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Marshall Plan

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Marshall Plan

The Marshall Plan was one of the first definite instances of the United States committing itself to prolonged engagement with European affairs after the Second World War. Although the Plan was seemingly a generous offer of economic aid to a devastated Europe, political tensions were also at play, with the Marshall Plan a significant step in starting the Cold War.

So how did an American initiative for foreign aid cause so much global political tension? Let's find out!

Marshall Plan Definition

As Europe was the theatre for WWII warfare, vast areas of European land were destroyed by frontline combat. Due to the strategic use of civilian bombing, many countries' areas of industry, transport infrastructure, factories, power plants and agricultural land was destroyed.

The European economy was brought to its knees by WWII, and the United States was the only country economically stable enough to help. Let's see how this led to the implementation of the Marshall Plan.

The Marshall Plan was an economic recovery programme proposed in 1947 by the United States to offer financial assistance to European countries affected by the destruction of industries during the Second World War.

The Marshall Plan Remains of a church in Coutances, France 1944 StudySmarterA 1944 photograph of the remains of a church in Coutances, France. Large areas of Europe were destroyed by the warfare of WWII, requiring a vast amount of financial aid to rebuild its economies. Source: Wikimedia Commons

Marshall Plan Dates

Key dateEvent
12 March 1947The Truman Doctrine is announced.
5 June 1947Secretary of State George C. Marshall proposes a relief plan for Europe.
June -July 1947British, French, and Soviet ministers meet to discuss the Plan, but the USSR pulls out.
12 July 1947The Conference for European Economic Cooperation meets in Paris to discuss the terms of the Marshall Plan.
3 April 1948President Harry Truman authorises the Marshall Plan.
24 June 1948The Berlin Blockade begins as the USSR blocks access to West Berlin, partly in response to the Marshall Plan.

The Truman Doctrine and the Marshall Plan

Harry Truman was elected as vice-president of the United States in January 1945 and took office as President in April 1945 when Franklin Roosevelt died. Truman represented the US at the Potsdam Conference in July 1945 and introduced a harder line of international affairs against the USSR and communism.

The effect of the Truman Doctrine

The Marshall Plan Truman issuing his Doctrine 1947 StudySmarterTruman issued the Truman Doctrine in 1947, introducing a new approach to international relations with the USSR. Source: Wikimedia Commons

The Truman Doctrine was a key American initiative after the Second World War and signalled the development of the United States' foreign policy.

  • The Truman Doctrine was issued by US President Harry Truman on 12 March 1947 as an official US policy of containment, influenced by the growing culture of anti-communist expansion initiated by Ambassador George Kennan's 1946 "Long Telegram".
  • The key aim of the Truman Doctrine was to provide foreign aid to Greece and Turkey to stop communist insurgencies and therefore halt the domino effect. Britain had been previously providing assistance but could no longer due to its dire financial situation post-WWII.
  • The Truman Doctrine provided $400 million of aid to the two countries and thus established the US policy of containment against the spread of communism.

Truman declared in his closing remarks:

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.

Following the Truman Doctrine, United States foreign policy became increasingly concerned with European politics.

The Origins of the Marshall Plan

The Marshall Plan George C Marshall gives speech to the House Appropriations Committee StudySmarterGeorge C. Marshall was the US Secretary of State who created and helped to implement the European Recovery Program (ERP) in June 1947. It was later dubbed the "Marshall Plan" in recognition of his efforts. Source: Wikimedia Commons

In the wake of the destruction of WWII, the economic hardship of most of Europe was seen as a breeding ground for possible communist uprisings, especially with the USSR's continued military occupation of much of Eastern Europe. Thus European economic recovery became intrinsically linked to the US policy of containment.

  • US Secretary of State George Marshall announced his proposal for US foreign aid to kickstart the European economy in a speech made at Harvard University on 5 June 1947.
  • British and French foreign ministers met in June 1947 to discuss the economic requirements of Europe based on Marshall's proposal.
  • European economic cooperation was required to receive US support. This meant that participating countries would open up reliable trade with the US, increase production, uphold capitalism, and quash communist parties.
  • Between June and July 1947, Britain, France, and the USSR discussed the proposed European Recovery Program (ERP). Discussions broke down in early July, and the Conference of European Economic Cooperation was organised without the USSR's support.

The European Recovery Program (ERP) was the official name of the Marshall Plan.

Conference of European Economic Cooperation

On 12 July 1947, the Conference met in Paris to discuss the terms of the Marshall Plan. Invitations to the Conference were sent to 22 European nations, including the Soviet Union and its satellite states such as Poland and Hungary.

The USSR refused the invitation and pressured its satellite states to also decline the invitation. A total of 16 nations met at the Conference.

The attendees at the Conference of European Economic Cooperation were:

  • Austria
  • France
  • Italy
  • Portugal
  • Belgium
  • Greece
  • Luxembourg
  • Sweden
  • Britain
  • Iceland
  • The Netherlands
  • Switzerland
  • Denmark
  • Ireland
  • Norway
  • Turkey

The Conference led to the creation of the Committee of European Economic Cooperation (CEEC) which calculated the amount of American aid needed for each country.

It is important to know the distinction between the Conference and the Committee of European Economic Cooperation. The Conference was attended by national representatives who could make political decisions for their respective countries. The Committee was created by the Conference and was attended by civil servants to work out the economic aid required. The Committee is often abbreviated to CEEC.

Implementing the Marshall Plan Benefits

The CEEC sent their report to the US in September 1947, and the European Recovery Program was worked out by American Congress. Two organisations were established to implement the Marshall Plan, and Truman authorised it on 3 April 1948.

The Economic Cooperation Administration (ECA)

The Marshall Plan A propaganda poster supporting the marshall plan StudySmarterThis poster was created by the Economic Cooperation Administration in 1950 to gather support for the Marshall Plan and its benefits. Notice the significance of the US flag guiding the windmill of the European flags. Source: Wikimedia Commons

The ECA was established in early 1948 and decided how the Marshall Plan funds were allocated. This was often with political motivations in mind. An estimated total of $13.3 billion was provided by the Marshall Plan to 16 countries to aid their recovery.2 Each of the 16 countries of the CEEC had an ECA office that would organise the administration of the Marshall Plan benefits.

The Allied powers from WWII were allocated a higher proportion of funding, with Britain receiving 25% and France 20% of Marshall Plan aid. Former Axis powers, such as Italy, and neutral countries such as Switzerland, received less foreign aid than the Allies, indicating the United States' political stance whilst issuing the Marshall Plan. Neutral countries like Ireland could receive loans instead.3

West Germany received over 10% of Marshall Plan aid to rebuild its economy. The country's stability was seen as important to Western powers but also served to denounce Soviet-supported East Germany, another example of the political motivations behind the US's European funding. The US's Central Intelligence Agency (CIA) received 5% of Marshall Plan aid to set up "front" businesses in Europe to provide reliable trade with the United States. The CIA also reportedly supported anti-communist insurgencies in Soviet satellite states, such as the failed Ukrainian uprising, which ended in 1950.

Despite the blatant politics behind the Marshall Plan, George Marshall had stated that:

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.1

The Organisation of European Economic Cooperation (OEEC)

The Marshall Plan map of european countries who received marshall plan aid StudySmarterThis map shows the proportion of Marshall Plan aid that European countries received. Britain and France's proportion was significantly higher than any other nation. Source: Wikimedia Commons

The OEEC was established as the European counterpart to the ECA and made sure that Marshall Plan recipients implemented the economic cooperation with the US. The 16 participants received the American foreign aid as a grant rather than a loan, so it was not required to be paid back. Around 5% of the aid was sent back to the US to cover the administrative costs of implementing the Marshall Plan.

European countries were encouraged to develop trade with the US, which helped to increase the economies of both Europe and the US. Marshall Plan recipients also increased production in accordance with the OEEC, and the gross National Product rose by 15-25% in European countries between 1948-51, partly due to the Recovery Program. With increasingly more stable economies, European morale also rose and helped to develop stable democratic governments that were compatible with Western capitalism.

Although the Marshall Plan was initially supposed to decrease American military engagement in Europe, the Soviet-US divisions were deepened. Political tension arose from the Marshall Plan, and hence some historians attribute the American initiative for foreign aid as the starting pistol for the Cold War.

Consequences of the Marshall Plan

The Marshall Plan Children watch a plane in the berlin airlift StudySmarterThe economic and political accomplishments of the Marshall Plan worsened relations between the US and the USSR. One Soviet response was the Berlin Blockade in June 1948. Britain and the US airlifted supplies into West Berlin to avoid starvation. Source: Wikimedia Commons

So was the Marshall Plan a success? Let's look at some consequences of the American foreign aid initiative.

Successes

  • The Marshall Plan significantly aided Europe's economic recovery after the Second World War and saved countries that were on the brink of famine and economic collapse. European steel, chemical and engineering industries were restarted.
  • The spread of communism was stalled in some countries, such as Italy, which elected the Christian Democrat Party in its April 1948 elections rather than the prominent Italian Communist Party.
  • American trade brought Europe into a new era of consumerism, increasing the availability of food, employment, and industry.
  • The economic and political success of the Marshall Plan inspired United States foreign policy to extend throughout the world. The Point Four Program was announced in January 1949 and extended US foreign aid to "developing countries" in South America, the Middle East, South East Asia, and Africa.

Unintended failures

  • The inclusion of West Germany in the Marshall Plan united the Allies for an economically stable Germany. They created Bizonia (union of US and British occupied Germany) in May 1947 and subsequently Trizonia in April 1949 (addition of French-occupied Germany) and proposed a unified currency to further boost Germany's economy. This angered the USSR, which then started the Berlin Blockade.
  • Furthermore, the political and economic union of much of Western Europe furthered division with the USSR. The Marshall Plan and the formation of NATO had parallel Soviet responses in Cominform, the Molotov Plan, and Comecon.

Despite the significant economic success of the Marshall Plan, the political motivations had the effect of furthering divisions between the US and the USSR. The US policy to contain communism in Europe antagonised the USSR and helped to precipitate the conditions for the Cold War.

Marshall Plan - Key Takeaways

  • The Truman Doctrine was issued on 12 March 1947 and demonstrated a change in direction for US foreign policy. It aimed to contain the spread of communism through international aid to Greece and Turkey.
  • The Marshall Plan (a.k.a. The European Recovery Program) was proposed on 5 June 1947 and was primarily an American initiative for the economic recovery of Europe in the aftermath of the destruction of WWII. It served a dual purpose of following the Truman Doctrine by also stopping the USSR's threat of communist expansion throughout Europe by restoring economies with democratic governments.
  • One of the US's requirements for providing aid was that countries would develop trading with the US, increase production, and favour capitalism over communism. The funding was organised by the US's ECA, whilst the requirements were agreed upon by the CEEC and implemented by the OEEC.
  • Of the 22 countries invited to participate in the Marshall Plan, 16 agreed. The Allied powers received a higher proportion of funding than the former Axis powers. However, West Germany was significantly aided in order to demonstrate the benefits of capitalism in comparison to the communist East German economy.
  • The Marshall Plan helped to restart Europe's economy but had other side effects, such as increasing the divisions between Western Capitalism and Soviet Communism. The resultant political tensions from the Marshall Plan can be associated with creating the atmosphere for the Cold War.

1. Speech of George Marshall at Harvard University, 5 June 1947.

2. Kamil Kowalski, 'American Economic Aid Plans on the Example of the Marshall Plan and the Alliance for Progress: Similarities and Differences', Humanities and Social Sciences, 22:24 (2017), pp 77-92.

3. Ibid., p. 86.

Frequently Asked Questions about Marshall Plan

US Secretary of State George C. Marshall proposed the Marshall Plan in a speech at Harvard University on 5th June 1947. It was signed and implemented by President Truman on 3rd April 1948.

Formally the European Recovery Program (ERP), the Marshall Plan was a system of financial and economic support given by the US to European countries that had suffered after WWII. The US gave the aid with the requirements of creating reliable trade with the US, increasing production, upholding capitalism and quashing communism in Europe.

The Marshall Plan significantly improved European economies, helping the gross National Product to increase in Europe by 15-25%. Communism in the participating countries was subdued thanks to the economic support from America. However, the politics driving the Marshall Plan worsened international relations between the US and the USSR, creating the environment for the Cold War.

Primarily the intention of the Marshall Plan was to aid Europe's economic recovery after the destruction of WWII. However, the Plan was also a political device to attempt to stop the spread of communism in Europe.

The Marshall Plan was an American initiative to provide support to European countries. Britain, France and the USSR met in June and July 1947 to discuss the terms of the Plan, but the USSR dropped out and refused to partake in negotiations. 16 countries attended the Conference of European Economic Cooperation on 12th July 1947 and received US support from the Marshall Plan. The US created the Economic Cooperation Administration (ECA) and Europe formed the Committee of European Economic Cooperation (CEEC) to discuss the details of Marshall Plan aid.

Final Marshall Plan Quiz

Question

When was the Truman Doctrine issued?

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Answer

12 March 1947

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Question

How did Ambassador George Kennan influence American foreign policy?

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Answer

He sent the "Long Telegram" in 1946

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Question

What were the US requirements for European receipt of the Marshall Plan?

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Answer

Open up reliable trade links with the US

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Question

How many countries were invited to the Conference of European Economic Cooperation on 12 July 1947?

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Answer

22

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Question

Why did some countries not attend the Conference of European Economic Cooperation on 12 July 1947?

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Answer

The USSR pressured its satellite states not to attend

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Question

Roughly how much financial aid did the US provide in the Marshall Plan?

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Answer

$13.3 billion

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Question

What are the abbreviations of the US and European organisations created in 1948 to implement the Marshall Plan?

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Answer

ECA and OEEC

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Question

How many countries received Marshall Plan support?

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Answer

16

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Question

What was the average increase in gross National Product in Europe between 1948-51?

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Answer

15-25%

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Question

Why was Italy an example of the Marshall Plan's political success?

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Answer

The Christian Democrat Party was elected in 1948 rather than the Communist Party.

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Question

What was the name of Truman's global American aid policy inspired by the Marshall Plan?

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Answer

Point Four Program

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