening power. The Benelux countries, despite also suffering under the Nazis, had long been closely linked to the German economy and felt their prosperity depended on its revival. The Scandinavian nations, especially Sweden, insisted that their long-standing trading relationships with the Eastern bloc nations not be disrupted and that their neutrality not be infringed. The United Kingdom insisted on special status, concerned that if it were treated equally with the devastated continental powers it would receive virtually no aid. The Americans were pushing the importance of free trade and European unity to form a bulwark against communism. The Truman administration, represented by William L. Clayton, promised the Europeans that they would be free to structure the plan themselves, but the administration also reminded the Europeans that implementation depended on the plan's passage through Congress. A majority of Congress members were committed to free trade and European integration, and were hesitant to spend too much of the money on Germany.[61]

Agreement was eventually reached and the Europeans sent a reconstruction plan to Washington. In this document the Europeans asked for $22 billion in aid. Truman cut this to $17 billion in the bill he put to Congress. The plan met sharp opposition in Congress, mostly from the portion of the Republican Party that advocated a more isolationist policy and was weary of massive government spending. This group's most prominent representative was Robert A. Taft. The plan also had opponents on the left, with Henry A. Wallace a strong opponent. Wallace saw the plan as a subsidy for American exporters and sure to polarize the world between East and West.[62] This opposition was greatly reduced by the shock of the overthrow of the democratic government of Czechoslovakia in February 1948. Soon after, a bill granting an initial $5 billion passed Congress with strong bipartisan support. The Congress would eventually donate $12.4 billion in aid over the four years of the plan.[63]

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, Ireland, Italy, Luxembourg, the Netherlands, Norway, Sweden, Switzerland, Turkey, and the United States) signed an accord establishing a master financial-aid-coordinating agency, the Organization for European Economic Cooperation (later called the Organization for Economic Cooperation and Development, OECD), which was headed by Frenchman Robert Marjolin.


First page of the Marshall Plan

The first substantial aid went to Greece and Turkey in January 1947, which were seen as being on the front lines of the battle against communist expansion and were already being aided under the Truman Doctrine. Initially the UK had supported the anti-communist factions in those countries, but due to its dire economic condition it requested the U.S. to continue its efforts. The ECA formally began operation in July 1948. Its official mission statement was to give a boost to the European economy: to promote European production, to bolster European currency, and to facilitate international trade, especially with the United States, whose economic interest required Europe to become wealthy enough to import U.S. goods. Another unofficial goal of ECA (and of the Marshall Plan) was the containment of growing Soviet influence in Europe, evident especially in the growing strength of communist parties in Czechoslovakia, France, and Italy.

The Marshall Plan money was transferred to the governments of the European nations. The funds were jointly administered by the local governments and the ECA. Each European capital had an ECA envoy, generally a prominent American businessman, who would advise on the process. The cooperative allocation of funds was encouraged, and panels of government, business, and labor leaders were convened to examine the economy and see where aid was needed.

The Marshall Plan aid was mostly used for the purchase of goods from the United States. The European nations had all but exhausted their foreign exchange reserves during the war, and the Marshall Plan aid represented almost their sole means of importing goods from abroad. At the start of the plan these imports were mainly much-needed staples such as food and fuel, but later the purchases turned towards reconstruction needs as was originally intended. In the latter years, under pressure from the United States Congress and with the outbreak of the Korean War, an increasing amount of the aid was spent on rebuilding the militaries of Western Europe. Of the some $13 billion allotted by mid-1951, $3.4 billion had been spent on imports of raw materials and semi-manufactured products; $3.2 billion on food, feed, and fertilizer; $1.9 billion on machines, vehicles, and equipment; and $1.6 billion on fuel.[64]

Also established were counterpart funds, which used Marshall Plan aid to establish funds in the local currency. According to ECA rules 60% of these funds had to be invested in industry. This was prominent in Germany, where these government-administered funds played a crucial role in lending money to private enterprises which would spend the money rebuilding. These funds played a central role in the reindustrialization of Germany. In 1949–50, for instance, 40% of the investment in the German coal industry was by these funds.[65] The companies were obligated to repay the loans to the government, and the money would then be lent out to another group of businesses. This process has continued to this day in the guise of the state owned KfW bank. The Special Fund, then supervised by the Federal Economics Ministry, was worth over DM 10 billion in 1971. In 1997 it was worth DM 23 billion. Through the revolving loan system, the Fund had by the end of 1995 made low-interest loans to German citizens amounting to around DM 140 billion. The other 40% of the counterpart funds were used to pay down the debt, stabilize the currency, or invest in non-industrial projects. France made the most extensive use of counterpart funds, using them to reduce the budget deficit. In France, and most other countries, the counterpart fund money was absorbed into general government revenues, and not recycled as in Germany.[citation needed]

A far less expensive, but also quite effective, ECA initiative was the Technical Assistance Program. This program funded groups of European engineers and industrialists to visit the United States and tour mines, factories, and smelters so that they could then copy the American advances at home. At the same time several hundred American technical advisors were sent to Europe.

German level of industry restrictions

Even while the Marshall Plan was being implemented, the dismantling of German industry continued, and in 1949 Konrad Adenauer wrote to the Allies requesting that it end, citing the inherent contradiction between encouraging industrial growth and removing factories and also the unpopularity of the policy.[66] Support for dismantling was by this time coming predominantly from the French, and the Petersberg Agreement of November 1949 reduced the levels vastly, though dismantling of minor factories continued until 1951.[67] The first "level of industry" plan, signed by the Allies in March 29, 1946, had stated that German heavy industry was to be lowered to 50% of its 1938 levels by the destruction of 1,500 listed manufacturing plants.[68] In January 1946 the Allied Control Council set the foundation of the future German economy by putting a cap on German steel production—the maximum allowed was set at about 5,800,000 tons of steel a year, equivalent to 25% of the pre-war production level.[69] The UK, in whose occupation zone most of the steel production was located, had argued for a more limited capacity reduction by placing the production ceiling at 12 million tons of steel per year, but had to submit to the will of the U.S., France and the Soviet Union (which had argued for a 3 million ton limit). Steel plants thus made redundant were to be dismantled. Germany was to be reduced to the standard of life it had known at the height of the Great depression (1932).[70] Car production was set to 10% of pre-war levels, etc.[71]

The first "German level of industry" plan was subsequently followed by a number of new ones, the last signed in 1949. By 1950, after the virtual completion of the by then much watered-out "level of industry" plans, equipment had been removed from 706 manufacturing plants in western Germany and steel production capacity had been reduced by 6,700,000 tons.[72] Vladimir Petrov concludes that the Allies "delayed by several years the economic reconstruction of the war-torn continent, a reconstruction which subsequently cost the United States billions of dollars".[73] In 1951 West Germany agreed to join the European Coal and Steel Community (ECSC) the following year. This meant that some of the economic restrictions on production capacity and on actual production that were imposed by the International Authority for the Ruhr were lifted, and that its role was taken over by the ECSC.[74]


Map of Cold-War era Europe showing countries that received Marshall Plan aid. The blue columns show the relative amount of total aid per nation.

The Marshall Plan aid was divided amongst the participant states on a roughly per capita basis. A larger amount was given to the major industrial powers, as the prevailing opinion was that their resuscitation was essential for general European revival. Somewhat more aid per capita was also directed towards the Allied nations, with less for those that had been part of the Axis or remained neutral. The table below shows Marshall Plan aid by country and year (in millions of dollars) from The Marshall Plan Fifty Years Later. There is no clear consensus on exact amounts, as different scholars differ on exactly what elements of American aid during this period was part of the Marshall Plan.

Country 1948/49
($ millions)
($ millions)
($ millions)
($ millions)
 Austria 232 166 70 468
 Belgium and  Luxembourg 195 222 360 777
 Denmark 103 87 195 385
 France 1085 691 520 2296
 Germany 510 438 500 1448
 Greece 175 156 45 376
 Iceland 6 22 15 43
 Ireland 88 45 0 133
 Italy and  Trieste 594 405 205 1204
 Netherlands 471 302 355 1128
 Norway 82 90 200 372
 Portugal 0 0 70 70
 Sweden 39 48 260 347
 Switzerland 0 0 250 250
 Turkey 28 59 50 137
 United Kingdom 1316 921 1060 3297
Totals 4,924 3,652 4,155 12,731


One of a number of posters created to promote the Marshall Plan in Europe. The blue and white flag between those of Germany and Italy is a version of the Trieste flag.

The Marshall Plan was originally scheduled to end in 1953. Any effort to extend it was halted by the growing cost of the Korean War and rearmament. American Republicans hostile to the plan had also gained seats in the 1950 Congressional elections, and conservative opposition to the plan was revived. Thus the plan ended in 1951, though various other forms of American aid to Europe continued afterwards.

The years 1948 to 1952 saw the fastest period of growth in European history. Industrial production increased by 35%. Agricultural production substantially surpassed pre-war levels.[63] The poverty and starvation of the immediate postwar years disappeared, and Western Europe embarked upon an unprecedented two decades of growth that saw standards of living increase dramatically. There is some debate among historians over how much this should be credited to the Marshall Plan. Most reject the idea that it alone miraculously revived Europe, as evidence shows that a general recovery was already underway. Most believe that the Marshall Plan sped this recovery, but did not initiate it.

The political effects of the Marshall Plan may have been just as important as the economic ones. Marshall Plan aid allowed the nations of Western Europe to relax austerity measures and rationing, reducing discontent and bringing political stability. The communist influence on Western Europe was greatly reduced, and throughout the region communist parties faded in popularity in the years after the Marshall Plan. The trade relations fostered by the Marshall Plan helped forge the North Atlantic alliance that would persist throughout the Cold War. At the same time, the nonparticipation of the states of Eastern Europe was one of the first clear signs that the continent was now divided.

The Marshall Plan also played an important role in European integration. Both the Americans and many of the European leaders felt that European integration was necessary to secure the peace and prosperity of Europe, and thus used Marshall Plan guidelines to foster integration. In some ways this effort failed, as the OEEC never grew to be more than an agent of economic cooperation. Rather it was the separate European Coal and Steel Community, which notably excluded Britain, that would eventually grow into the European Union. However, the OEEC served as both a testing and training ground for the structures and bureaucrats that would later be used by the European Economic Community. The Marshall Plan, linked into the Bretton Woods system, also mandated free trade throughout the region.

While some historians today feel some of the praise for the Marshall Plan is exaggerated, it is still viewed favorably and many thus feel that a similar project would help other areas of the world. After the fall of communism several proposed a "Marshall Plan for Eastern Europe" that would help revive that region. Others have proposed a Marshall Plan for Africa to help that continent, and U.S. vice president Al Gore suggested a Global Marshall Plan.[75] "Marshall Plan" has become a metaphor for any very large scale government program that is designed to solve a specific social problem. It is usually used when calling for federal spending to correct a perceived failure of the private sector.

The West German economic recovery was partly due to the economic aid provided by the Marshall Plan, but mainly it was due to the currency reform of 1948 which replaced the Reichsmark with the Deutsche Mark as legal tender, halting rampant inflation. This act to strengthen the German economy had been explicitly forbidden during the two years that the occupation directive JCS 1067 was in effect. The Allied dismantling of the West German coal and steel industry finally ended in 1951. The Marshall Plan was only one of several forces behind the German recovery.[76][77] Even so, in Germany the myth of the Marshall Plan is still alive. According to Marshall Plan 1947–1997 A German View by Susan Stern, many Germans still believe that Germany was the exclusive beneficiary of the plan, that it consisted of a free gift of vast sums of money, and that it was solely responsible for the German economic recovery in the 1950s.[77]


The Organization for European Economic Cooperation took the leading role in allocating funds, and the ECA arranged for the transfer of the goods. The American supplier was paid in dollars, which were credited against the appropriate European Recovery Program funds. The European recipient, however, was not given the goods as a gift, but had to pay for them (though not necessarily at once, on credit etc.) in local currency, which was then deposited by the government in a counterpart fund. This money, in turn, could be used by the ERP countries for further investment projects.

Most of the participating ERP governments were aware from the beginning that they would never have to return the counterpart fund money to the U.S.; it was eventually absorbed into their national budgets and "disappeared". Originally the total American aid to Germany (in contrast to grants given to other countries in Europe) had to be repaid. But under the London debts agreement of 1953, the repayable amount was reduced to about $1 billion. Aid granted after July 1, 1951 amounted to around $270 million, of which Germany had to repay $17 million to the Washington Export-Import Bank of the United States. In reality, Germany did not know until 1953 exactly how much money it would have to pay back to the US, and insisted money was given out only in the form of interest-bearing loans—a revolving system ensuring the funds would grow rather than shrink. A lending bank was charged with overseeing the program. European Recovery Program loans were mostly used to support small- and medium-sized businesses. Germany paid the US back in installments (the last check was handed over in June 1971). However, the money was not paid from the ERP fund, but from the central government budget.[citation needed]

Areas without the Plan

Large parts of the world devastated by World War II did not benefit from the Marshall Plan. The only major Western European nation excluded was Francisco Franco's Spain, which did not overtly participate in World War II. After the war, it pursued a policy of self-sufficiency, currency controls, and quotas, with little success. With the escalation of the Cold War, the United States reconsidered its position, and in 1951 embraced Spain as an ally, encouraged by Franco's aggressive anti-communist policies. Over the next decade, a considerable amount of American aid would go to Spain, but less than its neighbors had received under the Marshall Plan.[78]

While the western portion of the Soviet Union had been as badly affected as any part of the world by the war, the eastern portion of the country was largely untouched and had seen a rapid industrialization during the war. The Soviets also imposed large reparations payments on the Axis allies that were in its sphere of influence. Austria, Finland, Hungary, Romania, and especially East Germany were forced to pay vast sums and ship large amounts of supplies to the USSR. These reparation payments meant the Soviet Union received about the same itself as 16 European countries received in total from Marshall Plan aid.[79]

In accordance with the agreements with the USSR shipment of dismantled German industrial installations from the west began on March 31, 1946. Under the terms of the agreement the Soviet Union would in return ship raw materials such as food and timber to the western zones. In view of the Soviet failure to do so the U.S. temporarily halted shipments east (although they were never resumed), although it was later shown that although utilized for cold war propaganda reasons the main reason for halting shipments east was not the behavior of the USSR but rather the recalcitrant behavior of France.[80] Examples of material received by the U.S.S.R. were equipment from the Kugel-Fischer ballbearing plant at Schweinfurt, the Daimler-Benz underground aircraft-engine plant at Obrigheim, the Deschimag shipyards at Bremen-Weser, and the Gendorf powerplant.[81],[82]

Eastern Europe saw no Marshall Plan money, as their Moscow-controlled governments rejected joining the program, and moreover received little help from the Soviets. The Soviets did establish COMECON as a riposte to the Marshall Plan. The members of Comecon looked to the Soviet Union for oil; in turn, they provided machinery, equipment, agricultural goods, industrial goods, and consumer goods to the Soviet Union. Economic recovery in the east was much slower than in the west, and the economies never fully recovered in the communist period, resulting in the formation of the shortage economies and a gap in wealth between East and West. Finland, which did not join the Marshall Plan and which was required to give large reparations to the USSR, saw its economy recover to pre-war levels in 1947.[83] France, which received billions of dollars through the Marshall Plan, similarly saw its average income per person return to almost pre-war level by 1949.[84] By mid-1948 industrial production in Poland, Hungary, Bulgaria, and Czechoslovakia had recovered to a level somewhat above pre-war level.[85]

Japan too, had been badly damaged by the war. However, the American people and Congress were far less sympathetic towards the Japanese than they were to the Europeans. Japan was also not considered to have as great a strategic or economic importance to the United States. Thus no grand reconstruction plan was ever created, and the Japanese economic recovery before 1950 was slow. However, by 1952 growth had picked up, such that Japan continued, from 1952 to 1971 to grow in real GNP at an average annual rate of 9.6 percent. The US, by contrast, grew at a rate of 2.9 percent from 1952 to 1991.[86] The Korean War may have played a role in the early economic growth in Japan. It began in 1950 and Japan became the main staging ground for the United Nations war effort, and a crucial supplier of material. One well-known example is that of the Toyota company. In June 1950, the company produced 300 trucks, and was on the verge of going out of business. The first months of the war saw the military order over 5,000 vehicles, and the company was revived.[87] During the four years of the Korean War, the Japanese economy saw a substantially larger infusion of cash than had any of the Marshall Plan nations.

Canada, like the United States, was little damaged by the war and in 1945 was one of the world's largest economies. The Canadian economy had long been more dependent than the American one on trade with Europe, and after the war there were signs that the Canadian economy was struggling. In April 1948, the U.S. Congress passed the provision in the plan that allowed the aid to be used in purchasing goods from Canada. The new provision ensured the health of that nation's economy as Canada made over a billion dollars in the first two years of operation.[88] This contrasted heavily with the treatment to Argentina, another major economy dependent on its agricultural exports with Europe, received from the ECA, as the country was deliberately excluded from participation in the Plan due to political differences between the U.S. and then-president Juan Perón. This would damage the Argentine agricultural sector and help to precipitate an economic crisis in the country.[89]


Early criticism

Initial criticism of the Marshall Plan came from a number of liberal economists. Wilhelm Röpke, who influenced German Minister for Economy Ludwig Erhard in his economic recovery program, believed recovery would be found in eliminating central planning and restoring a market economy in Europe, especially in those countries which had adopted more fascist and corporatist economic policies. Röpke criticized the Marshall plan for forestalling the transition to the free market by subsidizing the current, failing systems. Erhard put Röpke's theory into practice and would later credit Röpke's influence for West Germany's preeminent success.[90] Henry Hazlitt criticized the Marshall Plan in his 1947 book Will Dollars Save the World?, arguing that economic recovery comes through savings, capital accumulation and private enterprise, and not through large cash subsidies. Ludwig von Mises also criticized the Marshall Plan in 1951, believing that "the American subsidies make it possible for [Europe's] governments to conceal partially the disastrous effects of the various socialist measures they have adopted".[91]

Modern criticism

Criticism of the Marshall Plan became prominent among historians of the revisionist school, such as Walter LaFeber, during the 1960s and 1970s. 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. In a review of West Germany's economy from 1945 to 1951, German analyst Werner Abelshauser concluded that "foreign aid was not crucial in starting the recovery or in keeping it going". The economic recoveries of France, Italy, and Belgium, Cowen found, also predated the flow of U.S. aid. Belgium, the country that relied earliest and most heavily on free market economic policies after its liberation in 1944, experienced the fastest recovery and avoided the severe housing and food shortages seen in the rest of continental Europe.[92]

Former U.S. Chairman of the Federal Reserve Bank Alan Greenspan gives most credit to Ludwig Erhard for Europe's economic recovery. Greenspan writes in his memoir The Age of Turbulence that Erhard's economic policies were the most important aspect of postwar Western Europe recovery, far outweighing the contributions of the Marshall Plan. He states that it was Erhard's reductions in economic regulations that permitted Germany's miraculous recovery, and that these policies also contributed to the recoveries of many other European countries. Japan's recovery is also used as a counter-example, since it experienced rapid growth without any aid whatsoever. Its recovery is attributed to traditional economic stimuli, such as increases in investment, fueled by a high savings rate and low taxes. Japan saw a large infusion of US investment during the Korean war.[93]

Criticism of the Marshall Plan also aims at showing that it has begun a legacy of disastrous foreign aid programs. Since the 1990s, economic scholarship has been more hostile to the idea of foreign aid. For example, Alberto Alesina and Beatrice Weder, summing up economic literature on foreign aid and corruption, find that aid is primarily used wastefully and self-servingly by government officials, and ends up increasing governmental corruption.[94] This policy of promoting corrupt government is then attributed back to the initial impetus of the Marshall Plan.[95]

Noam Chomsky wrote that the amount of American dollars given to France and the Netherlands equaled the funds these countries used to finance their military forces in southeast Asia. The Marshall Plan was said to have "set the stage for large amounts of private U.S. investment in Europe, establishing the basis for modern transnational corporations".[96] Other criticism of the Marshall Plan stemmed from reports that the Netherlands used a significant portion of the aid it received to re-conquer Indonesia in the Indonesian National Revolution and was forced into joining the Korean War in 1950 after threats the project would end if it did not comply.[97]

In popular culture

Alfred Friendly, press aide to the U.S. Secretary of Commerce W. Averell Harriman, wrote a humorous operetta about the Marshall Plan during its first year; one of the lines in the operetta was: "Wines for Sale; will you swap / A little bit of steel for Chateau Neuf du Pape?"[98]

See also


  1. ^ Hogan (1987)
  2. ^ Geoffrey Roberts (December 2000). "Historians and the Cold War". History Today. Retrieved 2009-02-15. 
  3. ^ Robert J. McMahon (2003-03-27). The Cold War. Very Short Introductions. Oxford University Press. p. 30. 
  4. ^ Milward (1984) p 46
  5. ^ Hogan (1987) p. 427-45; Barry Eichengreen, The European Economy since 1945: Coordinated Capitalism and Beyond, (2008) pp 64-73
  6. ^ Barry Eichengreen, The European Economy since 1945: Coordinated Capitalism and Beyond, (2008) p. 57; West Germany was 6% higher, the other countries 45% higher.
  7. ^ Milward (1984) p. 466
  8. ^ Herman Van der Wee, Prosperity and Upheaval: The World Economy, 1945-1980 (1984) p. 44
  9. ^ a b Gaddis 2005, p. 13–23
  10. ^ "Leaders mourn Soviet wartime dead", BBC News, May 9, 2005. Retrieved on July 2, 2008.
  11. ^ Gaddis 2005, p. 7
  12. ^ a b Gaddis 2005, p. 21
  13. ^ Byrd, Peter (2003). "Cold War (entire chapter)". in McLean, Iain; McMillan, Alistair. The concise Oxford dictionary of politics. Oxford University Press. ISBN 0192802763. Retrieved 2008-06-16. 
  14. ^ Roberts 2006, p. 43
  15. ^ a b c Wettig 2008, p. 21
  16. ^ a b c Senn, Alfred Erich, Lithuania 1940 : revolution from above, Amsterdam, New York, Rodopi, 2007 ISBN 9789042022256
  17. ^ Kennedy-Pipe, Caroline, Stalin's Cold War, New York : Manchester University Press, 1995, ISBN 0719042011
  18. ^ Roberts 2006, p. 55
  19. ^ Shirer 1990, p. 794
  20. ^ Granville, Johanna, The First Domino: International Decision Making during the Hungarian Crisis of 1956, Texas A&M University Press, 2004. ISBN 1-58544-298-4
  21. ^ Grenville 2005, p. 370-71
  22. ^ Cook 2001, p. 17
  23. ^ a b c Wettig 2008, p. 96-100
  24. ^ a b Miller 2000, p. 5
  25. ^ Alan S. Milward, The Reconstruction of Western Europe.
  26. ^ Gregory A. Fossedal, Our Finest Hour.
  27. ^ Michael J. Hogan, The Marshall Plan, pg. 30.
  28. ^ Nicholas Balabkins, "Germany Under Direct Controls: Economic Aspects of Industrial Disarmament 1945 - 1948", Rutgers University Press, 1964 p. 125
  29. ^ Gaddis, We Now Know.
  30. ^ Erik Reinert, Jomo K.S. The Marshall Plan at 60: The General's Successful War On Poverty, UN Chronicle (accessed 2008-05-20)
  31. ^ Michael Wala, The Council on Foreign Relations and American Foreign Policy in the Early Cold War, 1994, Berghahn Books, ISBN 157181003X pp.104-105
  32. ^ Michael J. Hogan The Marshall Plan: America, Britain, and the Reconstruction of Western Europe, 1947-1952, 1987, Cambridge University, ISBN 0521378400 pp.34-35 (the citation is further referred to: Steelman undated memorandum for the president, Truman Papers, PSF, General File: Hoover, Herbert C.)
  33. ^ a b Beschloss 2003, p. 277
  34. ^ Pas de Pagaille! Time Magazine, Jul. 28, 1947.
  35. ^ Statistical Abstract of the United States: 1949 p. 846 online
  36. ^ Tony Judt, in The Marshall Plan: Fifty Years After, edited by Martin Schain, pg. 4.
  37. ^ Wettig 2008, p. 106
  38. ^ Turner 1987, p. 19
  39. ^ a b c Turner 1987, p. 47
  40. ^ Miller 2000, p. 13
  41. ^ a b c d e Miller 2000, p. 16
  42. ^ a b Wettig 2008, p. 116
  43. ^ Nash, Gary B., Julie Roy Jeffrey, John R. Howe, Peter J. Frederick, Allen F. Davis, Allan M. Winkler, Charlene Mires, and Carla Gardina Pestana. The American People, Concise Edition Creating a Nation and a Society, Combined Volume (6th Edition). New York: Longman, 2007.
  44. ^ a b c d e f g h i Wettig 2008, p. 117
  45. ^ a b Wettig 2008, p. 118
  46. ^ Charles L. Mee, (1984). The Marshall Plan. New York: Simon & Schuster. p. 99. ISBN 0671421492. 
  47. ^ "BBC Correspondent Leonard Miall and the Marshall Plan Speech: An Interview". The Marshall Foundation. September 19, 1977. Retrieved 2007-08-15. 
  48. ^ a b c d e f g Wettig 2008, p. 138
  49. ^ a b c d e Wettig 2008, p. 139
  50. ^ "Carnations — TIME". TIME. 1948-02-09.,9171,855998,00.html. Retrieved 2009-02-01. 
  51. ^ Schain, p.132
  52. ^ "Vyshinsky Speech to U.N. General Assembly". Temple University. Retrieved 2009-03-03. 
  53. ^ a b c d Wettig 2008, p. 148
  54. ^ Wettig 2008, p. 149
  55. ^ Behrman, Greg. Most noble adventure the Marshall plan and the time when America helped save Europe. New York: Free P, 2007.
  56. ^ a b Wettig 2008, p. 140
  57. ^ a b c Wettig 2008, p. 146
  58. ^ a b c d e Wettig 2008, p. 142
  59. ^ a b c Wettig 2008, p. 145
  60. ^ Wettig 2008, p. 147
  61. ^ Cini, p.24 in Schain
  62. ^ Hogan, p.93.
  63. ^ a b Grogin, p.118
  64. ^ Hogan, p.415
  65. ^ Crafts, Toniolo, p.464
  66. ^ Dennis L. Bark and David R. Gress. A history of West Germany vol 1: from shadow to substance (Oxford 1989) p259
  67. ^ Dennis L. Bark and David R. Gress. A history of West Germany vol 1: from shadow to substance (Oxford 1989) p260
  68. ^ Henry C. Wallich. Mainsprings of the German Revival (1955) pg. 348.
  69. ^ "Cornerstone of Steel", Time Magazine, January 21, 1946
  70. ^ Cost of Defeat, Time Magazine, April 8, 1946
  71. ^ The President's Economic Mission to Germany and Austria, Report 3 Herbert Hoover, March, 1947 pg. 8
  72. ^ Frederick H. Gareau "Morgenthau's Plan for Industrial Disarmament in Germany" The Western Political Quarterly, Vol. 14, No. 2 (Jun., 1961), pp. 517-534
  73. ^ Vladimir Petrov, Money and conquest; allied occupation currencies in World War II. Baltimore, Johns Hopkins Press (1967) p. 263
  74. ^ Information bulletin Frankfurt, Germany: Office of the US High Commissioner for Germany Office of Public Affairs, Public Relations Division, APO 757, US Army, January 1952 "Plans for terminating international authority for the Ruhr" , pp. 61-62 (main URL)
  75. ^ Marshall Plan style proposals for other parts of the world have been a perennial idea. For instance, Tony Blair and Gordon Brown have referred to their African aid goals as "a Marshall Plan".[1]. After the end of the Cold War many felt Eastern Europe needed a rebuilding plan.
  76. ^ German Economic "Miracle" Henderson, David R.
  77. ^ a b "Stern". Retrieved 2009-08-18. 
  78. ^ Crafts, Toniolo, p.363
  79. ^ Zwass, Adam (1989). The Council for Mutual Economic Assistance: the thorny path from political to economic integration. M.E. Sharpe. p. 16. ISBN 9780873324960. 
  80. ^ John Gimbel, "The American Reparations Stop in Germany: An Essay on the Political Uses of History"
  81. ^ "GHDI — Document — Page". Retrieved 2010-03-07. 
  82. ^
  83. ^ "Economy — Finland". Retrieved 2009-02-01. 
  84. ^ De Long, J.; Barry Eichengreen (1993). "The Marshall Plan". Postwar Economic Reconstruction and Lessons for the East Today. p. 202.,M1. 
  85. ^ "Economic Changes in Eastern Europe Since the War". Royal Institute of International Affairs. Retrieved 2010-02-11. 
  86. ^
  87. ^ Stueck, p. 146
  88. ^ Bothwell, p. 58
  89. ^ Peterson, p.215
  90. ^ Erhard, p. 22; also, Zmirak
  91. ^ "von Mises". Retrieved 2009-08-18. 
  92. ^ "A Marshall Plan for Iraq?". 2003-05-09. Retrieved 2009-02-01. 
  93. ^ Forsberg, Aaron (2000). America and the Japanese miracle: the Cold War context of Japan's postwar economic revival, 1950-1960. UNC Press. p. 84. ISBN 9780807825280. 
  94. ^ Alesina and Weder, pp.1126–1137
  95. ^ Tucker, 15:9
  96. ^ Chomsky, p.9
  97. ^ Nationalism and revolution in Indonesia — Google Books. Retrieved 2009-08-18. 
  98. ^ Richard D. McKinzie (July 17, 1975). "Oral History Interview with Lincoln Gordon". Truman Library. Retrieved December 2, 2008. 


  • Alesina, Alberto and Weder, Beatrice, "Do Corrupt Governments Receive Less Foreign Aid?" American Economic Review 92 (4): (September 2002)
  • Beschloss, Michael R (2003), The Conquerors: Roosevelt, Truman and the Destruction of Hitler's Germany, 1941-1945, Simon and Schuster, ISBN 0743260856 
  • Bothwell, Robert. The Big Chill: Canada and the Cold War. Canadian Institute for International Affairs/Institut Canadien des Affaires Internationales Contemporary Affairs Series, No. 1. Toronto: Irwin Publishing Ltd., 1998.
  • Chomsky, Noam, & Ruggiero, Greg, The Umbrella of U.S. Power: The Universal Declaration of Human Rights and the contradictions of U.S. policy, Seven Stories Press, 2002 ISBN 1583225471
  • Cini, Michelle, in Schain, Martin, (ed.) "From the Marshall Plan to the EEC", in The Marshall Plan: Fifty Years After, New York: Palgrave, 2001
  • Cook, Bernard A. (2001), Europe Since 1945: An Encyclopedia, Taylor & Francis, ISBN 0815340575 
  • Crafts, Nicholas, and Gianni Toniolo, eds. Economic Growth in Europe Since 1945. Cambridge University Press, 1996.
  • Erhard, Ludwig, "Veröffentlichung von Wilhelm Röpke", in In Memoriam Wilhelm Röpke, Ed., Universität Marburg, Rechts-und-Staatswissenschaftlice Fakultät,
  • Ericson, Edward E. (1999), Feeding the German Eagle: Soviet Economic Aid to Nazi Germany, 1933–1941, Greenwood Publishing Group, ISBN 0275963373 
  • Gaddis, John Lewis (2005), The Cold War: A New History, Penguin Press, ISBN 1594200629 
  • Gaddis, John Lewis. We Now Know: Rethinking Cold War History. New York: Oxford University Press, 1997
  • Grenville, John Ashley Soames (2005), A History of the World from the 20th to the 21st Century, Routledge, ISBN 0415289548 
  • Grenville, John Ashley Soames; Wasserstein, Bernard (2001), The Major International Treaties of the Twentieth Century: A History and Guide with Texts, Taylor & Francis, ISBN 041523798X 
  • Grogin, Robert C. (2001), Natural Enemies: The United States and the Soviet Union in the Cold War, 1917-1991, Lexington Books, ISBN ISBN 0739101609 
  • Hogan, Michael J. The Marshall Plan: America, Britain, and the Reconstruction of Western Europe, 1947–1952. Cambridge: Cambridge University Press, 1987.
  • Miller, Roger Gene (2000), To Save a City: The Berlin Airlift, 1948-1949, Texas A&M University Press, ISBN 0890969671 
  • Milward, Alan S. The Reconstruction of Western Europe 1945-51 (Berkeley: University of California Press, 2006)
  • Nekrich, Aleksandr Moiseevich; Ulam, Adam Bruno; Freeze, Gregory L. (1997), Pariahs, Partners, Predators: German–Soviet Relations, 1922–1941, Columbia University Press, ISBN 0231106769 
  • Peterson, Harold F., Argentina and the United States II. (1914–1960)
  • Roberts, Geoffrey (2006), Stalin's Wars: From World War to Cold War, 1939–1953, Yale University Press, ISBN 0300112041 
  • Schain, Martin, ed. The Marshall Plan: Fifty Years After. New York: Palgrave, 2001.
  • Shirer, William L. (1990), The Rise and Fall of the Third Reich: A History of Nazi Germany, Simon and Schuster, ISBN 0671728687 
  • Stern, Susan, Marshall Plan 1947–1997 A German View""German Missions in the United States — Home". Retrieved 2009-08-18. 
  • Stueck, William Whitney, ed. The Korean War in World History. Lexington, Ky.: University Press of Kentucky, 2004.
  • Tucker, Jeffrey, "The Marshall Plan Myth" The Free Market 15:9 (Sept 1997)
  • Turner, Henry Ashby (1987), The Two Germanies Since 1945: East and West, Yale University Press, ISBN 0300038658 
  • Van Meter Crabb, Cecil, American foreign policy in the nuclear age, Harper & Row, New York, 1965
  • von Mises, Ludwig, "Profit and Loss" presented to the Mont Pèlerin Society held in Beauvallon, France, September 9 to 16, 1951; reprinted in Planning for Freedom, South Holland, Ill., Libertarian Press, 1952 "Profit and Loss — Ludwig von Mises — Mises Institute". Retrieved 2009-08-18. 
  • Wettig, Gerhard (2008), Stalin and the Cold War in Europe, Rowman & Littlefield, ISBN 0742555429 
  • Woods, Thomas E., The Politically Incorrect Guide to American History, . ISBN 0895260476

Further reading

  • Agnew, John and Entrikin, J. Nicholas eds. The Marshall Plan Today: Model and Metaphor Routledge. (2004) online version
  • Arkes, Hadley. Bureaucracy, the Marshall Plan, and the National Interest (1972).
  • Behrman, Greg, The Most Noble Adventure: The Marshall Plan and the Time When America Helped Save Europe (2007) ISBN 0743282639
  • Bonds, John Bledsoe. Bipartisan Strategy: Selling the Marshall Plan (2002) online version
  • Esposito, Chiarella. America's Feeble Weapon: Funding the Marshall Plan in France and Italy, 1948–1950 (1994) online version
  • Djelic, Marie-Laure A. Exporting the American Model: The Post-War Transformation of European Business (1998) online version
  • Fossedal, Gregory A. Our Finest Hour: Will Clayton, the Marshall Plan, and the Triumph of Democracy. (1993).
  • Gimbel, John, The origins of the Marshall plan (Stanford University Press, 1976). (reviewed here)
  • Kipping, Matthias and Bjarnar, Ove. The Americanisation of European Business: The Marshall Plan and the Transfer of Us Management Models (1998) online version
  • Lewkowicz, Nicolas. The German Question and the Origins of the Cold War (IPOC: Milan) (2008)
  • Mee, Charles L. The Marshall Plan: The Launching of the Pax Americana (1984).
  • Milward, Alan S. The Reconstruction of Western Europe, 1945–51. (1984).
  • Röpke, Wilhelm, Humane Economist,"Biography of Wilhelm Röpke (1899-1966): Humane Economist". Retrieved 2009-08-18. 
  • Vickers, Rhiannon. Manipulating Hegemony: State Power, Labour and the Marshall Plan in Britain (2000) online edition
  • Wallich, Henry Christopher. Mainsprings of the German Revival (1955)
  • Wasser, Solidelle F. and Dolfman, Michael L., "BLS and the Marshall Plan: The Forgotten Story: The Statistical Technical Assistance of BLS Increased Productive Efficiency and Labor Productivity in Western European Industry after World War II; Technological Literature Surveys and Plan-Organized Plant Visits Supplemented Instruction in Statistical Measurement", Monthly Labor Review, Vol. 128, 2005
  • Wend, Henry Burke. Recovery and Restoration: U.S. Foreign Policy and the Politics of Reconstruction of West Germany's Shipbuilding Industry, 1945–1955 (2001) online version
  • Zmirak, John, Wilhelm Röpke: Swiss Localist, Global Economist (ISI Books, 2001)

External links

Source material

Up to date as of January 22, 2010
(Redirected to The Marshall Plan Speech article)

From Wikisource

The Marshall Plan Speech
by George Marshall
Secretary of State George Marshall gave this address to the graduating class of Harvard University on June 5, 1947. Standing on the steps of Memorial Church in Harvard Yard, he outlined the U.S. government's preparedness to contribute to European recovery after World War II.— Excerpted from The Marshall Plan on Wikipedia, the free encyclopedia.

Mr. President, Dr. Conant, members of the Board of Overseers, Ladies and Gentlemen:

I am profoundly grateful, touched by the great distinction and honor and great compliment accorded me by the authorities of Harvard this morning. I am overwhelmed, as a matter of fact, and I am rather fearful of my inability to maintain such a high rating as you've been generous enough to accord to me. In these historic and lovely surroundings, this perfect day, and this very wonderful assembly, it is a tremendously impressive thing to an individual in my position.

But to speak more seriously, I need not tell you that the world situation is very serious. That must be apparent to all intelligent people. I think one difficulty is that the problem is one of such enormous complexity that the very mass of facts presented to the public by press and radio make it exceedingly difficult for the man in the street to reach a clear appraisement of the situation. Furthermore, the people of this country are distant from the troubled areas of the earth, and it is hard for them to comprehend the plight and consequent reactions of the long-suffering peoples of Europe and the effect of those reactions on their governments in connection with our efforts to promote peace in the world.

In considering the requirements for the rehabilitation of Europe, the physical loss of life, the visible destruction of cities, factories, mines, and railroads was correctly estimated, but it has become obvious during recent months that this visible destruction was probably less serious than the dislocation of the entire fabric of European economy. For the past ten years conditions have been highly abnormal. The feverish preparation for war and the more feverish maintenance of the war effort engulfed all aspects of national economies. Machinery has fallen into disrepair or is entirely obsolete. Under the arbitrary and destructive Nazi rule, virtually every possible enterprise was geared into the German war machine. Long-standing commercial ties, private institutions, banks, insurance companies, and shipping companies disappeared through loss of capital, absorption through nationalization, or by simple destruction. In many countries, confidence in the local currency has been severely shaken. The breakdown of the business structure of Europe during the war was complete. Recovery has been seriously retarded by the fact that two years after the close of hostilities a peace settlement with Germany and Austria has not been agreed upon. But even given a more prompt solution of these difficult problems, the rehabilitation of the economic structure of Europe quite evidently will require a much longer time and greater effort than had been foreseen.

There is a phase of this matter which is both interesting and serious. The farmer has always produced the foodstuffs to exchange with the city dweller for the other necessities of life. This division of labor is the basis of modern civilization. At the present time it is threatened with breakdown. The town and city industries are not producing adequate goods to exchange with the food-producing farmer. Raw materials and fuel are in short supply. Machinery, as I have said, is lacking or worn out. The farmer or the peasant cannot find the goods for sale which he desires to purchase. So the sale of his farm produce for money which he cannot use seems to him an unprofitable transaction. He, therefore, has withdrawn many fields from crop cultivation and he's using them for grazing. He feeds more grain to stock and finds for himself and his family an ample supply of food, however short he may be on clothing and the other ordinary gadgets of civilization.

Meanwhile, people in the cities are short of food and fuel, and in some places approaching the starvation levels. So, the governments are forced to use their foreign money and credits to procure these necessities abroad. This process exhausts funds which are urgently needed for reconstruction. Thus, a very serious situation is rapidly developing which bodes no good for the world. The modern system of the division of labor upon which the exchange of products is based is in danger of breaking down. The truth of the matter is that Europe's requirements for the next three or four years of foreign food and other essential products -- principally from America -- are so much greater than her present ability to pay that she must have substantial additional help or face economic, social, and political deterioration of a very grave character.

The remedy seems to lie in breaking the vicious circle and restoring the confidence of the people of Europe in the economic future of their own countries and of Europe as a whole. The manufacturer and the farmer throughout wide areas must be able and willing to exchange their product for currencies, the continuing value of which is not open to question.

Aside from the demoralizing effect on the world at large and the possibilities of disturbances arising as a result of the desperation of the people concerned, the consequences to the economy of the United States should be apparent to all. It is logical that the United States should do whatever it is able to do to assist in the return of normal 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.

Such assistance, I am convinced, must not be on a piecemeal basis, as various crises develop. Any assistance that this Government may render in the future should provide a cure rather than a mere palliative. Any government that is willing to assist in the task of recovery will find full cooperation, I am sure, on the part of the United States Government. Any government which maneuvers to block the recovery of other countries cannot expect help from us. Furthermore, governments, political parties, or groups which seek to perpetuate human misery in order to profit there from politically or otherwise will encounter the opposition of the United States.

It is already evident that before the United States Government can proceed much further in its efforts to alleviate the situation and help start the European world on its way to recovery, there must be some agreement among the countries of Europe as to the requirements of the situation and the part those countries themselves will take in order to give a proper effect to whatever actions might be undertaken by this Government. It would be neither fitting nor efficacious for our Government to undertake to draw up unilaterally a program designed to place Europe on its feet economically. This is the business of the Europeans. The initiative, I think, must come from Europe. The role of this country should consist of friendly aid in the drafting of a European program and of later support of such a program so far as it may be practical for us to do so. The program should be a joint one, agreed to by a number, if not all, European nations.

An essential part of any successful action on the part of the United States is an understanding on the part of the people of America of the character of the problem and the remedies to be applied. Political passion and prejudice should have no part. With foresight, and a willingness on the part of our people to face up to the vast responsibility which history has clearly placed upon our country, the difficulties I have outlined can and will be overcome.

I am sorry that on each occasion I have said something publicly in regard to our international situation, I have been forced by the necessities of the case to enter into rather technical discussions. But, to my mind, it is of vast importance that our people reach some general understanding of what the complications really are, rather than react from a passion or a prejudice or an emotion of the moment.

As I said more formally a moment ago, we are remote from the scene of these troubles. It is virtually impossible at this distance merely by reading, or listening, or even seeing photographs and motion pictures, to grasp at all the real significance of the situation. And yet the whole world of the future hangs on a proper judgment. It hangs, I think, to a large extent on the realization of the American people, of just what are the various dominant factors. What are the reactions of the people? What are the justifications of those reactions? What are the sufferings? What is needed? What can best be done? What must be done?

Thank you very much.

PD-icon.svg This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).

Simple English

The Marshall Plan (officially called the European Recovery Program [ERP]) was a plan of the United States for rebuilding the allied countries of Europe after World War II. Another reason was to stop communism.

The plan was named after Secretary of State George Marshall, but the plan was worked out by other people in the State Department.

The plan ran for four years beginning in July 1947. During that period some US$ 13 billion in economic and technical assistance were given to help the recovery of the European countries that had joined in the Organization for European Economic Co-operation.[1]

By the time the plan ended, the economy of every member state except Germany, had grown well past pre-war levels.

In recent years some historians have said that another reason for the plan was to make the United States stronger, and to make the countries of western Europe need the United States. They also say that the United Nations Relief and Rehabilitation Administration, which helped millions of refugees from 1944 to 1947, also helped the European postwar recovery.


Alternatives to the Marshall Plan


Morgenthau plan

U.S. Treasury Secretary Henry Morgenthau, Jr. said that if Europe need money to rebuild what had been destroyed by the war they should take it from Germany. This money was called war reparations. Morgenthau said it would also stop Germany from ever being rebuilt, and threatening to start another war. Taking money from Germany was done after World War I. It did not work. Instead of helping other countries it hurt them. This is because companies could not sell the coal and steel that they made because it was coming in free from Germany.

Monnet plan

Jean Monnet of France said that France should control the German coal areas of the Ruhr and Saar and use it to rebuild French industry. In 1946 the occupying powers agreed to put strict limits on how quickly Germany could reindustrialize. Limits were placed on how much coal and steel could be produced.

Level of industry agreement

This was the first German industrial plan. It was signed in early 1946 and said that German heavy industry was to be cut down to half% of its 1938 levels by the destroying 1,500 manufacturing plants[2].

By the end of 1946 governments could see the problems of the plan, and the agreement was changed several times, the last time in 1949. But dismantling factories went on into 1950. Germany had been very important to the economy of Europe for a long time. This meant that a poor Germany was holding back European recovery, because other countries could not sell so many things to Germany. A poor Germany was also expensive for the occupying powers. They had to give Germany food and other things which it needed and could not grow or make for itself anymore.

Because of this the Morgenthau and Monnet plans were rejected.


The Marshall Plan ended in 1952. Ideas to extend it were stopped because of the cost of the Korean War and rearmament. U.S. Republicans hostile to the plan had also gained seats in the 1950 Congressional elections.


The Marshall Plan has been described as "the most unselfish act in history." However, this may not be the case. The United States benefited from the plan because part of the agreement for giving the aid was that country would have to open up their economies to US companies.

"Historical revisionist" hisistorians, such as Walter LaFeber, during the 1960s and 1970s said that the plan was American economic imperialism. That means, that it was an attempt to gain control over Western Europe just as the Soviets controlled Eastern Europe.

Tyler Cowen, economist, has said that nations receiving the most aid from the Marshall Plan (Britain, Sweden, Greece) saw the least returns and grew the least between 1947 and 1955. Those nations who received little (e.g. Austria) grew the most.

When he looked at West Germany's economy from 1945 to 1951, German analyst Werner Abelshauser decided that foreign aid was not needed to start the recovery or to keep it going. Cowen found that the economic recoveries of France, Italy, and Belgium, started before the Marshall Plan. Belgium relied heavily on free market economic policies after its liberation in 1944, and had the fastest recovery. It also did not have the severe housing and food shortages seen in the rest of continental Europe. [1]

Other pages

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  • Alliance for Progress failed Central and South American Marshall Plan.
  • GARIOA (Government and Relief in Occupied Areas) The precursor of the Marshall plan aid.
  • Morgenthau plan Post-surrender plan for Germany
  • The industrial plans for Germany


  • Arkes, Hadley. Bureaucracy, the Marshall Plan, and the National Interest. Princeton, N.J: Princeton University Press, 1972.
  • Agnew, John and J. Nicholas Entrikin, eds. The Marshall Plan Today: Model and Metaphor. Routledge. (2004) online version
  • John Bledsoe Bonds; Bipartisan Strategy: Selling the Marshall Plan Praeger, 2002 online version
  • Bothwell, Robert. The Big Chill: Canada and the Cold War. Canadian Institute for International Affairs/Institut Canadien des Affaires Internationales Contemporary Affairs Series, No. 1. Toronto: Irwin Publishing Ltd., 1998.
  • Crafts, Nicholas, and Gianni Toniolo, eds. Economic Growth in Europe Since 1945. Cambridge University Press, 1996.
  • Djelic, Marie-Laure A.; Exporting the American Model: The Post-War Transformation of European Business.Oxford University Press, 1998 online version
  • Chiarella Esposito; America's Feeble Weapon: Funding the Marshall Plan in France and Italy, 1948 – 1950, Greenwood Press, 1994 online version
  • Fossedal, Gregory A. Our Finest Hour: Will Clayton, the Marshall Plan, and the Triumph of Democracy. Stanford, CA: Hoover Institution Press, 1993.
  • Gaddis, John Lewis. We Now Know: Rethinking Cold War History. New York: Oxford University Press, 1997.
  • Grogin, Robert C. Natural Enemies: The United States and the Soviet Union in the Cold War, 1917 – 1991. Lanham, Md.: Lexington Books, 2001.
  • Hogan, Michael J. The Marshall Plan: America, Britain, and the Reconstruction of Western Europe, 1947 – 1952. Cambridge: Cambridge University Press, 1987.
  • Matthias Kipping and Ove Bjarnar; The Americanisation of European Business: The Marshall Plan and the Transfer of Us Management Models Routledge, 1998 online version
  • Mee, Charles L. The Marshall Plan: The Launching of the Pax Americana. New York: Simon and Schuster, 1984.
  • Milward, Alan S. The Reconstruction of Western Europe, 1945 – 51. London: Methuen, 1984.
  • Schain, Martin, ed. The Marshall Plan: Fifty Years After. New York: Palgrave, 2001.
  • Stueck, William Whitney, ed. The Korean War in World History. Lexington, Ky.: University Press of Kentucky, 2004.
  • Rhiannon Vickers; Manipulating Hegemony: State Power, Labour and the Marshall Plan in Britain Palgrave Publishers, 2000 online edition
  • Wallich, Henry Christopher. Mainsprings of the German Revival. New Haven: Yale University Press, 1955.
  • Wasser, Solidelle F. and Michael L. Dolfman; "BLS and the Marshall Plan: The Forgotten Story: The Statistical Technical Assistance of BLS Increased Productive Efficiency and Labor Productivity in Western European Industry after World War II; Technological Literature Surveys and Plan-Organized Plant Visits Supplemented Instruction in Statistical Measurement," Monthly Labor Review, Vol. 128, 2005
  • Wend, Henry Burke; Recovery and Restoration: U.S. Foreign Policy and the Politics of Reconstruction of West Germany's Shipbuilding Industry, 1945 – 1955. Praeger, 2001 online version

Further reading

  • John Gimbel "The origins of the Marshall plan" (Stanford University Press, 1976). (reviewed here)
  • Greg Behrman The Most Noble Adventure: The Marshall Plan and the Time When America Helped Save Europe (Free Press, 2007) ISBN 0743282639


  1. The $13 billion compares to the U.S. gross domestic product of $41 billion in 1949.
  2. Henry C. Wallich, Mainsprings of the German Revival (1955), pg. 348.

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