76 years ago, the Marshall Plan helped Western Europe recover from the war and resist the Communists. This is how much the United States paid and received for this

Serhii Pyvovarov
Kateryna Kobernyk
76 years ago, the Marshall Plan helped Western Europe recover from the war and resist the Communists. This is how much the United States paid and received for this

A shipment of American industrial equipment arriving in Europe under the Marshall Plan, 1949.

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On April 3, 1948, US President Harry Truman signed the law on American economic aid to European countries. It went down in history as the Marshall Plan. Thanks to this help, in the four post-war years, Western Europe got back on its feet, created a common market and understood well what real competitive business is. These achievements laid the foundation for the future of the European Union. And the Marshall Plan slowed Soviet expansion, contributed to the creation of NATO, and generally strengthened the influence of the United States in Europe and the world. We recall the history of the most successful American investment, which still brings not only economic, but also political dividends.

After World War II, most European countries were on the verge of economic collapse. Millions of people were left homeless and ended up in refugee camps. Most of the large industrial centers lay in ruins. Transport infrastructure was also affected — railways, roads, bridges, ports, airfields. Due to this, towns and villages that were not so much affected by the war found themselves in economic isolation.

Interstate trade almost stopped, and national currencies depreciated. Only in France in 1946 inflation reached 80%. The summer drought and harsh winter of 1946-1947 destroyed most of the wheat crop and exacerbated the food crisis. Most Europeans had to limit themselves to a bread ration of 250 grams.

The worst situation was in defeated Germany. In addition to the post-war devastation, the country suffered from sanctions imposed by the victors — the so-called Morgenthau plan. During 1945-1946, the equipment of industrial enterprises was exported from the country and an embargo was introduced on the import of raw materials. Because of this, the Germans were on the brink of starvation, and thousands of protests took place across the country demanding a solution to the food crisis.

Protesters with placards "We are starving", "We donʼt want calories. We want bread" in Düsseldorf, March 30, 1947.

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The United States remained the only one of the lage victorious countries in the Second World War to maintain a stable economy. American government officials were no longer going to return to the policy of isolationism, as it was after the First World War. By 1947, the US had spent almost $14 billion on postwar support for Europe. But these were rather local steps. A significant part of the funds went to humanitarian aid to refugees, the rest to loans for the main allies — Great Britain and France. But the recovery of Europe was too slow.

Already at the beginning of 1947, the economic advisers of the then US President Harry Truman predicted that the European crisis would hit the American economy as well. One of the main trading partners, Western Europe, will simply not be able to buy American goods. And therefore, production will soon have to be cut, which will cause many Americans to lose their jobs.

Political advisers sounded the alarm. A large-scale ideological confrontation with the Soviet Union was brewing. The Kremlin has already begun to turn the occupied countries of Eastern Europe into a social camp. Moreover, against the backdrop of economic troubles, even in France, the communist movement was gaining strength.

Communist rally in Paris, 1946.

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In order not to lose its main ally, Western Europe, and its position in the world in general, the White House decided to act comprehensively and quickly. Already in March 1947, the American president announced a new foreign policy course in Congress, which went down in history as the Truman Doctrine. It was based on the containment of communist regimes around the world, initially through economic aid to countries under Soviet threat.

By the summer of 1947, a group of specialists had developed a strategy for economic aid to Europe. The main face of the project was George Marshall, who was appointed US Secretary of State in January 1947. He was a veteran of two world wars, a combat general known in Europe, one of the most respected and least politicized national leaders. In addition, he was known for his principles. If the new Secretary of State supported the plan to help Europe, he sharply and publicly criticized some other initiatives of the White House. Marshall was the perfect candidate to promote the new economic strategy among both Europeans and Americans. So the plan was named after him.

US Army Chief of Staff General George Marshall (left) talks over lunch with British Admiral Dudley Pound, 1942.

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Initially, a speech was prepared for Marshall on the plan for the reconstruction of European countries, which he delivered at the graduation ceremony at Harvard University on June 5, 1947. There were no specific details and figures in the report. It was rather a call to European leaders — propose your plan for the restoration of Europe, and the United States will finance it (of course, taking into account its own interests). The White House made efforts so that this speech was not noticed by the American press. Instead, it was mentioned in all influential European newspapers, and the British BBC even read it in its entirety on live radio.

European states did not take long to react. Already on July 12, 1947, a conference of representatives of the countries of Western Europe and the USA gathered in Paris. First of all, they agreed on the main thing. Europe agreed to the American proposal and also agreed, albeit with certain doubts, that common European prosperity is impossible without the economic stability of yesterdayʼs enemies — Italy and especially Germany. Then began long and difficult negotiations about the nuances — what form American aid will take, how it will be distributed, who will control spending. Each country defended its own interests, so the discussion dragged on almost until the end of 1947. Even before reaching a final decision, the United States gave $40 million in aid to France, Austria, and Italy.

Eastern European countries were also invited to participate in the negotiations. The Americans also offered help to the USSR, which on paper still remained an ally. Secretary of State Marshall even flew to Moscow. But it was more of a formality. The White House understood that Congress would not approve such assistance, and the Kremlin was unlikely to accept it either. And so it happened. The Soviet Union not only refused, but also forbade the Eastern European countries under its control to participate in the negotiations. First of all, Czechoslovakia and Poland, which accepted the American proposal.

George Marshall with Soviet Foreign Minister Vyacheslav Molotov during a meeting in Moscow, 1947.

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An interesting story happened with Czechoslovakia. At that time, the country was already under Soviet occupation, and in the first post-war elections, the Communists won only a third of the seats in the parliament. But even they supported the idea of joining the Marshall Plan. In June 1947, Czechoslovak Prime Minister Klement Gottwald and Foreign Minister Jan Masaryk were urgently summoned to Moscow for a meeting with Stalin. After this visit, Czechoslovakia refused American aid.

"I went to Moscow as a minister of a sovereign state, returned as a Soviet slave," Masaryk recalled. In March 1948, he was found dead in the yard of the building of the Ministry of Foreign Affairs. According to the official version, he committed suicide by jumping out of the window. However, there are suspicions that local communists or Soviet special services were involved in Masarykʼs death.

Jan Masaryk during the Paris Peace Conference following the Second World War, October 5, 1946.

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Stalin sought to create the image of the "savior of Europe". So he demonstratively sent millions of tons of grain to the countries of the socialist camp, even though there was famine in the USSR itself due to a bad harvest. And Soviet propaganda reproached the USA for abandoning the ruined, impoverished Europe.

After the United States announced the Marshall Plan, the Soviet Union convened a meeting of European communists in Poland. Andrey Zhdanov, the then chief Kremlin ideologue and propagandist, presented Moscowʼs new position. He stated that the "ruling clique of American imperialists" hoped that Hitlerʼs Germany would defeat the USSR, and therefore delayed aid. And now he wants to "enslave the weakened countries of Europe" with the Marshall Plan. Therefore, European communists should jointly oppose "Wall Street bosses who have taken the place of fascist predators and their mercenaries." And finally, Zhdanov divided the world into two warring camps — "imperialist led by the USA and democratic led by the USSR."

It got to the point that the Italian and French communists directly asked when to prepare for an armed uprising. This stunned even Zhdanov. And only after consulting with Stalin, he replied that it was not worth taking up arms.

Andrey Zhdanov with Stalin, October 1945.

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Having reached an agreement with Europe, the White House began promoting the Marshall Plan in the United States. Government officials understood: the proposal to spend even more money on Europe would not be very popular among ordinary Americans. And it was necessary to convince the Republican opponents who held the majority in Congress. One economic argument about a repeat of the Great Depression was once not enough in the long run. That harsh reaction of the Soviet Union gave the Democrat Truman an additional trump card. Economic and political arguments were combined under the thesis that "communism flourishes in poverty." Another trump card was the authority of Secretary of State Marshall, the formal author of the plan. In addition, influential Republicans and well-known businessmen were invited to head the committees and structures that were supposed to monitor the implementation of the plan.

In March 1948, President Truman decided to insure himself just in case, and before submitting the bill to parliament, he reduced the amount of aid requested by the Europeans from $22 billion to $17 billion. Then everything went quite quickly. On April 1, 1948, the project was approved by a special committee, on the second — by both houses of Congress, on the third — it was signed by the president, and on the fourth — the Marshall Plan was already launched.

George Marshall defends the economic aid plan for Europe before a committee in Congress, 1948.

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The plan was calculated to be implemented in four years — from 1948 to 1952. The program included 17 European states. But the aid was not distributed equally between them. The big industrial states got the most, because their quick recovery was the key to the revival of Europe. So, Britain received almost 25%, France — about 20%, Germany and Italy — about 11% each.

More than 80 percent of Marshall Plan aid was to come in the form of grants and subsidies that did not have to be repaid. At the first stage, the Americans simply supplied Europe with food, raw materials, industrial equipment and agricultural machinery for free. The following scheme followed: European governments received American goods, which were sold domestically for local currency. All funds received from sales were kept in special funds of European countries, from which large projects were financed, for example, the construction of factories, power plants and railways.

In addition, American businessmen and industrialists shared with Europeans their own experience in management, innovation and marketing. In essence, they were reshaping the European market for a more advanced American model.

Newsreel of cargo delivery to Europe under the Marshall Plan, 1948-1950.

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Only less than 10% of the funds went to loans. They were issued at a very low interest rate — about 2% — for a term of 35 years or more. Some countries settled their debts even earlier: France in the early 1960s, West Germany in the early 1970s. But, for example, Britain was paying until 2006.

Compliance with all the terms of the Marshall Plan was monitored by the specially created government Administration for Economic Cooperation on the part of the USA, and by the Organization for European Economic Cooperation on the part of Europe. They not only controlled all funds and goods, but also decided on which projects money from special funds should be spent. At the same time, the Americans never forgot about their interests. For example, they did not allow the construction of large oil refineries in Europe so that they would not compete with American companies. And another 5% of the funds from the Marshall Plan went to the CIA to promote American interests in Europe and oppose communist propaganda.

The Marshall Plan was not fully implemented. In 1950, the United States intervened in the war on the Korean Peninsula, and itr distracted them from Europe. The plan was canceled in December 1951, at a cost of approximately $13.3 billion. But even this turned out to be enough. From 1948 to 1953, Western European GDP grew by more than 30%, industry by 40%, agriculture by 11%, trade volumes on the European market by 40%. Inflation stopped, state budgets stabilized.

But the Marshall Plan is not only about the economy. Transatlantic trade relations quickly turned into military-political relations, and in 1949 the North Atlantic Alliance, or NATO, appeared. Against the background of the common market, the European Coal and Steel Community was formed in 1950, which later grew into the modern European Union. The formal author of the project, George Marshall, even received the Nobel Peace Prize in 1953.

President Truman in front of the 1954 U.S. Estimated Revenue and Outlay Chart, January 8, 1953.

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In terms of strategic implications, the Marshall Plan is one of the most successful programs in the history of the American government. Economic assistance to foreign countries modeled on the Marshall Plan still remains a key element of US foreign policy. In 1961, the Economic Cooperation Administration, which oversaw the initial plan for aid to Europe, was reorganized into a separate government agency, the United States Agency for International Development (USAID). Countries around the world receive American economic and humanitarian aid, including Ukraine.

Translated from Ukrainian by Anton Semyzhenko.

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Marta Schaff. Marshall Plan. Great Neck Pub., 2009.

Charles L. Mee Jr. Saving a Continent: The Untold Story of the Marshall Plan. New Word City, 2015.

Michael Holm. The Marshall Plan: A New Deal For Europe (Part of: Critical Moments in American History). Routledge, 2016.

Bruce D. Jones. The Marshall Plan and the Shaping of American Strategy. Brookings Institution Press, 2017.

Serhii Pyvovarov
Kateryna Kobernyk

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