The only major Western European nation excluded was Francisco Franco's Spain, which was highly unpopular in Washington. Sam O'Brien (Editor: Jennifer Lee) The European Recovery Program, part of the Economic Recovery Act of 1948, was from its inception known by the name of its chief proponent and designer, George C. Marshall, United States Secretary of State from January 1947 to January 1949. The initiative was named after United States Secretary of State George C. Marshall. [87] This way, the European visitors would be able to return to their home countries and implement the technologies used in the United States. All articles are regularly reviewed and updated by the HISTORY.com team. The Marshall Plan was estimated to cost the United States approximately $22 billion, but it was later scaled down to cost $13 billion after the plan was put into action. The speech, written at Marshall's request and guidance by Charles Bohlen[49] contained virtually no details and no numbers. During his tenure as Chief of Staff of the U.S. Army from 1939 to 1945, Marshall contributed mightily to . [79], Also established were counterpart funds, which used Marshall Plan aid to establish funds in the local currency. Greenspan writes in his memoir The Age of Turbulence that Erhard's economic policies were the most important aspect of postwar Western European recovery, even outweighing the contributions of the Marshall Plan. In the same year, the participating countries (Austria, Belgium, Denmark, France, West Germany, the United Kingdom, 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 Organisation for European Economic Co-operation (later called the Organisation for Economic Co-operation and Development or OECD), which was headed by Frenchman Robert Marjolin. He said it was without economic justification; however, it was "absolutely necessary" in "the world battle against communism." It is the spirit which we bring to the fight that decides the issue. Language links are at the top of the page across from the title. "[39] 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. [42], The United Nations also launched a series of humanitarian and relief efforts almost wholly funded by the United States. [67], Congress, under the control of conservative Republicans, agreed to the program for multiple reasons. This book places Marshall squarely at the center of the story of . "[41] In Washington, the Joint Chiefs declared that the "complete revival of German industry, particularly coal mining" was now of "primary importance" to American security. The prime minister of Poland, Jzef Cyrankiewicz, was rewarded by Stalin for his country's rejection of the plan which came in the form of the Soviet Union's offer of a lucrative trade agreement lasting for five years, a grant amounting to the approximate equivalent of $450 million (in 1948; the sum would have been $4.4 billion in 2014 [56]) in the form of long-term credit and loans and the provision of 200,000 tonnes of grain, heavy and manufacturing machinery and factories and heavy industries to Poland. 1947, Letter from Harry S. Truman to Bess W. Truman, September 30, 1947, Marshall Plan Map - Library of Congress website (see Background Essay), Cold War Timeline - History on the Net website (see Background Essay). Date published: October 20, 2018 After conferring with them, President Harry S. Truman called in the Congressional leadersand managed to win to his cause the influential Republican senator Arthur H. Vandenberg, theretofore a notorious isolationist. The following year he obtained a commission in the United States Army. Is control of nuclear weapons necessary to maintain peace? Instead the U.S. delivered the goods and provided services, mainly transatlantic shipping, to the participating governments, which then sold the commodities to businesses and individuals who had to pay the dollar value of the goods in local currency ("counterparts") into so-called ERP Special Accounts that were set up at the country's central bank. [119], The Soviets established COMECON as a riposte to the Marshall Plan to deliver aid for Eastern Bloc countries, but that was complicated by the Soviet efforts to manage their own recovery from the war. Consequences of the Marshall Plan. [117], In accordance with the agreements with the Soviet Union, shipment of dismantled German industrial installations from the west began on March 31, 1946. [105] Since Germany chose to repay the aid debt out of the German Federal budget, leaving the German ERP fund intact, the fund was able to continue its reconstruction work. Its recovery is attributed to traditional economic stimuli, such as increases in investment, fueled by a high savings rate and low taxes. [74], The United Kingdom insisted on special status as a longstanding belligerent during the war, concerned that if it were treated equally with the devastated continental powers it would receive virtually no aid. The CIA used these funds to establish front businesses in several European countries that were designed to further U.S. interests in the region. As the designer of the plan, George C. Marshall himself said, Our policy is not directed against any country, but against hunger, poverty, desperation and chaos.. ", noted Representative Frederick Smith of Ohio. The Special Fund, then supervised by the Federal Economics Ministry, was worth over DM 10 billion in 1971. Letter from Harry S. Truman to Eleanor Roosevelt, March 16, 1948, Letter from Eleanor Roosevelt to Harry S. Truman, February 27, 1947, Can He Block It? Political Cartoon, ca. "[64]It argued that "the bosses of Wall Street" were "tak[ing] the place of Germany, Japan, and Italy". [55] After that, 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 U.S.-aligned countries branded as enemies. He is best-known for the European Recovery Program, or Marshall Plan, that bears his name. The European Union and the Financial Crisis in Greece. [134], The Marshall Plan has been recently reinterpreted as a public policy approach to complex and multi-causal problems (wicked problems) in search of building integrated solutions with multilevel governance. The plan was opposed by conservatives in the rural Midwest, who opposed any major government spending program and were highly suspicious of Europeans. The opposition argued that it made no sense to oppose communism by supporting the socialist governments in Western Europe; and that American goods would reach Russia and increase its war potential. On this occasion, Reagan noted that "Even in time of war, Marshall was a champion of peace.". Many argue that the structural adjustments that it forced were of great importance. General George C. Marshall | American Experience | PBS The Marshall Plan was the population name for the European Recovery Program (ERP), a massive program of foreign aid rolled out by the United States between 1948 and 1951. [33] While Germany struggled to recover from the destruction of the War, the recovery effort began in June 1948, moving on from emergency relief. [43] Already in 1943, the United Nations Relief and Rehabilitation Administration (UNRRA) was founded to provide relief to areas liberated from Germany. The reform revalued old currency and deposits and introduced new currency. The speech described the dysfunction of the European economy and presented a rationale for US aid. 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. Two weeks later President Truman sent him to China as temporary ambassador to try to bring an end to the Chinese civil war. After the fall of communism, several proposed a "Marshall Plan for Eastern Europe" that would help revive that region. In his work Dulles had the close cooperation of the Central Intelligence Agency (CIA), which was run by his brother, Allen Dulles. [52], Speaking at the Paris Peace Conference on October 10, 1946, Molotov had already stated Soviet fears: "If American capital was given a free hand in the small states ruined and enfeebled by the war [it] would buy up the local industries, appropriate the more attractive Romanian, Yugoslav enterprises and would become the master in these small states. "[110] One effect of the plan was that it subtly "Americanized" European countries, especially Austria, through new exposure to American popular culture, including the growth in influence of Hollywood movies and rock n' roll.[111]. Major newspapers were highly supportive, including such conservative outlets as Time magazine. None of these problems could be easily remedied, as most nations engaged in the war had exhausted their treasuries in the process.[28]. The table below shows Marshall Plan aid by country and year (in millions of dollars) from The Marshall Plan Fifty Years Later. The modern system of the division of labor upon which the exchange of products is based is in danger of breaking down. 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. [124] By the time the Marshall Plan was ready to be implemented, there was a general consensus throughout the American public that this was the right policy for both America, and the countries who would be receiving aid. This on-site analysis made the Factory Performance Reports especially helpful to the manufacturers. [54] He quickly realized, however, that this would be impossible after Molotov reportedfollowing his arrival in Paris in July 1947that conditions for the credit were non-negotiable. Herbert Hoover noted that "The whole economy of Europe is interlinked with German economy through the exchange of raw materials and manufactured goods. This Cold War site contains articles, perspectives and sources on global events and tensions between 1945 and 1991. The Marshall Plan money was transferred to the governments of the European nations. [19] The Marshall Plan was replaced by the Mutual Security Plan at the end of 1951; that new plan gave away about $7.5 billion annually until 1961 when it was replaced by another program. Cold War Flashcards | Quizlet Many citiesincluding the industrial and cultural centers of London, Dresden, Berlin, Cologne, Liverpool, Birmingham and Hamburghad been partly or wholly destroyed. [22][B] 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. A Theoretical and Political Analysis in the Global World Against a Background of Regional Integration: Table 1. [42] The Marshall Plan provided a more permanent solution as it gave $3.3 billion to Britain. Marshall resigned as Secretary of State in January 1949 and headed the American Red Cross for a time. Yugoslavia requested American aid. In the early 1950s Marshall came under sustained attacks from Joseph McCarthy. A common American interpretation of the program's role in European recovery was expressed by Paul Hoffman, head of the Economic Cooperation Administration, in 1949 when he told Congress Marshall aid had provided the "critical margin" on which other investment needed for European recovery depended. Food shortages were severe, especially in the harsh winter of 194647. The years 1948 to 1952 saw the fastest period of growth in European history. U.S. presidents and members of Congress, as well as world leaders, listened to Marshall because of his honesty, fairness, and trustworthiness. There were no agents working among the Soviets or their satellite states. This led to relatively modest growth of GDP in these countries during the four-year period the plan was in effect. Through the Office of Policy Coordination money was directed toward support for labor unions, newspapers, student groups, artists and intellectuals, who were countering the anti-American counterparts subsidized by the communists. The European recipient, however, was not given the goods as a gift but had to pay for them (usually on credit) in local currency. But Marshall was as. George Marshall - Alpha History It ceased operation of displaced persons camps in Europe in 1947; many of its functions were transferred to several UN agencies. [citation needed] The Soviets took a punitive approach, pressing for a delay rather than an acceleration in economic rehabilitation, demanding unconditional fulfillment of all prior reparation claims, and pressing for progress toward nationwide socioeconomic transformation. After the war, Marshall remained in the army, working in training and as a base commandant. The Marshall Plan provided aid to the recipients essentially on a per capita basis, with larger amounts given to major industrial powers, such as West Germany, France and Great Britain. The American supplier was paid in dollars, which were credited against the appropriate European Recovery Program funds. Somewhat more aid per capita was also directed toward the Allied nations, with less for those that had been part of the Axis or remained neutral. However, they refused to join the effort, allegedly fearing U.S. involvement in their respective national affairs. At the start of the plan, these imports were mainly much-needed staples such as food and fuel, but later the purchases turned toward reconstruction needs as was originally intended. UNRRA provided billions of dollars of rehabilitation aid and helped about 8 million refugees. In one of the most evident signs and reflections of tight Soviet control and domination over the region, Jan Masaryk, the foreign minister of Czechoslovakia, was summoned to Moscow and berated by Stalin for considering Czechoslovakia's possible involvement with and joining of the Marshall Plan. The funds were jointly administered by the local governments and the ECA. 75% said the same or more jobs; 10% said fewer.[126]. McCarthy pointed to Marshalls meetings with Mao Zedong and other communists in China, followed by their victory in 1949, as evidence of his treachery. The US, also terrified that communist groups would gain further powerthe Cold War was emerging and Soviet domination of Europe seemed a real dangerand wishing to secure European markets, opted for a program of financial aid. The two agreed that it would be necessary to invite the Soviets as the other major allied power. Reactions to Soviet Expansion - The Cold War origins 1941-56 - BBC McCarthy lists perceived failures or concessions to the Soviet Union, then suggests that Marshall is part of a communist conspiracy: [100], Ireland which received US$146.2 million through the Marshall Plan, received US$128.2 million as loans, and the remaining US$18 million as grants. The ECA's 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 US goods. Second, they compared the existing output rates in a particular country to output rates in other nations. In the end, only 17 senators voted against it on March 13, 1948[69] A bill granting an initial $5 billion passed Congress with strong bipartisan support. Taxes were also reduced and Germany prepared to remove economic barriers. [4] There is no clear consensus on exact amounts, as different scholars differ on exactly what elements of American aid during this period were part of the Marshall Plan. The Benelux countries (Belgium, Netherlands, and Luxembourg), despite also suffering under the Nazis, had long been closely linked to the German economy and felt their prosperity depended on its revival. Source: President Harry Truman to Secretary of State George C. Marshall, April 26, 1948, and Secretary of State George C. Marshall to President Harry Truman April 30, 1948, file 840.50 RECOVERY/4-2648, 1945-49 Central Decimal File, Record Group 59: General Records of the Department of State. With the escalation of the Cold War, the United States reconsidered its position and in 1951 embraced Spain as an ally since it was encouraged by Franco's aggressive anti-communist policies. [74] However, before the Marshall Plan was in effect, France, Austria, and Italy needed immediate aid. Integration with Europe at this point would mean cutting close ties to the emerging Commonwealth. Marshall Plan - Wikipedia Marshall gave the address at Harvard University on June 5, 1947. Total aids for the Dutch East Indies amounted to $101.4 million ($84.2 million in grants, $17.2 million in loans). On June 5, 1947, Secretary of State George Marshall announced the European Recovery Program. ECA was headed by economic cooperation administrator Paul G. Hoffman. Marshall Plan style proposals for other parts of the world have been a perennial idea. He is best-known for the European Recovery Program, or 'Marshall Plan', that bears his name. [81], The Netherlands received US aid for economic recovery in the Netherlands Indies. Under the terms of the agreement, the Soviet Union would in return ship raw materials such as food and timber to the western zones. A larger amount was given to the major industrial powers, as the prevailing opinion was that their resuscitation was essential for general European revival. American Republicans hostile to the plan had also gained seats in the 1950 Congressional elections, and conservative opposition to the plan was revived. "[37] In addition, the strength of Moscow-controlled communist parties in France and Italy worried Washington. In 1945, it had one of the world's richest economies and operated its own aid program. Cold War Policies, Propaganda, and Speeches - Encyclopedia Britannica [54][clarification needed], Initially, Stalin maneuvered to kill the plan, or at least hamper it using destructive participation in the Paris talks regarding conditions. AN ACT To promote world peace and the general welfare, national interest, and foreign policy of the United States through economic, financial, and other measures necessary to the maintenance of conditions abroad in which free institutions may survive and consistent with the maintenance of the strength and stability of the United States. These funds played a central role in the reindustrialization of Germany. Others have proposed a Marshall Plan for Africa to help that continent, and US Vice President Al Gore suggested a Global Marshall Plan. They state: It was not large enough to have significantly accelerated recovery by financing investment, aiding the reconstruction of damaged infrastructure, or easing commodity bottlenecks. 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 economically through the Comecon. Marshall was convinced that economic stability would provide political stability in Europe. from accepting. Interestingly, in the decades since its implementation, the true economic benefit of the Marshall Plan has been the subject of much debate. London tried to convince Washington that that American economic aid, especially to the sterling currency area, was necessary to solve the dollar shortage. The plan was largely the creation of State Department officials, especially William L. Clayton and George F. Kennan, with help from the Brookings Institution, as requested by Senator Arthur Vandenberg, chairman of the United States Senate Committee on Foreign Relations. [54] He directed thatin negotiations to be held in Paris regarding the aidcountries in the Eastern Bloc should not reject economic conditions being placed upon them. [9], In 1947, two years after the end of the war, industrialist Lewis H. Brown wrote, at the request of General Lucius D. Clay, A Report on Germany, which served as a detailed recommendation for the reconstruction of post-war Germany, and served as a basis for the Marshall Plan. In 1950 the outbreak of the Korean War led Truman to appoint Marshall as his Secretary of Defence. 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. By 1996 it had accumulated a value of 23 billion Deutsche Mark. Chinese Civil War; Cold War; George Marshall; History; Marshall Plan; U.S. Foreign Policy; COVID-19 In Asia C. June 12, 2023 Can IPEF Protect Corporate Supply Chains? Publisher: Alpha History [89] The balance of payment problems the trouble the postwar government was caused less by economic decline and more by political overreach, according to Jim Tomlinson. Its worth noting, too, that the Central Intelligence Agency (CIA), the secret service agency of the United States, received 5 percent of the funds allocated under the Marshall Plan. Counterpart funds were used to finance large-scale tours of American industry. While $19.4 billion was allocated for capital costs in the Marshall Plan, the Technical Assistance Program only required $300 million. 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. George C. Marshall and the Early Cold War - Google Books Did the Marshall Plan make the Cold War colder? 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. [93], The Marshall Plan was implemented in West Germany (19481950), as a way to modernize business procedures and utilize the best practices. There was also some hope that the Eastern Bloc nations would join the plan, and thus be pulled out of the emerging Soviet bloc, but that did not happen. Without the plan, agriculture would have played a larger role in the recovery period, which itself would have been longer. 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. [55], On July 12, a larger meeting was convened in Paris. t e The Cold War was a period of geopolitical tension between the United States and the Soviet Union and their respective allies, the Western Bloc and the Eastern Bloc. To conduct this analysis, the BLS performed two types of productivity calculations. The largest recipient of Marshall Plan money was the United Kingdom (receiving about 26% of the total). He said the plan was hostile to the Soviet Union, a subsidy for American exporters, and sure to polarize the world between East and West. [66]The French communist party, like 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. Our policy is not directed against any country, but against hunger, poverty, desperation and chaos. Marshall was involved in planning and authorising major American campaigns and operations, including the D-Day landings in 1944. A copious amount of propaganda ended up being highly effective in swaying public opinion toward supporting the Marshall Plan. They called it "a wasteful 'operation rat-hole'"[68] Vandenberg, assisted by Senator Henry Cabot Lodge Jr. (R-Massachusetts) admitted there was no certainty that the plan would succeed, but said it would halt economic chaos, sustain Western civilization, and stop further Soviet expansion. . However, in 1948 Tito broke decisively with Stalin on other issues. How is the current debate about immigration in the United States rooted in our nations past? Born in the same year as Douglas MacArthur, he is perhaps the only other military man to play major roles in both World Wars as well as the early years of the Cold War. On April 3, 1948, President Truman signed the Economic Recovery Act of 1948. In July 1947 Marshall scrapped Joint Chiefs of Staff Directive 1067, which was based on the Morgenthau Plan which had decreed "take no steps looking toward the economic rehabilitation of Germany [or] designed to maintain or strengthen the German economy."

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