The Marshall Plan (officially the European Recovery Program, ERP) was the American initiative to aid Europe, in which the United States gave $13 billion (approximately $160 billion in current dollar value) in economic support to help rebuild European economies after the end of World War II. The plan was in operation for four years beginning in April 1948. The goals of the United States were to rebuild war-devastated regions, remove trade barriers, modernize industry, and make Europe prosperous again. The phrase "equivalent of the Marshall Plan" is often used to describe a proposed large-scale rescue program.
The initiative is named after Secretary of State Brookings Institution, as requested by Senator Arthur H. Vandenberg, chairman of the Senate Foreign Relations Committee. Marshall spoke of an urgent need to help the European recovery in his address at Harvard University in June 1947.
- Development and deployment 1
- Wartime destruction 2
Initial post-war events 3
- Slow recovery 3.1
- Soviet negotiations 4
- Marshall's speech 5
Rejection by the Soviets 6
- Initial reactions 6.1
- Compulsory Eastern Bloc rejection 6.2
- Szklarska Poręba meeting 6.3
- Negotiations 7
- Technical Assistance Program 8.1
- German level of industry restrictions 8.2
- Expenditures 9
- Loans and grants 10
- Effects and legacy 11
- Repayment 12
Areas without the Plan 13
- Aid to Asia 13.1
- Canada 13.2
- World total 13.3
- Laissez-faire criticism 14.1
- Modern criticism 14.2
- In popular culture 15
- See also 16
- Notes 17
- References 18
- Further reading 19
- External links 20
Development and deployment
The reconstruction plan, developed at a meeting of the participating European states, was drafted on June 5, 1947. It offered the same aid to the
- George C. Marshall Foundation
- The German Marshall Fund of the United States
- Marshall Plan from the National Archives
- Excerpts from book by Allen W. Dulles
- United States Secretary of State Morgenthau Plan philosophy of economic dismantlement of Germany and towards a policy of economic reconstruction.
- Marshall Plan Commemorative Section: Lessons of the Plan: Looking Forward to the Next Century
- "Pas de Pagaille!", Time magazine July 28, 1947
- Luis García Berlanga's critique of the Marshall Plan in a classic Spanish film: Welcome Mr. Marshall!
- Marshall Plan Still Working, 60 Years Later Cincinnati Enquirer December 10, 2006
- Economist Tyler Cowen questions the conventional wisdom surrounding the Plan
- Truman Presidential Library online collection of original Marshal Plan documents from the year 1946 onwards
- "The Marshall Plan as Tragedy", comment on Michael Cox and Caroline Kennedy-Pipe, "The Tragedy of American Diplomacy? Rethinking the Marshall Plan", both published in the Journal of Cold War Studies, vol. 7, no. 1 (Winter 2005) (text of comment on pdf) (text of original article on pdf)
- Speech by George Marshall on June 5, 1947 at Harvard University (original recording)
- 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 0-7432-8263-9
- 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
- Elwood, David, “Was the Marshall Plan Necessary?” in Alan S. Milward and a Century of European Change, ed. Fernando Guirao, Frances M. B. Lynch, and Sigfrido M. Ramírez Pérez, 179–98. (Routledge, 2012)
- 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 (1976) (reviewed)
- Jackson, Scott. "Prologue to the Marshall Plan: The Origins of the American Commitment for a European Recovery Program," Journal of American History 65#4 (1979), pp. 1043-1068 in JSTOR
- 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 International Order, 1943-48 (Palgrave Macmillan: Basingstoke and New York) (2010)
- 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". Mises.org. 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)
- 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.
- Bischof, Gunter, Anton Pelinka, and Dieter Stiefel. "Contemporary Austrian Studies." The Marshall Plan in Austria. New Brunswick, NJ: Transaction, 2000. 174-75.
- 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 1-58322-547-1
- 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.
- 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.
- Gaddis, John Lewis (2005). The Cold War: A New History. Penguin Press.
- 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.
- Grenville, John Ashley Soames; Wasserstein, Bernard (2001). The Major International Treaties of the Twentieth Century: A History and Guide with Texts. Taylor & Francis.
- Grogin, Robert C. (2001). Natural Enemies: The United States and the Soviet Union in the Cold War, 1917-1991. Lexington Books.
- 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.
- Nekrich, Aleksandr Moiseevich; Ulam, Adam Bruno; Freeze, Gregory L. (1997). Pariahs, Partners, Predators: German–Soviet Relations, 1922–1941. Columbia University Press.
- Peterson, Harold F., Argentina and the United States II. (1914–1960)
- 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.
- Stern, Susan, Marshall Plan 1947–1997 A German View""German Missions in the United States — Home". Germany.info. 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.
- Van der Eng, Pierre (1988). ‘Marshall Aid as a Catalyst in the Decolonisation of Indonesia 1947-1949’, Journal of Southeast Asian Studies, 19: 335-352.
- 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". Mises.org. Retrieved 2009-08-18.
- Wettig, Gerhard (2008). Stalin and the Cold War in Europe.
- Woods, Thomas E., The Politically Incorrect Guide to American History, . ISBN 0-89526-047-6
- Hogan (1987)
- Brad Roberts, ed. (1990). The New Democracies: Global Change and U.S. Policy. MIT Press. p. 97.
- Robert J. McMahon (2003-03-27). The Cold War.
- Volkogonov, Dmitri. Stalin: Triumph and Tragedy. Forum, 1996, p.531.
- Kaplan, Jacob J. 1999. Interviewed by: W. Haven North. 22 March. Arlington, VA: Association for Diplomatic Studies and Training, Foreign Affairs Oral History Project, Foreign Assistance Series, p. 4. http://www.adst.org/OH%20TOCs/Kaplan,%20Jacob.toc.pdf
- Inflation Calculator reflecting value of $13 billion in 2013-http://www.usinflationcalculator.com/
- Milward (1984) p. 46
- Mills, Nicolaus (2008). Winning the Peace: the Marshall Plan and America's Coming of Age as a Superpower. Wiley. p. 195.
- Hogan (1987) pp. 427–45; Barry Eichengreen, The European Economy since 1945: Coordinated Capitalism and Beyond, (2008) pp. 64–73
- Barry Eichengreen, The European Economy since 1945: Coordinated Capitalism and Beyond, (2008) p. 57; West Germany was 6% higher, the other countries 45% higher.
- Quoted in Hogan (1987) p. 189
- Milward (1984) p. 466
- Herman Van der Wee, Prosperity and Upheaval: The World Economy, 1945–1980 (1984) p. 44
- Tom Buchanan, Europe's Troubled Peace 1945–2000, (2006) ch 1
- Allen J. Matusow, Farm Policies and Politics in the Truman Administration (1967) pp 35-36.
- Tony Judt, Postwar: a History of Europe since 1945 (2005) ch 1
- James T. Patterson (1997). Grand expectations: the United States, 1945-1974. Oxford University Press.
- Michael J. Hogan, The Marshall Plan, p. 30.
- Deither Raff, A History of Germany (1988) p. 335
- Alan S. Milward, The Reconstruction of Western Europe: 1945–51 (1984) pp. 356, 436
- Nicholas Balabkins, "Germany Under Direct Controls: Economic Aspects of Industrial Disarmament 1945–1948", Rutgers University Press, 1964 p. 207
- Balabkins, p. 209
- Pas de Pagaille! Time 28 July 1947.
- Gaddis, We Now Know.
- Beschloss 2003, p. 277
- Pas de Pagaille! Time, Jul. 28, 1947.
- Erik Reinert, Jomo K. S. The Marshall Plan at 60: The General's Successful War on Poverty, UN Chronicle (accessed 2008-05-20)
- Michael Wala, The Council on Foreign Relations and American Foreign Policy in the Early Cold War, 1994, Berghahn Books, ISBN 1-57181-003-X pp. 104–105
- Michael J. Hogan The Marshall Plan: America, Britain, and the Reconstruction of Western Europe, 1947–1952, 1987, Cambridge University, ISBN 0-521-37840-0 pp. 34–35
- Statistical Abstract of the United States: 1949 p. 846 online
- Tony Judt, in The Marshall Plan: Fifty Years After, edited by Martin Schain, p. 4.
- Miller 2000, p. 16
- Wettig 2008, p. 116
- Wettig 2008, p. 117
- Charles L. Mee, (1984). The Marshall Plan. New York: Simon & Schuster. p. 99.
- "BBC Correspondent Leonard Miall and the Marshall Plan Speech: An Interview". The Marshall Foundation. September 19, 1977. Retrieved 2007-08-15.
- Wettig 2008, p. 138
- Wettig 2008, p. 139
- US Inflation Calculator
- "Carnations — TIME". TIME. 1948-02-09. Retrieved 2009-02-01.
- Schain, p.132
- "Vyshinsky Speech to U.N. General Assembly". Temple University. Retrieved 2009-03-03.
- Behrman, Greg. Most noble adventure the Marshall plan and the time when America helped save Europe. New York: Free P, 2007.
- Wettig 2008, p. 140
- Wettig 2008, p. 146
- Wettig 2008, p. 142
- Wettig 2008, p. 148
- Wettig 2008, p. 145
- Wettig 2008, p. 147
- Cini, p.24 in Schain
- Sorel, Eliot, and Pier Carlo Padoan. The Marshall Plan: Lessons Learned for the 21st Century. Paris: OECD, 2008. 15-16. Print.
- Hogan, p.93.
- Nash, Gary B., and Julie Roy. Jeffrey. "Chills and Fever During the Cold War, 1945-1960." The American People: Creating a Nation and a Society. 6th ed. New York: Pearson Longman, 2008. 828.
- Grogin, p.118
- "President Harry S. Truman's March 17, 1948 address to a Joint Session". Clerk.house.gov. Retrieved 2011-12-09.
- Alan Bullock, Ernest Bevin: Foreign Secretary (1983) pp 368-9; Arnold Offner, Another Such Victory (2002) p 197; Denise M. Bostdorff, Proclaiming the Truman Doctrine (2008) p 51
- Hogan, p.415
- Crafts, Toniolo, p.464
- Wasser, Solidelle; Michael Dolfman (2005). "BLS and the Marshall Plan: the forgotten story". Monthly Labor Review: 44.
- Johnson, Gordon (2002). "Lessons for Today from the Marshall Plan". CIPE.ORG Feature Service: Technical Paper Series: 2.
- Wasser, Solidelle; Michael Dolfman (2005). "BLS and the Marshall Plan: the forgotten story". Monthly Labor Review: 49.
- Johnson, Gordon (2002). "Lessons for Today from the Marshall Plan". CIPE.ORG Feature Service: Technical Paper Series: 2–3.
- Dennis L. Bark and David R. Gress. A history of West Germany vol 1: from shadow to substance (Oxford 1989) p259
- Dennis L. Bark and David R. Gress. A history of West Germany vol 1: from shadow to substance (Oxford 1989) p260
- Henry C. Wallich. Mainsprings of the German Revival (1955) pg. 348.
- "Cornerstone of Steel", TIME, January 21, 1946
- Cost of Defeat, TIME, April 8, 1946
- The President's Economic Mission to Germany and Austria, Report 3 Herbert Hoover, March, 1947 pg. 8
- Frederick H. Gareau "Morgenthau's Plan for Industrial Disarmament in Germany" The Western Political Quarterly, Vol. 14, No. 2 (Jun., 1961), pp. 517-534
- Vladimir Petrov, Money and conquest; allied occupation currencies in World War II. Baltimore, Johns Hopkins Press (1967) p. 263
- , pp. 61-62"Plans for terminating international authority for the Ruhr"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 (main URL)
- The Marshall Plan Fifty Years Later, Palgrave MacMillan, United Kingdom, 2001 ISBN 9780333929834
- Timothy W. Guinnane, FINANCIAL VERGANGENHEITSBEWÄLTIGUNG: THE 1953 LONDON DEBT AGREEMENT, p.17
- John Agnew, J. Nicholas Entrikin, The Marshall Plan today: model and metaphor, p.110
- Gary Murphy, In search of the promised land: the politics of post-war Ireland, p.70
- James F. Lydon, The making of Ireland: from ancient times to the present, p.391
- Timothy W. Guinnane, FINANCIAL VERGANGENHEITSBEWÄLTIGUNG: THE 1953 LONDON DEBT AGREEMENT, p.28
- "The Marshall Plan and the ERP". Kfw.de. Retrieved 2011-12-09.
- Joseph A. Biesinger, Germany: a reference guide from the Renaissance to the present, p.556
- Detlef Junker, The United States and Germany in the Era of the Cold War, 1945-1990: 1945-1968, p.306
- J. Bradford De Long, and Barry Eichengreen, "The Marshall Plan: history's most successful structural adjustment program" (NBER No. w3899, National Bureau of Economic Research, 1991) online
- Bischof, Pelinka and Stiefel 174-175
- 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".Guardian.co.uk After the end of the Cold War many felt Eastern Europe needed a rebuilding plan.
- Harry Bayard Price, The Marshall Plan and its Meaning (1955), p. 106
- Timothy W. Guinnane, "Financial Vergangenheitsbewältigung: The 1953 London Debt Agreement" (Economic Growth Center, Yale University, 2004) pp 17. 20, 21, 27-8, 30 online
- Crafts, Toniolo, p.363
- Zwass, Adam (1989). The Council for Mutual Economic Assistance: the thorny path from political to economic integration. M.E. Sharpe. p. 16.
- John Gimbel, "The American Reparations Stop in Germany: An Essay on the Political Uses of History"
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- "Economy — Finland". Nationsencyclopedia.com. Retrieved 2009-02-01.
- De Long, J.; Barry Eichengreen (1993). "The Marshall Plan". Postwar Economic Reconstruction and Lessons for the East Today. p. 202.
- "Economic Changes in Eastern Europe Since the War". Royal Institute of International Affairs. Retrieved 2010-02-11.
- All data from the official document: U.S. Bureau of the Census, Statistical Abstract of the United States: 1954 (1955) table 1075 pp 899-902 online edition file 1954-08.pdf
- Bothwell, p. 58
- U.S. Bureau of the Census, Statistical Abstract of the United States: 1954 (1955) table 1075 p. 899
- Erhard, p. 22; also, Zmirak
- "von Mises". Mises.org. Retrieved 2009-08-18.
- Schain, Martin. The Marshall Plan: Fifty Years after. New York: Palgrave, 2001. 1-3. Google Books. Web. 28 April 2010.
- "A Marshall Plan for Iraq?". Cato.org. 2003-05-09. Retrieved 2009-02-01.
- Forsberg, Aaron (2000). America and the Japanese miracle: the Cold War context of Japan's postwar economic revival, 1950-1960. UNC Press. p. 84.
- Alesina and Weder, pp. 1126–1137.
- Tucker, 15:9.
- Chomsky, p. 9.
- Van der Eng (1988).
- Richard D. McKinzie (July 17, 1975). "Oral History Interview with Lincoln Gordon". Truman Library. Retrieved December 2, 2008.
The Spanish comedy film Welcome Mr. Marshall! tells the story of a small Spanish town, Villar del Río, which hears of the visit of American diplomats and begins preparations to impress the American visitors in the hopes of benefitting under the Marshall Plan.
Alfred Friendly, press aide to the US 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?"
In popular culture
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 actions against their colonial subjects in East Asia, in French Indochina and the Netherlands East Indies respectively. 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". The Netherlands received U.S. aid for economic recovery in the Netherlands Indies. However, in January 1949, the American government suspended this aid in response to the Dutch efforts to restore colonial rule in Indonesia during the Indonesian National Revolution, and it implicitly threatened to suspend Marshall aid to the Netherlands if the Dutch government continued to oppose the independence of Indonesia.
Criticism of the Marshall Plan also aims at showing that it began 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. This policy of promoting corrupt government is then attributed back to the initial impetus of the Marshall Plan.
Former US 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. 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.
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.
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 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". Some critics and Congressmen at the time believed that America was giving too much aid to Europe. America had already given Europe $9 billion in other forms of help in previous years. The Marshall Plan gave another $13 billion, equivalent to about $100 billion in 2010 value. Critics did not think that it was necessary for Americans to be using so much money to help nations they had already assisted in many ways before.
Initial criticism of the Marshall Plan came from a number of 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.
The total of American grants and loans to the world from 1945 to 1953 came to $44.3 billion.
Canada, like the United States, was little damaged by the war and in 1945 was one of the world's largest economies. It operated its own aid program. In 1948, the U.S. allowed ERP aid to be used in purchasing goods from Canada. Canada made over a billion dollars in sales in the first two years of operation.
From the end of the war to the end of 1953, the U.S. provided grants and credits amounting to $5.9 billion to Asian countries, especially China/Taiwan ($1.051 billion), India ($255 million), Indonesia ($215 million), Japan ($2.44 billion), South Korea ($894 million), Pakistan ($98 million) and the Philippines ($803 million). In addition, another $282 million went to Israel and $196 million to the rest of the Middle East. All this aid was separate from the Marshall Plan.
Aid to Asia
The USSR did establish COMECON as a riposte to the Marshall Plan to deliver aid for Eastern Bloc countries, but this was complicated by the Soviet efforts to manage their own recovery from the war. 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. 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. By mid-1948 industrial production in Poland, Hungary, Bulgaria, and Czechoslovakia had recovered to a level somewhat above pre-war level.
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 western zones halted the shipments east, ostensibly on a temporary basis, although they were never resumed. It was later shown that the main reason for halting shipments east was not the behavior of the USSR but rather the recalcitrant behavior of France. Examples of material received by the USSR 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.
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 itself received about the same as 16 European countries received in total from Marshall Plan aid.
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.
Areas without the Plan
In the case of Germany there also were 16 billion marks of debts from the 1920s which had defaulted in the 1930s, but which Germany decided to repay to restore its reputation. This money was owed to government and private banks in the U.S., France and Britain. Another 16 billion marks represented postwar loans by the U.S. Under the London Debts Agreement of 1953, the repayable amount was reduced by 50% to about 15 billion marks and stretched out over 30 years, and compared to the fast-growing German economy were of minor impact.
(an agency of the U.S. government) at the same time made long-term loans at low interest rates to finance major purchases in the US, all of which were repaid. Export-Import Bank In addition to ERP grants, the  The
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. "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 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 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.
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 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. 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. Many argue that the structural adjustments that it forced were of great importance. Economic historians J. Bradford DeLong and Barry Eichengreen call it "history's most successful structural adjustment program." One effect of the plan was that it subtly "Americanized" countries, especially Austria, who embraced United States' assistance, through popular culture, such as Hollywood movies and rock n' roll.
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.
Effects and legacy
Germany, which up until the 1953 Debt agreement had to work on the assumption that all the Marshall plan aid was to be repaid, spent its funds very carefully. Payment for Marshall plan goods, "counterpart funds", were administered by the Reconstruction Credit Institute, which used the funds for loans inside Germany. In the 1953 Debt agreement the amount of Marshall plan aid that Germany was to repay was reduced to less than 1 billion USD. This made the proportion of loans versus grants to Germany similar to that of France and the UK. The final German loan repayment was made in 1971. 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. By 1996 it had accumulated a value of 23 billion Deutsche Mark.
The UK received 385 million USD of its Marshall plan aid in the form of loans. Unconnected to the Marshall plan the UK also received direct loans from the US amounting to 4.6 billion USD. The proportion of Marshall plan loans versus Marshall plan grants was roughly 15% to 85% for both the UK and France.
Ireland which received 146.2 million USD through the Marshall plan, received 128.2 million USD as loans, and the remaining 18 million USD as grants. By 1969 the Irish Marshal plan debt, which was still being repaid, amounted to 31 million pounds, out of a total Irish foreign debt of 50 million pounds.
The Marshall plan, just as GARIOA, consisted of aid both in the form of grants and in the form of loans. Out of the total, 1.2 billion USD were loan-aid.
Loans and grants
|Belgium and Luxembourg||195||222||360||777|
|Italy and Trieste||594||405||205||1204|
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 were part of the Marshall Plan.
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-down "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. 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." 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.
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. 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). Consequently, car production was set to 10% of pre-war levels, and the manufacture of other commodities was reduced as well.
Even while the Marshall Plan was being implemented, the dismantling of German industry continued; and in 1949 Konrad Adenauer wrote to the Allies requesting the end of industrial dismantling, citing the inherent contradiction between encouraging industrial growth and removing factories, and also the unpopularity of the policy. Support for dismantling was by this time coming predominantly from the French, and the Petersberg Agreement of November 1949 greatly reduced the levels of deindustrialization, though dismantling of minor factories continued until 1951. The first "level of industry" plan, signed by the Allies on 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.
German level of industry restrictions
Another important aspect of the Technical Assistance Program was its low cost. While $19.4 billion was allocated for capital costs in the Marshall Plan, the Technical Assistance Program only required $300 million. Only one-third of that $300 million cost was paid by the United States.
The effects of the Technical Assistance Program were not limited to improvements in productive efficiency. While the thousands of European leaders took their work/study trips to the United States, they were able to observe a number of aspects of American society as well. The Europeans could watch local, state, and federal governments work together with citizens in a pluralist society. They observed a democratic society with open universities and civic societies in addition to more advanced factories and manufacturing plants. The Technical Assistance Program allowed Europeans to bring home many types of American ideas.
- That BLS productivity personnel should serve on American-European councils for productivity;
- that productivity targets (based on American productivity standards) can and should be implemented to increase productivity;
- that there should be a general exchange and publication of information; and
- that the "technical abstract" service should be the central source of information.
Before the Technical Assistance Program even went into effect, Maurice Tobin (the United States Secretary of Labor) expressed his confidence in American productivity and technology to both American and European economic leaders. He urged that the United States play a large role in improving European productive efficiency by providing four recommendations for the program's administrators:
The BLS used these statistical technologies to create Factory Performance Reports for Western European nations. The American government sent hundreds of technical advisors to Europe in order to observe workers in the field; this on-site analysis made the Factory Performance Reports especially helpful to the manufacturers. In addition, the Technical Assistance Program funded 24,000 European engineers, leaders, and industrialists to visit America and tour America's factories, mines, and manufacturing plants. This way, the European visitors would be able to return to their home countries and implement the technologies used in the United States. The analyses in the Factory Performance Reports and the "hands-on" experience had by the European productivity teams effectively identified productivity deficiencies in European industries; from there, it became clearer how to make European production more effective.
In order to perform this analysis, the BLS performed two types of productivity calculations. First, they used existing data to calculate how much a worker produces per hour of work—the average output rate. Second, they compared the existing output rates in a particular country to output rates in other nations. By performing these calculations across all industries, the BLS was able to identify the strengths and weaknesses of each country's manufacturing and industrial production. From that, the BLS could recommend technologies (especially statistical) that each individual nation could implement. Often, these technologies came from the United States; by the time the Technical Assistance Program began, the United States used statistical technologies "more than a generation ahead of what [the Europeans] were using".
By implementing technological literature surveys and organized plant visits, American economists, statisticians, and engineers were able to educate European manufacturers in statistical measurement. The goal of the statistical and technical assistance from the Americans was to increase productive efficiency of European manufacturers in all industries.
The US Bureau of Labor Statistics (BLS) contributed heavily to the success of the Technical Assistance Program. The United States Congress passed a law on June 7, 1940 that allowed the BLS to "make continuing studies of labor productivity" and appropriated funds for the creation of a Productivity and Technological Development Division. The BLS could then use its expertise in the field of productive efficiency to implement a productivity drive in each Western European country receiving Marshall Plan aid.
Technical Assistance Program
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, (Kreditanstalt für Wiederaufbau, meaning Reconstruction Credit Institute). 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.
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.
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.
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 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 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 first substantial aid went to Greece and Turkey in January 1947, which were seen as the front line of the battle against communist expansion, and were already receiving aid under the Truman Doctrine. Initially Britain had supported the anti-communist factions in those countries, but due to its dire economic condition it decided to pull out and in February 1947 requested the U.S. to continue its efforts. The ECA formally began operation in July 1948.
Truman signed the Economic Cooperation Act into law on April 3, 1948; the Act established the OECD), which was headed by Frenchman Robert Marjolin.
Members of the 
On March 17, 1948, President Harry S. Truman addressed European security and condemned the Soviet Union before a hastily convened Joint Session of Congress. Attempting to contain spreading Soviet influence in Eastern Europe, Truman asked Congress to restore a peacetime military draft and to swiftly pass the Economic Cooperation Act, the name given to the Marshall Plan. Of the Soviet Union Truman said, "The situation in the world today is not primarily the result of the natural difficulties which follow a great war. It is chiefly due to the fact that one nation has not only refused to cooperate in the establishment of a just and honorable peace but—even worse—has actively sought to prevent it."
Wallace, the former vice president and secretary of agriculture, mockingly called this the "Martial Plan," arguing that it was just another step towards war. However, opposition against the Marshall Plan was greatly reduced by the shock of the Communist coup in Czechoslovakia in February 1948. Soon after, a bill granting an initial $5 billion passed Congress with strong bipartisan support. Congress would eventually allocate $12.4 billion in aid over the four years of the plan.
Agreement was eventually reached and the Europeans sent a reconstruction plan to Washington. In the document the Europeans asked for $22 billion in aid. Truman cut this to $17 billion in the bill he put to Congress. The plan encountered sharp opposition in Congress, mostly from the portion of the Republican Party led by Robert A. Taft that advocated a more isolationist policy and was weary of massive government spending. The plan also had opponents on the left, Henry A. Wallace notably among them. Wallace saw the plan as a subsidy for American exporters and sure to polarize the world between East and West.
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 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. However, before the Marshall Plan was in effect, France, Austria, and Italy needed immediate aid. On December 17, 1947, the United States agreed to give $40 million to France, Austria, China, and Italy.
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, (Belgium, Netherlands and Luxemburg), 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.
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. 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. When they asked Zhdanov if they should prepare for armed revolt when they returned home, he did not answer. 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.
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. The meeting's chair, Andrei Zhdanov, who was in permanent radio contact with the Kremlin from whom he received instructions, also castigated communist parties in France and Italy for collaboration with those countries' domestic agendas. Zhdanov 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.
Referring to the Eastern Bloc, the report 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." It argued that "the bosses of Wall Street" were "tak[ing] the place of Germany, Japan and Italy." The Marshall Plan was described as "the American plan for the enslavement of Europe". 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".
In late September, the Soviet Union called a meeting of nine European Communist parties in southwest Poland. 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." Parties were to struggle against the U.S. presence in Europe by any means necessary, including sabotage. The report 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."
Szklarska Poręba meeting
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. 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.
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 Józef Cyrankiewicz was rewarded by Stalin for the Polish rejection of the Plan. Russia rewarded Poland with a lucrative five-year trade agreement, the equivalent of 450 million 1948 dollars ($4.4 billion in 2014 dollars) in credit, 200,000 tons of grain, heavy machinery, and factories.
Soviet Foreign Minister Vyacheslav Molotov left Paris, rejecting the plan. 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 U.S.-aligned countries branded as enemies. 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. 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. In addition, Western embassies in Moscow were isolated, with their personnel being denied contact with Soviet officials.
Compulsory Eastern Bloc rejection
Stalin suspected a possibility that these Eastern Bloc countries might defy Soviet directives not to accept the aid, potentially causing a loss of control of the Eastern Bloc. In addition, the most important condition was that every country choosing to take advantage of the plan would need to have its economic situation independently assessed—a level of 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.
Initially, Stalin maneuvered to kill the Plan, or at least hamper it by means of destructive participation in the Paris talks regarding conditions. He quickly realized, however, that this would be impossible after Molotov reported—following his arrival in Paris in July 1947—that conditions for the credit were non-negotiable. Looming as just as large a concern was the Czechoslovak eagerness to accept the aid, as well as indications of a similar Polish attitude.
While the Soviet ambassador in Washington suspected that the Marshall Plan could lead to the creation of an anti-Soviet bloc, Stalin was open to the offer. He directed that—in negotiations to be held in Paris regarding the aid—countries in the Eastern Bloc should not reject economic conditions being placed upon them. Stalin only changed his outlook when he learned that (a) credit would only be extended under conditions of economic cooperation and,(b) aid would also be extended to Germany in total, an eventuality which Stalin thought would hamper the Soviets' ability to exercise influence in western Germany.
British Foreign Secretary 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.
Rejection by the Soviets
The speech, written by Charles Bohlen, contained virtually no details and no numbers. More a proposal than a plan, it was a challenge to European leaders to cooperate and coordinate. It asked Europeans to create their own plan for rebuilding Europe, indicating 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. In contrast, Dean Acheson, an Under Secretary of State, was dispatched to contact the European media, especially the British media, and the speech was read in its entirety on the BBC.
Marshall was convinced that economic stability would provide political stability in Europe. He offered aid, but the European countries had to organize the program themselves.
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 USA. 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.
To clarify the US's position, a major address by 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.
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.
After six weeks of negotiations, Molotov rejected all of the American and British proposals. Molotov also rejected the counter-offer to scrap the British-American "Bizonia" and to include the Soviet zone within the newly constructed Germany. 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.
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. 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.
of Europe in 1947; many of its functions were transferred to several UN agencies. Displaced persons camp Already in 1943, the United Nations Relief and Rehabilitation Administration (UNRRA) was founded to provide relief to areas liberated from Germany. UNRRA provided billions of dollars of rehabilitation aid, and helped about 8 million refugees. It ceased operations in the  The
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, and is not counted as part of the Marshall Plan. Much of this aid was designed to restore infrastructure and help refugees. Britain, for example, received an emergency loan of $3.75 billion.
Hoover further 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." Hoover's report led to a realization in Washington that a new policy was needed; "almost any action would be an improvement on current policy." In Washington, the Joint Chiefs declared that the "complete revival of German industry, particularly coal mining" was now of "primary importance" to American security.
"There is the illusion that the New Germany left after the annexations can be reduced to a 'pastoral state' (Morgenthau's vision). It cannot be done unless we exterminate or move 25,000,000 people out of it."
With a Communist insurgency threatening Greece, and Britain financially unable to continue its aid, the President announced his Truman Doctrine on 12 March 1947, "to support free peoples who are resisting attempted subjugation by armed minorities or by outside pressures", with an aid request for consideration and decision, concerning Greece and Turkey. Also in March 1947, former US President Herbert Hoover, in one of his reports from Germany, argued for a change in US occupation policy, amongst other things stating:
In January 1947, Truman appointed retired General  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.
In the view of the State Department under President Harry S. Truman, the United States needed to adopt a definite position on the world scene or fear losing credibility. The emerging doctrine of containment (as opposed to rollback) 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, but that was not to happen.
Nicholas Balabkins concludes that "as long as German industrial capacity was kept idle the economic recovery of Europe was delayed." By July 1947 Washington realized that economic recovery in Europe could not go forward without the reconstruction of the German industrial base, deciding that an "orderly, prosperous Europe requires the economic contributions of a stable and productive Germany." In addition, the strength of Moscow-controlled communist parties in France and Italy worried Washington.
During the first three years of occupation of Germany the UK and US vigorously pursued a Franklin D. Roosevelt.
In Germany in 1945–46 housing and food conditions were bad, as the disruption of transport, markets and finances slowed a return to normality. In the West, bombing had destroyed 5,000,000 houses and apartments, and 12,000,000 refugees from the east had crowded in. Food production was only two-thirds of the pre-war level in 1946–48, while normal grain and meat shipments no longer arrived from the East. Furthermore, the large shipments of food stolen from occupied nations during the war no longer reached Germany. Industrial production fell more than half and reached pre-war levels only at the end of 1949.
Europe's economies were recovering 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%. In Britain the situation was not as severe.
Initial post-war events
The only major powers whose infrastructure had not been significantly harmed in World War II were the United States and Canada. They were much more prosperous than before the war but exports were a small factor in their economy. Much of the Marshall Plan aid would be used by the Europeans to buy manufactured goods and raw materials from the United States and Canada.
Especially damaged was transportation infrastructure, as railways, bridges, and docks had been specifically targeted by air strikes, while much merchant shipping had been sunk. Although most small towns and villages 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.
By the end of World War II, much of Europe was devastated. Sustained aerial bombardment during the war had badly damaged most major cities, and industrial facilities were especially hard-hit. The region's trade flows had been thoroughly disrupted; millions were in refugee camps living on aid from United Nations Relief and Rehabilitation Administration and other agencies. Food shortages were severe, especially in the harsh winter of 1946–1947. From July 1945 Through June 1946, the United States shipped 16.5 million tons of food, primarily wheat, to Europe and Japan. It amounted to 1/6 of the American food supply, and provided 35 trillion calories, enough to provide 400 calories a day for one year to 300 million people. 
- "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."
Belgian economic historian Herman Van der Wee concludes the Marshall Plan was a "great success":
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 at least 35% higher than in 1938. 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 common American interpretation of the program's role in European recovery is the one expressed by Paul Hoffman, head of the Economic Cooperation Administration, in 1949, when he told Congress that Marshall aid had provided the "critical margin" on which other investment needed for European recovery depended. 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.
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, reducing artificial trade barriers, and instilling a sense of hope and self-reliance.
 at the end of 1951.Mutual Security Plan The Marshall Plan was replaced by the  The $13 billion was in the context of a US GDP of $258 billion in 1948, and was on top of $13 billion in American aid to Europe between the end of the war and the start of the Plan that is counted separately from the Marshall Plan.