Marshall Plan

The Marshall Plan, known officially following its enactment as the European Recovery Program (ERP), was the main plan of the United States for the reconstruction of Europe following World War II. The initiative was named for United States Secretary of State George Marshall and was largely the creation of State Department officials including William L. Clayton and George F. Kennan.

Background

After six years of war much of Europe was devastated. Battles had been fought throughout the continent, covering a far larger area than in the First World War. Air bombardment meant that most of the major cities had been badly damaged, with industrial production especially hard-hit. Many of the continent's greatest cities, including Warsaw and Berlin, were in ruins. Others, such as London and Rotterdam, were 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 especially poor winter of 1946-1947 in north-western Europe. Especially damaged was the transportation industry as railways, bridges, and roads had been heavily targeted by air strikes, while many merchant shipping boats had been sunk.

Related Topics:
First World War - Warsaw - Berlin - London - Rotterdam - Dutch famine of 1944 - Starvation - Transportation - Railway - Bridge - Road - Air strike

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

None of these problems could be easily fixed, as the nations engaged in the war had exhausted their treasuries in its prosecution.

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

After the First World War the European economy had also been greatly damaged, and a deep recession lasted well into the 1920s, leading to instability and a general global downturn. The United States, despite a resurgence of isolationism, had attempted to promote European growth, mainly through partnerships with the major American banks. When Germany was unable to pay its reparations, the Americans also intervened by extending a large loan to Germany, a debt the Americans were left with when war was declared in 1941.

Related Topics:
Deep recession - Isolationism - Reparations

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

There was a consensus that the events after the First World War should not be repeated. The State Department under Harry S. Truman was dedicated to pursuing an activist foreign policy, but the Congress was somewhat less interested. Originally, it was hoped that little would need to be done to rebuild Europe and that the United Kingdom and France, with the help of their colonies, would quickly rebuild their economies. By 1947 there was still little progress, however. A series of cold winters aggravated an already poor situation. The European economies did not seem to be growing as high unemployment and food shortages led to strikes and unrest in several nations. In 1947 the European economies were still well below their prewar levels and were showing few signs of growth. Agricultural production was 83% of 1938 levels, industrial production was 88%, and exports only 59%. {{ref|1947}}

Related Topics:
Harry S. Truman - United Kingdom - France - Unemployment - Strikes

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

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. The situation was especially bad in Germany where in 1946–47 the average calorie intake per day was only 1,800, an insufficient amount for long-term health.{{ref|food}} William Clayton reported to Washington that "millions of people are slowly starving."{{ref|Clayton}} As important for the overall economy was the shortage of coal, aggravated by the cold winter of 1946–47. In Germany homes went unheated and hundreds froze to death. In Britain the situation was not as severe, but domestic demand meant that industrial production came to a halt. The humanitarian desire to end these problems was one motivation for the plan.

Related Topics:
Iron Curtain - Calorie - William Clayton

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

The only major power whose infrastructure had not been significantly harmed was the United States. It had entered the war later than most European countries, and had been attacked only twice during the conflict, the surprise attack on Pearl Harbor in Hawaii and a diversionary attack on the Aleutian Islands of Alaska. The American gold reserves were still intact as was its massive agricultural and manufacturing base, and the country was enjoying a robust economy. 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 plant quickly retooled to produce consumer goods, and the scarcity of the war years was replaced by a boom in consumer spending. The long term health of the economy was dependent on trade, however, as continued prosperity would require markets to export these goods. Marshall Plan aid would largely be used by the Europeans to buy manufactured goods and raw materials from the United States.

Related Topics:
Hawaii - Aleutian Islands

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Another strong motivating factor for the United States, and an important difference from the post-WWI era, was the beginning of the Cold War. Some in the American government had grown deeply suspicious of Soviet actions. George Kennan, one of the leaders in developing the plan, was already predicting a bipolar division of the world. To him the Marshall Plan was the centrepiece of the new doctrine of containment.{{ref|containment}} It should be noted that when Marshall Plan was initiated, the wartime alliances were still somewhat intact and the Cold War had not yet truly begun, and for most of those who developed the Marshall Plan, fear of the Soviet Union was not the overriding concern it would be in later years. The power and popularity of indigenous communist parties in several Western European states was still worrisome. In both France and Italy the poverty of the postwar era had provided fuel for the communist parties, which had also played central roles in the resistance movements of the war. These parties had seen significant electoral success in the postwar elections, with the Communists becoming the largest single party in France. Though today most historians feel the threat of France and Italy falling to the communists was remote{{ref|Gaddis}}, it was regarded as a very real possibility by American policy makers at the time. The American government of Harry Truman began to be aware of these problems in 1946. The emerging doctrine of containment argued that the United States needed to substantially aid noncommunist 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.

Related Topics:
Cold War - Soviet - George Kennan - Containment - Italy - Harry Truman

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Even before the Marshall Plan the United States was spending a great deal to help Europe recover. An estimated $9 billion was spent during the period from 1945 to 1947. Much of this aid was indirect, coming in the form of continued lend-lease agreements, and through the many efforts of American troops to restore infrastructure and help refugees. A number of bilateral aid agreements had been signed, perhaps the most important of which was the Truman Doctrine's pledge to provide military assistance to Greece and Turkey. The young 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.{{ref|early}}

Related Topics:
Lend-lease - Truman Doctrine - United Nations

~ ~ ~ ~ ~ ~ ~ ~ ~ ~