The Marshall Plan

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The Marshall Plan
« on: May 15, 2013, 11:34:31 PM »
The first I knew of the Marshall Plan was when I was trawling through some magazines from the 1940's and came across two articles on the Plan.I then did further research on General Marshall.
I have copied the following from Wiki,there is much more to be had by following the link
Marshall Plan

From Wikipedia, the free encyclopedia

"European Recovery Program" redirects here. It is not to be confused with European Economic Recovery Plan.

The Labeling used on Marshall Plan aid packages.
The Marshall Plan (officially the European Recovery Program, ERP) was the American program to aid Europe, in which the United States gave economic support to help rebuild European economies after the end of World War II in order to prevent the spread of Soviet Communism.[1] The plan was in operation for four years beginning in April 1948.[2] The goals of the United States were to rebuild a war-devastated region, remove trade barriers, modernize industry, and make Europe prosperous again.[3] The term "equivalent of the Marshall Plan" is often used to describe a proposed large-scale rescue program.[4]
The initiative [5] was named after Secretary of State George Marshall. The plan had bipartisan support in Washington, where the Republicans controlled Congress and the Democrats controlled the White House. The Plan was largely the creation of State Department officials, especially William L. Clayton and George F. Kennan. Marshall spoke of urgent need to help the European recovery in his address at Harvard University in June 1947.[3][6]
The reconstruction plan, developed at a meeting of the participating European states, was established on June 5, 1947. It offered the same aid to the Soviet Union and its allies, but they did not accept it,[7][8] as to do so would be to allow a degree of US control over the Communist economies.[9] During the four years that the plan was operational, U.S. $13 billion in economic and technical assistance was given to help the recovery of the European countries that had joined in the Organization for European Economic Co-operation. This $13 billion was in the context of a U.S. GDP of $258 billion in 1948, and was on top of $13 billion in American aid to Europe between the end of the war and the start of the Plan that is counted separately from the Marshall Plan.[10] The Marshall Plan was replaced by the Mutual Security Plan at the end of 1951.[11]
The ERP addressed each of the obstacles to postwar recovery. The plan looked to the future, and did not focus on the destruction caused by the war. Much more important were efforts to modernize European industrial and business practices using high-efficiency American models, reducing artificial trade barriers, and instilling a sense of hope and self-reliance.[12]
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.[13] Over the next two decades, Western Europe enjoyed unprecedented growth and prosperity, but economists are not sure what proportion was due directly to the ERP, what proportion indirectly, and how much would have happened without it. A common American interpretation of the program's role in European recovery is the one expressed by Paul Hoffman, head of the Economic Cooperation Administration, in 1949, when he told Congress that Marshall aid had provided the "critical margin" on which other investment needed for European recovery depended.[14] The Marshall Plan was one of the first elements of European integration, as it erased trade barriers and set up institutions to coordinate the economy on a continental level ? that is, it stimulated the total political reconstruction of western Europe.[15]
Belgian economic historian Herman Van der Wee concludes the Marshall Plan was a "great success":
 "It gave a new impetus to reconstruction in Western Europe and made a decisive contribution to the renewal of the transport system, the modernization of industrial and agricultural equipment, the resumption of normal production, the raising of productivity, and the facilitating of intra-European trade."[16]

European Recovery Program expenditures by country.

  [hide]  1 Wartime destruction
 2 Initial post-war events 2.1 Slow recovery
3 Soviet negotiations
 4 The speech
 5 Rejection by the Soviets 5.1 Initial reactions
 5.2 Compulsory Eastern Bloc rejection
 5.3 Szklarska Poręba meeting
6 Negotiations
 7 Implementation 7.1 Technical Assistance Program
 7.2 German level of industry restrictions
8 Expenditures
 9 Loans and Grants
 10 Effects and legacy
 11 Repayment
 12 Areas without the Plan 12.1 Aid to Asia
 12.2 Canada
 12.3 World total
13 Criticism 13.1 Early criticism
 13.2 Modern criticism
14 In popular culture
 15 See also
 16 Notes
 17 References
 18 Further reading
 19 External links

Wartime destruction [edit]

1960 West German stamp honoring George Marshall
By the end of World War II much of Europe was devastated. Sustained aerial bombardment had badly damaged most major cities, and industrial facilities were especially hard-hit.[17] The region's trade flows had been thoroughly disrupted; millions were in refugee camps living on aid from United Nations Relief and Rehabilitation Administration and other agencies. Food shortages were severe, especially in the harsh winter of 1946?1947.
Especially damaged was transportation infrastructure, as railways, bridges, and docks had been specifically targeted by air strikes, while much merchant shipping had been sunk. Although most small towns and villages had not suffered as much damage, the destruction of transportation left them economically isolated. None of these problems could be easily remedied, as most nations engaged in the war had exhausted their treasuries in its execution.[18]
The only major powers whose infrastructure had not been significantly harmed in World War II were the United States and Canada. They were much more prosperous than before the war but exports were a small factor in their economy. Much of the Marshall Plan aid would be used by the Europeans to buy manufactured goods and raw materials from the United States and Canada.[19]
Initial post-war events [edit]
Slow recovery [edit]

The hunger-winter of 1947, thousands protest in West Germany against the disastrous food situation (March 31, 1947). Sign: We want coal, we want bread
Europe's economies were recovering slowly, as unemployment and food shortages led to strikes and unrest in several nations. In 1947 the European economies were still well below their pre-war levels and were showing few signs of growth. Agricultural production was 83% of 1938 levels, industrial production was 88%, and exports only 59%.[20] In Britain the situation was not as severe.[21]
In Germany in 1945-46 housing and food conditions were bad, as the disruption of transport, markets and finances slowed a return to normal. In the West, bombing had destroyed 5,000,000 houses and apartments, and 12,000,000 refugees from the east had crowded in.[21] Food production was only two-thirds of the pre-war level in 1946-48, while normal grain and meat shipments no longer arrived from the East. Furthermore, the large shipments of food from occupied nations that had sustained Germany during the war ended. Industrial production fell more than half and reached pre-war levels only at the end of 1949[22]
 In May 1947 communist ministers were abruptly expelled from the French and Italian governments.
 During the first three years of occupation of Germany the UK and US vigorously pursued a military disarmament program in Germany, partly by removal of equipment but mainly through an import embargo on raw materials.[23]
Nicholas Balabkins concludes that "as long as German industrial capacity was kept idle the economic recovery of Europe was delayed."[24] By July 1947 Washington realized that economic recovery in Europe could not go forward without the reconstruction of the German industrial base, deciding that an "orderly, prosperous Europe requires the economic contributions of a stable and productive Germany."[25] In addition, the strength of Moscow-controlled communist parties in France and Italy worried Washington.[26]
In the view of the State Department under President Harry Truman the United States needed to adopt a definite position on the world scene or fear losing credibility. The emerging doctrine of containment (as opposed to rollback) argued that the United States needed to substantially aid non-communist countries to stop the spread of Soviet influence. There was also some hope that the Eastern European nations would join the plan, and thus be pulled out of the emerging Soviet bloc, but that was not to happen.
In January 1947, Truman appointed retired General George Marshall as Secretary of State. In July 1947 Marshall scrapped JCS 1067 which had decreed "take no steps looking toward the economic rehabilitation of Germany [or] designed to maintain or strengthen the German economy." Thereafter, JCS 1067 was supplanted by JCS 1779, stating that "an orderly and prosperous Europe requires the economic contributions of a stable and productive Germany."[27] 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.[28]
With a Communist insurgency threatening Greece, and Britain financially unable to continue its aid, the President announced his Truman Doctrine on 12 March 1947, "to support free peoples who are resisting attempted subjugation by armed minorities or by outside pressures", with an aid request for consideration and decision, concerning Greece and Turkey. Also in March 1947, former U.S. President Herbert Hoover, in one of his reports from Germany, argued for a change in U.S. occupation policy, amongst other things stating:
 There is the illusion that the New Germany left after the annexations can be reduced to a 'pastoral state'. It cannot be done unless we exterminate or move 25,000,000 people out of it.[29]
Hoover further noted that, "The whole economy of Europe is interlinked with German economy through the exchange of raw materials and manufactured goods. The productivity of Europe cannot be restored without the restoration of Germany as a contributor to that productivity."[30] Hoover's report led to a realization in Washington that a new policy was needed; "almost any action would be an improvement" on current policy."[31] In Washington, the Joint Chiefs declared that the "complete revival of Germany industry, particularly coal mining" was now of "primary importance" to American security.[27]
The United States was already spending a great deal to help Europe recover. Over $14 billion was spent or loaned during the postwar period through the end of 1947, and is not counted as part of the Marshall Plan. Much of this aid was designed to restore infrastructure and help refugees. Britain, for example, received an emergency loan of $3.75 billion.[32]
The United Nations also launched a series of humanitarian and relief efforts almost wholly funded by the United States. These efforts had important effects, but they lacked any central organization and planning, and failed to meet many of Europe's more fundamental needs.[33] Already in 1943, the United Nations Relief and Rehabilitation Administration (UNRRA) was founded to provide relief to areas liberated from Germany. UNRRA provided billions of dollars of rehabilitation aid, and helped about 8 million refugees. It ceased operations in the DP camps of Europe in 1947; many of its functions were transferred to several UN agencies.
Soviet negotiations [edit]
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.[34][35] The Soviets took a punitive approach, pressing for a delay rather than an acceleration in economic rehabilitation, demanding unconditional fulfillment of all prior reparation claims, and pressing for progress toward nationwide socioeconomic transformation.[36]
After six weeks of negotiations, Molotov rejected all of the American and British proposals.[34][36] Molotov also rejected the counter-offer to scrap the British-American "Bizonia" and to include the Soviet zone within the newly constructed Germany.[36] Marshall was particularly discouraged after personally meeting with Stalin to explain that the United States could not possibly abandon its position on Germany, while Stalin expressed little interest in a solution to German economic problems (see pre-war Molotov-Ribbentrop pact of non aggression between Germany and the Soviet Union).[34][36]
The speech [edit]

Wikisource has original text related to this article:
The Marshall Plan Speech

After the adjournment of the Moscow conference following six weeks of failed discussions with the Soviets regarding a potential German reconstruction, the United States concluded that a solution could not wait any longer.[34]
To clarify the U.S.'s position, a major address by Secretary of State George Marshall was planned. Marshall gave the address to the graduating class of Harvard University on June 5, 1947. Standing on the steps of Memorial Church in Harvard Yard, he offered American aid to promote European recovery and reconstruction. The speech described the dysfunction of the European economy and presented a rationale for U.S. aid.

The modern system of the division of labor upon which the exchange of products is based is in danger of breaking down. . . . Aside from the demoralizing effect on the world at large and the possibilities of disturbances arising as a result of the desperation of the people concerned, the consequences to the economy of the United States should be apparent to all. It is logical that the United States should do whatever it is able to do to assist in the return of normal economic health to the world, without which there can be no political stability and no assured peace. Our policy is not directed against any country, but against hunger, poverty, desperation and chaos. Any government that is willing to assist in recovery will find full co-operation on the part of the U.S.A. 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.
Marshall was convinced that economic stability would provide political stability in Europe. He offered aid, but the European countries had to organize the program themselves.
The speech, written by Charles Bohlen, contained virtually no details and no numbers. More a proposal than a plan, it was presented vaguely and made little impact in America.Empty citation‎ (help) Eight weeks after the Harvard speech, the State Department wrote in a confidential memorandum that "The Marshall Plan has been compared to a flying saucer ? nobody knows what it looks like, how big it is, in what direction it is moving, or whether it really exists."[37] The most important element of the speech was the call for the Europeans to meet and create their own plan for rebuilding Europe, and that the United States would then fund this plan. The administration felt that the plan would likely be unpopular among many Americans, and the speech was mainly directed at a European audience. In an attempt to keep the speech out of American papers journalists were not contacted, and on the same day Truman called a press conference to take away headlines. In contrast, Dean Acheson, an Under Secretary of State, was dispatched to contact the European media, especially the British media, and the speech was read in its entirety on the BBC.[38][39]
Rejection by the Soviets [edit]
British Foreign Secretary Ernest Bevin heard Marshall's radio broadcast speech and immediately contacted French Foreign Minister Georges Bidault to begin preparing a quick European response to (and acceptance of) the offer. The two agreed that it would be necessary to invite the Soviets as the other major allied power. Marshall's speech had explicitly included an invitation to the Soviets, feeling that excluding them would have been a sign of distrust. State Department officials, however, knew that Stalin would almost certainly not participate, and that any plan that would send large amounts of aid to the Soviets was unlikely to be approved by Congress.
Throughout its history, the Soviet Union had a state-controlled, Communist economy; the centrally planned economy regulated collective farming, industrial manufacturing, and the means of production. This was one main source of the Soviet government?s power over its citizens. By controlling the economy, the USSR leaders could effectively dictate the other facets of Soviet policy and life.[40] George Kennan, the United States? ambassador to the Soviet Union, articulated this point in his 1946 ?Long Telegram.? Kennan concluded, ?Soviet [economic] policy will really be dominated by pursuit of autarchy for Soviet Union and Soviet-dominated adjacent areas taken together," meaning that the Soviet government wanted economic independence for the USSR in order to protect its sphere of influence. Consequently, accepting American aid from the Marshall Plan posed a potential threat to the Soviet government?s ability to keep the Eastern Bloc together.[41]
Initial reactions [edit]
Whilst the Soviet ambassador in Washington suspected that the Marshall Plan could lead to the creation of an anti-Soviet bloc, Stalin was open to the offer.[42] He directed that?in negotiations to be held in Paris regarding the aid?countries in the Eastern Bloc should not reject economic conditions being placed upon them.[42] Stalin only changed his outlook when he learned that (a) credit would only be extended under conditions of economic cooperation and,(b) aid would also be extended to Germany in total, an eventuality which Stalin thought would hamper the Soviets' ability to exercise influence in western Germany.[42]
Initially, Stalin maneuvered to kill the Plan, or at least hamper it by means of destructive participation in the Paris talks regarding conditions.[42] He quickly realized, however, that this would be impossible after Molotov reported?following his arrival in Paris in July 1947?that conditions for the credit were non-negotiable.[42] Looming as just as large a concern was the Czechoslovak eagerness to accept the aid, as well as indications of a similar Polish attitude.[42]
Stalin suspected a possibility that these Eastern Bloc countries might defy Soviet directives not to accept the aid, potentially causing a loss of control of the Eastern Bloc.[42] In addition, the most important condition was that every country choosing to take advantage of the plan would need to have its economic situation independently assessed?a level of scrutiny to which the Soviets could not agree. Bevin and Bidault also insisted that any aid be accompanied by the creation of a unified European economy, something incompatible with the strict Soviet command economy.

« Last Edit: May 15, 2013, 11:46:58 PM by the leveller »

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