The U.S. effort to aid war-torn Europe and contain Soviet communism after World War II.
The Marshall Plan (also known as the European Recovery Program) became one of the two pillars supporting the containment policy. George F. Kennan, head of the U.S. Department of State’s Policy Planning Staff, first coined the concept in a famous article he wrote anonymously for a 1947 issue of Foreign Affairs. While Kennan described containment as a check on the expansionist tendencies of Soviet Russia, President Harry S Truman and Secretary of State George C. Marshall transformed the concept into U.S. policy.
Truman laid the groundwork when he delivered an address before a joint session of Congress on March 12, 1947. In seeking funds for military and economic assistance to block communist insurgents in Greece and Soviet military pressure on Turkey, Truman suggested that any time direct or indirect aggression threatened free peoples, U.S. security would be undermined. The Truman Doctrine grabbed the attention of the American people and galvanized political opinion into a powerful, anticommunist consensus. His administration, at loggerheads with the parsimonious national legislature over the subject of postwar aid, found the right argument to secure the financial resources necessary to catapult the United States into a major leadership role in world affairs.
The passage of the Greek-Turkish aid bill in May opened the door for the far more ambitious American proposal for the European Recovery Program. The proposal became named after Secretary of State Marshall, who announced the plan during his commencement address at Harvard University on June 5, 1947. Although largely justified to the public on humanitarian grounds, the plan also reflected the U.S. government’s concern about Western Europe’s large and powerful communist parties. They had garnered prestige in the struggle against fascism and found political strength in the economic wreckage left in the wake of World War II. The Marshall Plan thus became a logical extension of the Truman Doctrine.
On the surface, the plan offered U.S. aid to all European nations devastated by the recent conflict. From the vantage point of U.S. policy makers, however, it would also reduce communism’s appeal, hence Soviet influence, in Western Europe by promoting economic stability. The Truman administration naturally hoped the Soviets would turn down the opportunity to participate in the U.S. program; American officials were not disappointed. Indeed, they helped guarantee Soviet rejection by insisting that future participants open all economic records to public scrutiny to expose, and allow to be addressed, economic shortcomings. Such transparency in exploring economic problems proved alien to the secretive Soviets. When the Soviet Union decided in July 1947 against seeking Marshall Plan aid, its leader, Joseph Stalin, prohibited participation by the Soviet bloc countries of Eastern Europe. Czechoslovakia had expressed an interest in the program when the Marshall Plan was first announced.
In February 1948, the Soviet Union backed a coup in Czechoslovakia that removed the last semiautonomous coalition government in the Soviet sphere. The event handed the Truman administration the culminating argument needed to secure congressional approval of legislation implementing the Marshall Plan. In April 1948, President Truman signed into law an act creating the Economic Cooperation Administration (ECA). Directed by Paul G. Hoffman, the ECA increased European industrial production, strengthened local currencies, and promoted international trade through the first installment of $4 billion in U.S. funds. The ECA accomplished these tasks by way of collaboration with the Organization for European Economic Cooperation (OEEC; later the Organization for European Recovery and Development; now the Organization for Economic Development and Cooperation).
Under the Marshall Plan, the United States provided billions of dollars in aid to postwar Western Europe, as this 1951 scene in West Germany indicates. Supporters of the plan believed that a prosperous Western Europe would act as a bulwark against the spread of communism and operate as a major trading partner for the United States. (National Archives at College Park)
Sixteen recipient nations formed the OEEC and shared $12.4 billion before the program ended at the beginning of 1952. Approximately half of this aid went to France, Great Britain, and the Federal Republic of (West) Germany. Because funds involved credits spent in the United States, the Marshall Plan influenced both American and European economies and served as a basis for the resurrection of postwar trade among countries of the North Atlantic. At the conclusion of the Marshall Plan, West European economies had fully recovered from wartime devastation. For example, the collective gross national product of participants jumped 32 percent from $120 billion to $159 billion during the Marshall Plan era. Moreover, industrial output for the same nations demonstrated a 40 percent increase over prewar levels, and even agricultural production improved by more than 10 percent.
Scholars and commentators point out that the Marshall Plan should not receive exclusive credit for the palpable strengthening of the economies of Western Europe between 1948 and 1952. On the other hand, the ECA was responsible for attacking import quotas among OEEC members, promoting transferable currencies, and adjusting European exchange rates. Intra-European trade, which had been largely conducted on a bilateral basis (i.e., commercial agreements between two countries) before World War II, was transformed to a multilateral approach, unleashing market forces that assisted European nations in moving toward economic integration. The capstone to that process would emerge later with the appearance of the European Community (after 1991, the European Union). Meanwhile, the ECA merged in 1951 with the U.S. Mutual Security Administration, which continued American aid to Western Europe, but generally in the form of military hardware.
James K. Libbey
See also: Cold War; Containment; European Union; Soviet Union.
Grose, Peter, ed. “The Marshall Plan and Its Legacy: Special Commemorative Section.” Foreign Affairs 76 (May–June 1997): 157–221.
Hogan, Michael J. The Marshall Plan: America, Britain, and the Reconstruction of Western Europe. New York: Cambridge University Press, 1987.
Libbey, James K. Russian-American Economic Relations. Gulf Breeze, FL: Academic International, 1999.
Pogue, Forrest C. George C. Marshall: Statesman. New York: Viking, 1987.
U.S. Economic Cooperation Administration. Quarterly Reports to Congress. Thirteen Reports. Washington, DC: U.S. Government Printing Office, 1948–1951.