The Marshall Plan

Two years after the end of World War II, the situation in Europe was not much improved—in fact, whole segments of populations faced star­vation. An economic depression loomed for the entire continent. Serious concerns were voiced in the United States over the deteriorating economic condition of Europe, and ideas were debated in foreign policy circles as to the best way to meet these concerns. By early 1947, preparations were complete for the initiation of a European eco­nomic recovery, a program that would come to be known as the Marshall Plan.

George C. Marshall was the Secretary of State in the Truman Administration in 1947. Dur­ing the war he had been Army chief of staff and central to the military planning that had led to the defeat of the Axis Powers, particularly in Europe. He was considered indispensable in European affairs and he enjoyed considerable prestige with the United States Congress. In a speech to the graduating class at Harvard University on June 5, 1947, he proposed a solution for the European economic situation that was centered on the con­cept that the European countries would them­selves set up a program for reconstruction, with the assurance of American assistance. The prob­lem, he said, was:

The truth of the matter is that Europe’s requirements for the next three or four years for 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.

The remedy lies in breaking the vicious circle and restoring the confidence of the European people in the economic future of their own countries and of Europe as a whole.1

European response to this U. S. proposal of assistance was immediate and positive. A confer­ence of 16 European countries arranged to meet in Paris in 1947. Twenty-two countries were invited to participate and all of those invited, except the Soviet Union and those countries under its control, attended. The Soviet Union, in fact, vigorously opposed the plan. The Paris conference led to the establishment of the Com­mittee for European Economic Cooperation, and it was the forerunner of successive organizations that ultimately led to the existence of the Euro­pean Union today.

In the United States, Congress passed the Economic Assistance Act of 1948, which became known as “The Marshall Plan.” Congress appro­priated in excess of $13.3 billion over the next four years and applied it to the European recovery plan. The plan has become known as the costliest, most successful, and arguably the most vision­ary international cooperative plan ever conceived in peacetime. It averted a postwar European depression and led to the economic recovery of the Western European countries, allowing an eco­nomic independence along with political stability that has endured. In addition to leading to the cre­ation of the European Union, in due course it led to the creation of the Organization for Economic Development and Cooperation and to the North Atlantic Treaty Organization (NATO).

The Plan was amended in 1949 to include West Germany, the western part of the former German National Socialist State that had been the former foe of the United States and the other countries in Europe, which was a marked change from the victors’ treatment of Germany after World War I. The inclusion of West Germany was not only a benevolent and humanitarian act, it was a far-sighted move that quickly contrasted the free West German economy with that of the communist Soviet-controlled East Germany, and led to the establishment of a lasting progres­sive, free, and dynamic German economy. The Plan did not include Spain, which in 1948 was a dictatorship under Franco, and Spain was not invited to participate. At the same time, Spain had not been a combatant against Germany, and its economy and commercial infrastructure were relatively intact. (See Figure 38-1.)

To say that the Marshall Plan was a success would understate the facts. Europe gradually rebuilt, and its countries set about consolidating their common interests and strengths. The eco­nomic cooperation that spawned the European Community has gradually evolved into a legal, political, commercial, and social phenomenon.

In 1971, President Richard M. Nixon pro­phetically said of the American relationship with Europe:

The program which Secretary Marshall announced in 1947 served as a catalyst in helping the peoples of Western Europe release their boundless energies and express their abundant creativity. The Marshall Plan also created an environment in which the

growth of strong ties within the Atlantic Community could be continually nourished.

The relationship between the United States and Europe is a dynamic one, sus­ceptible, as we have seen, to constant, con­structive change and thus touches on almost all aspects of our national well-being. This relationship is too critical to be taken for granted, too complex to be easily under­stood. We believe there is a great need for continuing study to enhance understanding of the relationship among all of our peoples.2

Ш The Evolution of the European Community

In 1948, the major free nations of Europe cre­ated the Organization for European Economic Cooperation for the purpose of coordinating and
administering the Marshall Plan for the economic recovery of Europe as a result of the devastat­ing effects of World War II. Two years later, in 1950, the first significant step toward economic unification occurred with the agreement to pool coal and steel resources, which was entered into by those countries thereafter known as the “Six,” and who were the original members of the Euro­pean Community.3 This was followed in 1951 with formalization in the Treaty of Paris, which established the European Coal and Steel Commu­nity. In 1953, the Six agreed to remove customs duties and quantitative restrictions on these raw materials, thus establishing for the first time a Common Market for coal and steel among those six countries.

In 1957, the Six signed the Treaty of Rome (amended in the Treaty of Lisbon, signed in 2007 and entered into force on December 1, 2009), establishing the European Economic

Community (EEC). This agreement was to become the cornerstone of the present European Union, and is sometimes referred to as its “con­stitution.” The Treaty of Rome is a comprehen­sive undertaking, articulating monetary policy, broad economic policy, and common commer­cial policy. It set goals for research and devel­opment, and for dealing with the environment, employment, discrimination, competition, and transportation. The Treaty also established the four governing bodies of the EEC: the Council, the Commission, the Parliament, and the Euro­pean Court of Justice.