What was the Marshall Plan?

The European Recovery Programme (nicknamed the ‘Marshall Plan’) was set up because the economic infrastructure of Europe had been destroyed by the Second World War and because this – and the coldest winter on record – had by 1947 reduced the people of Europe to starvation.  Also, in response to Soviet ‘salami tactics’, Congress had in March 1947 decided to ‘support free peoples who are resisting attempted subjugation by armed minorities or by outside pressures.’

Returning from a fact-finding mission, a shocked General George Marshall told Truman that all of Europe would turn Communist unless the European economy could be jump-started.  So Truman agreed.  An alternative plan to finance regeneration from massive German reparations – by Treasury Secretary Henry Morgenthau – was rejected. 

Marshall announced his Plan, not in Congress, but to students at Harvard University on 5th June 1947.  He explained his idea in simple terms: the European economy had been destroyed because the Nazis had reorganised it to support their war effort.  Now, townspeople could not produce enough to afford to buy food from the farmers; and farmers were unable to get from the towns the equipment they needed to produce the food:

"...  the United States should do whatever it is able to do to assist in the return of normal economic health in the world, without which there can be no political stability and no assured peace.  Our policy is directed not against any country or doctrine but against hunger, poverty, desperation and chaos.  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."

He challenged the countries of Europe to get together and produce a plan for regeneration, which the US would fund.  Only countries which refused to co-operate with others would be refused funding. 

The British foreign secretary Ernest Bevin called the Plan ‘a lifeline to sinking men, bringing hope where there was none’ and by 12 July he had organised a meeting of European nations in Paris, which asked for $22 billion of aid.  Stalin was invited but – seeing the Plan as a US plot to undermine the Soviet Union – he forbade Cominform countries to take part.  Truman asked Congress for $17 bn, and Congress (after the scare of the collapse of Czechoslovakia in March 1948) authorised $13 bn. 

The first ship set sail from Texas to France with 19,000 tons of wheat.  Marshall Aid took the form of fuel, raw materials, goods, loans and food, US machinery to help factories to get back to normal, advisers to help rebuild transport systems.  There were nets for Norwegian fishermen, wool for Austrian weavers, and tractors for French farmers.  Britain was the main recipient, getting $3 bn aid.  France, Italy, West Germany and the Netherlands all received huge amounts. 

Marshall Aid had a huge effect on Europe; the years 1948-1952 were a time of massive economic growth.  It also stopped the spread of Communism – one of the hungry teenage boys in Germany who was given soup by American trucks driving onto his schoolyard was Helmut Kohl: who grew up to be the first Chancellor of a free and unified Germany.