Portugal 51.2 15.1 36.1
Sweden 107.3 86.9 20.4
Turkey 225.1 140.1 85.0
United Kingdom 3,189.8 2,805.0 384.8
Regional 407.0d 407.0d --
Notes:
Loan total includes $65.0 million for Belgium and $3.0 million for Luxembourg: grant detail between the two countries cannot be identified.
Includes an original loan figure of $16.9 million, plus $200.0 million representing a pro-rated share of grants converted to loans under an agreement signed February 27, 1953.
Marshall Plan aid to the Netherlands East Indies (now Indonesia) was extended through the Netherlands prior to transfer of sovereignty on December 30, 1949. The aid totals for the Netherlands East Indies are as follows:
Total $101.4 million, Grants $84.2 million, Loans $17.2 million.
Includes U.S. contribution to the European Payments Union (EPU) capital fund, $361.4 million; General Freight Account, $33.5 million; and European Technical Assistance Authorizations (multi-country or regional), $12.1 million.
Statistics & Reports Division
Agency for International Development
November 17, 1975
Origins of the Marshall Plan
Marshall’s Worldview in Early 1947
Richard Neustadt and Ernest May observed in their book, Thinking in Time: The Uses of History for Decision-Makers (1986), that Marshall had developed the habit of "seeing time as a stream": that is, of applying a consciousness of past problems, ideas, and solutions to the present rather than seeing every current problem in isolation and thus as new and unique (pp. 247-28). Marshall was not a scholar of military or political history, but he read widely and was excellent at extracting accurate lessons from his reading and from his own experience. In many respects, Marshall sought during World War II to avoid the mistakes he had witnessed in World War I and its immediate aftermath.
Consequently, Marshall was increasingly disturbed after the autumn of 1945 at what he considered the disintegration of American military power rather than the careful demobilization and reorganization for which he had planned since 1943. As he said publicly several times in the latter half of 1945, the United States courted disaster for itself and the world if it again fell "into a state of disinterested weakness" and failed to fulfill its international responsibilities for aid and assistance in postwar economic and political reconstruction. (See his October 29, 1945, speech to the New York Herald Tribute Forum, and his November 17, 1945, speech to the Salvation Army National Convention in Marshall Papers, Pentagon Office Selected, Speeches file.)
These could have remained the departing sentiments of a fading-away old soldier. Indeed, in late November 1945, Marshall longed to retire after forty-four years of active duty, but President Truman needed Marshall’s prestige and skills to attempt to mediate the Chinese civil war and (as Marshall knew by early 1946) thereafter to take over from James Byrnes as Secretary of State.
Marshall’s failure in China was not a result of his lack of negotiating skills but of the determination of both sides to seek a military solution to China’s problems. Marshall considered the Chinese Communist Party ruthless, dedicated Marxists who seemed to count on and encourage China’s economic collapse as a way of furthering their objectives. What particularly pained him, however, was that Chiang Kai-shek’s government was such a poor ally for the United States. Reactionaries within the Nationalist party presumed that U.S. national interests required it to support the Nationalists, and they thus rejected the domestic reforms that Marshall and other Truman administration leaders considered essential to undermining Communist growth.
Origins of the Truman Doctrine
Washington leaders were aware of Britain’s growing economic weaknesses, the likely effects that would have on the eastern Mediterranean, and the possibility that the Soviet Union or its surrogates would fill the power vacuum there. Even before the disastrous blizzard of December 1946 to January 1947 had pushed Britain to the edge economically, the U.S. was moving toward helping the Greek government against the Communists. The suddenness of the British notification that it had to relinquish its traditional role in Greece put Washington under the gun to act quickly. (See Howard Jones, "A New Kind of War": America’s Global Strategy and the Truman Doctrine in Greece [1989].) When the advance version of the British notes were presented on February 21, 1947, Marshall was out of town, on his way to Columbia University to receive an honorary degree and then to Princeton on the twenty-second for his first speech as Secretary of State. At Princeton, in the face of the recent elections returning Republican party majorities in both houses that were infused with the rhetoric of tax-cutting, economic nationalism, and government downsizing, Marshall reiterated his 1945 calls for Americans to learn from the lessons of past and assume their world responsibilities as citizens of a great power.
On Monday February 24 Marshall returned to his office and Dean Acheson presented the British memos, reports from Athens, and the staff’s recommendations. The situation probably reminded Marshall of the situation in China fifteen months earlier. The staff recommended the unification of all Greek parties (this time excluding the Communists and the extreme right), domestic reforms in government and tax programs, and economic and military aid from the U.S.
By February 27, Marshall’s advisers had written a plan of action, which Marshall read to a White House meeting of congressional leaders and the president. Marshall was well acquainted with all the senators and congressmen and adopted his usual low-key but earnest approach to defending the policy of aid to Greece and Turkey. Using a version of what would later be called the domino thesis, Marshall asserted that a communist victory in Greece would be a disaster. "It is not alarmist," he said, "to say that we are faced with the first crisis of a series which might extend Soviet domination to Europe, the Middle East and Asia." Marshall made no call for the defense of democracy everywhere or for an anticommunist crusade, but for containment of Soviet opportunism in the face of British weakness. American assistance would be aimed at boosting Greek public morale through financial and military equipment aid.
Under Secretary of State Dean Acheson thought that Marshall had failed to put the Administration’s case across and repainted the picture for the politicians with more vigorous strokes and in starker contrasts, an approach encouraged by Senate Foreign Relations Committee Chairman Arthur Vandenberg. Acheson asserts in his memoir, Present at the Creation (1969), that only in this way were the congressmen sufficiently impressed to take action (p. 219). This approach cleared the way for more vigorous public rhetoric by the Truman administration. (Congress ultimately appropriated $250 million for Greece and $150 million for Turkey, which was also being subjected to Soviet diplomatic pressure.)
Marshall was reluctant to put too militant a public face on the U.S. response to the Greek situation lest all hope of agreement on the treatment of Germany and Austria at the up-coming Moscow Foreign Ministers’ Conference be lost. Moreover, should the Soviet Union be provoked into aggressive action, the United States was not prepared to offer effective military resistance in Europe. Truman and certain of his advisers, however, believed that strong anticommunist rhetoric was essential to the aid bill’s passage, and despite a March 7 note from Marshall in Paris urging some cooling of the rhetoric, Marshal had almost no influence on the final form of the March 12 Truman Doctrine speech. His real influence to this point had been in reorganizing and revitalizing the State Department itself.
Hamburg's Moenckebergstrasse in the business district at the end of the war (top) and in 1950 (bottom). The Marshall Plan did not cause European reconstruction, but it gave people hope for a better future and acted as a crucial lubricant in the engine of recovery.
Moscow Foreign Ministers’ Conference
As it turned out, the President’s pronouncement appeared to have no impact on the Soviet attitude at the Moscow Foreign Ministers’ Conference. Nevertheless, the conferees meet forty-three times between March 10 and April 24 but found few areas of agreement. More important were Marshall’s frequent discussions with the British and French, smoothing out disagreements and displaying American concern; Marshall also received a dire picture of Anglo-French economic and political problems.
As for the Soviets, Marshall concluded that they had decided to stall in the expectation that the spreading social disintegration would work to their benefit. Their attitude reminded Marshall of the 1944 proposal by Secretary of the Treasury Henry Morgenthau to break up and pastoralize Germany, and when he returned to Washington he reread then Secretary of War Henry Stimson’s vehement critique of the plan. It probably also reminded him of the Communist’s attitude during his 1946 mission to China.
Marshall’s second public address as Secretary of State came in an April 28 national radio speech on the Moscow Conference. Marshall still desired to avoid a rupture with the Soviet Union, but his optimism was rapidly waning. Europe, he asserted, needed American help for reconstruction and economic relief, and there must not be further delay on a German settlement. "Disintegrating forces are becoming evident. The patient is sinking while the doctors deliberate." He called for bipartisan unity on the reconstruction of Europe.
Decision to Propose a New U.S. Aid Policy
By late April, dozens of public figures and commentators in addition to Marshall were calling for aid to Europe. Studies were already underway in the State Department that would help to lay the groundwork for a new American initiative to restore the balance of power in Europe. But Marshall and his advisers faced countervailing pressures. On the one hand, increasing misery and Communist voting strength in western Europe demanded speed and decisiveness from the Truman administration. On the other hand, domestic politics encouraged the administration to caution. While the reaction to the Truman Doctrine had generally been positive, there was a worrisome undercurrent of opposition to increased foreign aid, and not just from Republican party isolationists. Many Democratic congressmen warned that they would not stand for the presentation of another administration policy fait accompli like the Greece-Turkey aid package. State Department officials went out of their way to avoid any further hints that the United States would seek everywhere to resist communism or the Soviet menace. Marshall himself went to considerable lengths to stroke Senator Vandenberg’s ego and to reassure him that no budget-busting programs were under consideration.
By early May 1947, Marshall had decided upon a low-key approach to proposing American political-economic efforts in Europe. He suggested that he announce a new initiative at one of the graduation ceremonies that he was scheduled to attend. Acheson assured him that nobody paid any attention to what was said at those events, but Marshall knew that European leaders could be tipped off in advance to the importance of what he would say.
Marshall first thought of announcing something at the University of Wisconsin on May 24; that venue had the advantage of bearding the very conservative and hostile Robert McCormick and his Chicago Tribune tiger in their Midwestern den. But key adviser William L. Clayton (Under Secretary of State for Economic Affairs) was out of the country, the Policy Planning Staff was just getting started, and Marshall’s advisers could not have drafted a policy statement in time. The next important venue Marshall considered was Amherst College on June 15, but it was quickly evident that the United States could not wait that long. Consequently, Marshall decided upon Harvard University on June 5, as the best time, and hurriedly arranged to receive a long-delayed honorary degree from that institution.
The Harvard Speech
Secretary of State Marshall walks in the academic procession before receiving an honorary degree from Harvard University and delivering his brief Marshall Plan speech, June 5, 1947.
By the end of May, State Department planning was beginning to jell; all Marshall’s advisers were by now agreed that the United States had to launch a massive aid program. They were all too aware of the U.S.’s too-little-too-late response to West Europe’s economic crisis of 1929-31 and that it had contributed to the rise of Adolph Hitler. On May 30, Marshall directed his staff to prepare a draft for a ten-minute talk. To avoid comparisons of the new approach with the controversial Truman Doctrine, Marshall agreed with Acheson’s suggestion that he present the aid issue as a material or technological rather than an ideological problem, and to propose no American-inspired solution.
Marshall’s advisers were generally agreed on two other points: first, European nations had to take the initiative and to coordinate policies; second, the offer was made to all European states in order to avoid the implication that the United States sought to divide Europe into American and Soviet blocs. Nevertheless, it was assumed that the Soviets would never accept economic conditions such as openness, free trade, and American supervision.
The Marshall Plan speech was deliberately low-key and no master plan was enunciated; the speech had just the right degree of vagueness to require European action, yet the right degree of specificity to excite it. In time, the Marshall Plan program that evolved from the planning of the first half of 1947 would be adjudged one of the greatest of America’s foreign policy successes. Harry Truman considered the Truman Doctrine and the Marshall Plan "two halves of the same walnut," although Marshall did not.
Charles Bohlen wrote a draft of the talk for Marshall based upon a study by George F. Kennan and his Policy Planning Staff and Will Clayton’s memorandum on the seriousness of Europe’s economic plight. Marshall then modified the draft, contributing the insistence that the program come from Europe and be open to all European states willing to abide by the rules. To prevent leaks, neither President Truman nor Marshall’s State Department advisers knew the content of the final version of the speech until after it was delivered, although the text was available to newsmen at the State Department on June 4. Acheson, Kennan, and others dropped pointed hints to various influential British opinion-makers in Washington that Marshall was going to make a statement on foreign aid.
Text of the Marshall Plan Speech
(State Department handout version of 4 June 1947.
The speech was not given at the formal June 5 morning commencement exercise but after lunch when the twelve honorary degree recipients made speeches to the graduates, friends, and alumni. The speech was tape-recorded and is available from the Marshall Museum Shop.)
I need not tell you gentlemen that the world situation is very serious. That must be apparent to all intelligent people. I think one difficulty is that the problem is one of such enormous complexity that the very mass of facts presented to the public by press and radio make it exceedingly difficult for the man in the street to reach a clear appraisement of the situation. Furthermore, the people of this country are distant from the troubled areas of the earth and it is hard for them to comprehend the plight and consequent reactions of the long-suffering peoples, and the effect of those reactions on their governments in connection with our efforts to promote peace in the world.
In considering the requirements for the rehabilitation of Europe the physical loss of life, the visible destruction of cities, factories, mines and railroads was correctly estimated, but it has become obvious during recent months that this visible destruction was probably less serious than the dislocation of the entire fabric of European economy. For the past ten years conditions have been highly abnormal. The feverish preparation for war and the more feverish maintenance of the war effort engulfed all aspects of national economies. Machinery has fallen into disrepair or is entirely obsolete. Under the arbitrary and destructive Nazi rule, virtually every possible enterprise was geared into the German war machine. Long-standing commercial ties, private institutions, banks, insurance companies and shipping companies disappeared, through loss of capital, absorption through nationalization or by simple destruction. In many countries, confidence in the local currency has been severely shaken. The breakdown of the business structure of Europe during the war was complete. Recovery has been seriously retarded by the fact that two years after the close of hostilities a peace settlement with Germany and Austria has not been agreed upon. But even given a more prompt solution of these difficult problems, the rehabilitation of the economic structure of Europe quite evidently will require a much longer time and greater effort than had been foreseen.
There is a phase of this matter which is both interesting and serious. The farmer has always produced the foodstuffs to exchange with the city dweller for the other necessities of life. This division of labor is the basis of modern civilization. At the present time it is threatened with breakdown. The town and city industries are not producing adequate goods to exchange with the food-producing farmer. Raw materials and fuel are in short supply. Machinery is lacking or word out. The farmer of the peasant cannot find the goods for sale which he desires to purchase. So the sale of his farm produce for money which he cannot use seems to him an unprofitable transaction. He, therefore, has withdrawn many fields from crop cultivation and is using them for grazing. He feeds more grain to stock and finds for himself and his family an ample supply of food, however short he may be on clothing and the other ordinary gadgets of civilization. Meanwhile people in the cities are short of food and fuel. So the governments are forced to use their foreign money and credits to procure these necessities abroad. This process exhausts funds which are urgently needed for reconstruction. This a very serious situation is rapidly developing which bodes no good for the world. The modern system of the division of labor upon which the exchange of products is based is in danger of breaking down.
The truth of the matter is that Europe’s requirements for the next three or four years of foreign food and other essential products--principally from America--are so much greater than her present ability to pay that she must have substantial additional help, or face economic, social and political deterioration of a very grave character.
The remedy lies in breaking the vicious circle and restoring the confidence of the European people in the economic future of their own countries and of Europe as a whole. The manufacturer and the farmer throughout wide areas must be able and willing to exchange their products for currencies the continuing value of which is not open to question.
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 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. Such assistance, I am convinced, must not be on a peace-meal basis as various crises develop. Any assistance that this Government may render in the future should provide a cure rather than a mere palliative. Any government that is willing to assist in the task of recovery will find full cooperation, I am sure, on the part of the United States Government. Any government which maneuvers to block the recovery of other countries cannot expect help from us. Furthermore, governments, political parties or groups which seek to perpetuate human misery in order to profit therefrom politically or otherwise will encounter the opposition of the United States.
It is already evident that, before the United States Government can proceed much further in its efforts to alleviate the situation and help start the European world on its way to recovery, there must be some agreement among the countries of Europe as to the requirements of the situation and the part those countries themselves will take in order to give proper effect to whatever action might be undertaken by this Government. It would be neither fitting nor efficacious for this Government to undertake to draw up unilaterally a program designed to place Europe on its feet economically. This is the business of the Europeans. The initiative, I think, must come from Europe. The role of this country should consist of friendly aid in the drafting of a European program and of later support of such a program so far as it may be practical for us to do so. The program should be a joint one, agreed to by a number, if not all European nations.
An essential part of any successful action on the part of the United States is an understanding on the part of the people of America of the character of the problem and the remedies to be applied. Political passion and prejudice should have no part. With foresight, and a willingness on the part of our people to face up to the vast responsibility which history has clearly placed upon our country, the difficulties I have outlined can and will be overcome.
Results of the Speech
British Foreign Minister Ernest Bevin heard a BBC report on the Marshall’s Harvard speech shortly after it was given; the next day he contacted French Foreign Minister Georges Bidault and arranged for a June 17 conference in Paris to consider the ideas Marshall had put forth. The key issue was to define what was the nature of the economic problem in Europe, what Europe could do about it, and what was needed from the U.S. Many in Congress were displeased with the various socialist schemes in Europe and dubious about any self-perpetuating U.S. government welfare programs. The Europeans wanted to know what the U.S. required of Europe, and the Americans wanted the potential recipients of aid to list their resources for self-help.
Soviet Foreign Minister Molotov was invited to the Paris meetings, and some countries in the Soviet sphere of influence (e.g., Poland and Czechoslovakia) expressed an interest in participating. Molotov walked out on July 2, however, labeling the Marshal Plan American economic imperialism; Soviet-dominated countries quickly fell into line. One scholarly estimate is that the Soviet Union extracted some $14 billion from East Europe between 1948 and 1953.
On July 12, 1947, representatives of sixteen nations (called the CEEC--Committee of European Economic Cooperation) began meeting in Paris to discuss reconstruction. When the Truman administration leaders did not like the recommendations the CEEC initially produced, Marshall sent State Department Policy Planning Staff head George F. Kennan to Paris to tell the CEEC representatives how to make their proposals politically acceptable to a majority in Congress. The CEEC reported on September 12, 1947, that the sixteen nations needed $19.1 billion for the period 1948-51 or disaster would strike Europe. President Truman called a special session of Congress on November 17 to get short-term economic funding for France, Italy, and Austria. On December 19 he submitted to Congress the European Recovery Program bill, requesting $17 billion over the next four years.
Struggle for Congressional Approval
Marshall began to concentrate his energies on getting the Economic Cooperation Act (authorizing and funding the ERP) passed after returning from the London Foreign Ministers’ meeting in December 1947. He was the lead-off witness in the Senate hearings on January 8, 1948. Marshall insisted that the ERP would reduce the expansion of Soviet influence without the need to resort to overheated rhetoric.
Secretary of State Marshall testifies in favor of the Economic Cooperation Act.
George C. Marshall’s speeches in support of Marshall Plan authorization and funding:
19 December 1947 to the nation via radio and television on the results of London Foreign Ministers’ Conference: Soviet obstruction re Germany, need to get German issues settled in order for West Europe to recover from the war
8 January 1948 opening statement to the Senate Foreign Relations Committee ERP hearings
12 January 1948 opening statement to the House Foreign Affairs Committee ERP hearings
15 January 1948 to the Pittsburgh Chamber of Commerce
22 January 1948 to the National Cotton Council, Atlanta, Georgia
13 February 1948 to National Farm Institute, Des Moines, Iowa (by telephone from Knoxville, Tennessee, because of bad flying weather)
11 March 1948 to the Federal Council of Churches, Washington Cathedral
28 May 1948 to the General Federation of Women’s Clubs, Portland Oregon
Europe’s communists helped Congress decide. In addition to the specter of their growing power in West European countries (especially Italy and France), in October 1947 the communists issued a manifesto reviving Comintern, their international organization pledged to destroying world capitalism. In February 1948 the coup that gave the communists control of the government of Czechoslovakia--a country whose 1938 fate was linked to Western appeasement of the insatiable Hitler--undermined the last important congressional opposition to the Marshall Plan.
President Truman signs the Economic Cooperation Act on April 3, 1948. (Marshall is at the Conference of American States meeting in Bogota, Colombia.)
The vote in favor of authorization for the Economic Cooperation Act of 1948 was: Senate 69-17 (March 13); House, 329-74 (April 2). The bill authorized an appropriation of $5.3 billion for the program’s first twelve months. In his testimonies, Marshall had insisted that the program should be administered by an autonomous agency headed by a single person (i.e., something like Dwight Eisenhower’s 1944-45 Supreme Headquarters Allied Forces Europe). Congress was determined to have an important businessman head the Economic Cooperation Administration that was to implement the Marshall Plan. Paul Hoffman, head of the Studebaker Corporation and a favorite of Vandenberg’s, was chosen. Marshall never interfered with the ECA after Hoffman took command.
Examples of the Uses of Marshall Plan Aid
The first ship carrying Marshall Plan aid arrives in Bordeaux, France, May 1948. U.S. Ambassador to France Jefferson Caffery is on hand to welcome it. A shipment of U.S. wheat arrives in the Netherlands.
The Marshall Plan was a complex undertaking that is not easily described. The following are a few examples of how the program worked:
(1) Pays freight subsidies for 16.8 million private voluntary relief packages to Europe.
(2) Funds building of a new wharf in North Borneo to help that British colony export vitally needed rubber.
(3) Assists building railroads and water systems in French North Africa
(4) $50 million for medicine to combat tuberculosis.
(5) Technical assistance program: over 3,000 Europeans make six-month visits to various U.S. industries to learn new techniques; there was a similar program in agriculture.
(6) The Ford Motor Co. in Britain receives funds to replace machine tools needed to produce cars, trucks, and tractors for export, thereby earning valuable foreign exchange credits.
(7) The Otis Elevator Company (U.S.) helps to modernize British factories, and its investment is guaranteed by ECA insurance.
(8) ECA money enables Portugal to purchase key equipment and materials to build a new hospital-tender ship for its cod-fishing fleet.
(9) The French aircraft industry in able to purchase propellers for the aircraft it is producing.
(10) An alcohol-producing plant in Scotland is granted $6.5 million, thereby reducing British imports and facilitating plastic, pharmaceutical, and rayon production.
Bibliography
- John Gimbel, The Origins of the Marshall Plan (1976);
- Imanuel Wexler, The Marshall Plan Revisited (1983);
- Michael Hogan, The Marshall Plan (1987);
- S. E. Harris, ed., Foreign Economic Policy for the United States (1948, repr. 1968);
- H. B. Price, The Marshall Plan and Its Meaning (1955).
World under the US influence:
The Marshall plan
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