In the aftermath of World War II, Europe was in ruins. After 6 years of war had reduced cities and industries across the continent to rubble from fighting and aerial bombings. To return the countries back to their prewar levels, something major needed to occur. Enter aid from the Marshall Plan.
Named after former US General and then current Secretary of State George Marshall, the 1947 plan outlined a strategy to provide relief to the battered European economies. The plan was actually called the European Recovery Plan (ERP), but it became synonymous with Marshall as he presented and championed the plan in 1947-1948.
A student of history, Marshall knew that the post war rebuilding effort needed to be drastically different than after WWI. The aftermath of political and economic instability (such as the hyperinflation of the German Mark) in various countries made a future war all but inevitable.
In addition, the Marshall Plan was utilized as a method to combat the spread of communism as outlined in the Truman Doctrine. Economic aid and investment had the ability to tie these nations closer to the United States, rather than turning towards the Soviet Union.
The first nations to receive aid under the Marshall Plan were Turkey Greece for this exact purpose: to limit the spread of communism.
The Purpose of the Marshall Plan Aid
The purpose of the Marshall Plan was for the United States to provide aid to European countries in the form of grants and loans. This aid would go towards commodities such as food, fuel and machinery as well as for specific projects such as rebuilding and developing new infrastructure. The United States considered a vast majority of the aid as grants, which did not required repayment.
The significant public aid also encouraged private investment into the European economies. The federal government used financial incentives to persuade private companies to send engineers with expertise to help redevelop industrial capacity. The same was reversed as some of the aid allowed European citizens to visit the US and encourage learning and technological transfers.
The following list shows the Marshall Plan aid received by country:
- United Kingdom: ~$3.2B
- France: ~$2.7B
- Italy: ~$1.5B
- West Germany: ~$1.4B
- Netherlands: ~$1.1B
- Greece: ~$0.7B
- All Others: ~$2.7B
Operating over a period of four years the Marshall plan surpassed all expectations. The rampant hunger and starvation mostly disappeared, and economic activity skyrocketed. Each nation receiving funds had a higher economic output than their pre-war levels by 1952.
It also had the benefited of reducing trade barriers and making European countries more interconnected. Historians believe that the Marshall plan was the first step towards the eventual European Union that is in existence today.
Critics of the Marshall Plan state that the program was just another form of American imperialism. Many of the stipulations provided arrangements that were also favorable to the US.
It’s for this reason that the Soviet Union declined aid and blocked any of the Eastern European countries under their influence from receiving aid as well.
Throughout the decades the Marshall Plan has been lauded for the stability it brought Western Europe in the postwar years. For his efforts George Marshall won the Nobel Peace Prize in 1953.
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