The Marshall Plan.

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A Summary of the Marshall Plan

Marshall Plan Expenditures (chart)

Origins of the Marshall Plan

Marshall’s Worldview in Early 1947

Origins of the Truman Doctrine

Moscow Foreign Ministers’ Conference

Decision to Propose a New U.S. Aid Policy

The Harvard Speech

Text of the Marshall Plan Speech

Results of the Speech

Struggle for Congressional Approval

Examples of the Uses of Marshall Plan Aid



On June 5, 1947, Secretary of State George C. Marshall spoke at Harvard University and outlined what would become known as the Marshall Plan. Europe, still devastated by the war, had just survived one of the worst winters on record. The nations of Europe had nothing to sell for hard currency, and the democratic socialist governments in most countries were unwilling to adopt the draconian proposals for recovery advocated by old-line classical economists. Something had to be done, both for humanitarian reasons and also to stop the potential spread of communism westward.

The United States offered up to $20 billion for relief, but only if the European nations could get together and draw up a rational plan on how they would use the aid. For the first time, they would have to act as a single economic unit; they would have to cooperate with each other. Marshall also offered aid to the Soviet Union and its allies in eastern Europe, but Stalin denounced the program as a trick and refused to participate. The Russian rejection probably made passage of the measure through Congress possible.

The Marshall Plan, it should be noted, benefited the American economy as well. The money would be used to buy goods from the United States, and they had to be shipped across the Atlantic on American merchant vessels. But it worked. By 1953 the United States had pumped in $13 billion, and Europe was standing on its feet again. Moreover, the Plan included West Germany, which was thus reintegrated into the European community. (The aid was all economic; it did not include military aid until after the Korean War.)

Aside from helping to put Europe back on its feet, the Marshall Plan led to the Schuman Plan, which in turn led to Euratom, then the Coal and Iron Community and the Common Market, and pointed to what may yet evolve into an economically and politically united Europe. In many ways, the Marshall Plan satisfied both those who wanted our foreign policy to be generous and idealistic and those who demanded realpolitik; it helped feed the starving and shelter the homeless, and at the same time stopped the spread of communism and put the European economy back on its feet.

A Summary of the Marshall Plan

Even now a model for positive economic diplomacy, the Marshall Plan was a rational effort by the United States aimed at reducing the hunger, homelessness, sickness, unemployment, and political restlessness of the 270 million people in sixteen nations in West Europe. Marshall Plan funds were not mainly directed toward feeding individuals or building individual houses, schools, or factories, but at strengthening the economic superstructure (particularly the iron-steel and power industries). The program cost the American taxpayers $11,820,700,000 (plus $1,505,100,000 in loans that were repaid) over four years and worked because it was aimed at aiding a well-educated, industrialized people temporarily down but not out. The Marshall Plan significantly magnified their own efforts and reduced the suffering and time West Europe took to recover from the war. The program--whose official title was "European Recovery Program"--aimed at: (1) increasing production; (2) expanding European foreign trade; (3) facilitating European economic cooperation and integration; and (4) controlling inflation, which was the program's chief failure.

The idea of massive U.S. loans to individual countries had already been tried (nearly $20 billion--mainly long-term, low interest loans--since the war’s end) and had failed to make significant headway against Europe's social and economic problems. The plan that Marshall enunciated at Harvard University on June 5, 1947, was revolutionary in that it required the recipients to organize to produce a rational, multilateral approach to their common economic problems. Another innovative feature was its limited duration: four years maximum, thereby assuring American taxpayers and their representatives that the program would not be an indefinite commitment.

The economic problems in 1947-48 included not only the lack of capital to invest, but also the need for Europeans to overcome a U.S. trade surplus with them so massive as to imperil further trade and to encourage unmanageable inflation. Marshall Plan money helped stimulate the revival of European trade with the world and increased trade among European countries.

Americans were reluctant to invest in Europe because their profits were available only in local currencies that were little desired by U.S. businesses and investors. The Marshall Plan guaranteed that these investors would be able to convert their profits earned in European currencies into U.S. dollars. Grants and loans in U.S. dollars enabled managers in Europe to purchase in America specialty tools for their new industries. Marshall Plan money also paid for industrial technicians and farmers to visit U.S. industries and farms to study American techniques. Plan funds even paid the postage on privately contributed relief packages.

Many people in Washington helped to implement and manage the European Recovery Program that Marshall first outlined at Harvard; this is why, in addition to his normal modesty, Marshall refused to call the idea the "Marshall Plan." He always believed that his greatest contribution to the program was his 1947-48 nationwide campaign to convince the American people--and through them the Congress--of the its necessity; he likened his efforts in scope and intensity to a campaign for the presidency.

Over its four-year life, the Marshall Plan cost the U.S. 2.5 to 5 times the percent of national income as current foreign aid programs. One would need to multiply the program's $13.3 billion cost by 10 or perhaps even 20 times to have the same impact on the U.S. economy now as the Marshall Plan had between 1948 and 1952. (Most of the money was spend between 1948 and the beginning of the Korean War (June 25, 1950); after June 30, 1951, the remaining aid was folded into the Mutual Defense Assistance Program.)

On December 10, 1953, George C. Marshall received the Nobel Peace Prize in Oslo, Norway. He accepted it, not as his individual triumph, but as the representative of the American people, whose efforts and money had made the program a success.

Marshall Plan Expenditures

Economic Assistance, April 3, 1948 to June 30, 1952

(in millions of dollars)

COUNTRY Total Grants Loans

Total for all countries $13,325.8 $11,820.7 $1,505.1


Austria 677.8 677.8 --

Belgium-Luxembourg 559.3 491.3 68.0a

Denmark 273.0 239.7 33.3

France 2,713.6 2,488.0 225.6

Germany, Federal Republic of 1,390.6 1,173.7 216.9b

Greece 706.7 706.7 --

Iceland 29.3 24.0 5.3

Ireland 147.5 19.3 128.2

Italy (including Trieste) 1,508.8 1,413.2 95.6

Netherlands (*East Indies)c 1,083.5 916.8 166.7

Norway 255.3 216.1 39.2

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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 --


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 ...

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