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).

Fifty years ago this June, Secretary of State George Marshall offered unprecedented American assistance to the European countries that would together draft a blueprint for their economic recovery. Within ten months, this vague proposal, known as the Marshall Plan, became a detailed program and then law. Billions of American dollars and tons of American products flowed across the Atlantic over the next five years. As large crates bearing the label "European Recovery Program" (ERP) became familiar sights in Western Europe, the contemporary verdict on the Marshall Plan came in clearly: it was a grand success.

Historical scholarship usually follows the laws of physics: what goes up, must come down. New generations of historians challenge the interpretations of their predecessors and question the deeds of their forefathers, especially those that have received widespread praise. Complementing these trends, the end of the Cold War has forced scholars to rethink their views on the last half-century. But, except for some of the fine points regarding motives, operations, and outcomes, the Marshall Plan has largely been spared this revisionist fate. The collapse of the Soviet Union, the thaw of the Cold War, and geopolitics' return to the messy sordidness of history have only enhanced the importance of the Marshall Plan and the reputation of its American creators.

The Marshall Plan served as the economic and political foundation for the Western alliance that waged the Cold War. It allowed the United States gradually to engage itself in the bipolar confrontation by first committing money, not blood. After its initial subscription of dollars, the United States backed up its investment with military force, protecting Berlin against the Soviet blockade and forming the North Atlantic Treaty Organization, the first permanent military alliance in the nation's history. By providing the seed money for the recovery of Western Europe, the Marshall Plan transformed its beneficiaries from poverty cases into partners. During the quarter-century after 1948, Western Europe recorded its highest economic growth ever. This miraculous progress -- indeed, the German recovery was known as the wirtschaftwunder, or economic miracle -- muted the communist sirens on the eastern side of the Oder-Neisse line. Financial recovery and political stability went hand in hand. And military security soon followed: as the Americans came to see the Europeans as potential contributors to their own defense, Washington became increasingly committed to the alliance.

Thanks to the Marshall Plan, Western Europe could emulate the United States, giving its citizens butter for the good life while not stinting on the guns that would protect that prosperity. The United States and its team had the recipe; the Soviet Union and its Warsaw Pact partners did not, for they lacked the economic and political freedom needed to replicate the winning amalgam.

A WORLD MADE SAFE FOR CAPITALISM

What seems evident in retrospect -- the need for American help to rebuild Europe -- had not yet become clear at the turn of 1947. The worst winter in a century had paralyzed the continent. Shivering British officials worked in unheated offices as coal supplies piled up at mineheads. Railroad cars froze on tracks through out Europe. General Lucius Clay, the U.S. military commander in occupied Germany, concluded that Germany's predicament was "truly appalling."

The international political situation was almost as dismal. Deadlocked Council of Ministers meetings ended any hope that the chasm between the United States and Britain, on the one hand, and the Soviet Union, on the other, could be bridged. In March President Truman took the enormous step of offering aid to Greece and Turkey to combat perceived communist subversion. "It must be the policy of the United States to support free peoples who are resisting attempted subjugation by armed minorities or by outside pressures," he told a joint session of Congress. The influential Senator Arthur Vandenberg (R-Mich.) had advised the president to pull out all the stops, and that is exactly what Truman did. Congress authorized $250 million in aid for Greece and $150 million for Turkey. Yet legislators applauded enthusiastically only when Truman promised that these loans would promptly be repaid. The United States had appropriated nearly $20 billion for various foreign-aid programs in the two years since the end of World War II, and Congress and the American people had wearied of seeing their generosity seemingly squandered. But Truman realized that American national security (a term not yet in vogue) demanded an economically healthy Western Europe.

The United States had earlier underestimated the depth of the European crisis. During the war years, U.S. officials had devoted much thought to the design of the postwar economic rules of the game. Learning from the failures of Versailles, they outlined the financial and trade parameters that would guide American economic diplomacy and nurture a peaceful world. The result was the Bretton Woods agreements of July 1944, establishing the International Monetary Fund to supervise and maintain global financial relations and the International Bank for Reconstruction and Development, popularly called the World Bank, to offer large-scale capital loans. The aim was laudable, but the institutions' funds were paltry. The IMF and World Bank received less than $20 billion between them to revive the international monetary system. Britain's virtual bankruptcy in 1945 undermined the foundation on which the Bretton Woods institutions had been laid. Rather than start afresh, the Truman administration granted Britain a loan for $3.75 billion. Other stopgap credits followed.

Even as their postwar plans proved inadequate, American policymakers refused to examine the underlying assumption of their economic diplomacy: the international capitalist system was basically healthy, needing only a government jump-start and some clear guidelines. But the European crisis of 1947 exploded that myth. American officials now accepted that direct U.S. government assistance was the answer. The New Deal had made America safe for capitalism; the Marshall Plan would do the same for Europe. Truman administration officials viewed relief and recovery as intertwined, and the Marshall Plan, with a longer-range vision than most other aid programs, was conceived with its own end in sight: it would help Western Europe rebuild the industrial base that was the key to European prosperity, eventually obviating the need for further American assistance. The first step was to remedy the "dollar gap"; Europe was desperately short of the dollars needed for the American raw materials and parts that would lay the groundwork for the continent's reconstruction.

Charitable considerations played a large role in the Marshall Plan, but strategic concerns were equally important. American officials worried about the leftward turn in European politics, from the pervasive socialist influence throughout Europe to the heavy communist inroads in France and Italy. No one in Washington in May 1947 feared the imminent arrival of Soviet tanks in Paris or Rome. But, as George Kennan's Policy Planning Staff had pointed out, "economic maladjustment . . . makes European society vulnerable to exploitation by any and all totalitarian movements." In other words, a hungry, suffering electorate might vote communist governments into power. The Marshall Plan, wrote Kennan in December 1947, would be an effective tool in the strategy of containment.