Marshall Plan

Map of Europe and the Near East during the Cold War that shows the countries that received Marshall Plan aid. The red columns show the amount of total aid in the country

The Marshall Plan, officially called the European Recovery Program (ERP), was a United States plan for the rebuilding of Western Europe after World War II. One of the main reasons was to stop the rise of communism and the Soviet Union.

The plan was named after U.S. Secretary of State George Marshall, and was based on work by James Warburg, Lewis Brown, and other people in the U.S. State Department.

The plan ran for four years and started in April 1948. During that period, US$ 13 billion in economic and technical help were given to help the recovery of the countries in Europe that had joined in the Organization for European Economic Co-operation.

By the time the plan ended, the economy of every member state 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 Western Europe need the Americans. They also say that the United Nations Relief and Rehabilitation Administration, which helped millions of refugees from 1944 to 1947, it also helped European postwar recovery.

Alternatives

Burned-out buildings after the bombing of Hamburg, Germany

Morgenthau Plan

U.S. Treasury Secretary Henry Morgenthau said that if Europe needed war reparations (money to rebuild what had been destroyed by the war), it should take them from Germany. Morgenthau said that would also stop Germany from ever being rebuilt and threatening to start another war.

World War I reparations had taken money from Germany before World War II. That did not work, and the companies of other countries could not sell coal and steel, which were being imported for 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

The first German industrial plan was signed in early 1946. The level of industry agreement said that German heavy industry was to be cut down to half of its 1938 levels by destroying 1,500 manufacturing plants.

By the end of 1946, governments could see the problems of the plan, and the agreement was changed several times until 1949. However, the dismantling of factories went on until 1950. Germany had been very important to the European economy for a long time. A poor Germany held back European recovery since other countries could not sell as much to Germany. A poor Germany was also expensive for the occupying powers, which had to give Germany food and other things that it needed and could no longer grow or make for itself. That caused the Morgenthau and the Monnet Plans to be rejected.

One of a number of posters created to promote the Marshall Plan in Europe. The blue-white flag between the German and Italian ones is a version of the Trieste flag.

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 who were hostile to the plan had also gained seats during the 1950 elections.

Criticism

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

Historical revisionist historians such as Walter LaFeber said during the 1960s and the 1970s that the plan was American economic imperialism and was an attempt to gain control over Western Europe while the Soviets were controlling Eastern Europe.

The American economist Tyler Cowen said that nations receiving the most aid from the Marshall Plan (the United Kingdom, Sweden, and Greece) saw the fewest returns and grew the least between 1947 and 1955. Those nations who received little like Austria grew the most.

When he looked at the West Germany economy from 1945 to 1951, the German analyst and conomiust 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 had started before the Marshall Plan. Belgium relied heavily on free-market economic policies after its liberation in 1944, had the fastest recovery, and did not have the severe housing and food shortages that were seen in the rest of Continental Europe.

References

Further reading

Notes

  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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