The modern system of the division of labor upon which the exchange of products is based is in danger of breaking down. Britain received an emergency loan of $3.75 billion in 1946; it was a 50-year loan with a low 2% interest rate. [citation needed], In January 1947, Truman appointed retired General George Marshall as Secretary of State. [132], Former US Chairman of the Federal Reserve Bank Alan Greenspan gives most credit to German Chancellor Ludwig Erhard for Europe's economic recovery. April 13, 2018 THE MARSHALL PLAN Dawn of the Cold War By Benn Steil 608 pp. [115], Large parts of the world devastated by World War II did not benefit from the Marshall Plan. Sixty years after Secretary of State George C. Marshall outlined the need for economic aid to stimulate European recovery, in a speech at Harvard University's commencement on June 5, 1947, the. These secondary sources provided, through their citations and bibliographies, links to primary sources that documented the obstacles facing George Marshall and the motivations of the U.S. for the crafting and implementation of the European Recovery Program. The only major powers whose infrastructure had not been significantly harmed in World War II were the United States and Canada. As the experience of the past few months has shown, the proclamation of this doctrine meant that the United States government has moved towards a direct renunciation of the principles of international collaboration and concerted action by the great powers and towards attempts to impose its will on other independent states, while at the same time. [35] Historian Nicholas Balabkins concluded that "as long as German industrial capacity was kept idle the economic recovery of Europe was delayed. If not, what were the true intentions of the U.S. while designing the Marshall Plan? The trade relations fostered by the Marshall Plan helped forge the North Atlantic alliance that would persist throughout the Cold War in the form of NATO. Furthermore, Gallup polls in England, France, and Italy showed favorable majorities over 60%. The Scandinavian nations, especially Sweden, insisted that their long-standing trading relationships with the Eastern Bloc nations not be disrupted and that their neutrality not be infringed. The ECA's official mission statement was to give a boost to the European economy: to promote European production, to bolster European currency, and to facilitate international trade, especially with the United States, whose economic interest required Europe to become wealthy enough to import US goods. The Marshall Plan vs. the Stalin Plan - Marxists Internet Archive [7] In addition, there is no correlation between the amount of aid received and the speed of recovery: both France and the United Kingdom received more aid, but West Germany recovered significantly faster. From July 1945 through June 1946, the United States shipped 16.5 million tons of food, primarily wheat, to Europe and Japan. Language links are at the top of the page across from the title. Andrei Vyshinsky - University of California, San Diego The Marshall Plan has helped repair the ruined docks and wharves of Ostende, one of Belgium's principal fishing ports. By necessitating intra-European cooperation, the Marshall Plan was creating a scenario in which the economic activity of Eastern Europe would be determined by the needs of the other European participants, not the Soviet Union. The Special Fund, then supervised by the Federal Economics Ministry, was worth over DM 10 billion in 1971. On March 17, 1948, Truman addressed European security and condemned the Soviet Union before a hastily convened Joint Session of Congress. The negotiations were long and complex, with each nation having its own interests. Bryan, Ferald J. [118] Examples of material received by the Soviets were equipment from the Kugel-Fischer ballbearing plant at Schweinfurt, the Daimler-Benz underground aircraft-engine plant at Obrigheim, the Deschimag shipyards at Bremen-Weser, and the Gendorf powerplant. The American aid was not part of the Marshall Plan. Only Yugoslavia, I think, accepted aid from the . Review of International Studies 8, no. 4 (December 1979): 422-443. The speech, written at Marshall's request and guidance by Charles Bohlen[49] contained virtually no details and no numbers. America had already given Europe $9 billion in other forms of help in previous years. He offered aid, but the European countries had to organize the program themselves. [21], By 1952, as the funding ended, the economy of every participant state had surpassed pre-war levels; for all Marshall Plan recipients, output in 1951 was at least 35% higher than in 1938. Dollar Diplomacy | The New Yorker He plans to finish a master of arts in teaching the following year for his career goal of becoming a high school social studies teacher. In 194950, for instance, 40% of the investment in the German coal industry was by these funds. In 1951 the Marshall Plan was largely replaced by the Mutual Security Act. The Marshall Plan (officially the European Recovery Program, ERP) was an American initiative enacted in 1948 to provide foreign aid to Western Europe. 8, October 1947, pp. The Linear Stages of Growth model is an economic model which is heavily inspired by the Marshall Plan of the US which was used to rehabilitate Europe's economy after the Post-World War II. By implementing technological literature surveys and organized plant visits, American economists, statisticians, and engineers were able to educate European manufacturers in statistical measurement. And finally, the program must be self-sufficient (Cromwell, 1979). The United States transferred $13.3 billion (equivalent of $173 billion in 2023) in economic recovery programs to Western European economies after the end of World War II. Nicholas Shaxson comments: "It is widely believed that the plan worked by offsetting European countries' yawning deficits. The recipient nations were represented collectively by the Organisation for Economic Co-operation and Development (OECD), headed by British statesman Oliver Franks. that the "technical abstract" service should be the central source of information. The financial scope of a pan-European approach, the prospect of including countries that had already exhibited communist tendencies as a result of Soviet pressure, and the inclusion of the Soviet Union in the recovery effort practically ensured congressional rejection (Cromwell, 1979). This way of operation held three advantages: the provision of U.S. goods to Europe without European dollar payments helped to narrow the dollar gap that strangled European reconstruction; the accumulated funds could be used for investments in long-term reconstruction (as happened in France and Germany) or for paying off a government's war debts (as in Great Britain); and the payments of the goods in local currencies helped to limit inflation by taking these funds temporarily out of circulation while they were held in the Special Accounts.[77]. Senior Sam OBrien is a history major with an education minor at the Manchester campus of the University of New Hampshire. The Truman Doctrine and the Marshall Plan changed the course of American Foreign Policy from isolationism to involvement in world affairs. The exception was Iceland, which had been neutral during the war, but received far more on a per capita basis than the second highest recipient.[98]. The Cox and Kennedy-Pipe argument completely clouded my perception of the plan as principally benevolent. "[97], Marshall Aid in general and the counterpart funds in particular had a significant impact in Cold-War propaganda and economic matters in Western Europe, which most likely contributed to the declining appeal of domestic communist parties. Second, the program must be collaborative and European nations must form a coalition from which a comprehensive plan could be developed. The British Labour government under Prime Minister Clement Attlee was an enthusiastic participant. Through the revolving loan system, the Fund had by the end of 1995 made low-interest loans to German citizens amounting to around DM 140 billion. Across America, multiple interest groups, including business, labor, farming, philanthropy, ethnic groups, and religious groups, saw the Marshall Plan as an inexpensive solution to a massive problem, noting it would also help American exports and stimulate the American economy as well. [46] Molotov refrained from supplying accounts of Soviet assets. [102] The UK received US$385 million of its Marshall Plan aid in the form of loans. Analysis of the structural change & Linear growth models of development In short, this so-called Marshall Plan would be a roundabout subsidy, keeping Chinese industry and production robust, employment in place, and GDP growth high. According to ECA rules, recipients had to invest 60% of these funds in industry. [10] Marshall spoke of an urgent need to help the European recovery in his address at Harvard University in June 1947. [7], Graham T. Allison states that "the Marshall Plan has become a favorite analogy for policy-makers. The Marshall Plan with Africa The introduction to the Marshall Plan - a new partnership for development and peace says: The Marshall Plan was unquestionably a product of the former. Despite its reservations, the 80th Congress implemented Truman's requests, further escalating the Cold War with the USSR. Counterpart funds were used to finance large-scale tours of American industry. That BLS productivity personnel should serve on American-European councils for productivity; that productivity targets (based on American productivity standards) can and should be implemented to increase productivity; that there should be a general exchange and publication of information; and. The purpose of this campaign was to sway public opinion in their direction and to inform the common person of what the Marshall Plan was and what the plan would ultimately do. For instance. Unrealistic Assumptions: Marshall's utility analysis is based on some unrealistic assumptions. These requirements were crucial if the Marshall Plan was to succeed, not merely at alleviating the immediate European predicament, but also at providing the economies of Europe an external support from which they could eventually stand on their own. Many argue that the structural adjustments that it forced were of great importance. It is thrilling to think of traveling to Mars. [65] The meeting's chair, Andrei Zhdanov, who was in permanent radio contact with the Kremlin from whom he received instructions,[62] also castigated communist parties in France and Italy for collaboration with those countries' domestic agendas. [134], The Marshall Plan has been recently reinterpreted as a public policy approach to complex and multi-causal problems (wicked problems) in search of building integrated solutions with multilevel governance. If the Marshall Plan was to be accepted by European voters, it would have to avoid being framed in the context of a Soviet-American conflict. Most of Europe's economies were recovering slowly, as unemployment and food shortages led to strikes and unrest in several nations. First, it costs a lot of money. 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.[48]. [44][45], After Marshall's appointment in January 1947, administration officials met with Soviet Foreign Minister Vyacheslav Molotov and others to press for an economically self-sufficient Germany, including a detailed accounting of the industrial plants, goods and infrastructure already removed by the Soviets in their occupied zone. [59], Although all other communist European countries had deferred to Stalin and rejected the aid, the Yugoslavs, led by Josip Broz (Tito), initially went along and rejected the Marshall Plan. [19] The Marshall Plan was replaced by the Mutual Security Plan at the end of 1951; that new plan gave away about $7.5 billion annually until 1961 when it was replaced by another program. [30] In Germany in 194546 housing and food conditions were bad, as the disruption of transport, markets, and finances slowed a return to normality. [citation needed], The U.S. government did not give money directly to the participating countries so that they could buy whatever they thought they needed. Cox, Michael, and Caroline Kennedy-Pipe. Furthermore, the countries of Western Europe provided greater prospects for future economic relationships beneficial to the U.S. (U.S. State Department, 1947). [D] All this aid was separate from the Marshall Plan. Economic historians J. Bradford DeLong and Barry Eichengreen call it "history's most successful structural adjustment program. [94][95][96] With respect to Austria, Gnter Bischof has noted that "the Austrian economy, injected with an overabundance of European Recovery Program funds, produced "miracle" growth figures that matched and at times surpassed the German ones. [54][clarification needed], Initially, Stalin maneuvered to kill the plan, or at least hamper it using destructive participation in the Paris talks regarding conditions. In 1997 it was worth DM 23 billion. [89] The balance of payment problems the trouble the postwar government was caused less by economic decline and more by political overreach, according to Jim Tomlinson. Currently he is the coordinator of the history program at UNHM and professor of modern European history. The analyses in the Factory Performance Reports and the "hands-on" experience had by the European productivity teams effectively identified productivity deficiencies in European industries; from there, it became clearer how to make European production more effective. By 1996 it had accumulated a value of 23 billion Deutsche Mark. Any government that is willing to assist in recovery will find full co-operation on the part of the United States. The Marshall Plan, also known as the European Recovery Program, was a U.S. program providing aid to Western Europe following the devastation of World War II. In some ways, this effort failed, as the OEEC never grew to be more than an agent of economic cooperation. However, the OEEC served as both a testing and training ground for the structures that would later be used by the European Economic Community. However, Marshall knew that the U.S. insistence on intra-European cooperation, which would require participants to divulge their economic shortcomings, would make it impossible for the U.S.S.R. to participate (Cromwell, 1979). The Marshall Plan gave another $13 billion, equivalent to about $100 billion in 2010 value. In the movie, the roaring winds that rocked their spacecraft and forced them to abort the mission would actually feel like a gentle breeze. 3 Major Criticisms against Marshall's Utility Analysis Thus, the United States primary goal in designing the Marshall Plan was to entice the countries within the Soviet orbit to join the Western camp (Cox and Kennedy-Pipe, 2005). The Marshall Plan and its consequences And second, it was imperative that the United States maintain its surplus markets in Europe, specifically in Western Europe because of their future economic potential. At the same time, they agreed that the Plan indirectly contributed to the East-West division of Europe, a process that ultimately culminated in the Cold War. He was best known as an advocate of a policy of containment of Soviet expansion during the Cold War. The prime minister of Poland, Jzef Cyrankiewicz, was rewarded by Stalin for his country's rejection of the plan which came in the form of the Soviet Union's offer of a lucrative trade agreement lasting for five years, a grant amounting to the approximate equivalent of $450 million (in 1948; the sum would have been $4.4 billion in 2014 [56]) in the form of long-term credit and loans and the provision of 200,000 tonnes of grain, heavy and manufacturing machinery and factories and heavy industries to Poland. In one of the most evident signs and reflections of tight Soviet control and domination over the region, Jan Masaryk, the foreign minister of Czechoslovakia, was summoned to Moscow and berated by Stalin for considering Czechoslovakia's possible involvement with and joining of the Marshall Plan. The political effects of the Marshall Plan may have been just as important as the economic ones. To uncover Americas true motives for implementing the Marshall Plan, I needed to explore the actual documents from the period. [125] By looking at polling data over time from pre-World War II to post-World War II, one would find that there was a change in public opinion in regards to ideology. [104] This made the proportion of loans versus grants to Germany similar to that of France and the UK. The Marshall Plan: The Economic Exchange of the Century by Tyler Bray, United States Senate Committee on Foreign Relations, Organisation for European Economic Co-operation, United Nations Relief and Rehabilitation Administration, communist, although non-Soviet, insurgency, De-satellization of the Socialist Republic of Romania, Committee of European Economic Co-operation, Organisation for Economic Co-operation and Development, Timeline of United States diplomatic history, "Research Starters: Worldwide Deaths in World War II", https://www.youtube.com/watch?v=nymHILU_XNg, "Soviet Union rejects Marshall Plan assistance", "Biography of Wilhelm Rpke (18991966): Humane Economist", "The PostWorld War II Allied Occupation of Austria: What Can We Learn about It for Iraq in Successful Nation Building? France made the most extensive use of counterpart funds, using them to reduce the budget deficit. The next highest contributions went to France (18%) and West Germany (11%). American leaders were internally divided, but finally agreed and began sending money on a small scale in 1949 and on a much larger scale in 195053. British economist argued that their position was validated by 1950 as European industrial production exceeded prewar levels. Much of this aid was designed to restore infrastructure and help refugees. [107] The founding conference of the Congress for Cultural Freedom was held in Berlin in June 1950. As tensions mounted, the U.S. and U.S.S.R. took diplomatic initiatives to undermine one anothers political progress. The BLS could then use its expertise in the field of productive efficiency to implement a productivity drive in each Western European country receiving Marshall Plan aid. [54], Soviet Foreign Minister Vyacheslav Molotov left Paris, rejecting the plan. Austrian School economist Ludwig von Mises criticized the Marshall Plan in 1951, believing that "the American subsidies make it possible for [Europe's] governments to conceal partially the disastrous effects of the various socialist measures they have adopted". [39], The United States was already spending a great deal to help Europe recover. Those reparation payments meant the Soviet Union itself received about the same as 16 European countries received in total from Marshall Plan aid. [83], A high priority was increasing industrial productivity in Europe, which proved one of the more successful aspects of the Marshall Plan. General George C. Marshall, the 50th U.S. Secretary of State The Marshall Plan (officially the European Recovery Program, ERP) was an American initiative enacted in 1948 to provide foreign aid to Western Europe. "[39] The restrictions placed on German heavy industry production were partly ameliorated; permitted steel production levels were raised from 25% of pre-war capacity to a new limit placed at 50% of pre-war capacity. In this way, Europe would receive the aid it needed, American businesses would receive capital investment, and the federal government would make a profit when the stock was sold. Policymakers have summoned a simple idea: a Marshall . Criticism of the Marshall Plan, however, became prominent among historians of the revisionist school, such as Walter LaFeber, during the 1960s and 1970s. [76], Members of the Republican-controlled 80th Congress (19471949) were skeptical. "[8] Some new studies highlight not only the role of economic cooperation but approach the Marshall Plan as a case concerning strategic thinking to face some typical challenges in policy, as problem definition, risk analysis, decision support to policy formulation, and program implementation. In most participant nations, production had reached or surpassed its pre-war level. Following Marshalls announcement, three requirements in his proposal became essential for the U.S. as the design of the recovery program developed. ( sound effect: waves on a beach) [6:54] To understand how such strong winds wouldn't feel strong, imagine you're at the beach. The criticisms are: 1. In addition, the Technical Assistance Program funded 24,000 European engineers, leaders, and industrialists to visit America and tour America's factories, mines, and manufacturing plants. Therefore, The Marshall Plan (officially called the European Recovery Program [ERP]) was a plan of the United States for rebuilding the allied countries of Europe after World War II. The European Union and the Financial Crisis in Greece. [5] The United States provided similar aid programs in Asia but they were not part of the Marshall Plan. The other 40% of the counterpart funds were used to pay down the debt, stabilize the currency, or invest in non-industrial projects. [60], In late September, the Soviet Union called a meeting of nine European communist parties in southwest Poland. It was later shown that the main reason for halting shipments east was not the behavior of the Soviet Union but rather the recalcitrant behavior of France. When I first researched the Marshall Plan in a senior history course at the University of New Hampshire at Manchester (UNHM), I found historians almost unanimous in their praise for its humanitarian incentives and overall effectiveness. The plan had bipartisan support in Washington, where the Republicans controlled Congress and the Democrats controlled the White House with Harry S. Truman as president. Back in the United States, with the help of the newly formed Policy Planning Staff, which consisted of notable American diplomats such as George Kennan and William Clayton, Marshall developed a novel approach to the reinvigoration of Europes economy. Our policy is not directed against any country, but against hunger, poverty, desperation and chaos.
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