On 12th March 1947 President Truman, in response to the failing economies in Europe and the communist insurrection in Greece, gave a speech which became the Truman Doctrine declaring: ‘I believe that it must be the policy of the United States to support free peoples who are resisting attempted subjugation by armed minorities or by outside pressure. Truman was petrified by the idea that a domino effect would soon wreck havoc in Western Europe and that eventually communism would also find its way across the Atlantic and penetrate northern America. The prevailing attitude was that communism means a dark future for America and the end of free trade and civilized life in general. In response to this Secretary of State General George C. Marshall, in a May 1947 speech, planted the idea for what became known as the Marshall Plan for the reconstruction of Western Europe and Japan. The Marshall Plan was created to assist those European countries that were in need of financial aid after the war. The United States feared that "poverty, unemployment and the dislocation of millions of people in the post-war era were reinforcing the communist parties in many Western European countries." The American Secretary of State George C. Marshall, in a speech which he gave at Harvard University, emphasized the forthcoming dark future for the European countries unless powerfully supported by America. "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." To that end, the Marshall Plan was introduced with the aim to "win over" Western Europe, and to ensure the support of its countries for democracy.
Although the Marshall plan has traditionally been seen as a decisive turning point, many contemporary scholars argue that Europe revived spontaneously during 1945-6, and that American ‘dollars did not save the world’ in 1947-8. Criticism of the Marshall Plan became prominent among historians of the revisionist school during the 1960s and 1970s. They argued that the plan was American economic , and that it was an attempt to gain control over Western Europe just as the Soviets controlled Eastern Europe. In the 1980s criticism of the Marshall Plan's claim to a decisive role in Europe's recovery developed. These critics point out that growth in many European countries revived before the large-scale arrival of U.S. aid, and was fastest among some of the lesser recipients. The first person to make this argument was the economic historian who argues that while Marshall aid eased immediate difficulties and contributed to the recovery of some key sectors, growth from the post-war nadir was largely an independent process.
However most historians agree that although Marshall Plan aid was small, compared to the gross domestic product of the European nations, it is of critical importance due to the moment when it was implemented. True, Europe was experiencing rapid recovery from the effects of the war by 1947, but the winter of 1946–1947 and consequent shortages of food and fuel threatened economic collapse and political instability. In the case of France, she was producing 6.7 million metric tons of wheat in 1946 but only half as much in 1947, and the bread ration was reduced to 250 and then 200 grams per day. Investment could not have continued in these conditions; small in relation to French GDP, the Marshall Plan provided up to fifty percent of Monnet Plan investment in 1948. More importantly, what William Clayton correctly perceived from Washington was a breakdown in the structure of European markets, with peasants withholding their grain from the cities and feeding it to cattle. Overall industrial production was 10 to 15 per cent below the level of 1938. In Greece it was only 70 per cent of the pre-war level, in Austria less than 60 per cent, and in Germany 35 per cent. Agricultural production was down by 15-20 per cent and Europe was facing a fuel crisis due to stocks being exhausted in the harsh winter of 1946-7. Trade was at a very low level and there was a danger of famine due to widespread crop failures (1). Most historians agree that the crisis was real, and, as it worsened during 1947, the Americans were obliged to step in with "interim aid" even before the Marshall Plan could be put through Congress in 1948.
The Marshal Plan organized and distributed over a period of the four years of its existence some 17 billion USD worth of economic aid. By 1950 industrial production was 45 per cent higher than in 1947, steel production had risen by 66 per cent, cement by 82 per cent and electric power by almost 25 per cent. The balance of payments deficit was reduced from 7.9 billion dollars in 1947 to less than 2 billion dollars in 1950 and the gold and dollar deficit fell from 8.5 billion to about 1.5 billion (2). The Plans success brought a 15 to 25 percent of national production growth in the 16 nations receiving it benefits. American President Truman was so impressed by the plan's success that he initiated its continual and offered it to various third world countries in 1949.
As well as helping Europe economically recover, the Marshall plan had other successes. There was a growth of cooperation between European countries reflected in the work of the Organisation for European Economic Co-Operation. For example the joint preparation of import programs, the elimination of obstacles to the free movement of goods and the establishment of the European Payments Union. As well as this a real partnership between the United States and Europe was developed. In some cases American influence was much wider than aid alone. In West Germany for example, Marshall Aid arrived little and late, yet it is difficult to believe that the wider effects of American policy on security and trade were not crucial for German recovery.
In conclusion, I agree with Killick, that although 'American policy was very important in European reform and development' the 'potential for rapid growth was already present, but it had to be activated and directed into viable channels' (3). The Marshall Plan established 'a liberal policy aimed at restoring European viability, American trade and international peace' (4). Marshall Plan met the British financial crisis of 1947 and provided for German reconstruction and integration into the Western bloc. Although there is evidence that the Marshall Plan’s impact was small in areas, overall Marshall Aid helped the reestablishment of markets and stimulated the revival of intra-European trade, of critical importance to the smaller European countries. Without the Marshall Plan France and Italy could have collapsed, dragging down the whole European system.
REFERENCES
(3) John Killick. The United States and European Reconstruction, 1945–1960. (BAAS paperbacks.) Edinburgh: Keele University Press. 1997, p180-181
(4) John Killick. The United States and European Reconstruction, 1945–1960. (BAAS paperbacks.) Edinburgh: Keele University Press. 1997, p185
(1) Robert Majolin. Europe and the United States in the World Economy. Durham, N.C. Duke University Press. 1953, p 3-4
(2) Robert Majolin. Europe and the United States in the World Economy. Durham, N.C. Duke University Press. 1953, p 9-11