Marshall Plan Commemorative Section: The Marshall Plan Reconsidered: A Complex of Motives

Diane B. Kunz

From Foreign Affairs, May/ June 1997

Summary:  A look back at perhaps the most important foreign policy success of the postwar period. Edited by Peter Grose, with contributions by historians Diane B. Kunz and David Reynolds, a memoir by Charles P. Kindleberger, a profile of Marshall and Acheson by James Chace and one of Will Clayton by Gregory Fossedal and Bill Mikhail. And reflections from Roy Jenkins, Walt Rostow, and Helmut Schmidt.

Diane B. Kunz is Associate Professor of History at Yale University. Her most recent book is Butter and Guns: America's Cold War Economic Diplomacy (Free Press, 1997).

The administration continued its battle when Congress returned from its Christmas break. In hearings in January 1948, Marshall had the task of defending the $17 billion, four-year aid request. Both the size of the package and its multi-year authorization were unprecedented. A parade of notables urging enactment of the plan followed: Bernard Baruch, Allen and John Foster Dulles, H. J. Heinz II, James O'Neill, national commander of the American Legion, Walter Reuther, president of the United Auto Workers, and Hamilton Fish, who as a congressman had stood against the New Deal and for isolationism. Henry Wallace of the far-left Progressive Party stood out as one of the few dissenters, assailing the program as a step toward war.

In February a communist government took control in Czechoslovakia; supporters of the Marshall Plan did not hesitate to remind Congress and the public that a decade earlier the West had sold out that country to the Nazis. As Marshall informed the cabinet on March 5: "The strategic and political situation in Europe makes it imperative that the ERP legislation be enacted without crippling amendments." After the communist coup in Czechoslovakia, even such holdouts as the isolationist Senator Robert Taft (R-Ohio) dropped their opposition to the Marshall Plan. On April 2 Congress lopsidedly passed the European Recovery Act. The next day, a proud president signed the legislation into law. The Marshall Plan was under way.

AID IN ACTION

The Marshall Plan legislation called for the creation of an Economic Cooperation Administration (ECA), separate from the Department of State. For this critical job Truman tapped Paul Hoffman, an automobile executive highly regarded by Republicans and Democrats alike. W. Averell Harriman became the ECA's ambassador to Europe, making himself at home in an elegant office on the Place de la Concorde in Paris, where he held court under a bust of Benjamin Franklin. A modest but all-powerful army -- 630 Americans and over 800 Europeans by the end of the program in 1953 -- served under these officers.

American aid came in several varieties: dollar grants, grants in kind, and loans. The total amount disbursed under the Marshall Plan from April 3, 1948, until June 30, 1951, when remaining aid was folded into the Mutual Defense Assistance Program, totaled some $12.5 billion. The ECA allocated grants and loans according to each country's dollar balance-of-payments deficit. Britain received 23 percent of total Marshall aid, and 20 percent went to France (in each case before taking account of intra-European transfers). Overall, around one-third of ERP imports were agricultural, but imports of capital goods also proved crucial. Many of the aid dollars remained in the United States, as the secretary of agriculture had declared that surplus American agricultural products had to be purchased in the country; moreover, 25 percent of the total wheat or wheat products sent to Europe under the first ERP legislation had to be in the form of flour milled in the United States.

The American role in promoting Europe's recovery during these years extended far beyond the disbursement of aid. The ECA oversaw numerous projects, from the rebuilding of the Corinth canal by American contractors under the supervision of the Army Corps of Engineers to the modernization of mines in Turkey. In Trieste American technicians helped install U.S. equipment in an oil refinery. The ECA funded the Anglo-American Council on Productivity which, despite its name, sent businessmen from across Europe to the United States to study American production techniques. The ECA also had a small-business division which distributed information and held counseling sessions. However, most of the time ECA employees concentrated on logistical issues related to the assistance, conducting economic surveys of Europe's infrastructure, continuously reevaluating Europe's aid needs, managing agricultural shipments, and dealing with European officials. On a broader level, American officials attempted to shape European monetary and fiscal policy, especially in such areas as exchange rates and intra-European trade. The ECA had the responsibility of managing export controls to Eastern Europe and the Soviet Union, a cooperative Western policy designed to limit the flow of strategic goods to the communist bloc. The ECA also worked to acquire strategic materials for the United States.

Two contentious issues surrounded the operations from the start: the future of Germany and European economic integration. American officials saw German recovery as essential, but France and Britain still drained reparations from their zones of occupation. Not only did these outflows damage the German economy, but they undermined the Marshall Plan by making Germany, in effect, a conduit for American aid to Britain and France. Once again, the Soviet Union came to the rescue. In June 1948 Soviet forces blocked ground access to Berlin. Rather than allow the Soviets control over the former German capital, American and British aircraft supplied Berlin by air. The city became a symbol of Western resistance to Russian aggression, while the confrontation led both Britain and France to adopt more conciliatory positions on German recovery. By May 1949, when Stalin conceded defeat and the American, British, and French zones merged to become the Federal Republic of Germany, the reparations debate had faded in importance. The communist challenge had spurred the triumph of the American position on Germany's future.

The second question, economic integration, had two dimensions. From the beginning American officials had believed that multilateral European arrangements were a prerequisite for the continent's economic recovery. A joint plan would eliminate duplication and waste, maximize intra-European trade and transfers, and increase efficiency. The more fundamental consideration was whether the ERP should set Western Europe on a path that would lead from integration to economic and political union. European unity appealed to Americans for several reasons, not the least of which was the conviction that Europe's best course was to imitate the United States as closely as possible. These ideas had featured in discussions prior to the ERP's enactment and became far more important once the Marshall Plan was under way. While France, the Benelux countries, and Italy embraced the idea, Britain remained aloof.

But on the strategic plane, a transatlantic unity was emerging. The threat to Europe increasingly demanded a military as well as economic response. In the opening months of 1948, U.S. and British policymakers independently aired the possibility of a security alliance between the United States and Europe. The result of these American and British initiatives, enshrined in a treaty signed in Washington on April 4, 1949, was the North Atlantic Treaty Organization.

A SUCCESS AT HOME AND ABROAD