How reasonably can it be argued that the United States ‘rescued’ Western Europe in the years 1945-51?

                                                              

 

Peter Engholm

Monash University, October 1998

 

 

 

ABSTRACT:

The aim of this paper is to assess what impact United States’ post-war policy towards rebuilding Europe had, and look at how reasonably it can be argued that it ‘rescued’ Western Europe in the years between 1945 and 1951. Was the aid necessary for Western Europe’s economic growth and development? Did it come with any obligations for the European countries so that in the long-run they might even have been better off without the help from the United States? How was the aid connected to the rise of the Cold War? The conclusion states that it cannot be argued, nor denied, that the United States ‘rescued’ the Western European countries after World War II.

KEYWORDS:

United States, Europe, Marshall plan, World War II

 

FULL TEXT:

1. INTRODUCTION:

“Amerika als unser Retter
aus der Hungersnot
Amerika, Amerika!
Du bist von Gott gesandt.
Wir haben dich als unser'n Retter
aus der Hungersnot erkannt!
Wir sagen Dank für diese Gaben,
an denen wir uns lang' schon laben.!”
[1]

We are gathered here at this ceremony to commemorate the speech with which George Marshall announced 25 years ago a plan which was to become one of America’s most formidable and most successful achievements. I have no authority to speak for any country other than my own, but I know, and I want the American people to know that our gratitude, the gratitude of Europeans, live on.[2]

No matter whether appreciation comes from two young school-boys in a small town in Austria in form of small poems and drawings, or in official speeches from former important political leaders such as Willy Brandt - the extent of gratefulness towards the United States for its financial help to Europe after World War can not be doubted.

For many people, the Second World War had brought hunger, misery, loss of jobs, and depression to an immediate and unavoidable reality. The whole framework of the European economies had been shaken to its foundations, and in 1947 many were threatened by the possibility and feasibility of a coming economic crisis.

In this period, the United States steps in and becomes in many eyes a ‘rescuer’, mainly through its massive financial aid due to what generally is known as the “Marshall Plan” or the “European Recovery Program (ERP)”.

The aim of this paper is to assess what impact United States’ post-war policy towards rebuilding Europe had, and look at how reasonably it can be argued that it ‘rescued’ Western Europe in the years between 1945 and 1951. Was the aid necessary for Western Europe’s economic growth and development? Did it come with any obligations for the European countries so that in the long-run they might even have been better off without the help from the United States? How was the aid connected to the rise of the Cold War?

These are a few of the questions that this paper attempts to answers, and this is done by first discussing whether Europe actually was heading towards a major crisis and needed America’s help. The major part of the paper looks at why and how the Marshall plan and other financial programs by the United States were brought about, and what economic, political and social effects these had for the European people.

The paper then looks at the Marshall plan in context of the relationship between the United States and the Soviet Union, which in the 1950s developed into the ‘Cold War’ between these two. The findings of the discussion are finally summarised and evaluated.

 

2. BACKGROUND: A shattered Europe

2.1 The strength of the United States

The war left Europe in ruins, but the United States came out of it as a dominating power, untouched within its borders. It was stronger economically and was in sole possession of nuclear arms. In contrast to the first world war, the United States now emerged from the second with the realisation that isolationism was no longer possible and that its future was tied to every part of the world. It was willing to assume leadership, which it accepted[3].

The United States saw a united and strong Europe as an important element for its own future economic success. According to Milward[4], the problems the United States faced in 1947 was to establish policies that would secure the nation’s strategic interests in Europe; prevent impending breakdowns in international trade and payments; partly solve the problems of Germany as this was important for the other objectives to be fulfilled; and finally still adhere to objectives of its newly established Bretton-Woods system and existing Anglo-American financial agreements.

These problems, plus the imposition of Soviet control on the whole of Eastern Europe and the effort of the Soviet Union to break through to the Middle East, were the first steps towards the United States’ decision to help Europe financially and eventually led to the signings of the Truman Doctrine and the Marshall Plan[5].

2.2 Was Europe heading towards a crisis?

Van der Beugel[6] argues that the pre-war European economic pattern fundamentally had changed during the war, and that the European countries had to start almost from scratch when the war ended, although he also states that the recovery proceeded amazingly well and that eighteen months after the termination of the war, European industry and transport were moving again. But the European economy was still suffering, and the process of recovery suffered badly during the exceptionally cold winter of 1946-47. Coal and food shortages, rising prices of primary products and other essential commodities intensified the situation, and Europe was threatened with the possibility of a total economic and political collapse.

Milward argues, however, that there were no clear signs of an acute economic crisis in Europe. Opposite Van der Beugel, he claims that no population outside Germany was starving, there were also no bank crashes and few bankruptcies, and investment and employment was high in many countries. The slowing down of growth after May 1947 was by no means general, and was due to a wide variety of separate economic causes[7]. Milward states that the slowdown may have been more the result of the rapidity with which output was still expanding and the inability of supply to keep pace, and that Europe, if only given more time, would not have entered a crisis had not the United States financially started supporting it[8]. All that was immediately at stake was a malfunction of international trade and payments - itself partly due to the very success of economic recovery[9]. Pollard agrees with Milward that the long-run European economy looked good, but that the immediate problems could not be overcome because of a general dollar shortage. Hence financial aid was needed[10].

Whether Europe would have recovered without American financial support or not, is a matter of opinion. What can be argued, however, is that in 1947 future economic prospects did not look too well, and few did not welcome the seemingly generous offer from the United States that was to come.

 

3. U.S. AID TO EUROPE

3.1 United States’ objectives

The Truman Doctrine and the Marshall Plan were two aspects of the same new American foreign policy that developed after the war. They emerged from different sources, trends, and priorities, but they belonged to the same concept and they aimed at the same objectives. The Truman Doctrine was a policy aimed to prevent communist aggression against states in the non-Soviet orbit, and the Marshall Plan was a policy of reconstruction, aiming at the creation of sound economic conditions and the removal of threats to the stability of the European countries[11].

Hence it is clear that the United States’ ‘friendly’ policies had strong political underpinnings. Milward argues that the Marshall Plan aimed at “the total political reconstruction of Western Europe, not just its recovery. The goal was the integration of Western Europe into one common economic area (…) and its ultimate integration into one common political area”. Ultimately, the process would lead to a ‘United States of Europe’[12]. Willy Brandt said in a speech at Harvard University that the Marshall Plan was productive proof that America needed a self-confident Europe capable of forming a common political will, and that the United States was waiting for Europe to grow into an equal partner with whom it could share the burden of responsibility for world affairs. [13]

The aid was not a matter of pure generosity, but a strategic policy which in the long-term would benefit the American people. Under-Secretary of State for Economic Affairs William Clayton, after Marshall the most important U.S. official in that time, said that:

“Let us admit right off that our objective has its background in the needs and interests of the people of the United States. We need markets - big markets, in which to buy and sell.”[14]

Hence, as Milward also notices, the object of United States aid policies was to save Europe - and so making the future safe for U.S. society[15].

3.2 Extent of U.S. Post-War economic aid

The financial aid to Europe during 1945 and 1951 cost the American taxpayers altogether about US$13 billion (more than $100 billion in today’s dollars). Of these, roughly $3.1 billion went to Great Britain, $2.7 billion to France, and $1.5 billion to Italy and Germany[16]. The outflow of dollars under the Marshall aid represented 2.1% of Unites States’ GNP in 1948 and 2.4% in 1949. Overall, about 1/3 of the Marshall aid financing European imports went to agricultural products, in most cases food.[17]

These huge sums may initially give rise to the assumption that the United States in some sense did ‘rescue’ Europe. The Marshall aid obviously funded many restoration and building projects throughout Europe, and supplied food and commodities for needy.

In Berlin for example, Marshall aid reconstructed a power station that had earlier been dismantled as war reparations. In Austria, it played an important part in building the Limberg Dam and other components of a vast hydroelectric project. Elsewhere, U.S. funds served to upgrade manu­facturing, mining, transportation and communi­cations industries[18].

Picture 1: English family recieves American goods.

 
Walter Scheel, Foreign Minister in West Germany 1972, argued that the US$1.3 billion made available at that time laid the foundation for West Germany’s recovery. Not only did its broken-down industry get a new spark of life; a hungry, crushed and dejected citizenry could again be given sustenance[19].

Ludwig Erhard, former chancellor of West Germany, also stated in a speech that:

I have always stressed the fact that it was not so much the “money but rather the spirit in which the aid was given that inspired the Germans to make their effort. This spirit gave us hope that we would not be written off but treated as equal partners in the family of civilized free nations. In this respect, Marshall aid represented a moral breakthrough.[20]


Erhard continued by saying: “I cannot imagine Germany without the Marshall Plan during my 25 years of political activity”[21].

Picture 2: Stuttgart before and after Marshall aid. http://lcweb.loc.gov/exhibits/marshall/m48.html.

Although Marshall aid obviously helped reconstructing and rebuilding the European nations as well as providing citizens with food and goods, recent debate has focused on the degree to which the plan was necessary for Europe’s economic recovery. It is not hard to agree with Erhard that it probably served as a spiritual incentive for many citizens who were provided with American food and goods, but what impact did it have on Europe’s development?

3.3 Economic and integrative aspects

Milward argues that the Marshall aid did not save Europe from economic collapse. Rather, it acted as an incentive for European governments to continue their various policies towards productivity and development. He further argues that all countries, except for France and the Netherlands, without the aid may have been able to achieve similar high rates of capital formation as they did while receiving the aid. Thus, the aid in this perspective was of minor importance[22]. Milward also claims that there is no indication that U.S. aid spurred European integration. Rather, the instances set up for handling the Marshall plan did more to emphasise the lack of cooperation between European economies than their willingness to plan in harmony[23]. However, later on in his book he states that the Marshall Plan in fact did help these instances pursue complex political and social goals in European countries, but that forces within these countries pursing the same goals usually were much stronger. According to Milward, European integration appeared as no more than following through the inherent logic of Europe’s economic development[24].

However, Van der Beugel strongly believes it was American and not European initiative which pushed Western Europe further on the road to greater cooperation and integration. This eventually resulted in the foundation of the European Community - the closest the European countries ever have come towards unification[25]. Walter Hallstein, former president of the Commission of the European Economic Community (EEC), also said that:

It has now been proved that the United States, in suggesting then that self-organisation and cooperation should be a new principle of European policy and in giving active support to that principle, helped decisively to influence the nations of Europe in favour of integration.[26]

Blocker argues that the Marshall Plan stimulated European unification because its architects celebrated the benefits of economic integration and did what they could to bring it about. Also witness the words of former German Chancellor Helmut Schmidt: “The United States ought not to forget that the emerging European Union is one of its greatest achievements: it would never have happened without the Marshall Plan.”[27]

Although different writers disagree about whether U.S. aid was necessary and whether it saved Europe, most seem to agree about that it had strong psychological effects. It gave people hope of a better future after decades of war and misery and strengthened people’s self-confidence. It is also generally accepted that it had important political effects, especially in the relationship of United States and Soviet Union. This is now discussed.

3.4 Political aspects

According to Blocker[28], the promise of U.S. aid helped persuade Center-Left political parties to break with the communists in countries such as France and Italy. Also, in Italy, Christian Democrats won almost half of the popular vote two weeks after the ERP was enacted, reversing a three-year electoral trend to the left.

Although aid under the Marshall Plan initially was offered also to the Soviet Union, its Foreign Minister Vyacheslav M. Molotov stated in 1947 that the Soviet government "rejects this plan as totally unsatisfactory." In addition to declining to participate in the Marshall Plan itself, the Soviet Union prevented the Eastern European countries under its control from taking part. Soviet Union’s prime concern was to consolidate the territory and security gains which it had won in World War II. Because of the relative weakness of the Soviet Union, a policy of confrontation with the West would not serve this goal, and might in fact undermine it. Confronted with the ambiguous American initiative, Stalin first hesitated, then assumed the worst and acted accordingly. The Soviet leader did not desire to provoke a confrontation with the Western powers, but in the situation created by the Marshall Plan, he apparently felt that he had no other choice. The upshot was what we have come to know as the Cold War[29].

The Marshall Plan appears to have been largely a defensive move on the part of the United States, but, as argued by Parrish and Narinsky, the plan had its "offensive" side as well, in that its authors hoped to lure some of the Eastern European states out of the Soviet orbit and integrate them into the Western European economy[30].

Hence, the real difficulty and source of conflict that started in 1947 was neither Soviet nor American "aggression." Rather, it lay in the unstable international economic and political conditions in key European countries which led both sides to believe that the current status quo was unstable, and that assertive action was required to defend that status quo. It was in this environment that the Western powers felt compelled to design the details of the Marshall Plan in such a way that it would stabilize Western Europe, but only at the cost of provoking a confrontation with the USSR. Parrish and Narrinsky hence argue that neither the West nor the Soviet Union deliberately strove to provoke a confrontation with the other. Instead, the fluid political and economic conditions in postwar Europe compelled each side to design policies which were largely defensive, but had the unfortunate consequence of provoking conflict with the other.[31]

Parrish and Narrinsky conclude that:

Paradoxically enough, implementation of the Marshall Plan without Soviet participation and with strong opposition by the USSR to a certain extent suited both sides. The Soviet Union retained and consolidated its influence in the countries of Eastern Europe, whereas the USA and its partners in the Marshall Plan had an opportunity to carry out a set of measures to stabilize the socio-political situation in Western Europe and, later, to set up a military-political Western alliance.[32]

Hence, it seems as if the Marshall Plan became the incentive to the Cold War. In 1945-51, this might have been regarded as a negative aspect, but long-run evidence has shown that it eventually brought the two superpowers, United States and Soviet Union, together.

 

4. CONCLUSION

Whether the Europe we know today would have been the same without the Marshall plan will remain an unanswered question. The argument that U.S. aid did not rescue Europe may hold only if Milward’s view about one at that time relative stable and growing European economy is considered valid. However, what is incorporated in the word ‘rescue’? In a long-term perspective it might be valid to say that due to different economic and historical factors, Europe without U.S. aid would have been able to develop and prosper as it did in the Golden Age. On the other hand, people in Europe and in the United States at that time saw a possible scenario in the break-down of European economy and a return to depression and misery. There was a general feeling that something had to be done, and this turned out to be financial help from the United States.

The political situation in Europe - especially the development of the Cold War, also seems to be intimately connected with the Marshall Plan. Would Europe have gained by less involvement with the United States, or would in that case the Soviet Union have become a bigger threat to Europe’s development and integration?

This paper has discussed some of the implications that U.S. post-war policy had for Europe and its population. Much more could be said in this vast topic, but the conclusion is that it can not be argued, nor denied, that the United States ‘rescued’ the Western European countries after World War II. The facts remain that the aid, particularly through the Marshall Plan, had more positive than negative effects for Europe as a whole. At present, the United States, Europe and the former Soviet Union bloc have overcome centuries of rivalry and hostility towards each other. Problems still occur, for example the disturbances in the Balkan region, but a more unified Europe can now better deal with these. What really matters is not that of looking back and asking “what if” questions. Rather, United States aid after World War II should be accepted as one of many historical aids that at the time it was implemented was considered to be the best possible solution. It certainly was positive to the Western European countries, and was a solution that still today is praised and commemorated.

So why not just let it be?

 

Any reproduction or distribution of this text is prohibited without express permission by the author. Please contact peter@engholm.nu for permission or further information.

 

REFERENCES:

Blocker, J., ”Europe: How the Marshall Plan Took Western Europe From Ruins To Union”, http://www.rferl.org/nca/features/1997/05/F.RU.970526115555.html, Prague, 1997.

Bradford De Long, J. and Eichengreen, B., ”The Marshall Plan: History’s Most Successful Structural Adjustment Program” in Dornbusch, R., Nölling, W., and Layard R. (eds), Postwar Economic Reconstruction and Lessons for the East Today, London: The MIT Press, 1993.

CNN Cold War, http://www.cnn.com/specials/cold.war/, 1998.

For European Recovery: The Fiftieth Anniversary of the Marshall Plan, http://lcweb.loc.gov/exhibits/marshall/, 1998.

Milward, A. S., The Reconstruction of Western Europe 1945-51, London: Methuen & Co. Ltd, 1984.

Parrish, S.D. and Narinsky, M. M., ”Working Paper #9: New Evidence on the Soviet Rejection of the Marshall Plan, 1947”, http://cwihp.si.edu/cwihplib.nsf/, 1993.

Pollard, S., European Economic Integration 1815-1970, London: Thames and Hudson, 1974.

Toniolo G., ”Europe’s Golden Age 1950-1973: speculations from a long-run perspective”, The Economic History Review, Vol. LI, No. 2, 1998.

Van der Beugel, E. H., From Marshall Aid to Atlantic Partnership, Amsterdam: Elsevier Publishing Co, 1966.

Wood, R. E., From Marshall Plan to Debt Crisis, Berkeley: University of California Press, 1986.

 

FOOTNOTES:



[1] Trans: “America, America! You were sent on angels’ wings, to rescue us from famine with the food you bring! We give our thanks to you for everything you do!,” Florian, L., in 1947 a schoolboy in Linz, Upper Austria, (Estate of Major General Harry J. Collins, Boltzmann-Institut/Steinocher-Fonds Archive, Salzburg)

http://www.image-at.com/salzburg/3045.htm.

[2] Willy Brandt, Chancellor of the Federal Republic of Germany, speaking at Harvard University, June 5, 1972, in “For European Recovery: The Fiftieth Anniversary of the Marshall Plan”, 1998, http://lcweb.loc.gov/exhibits/marshall/m15.html, p.13.

[3] E. H. Van Der Beugel, From Marshall Aid to Atlantic Partnership, 1966, p.17.

[4] A. S. Milward, The Reconstruction of Western Europe 1945-51, 1984, pp.53-54.

[5] Van Der Beugel, From Marshall Aid to Atlantic Partnership, 1966, p.20.

[6] Ibid., pp.36-38.

[7] A. S. Milward, The Reconstruction of Western Europe 1945-51, pp.2-5.

[8] Ibid., p.11.

[9] Ibid., p.55.

[10] S. Pollard, European Economic Integration 1815-1970, 1974, p.158.

[11] Van Der Beugel, From Marshall Aid to Atlantic Partnership, p.28.

[12] Milward, The Reconstruction of Western Europe 1945-51, pp.466-467.

[13]For European Recovery: The Fiftieth Anniversary of the Marshall Plan”, p.18.

[14] J. Blocker, ”Europe: How the Marshall Plan Took Western Europe From Ruins To Union”, http://www.rferl.org/nca/features/1997/05/F.RU.970526115555.html, 1997.

[15] Milward, The Reconstruction of Western Europe 1945-51, p.5.

[16]For European Recovery: The Fiftieth Anniversary of the Marshall Plan”, p.44.

[17] Milward, p.95, p.107.

[18] Blocker, ”Europe: How the Marshall Plan Took Western Europe From Ruins To Union”.

[19]For European Recovery: The Fiftieth Anniversary of the Marshall Plan”, p.29.

[20] Ibid., p.35.

[21] Ibid., p.36.

[22] Milward, The Reconstruction of Western Europe 1945-51, pp.469-470.

[23] Ibid., pp.69-70.

[24] Ibid., pp.123-124.

[25] Van Der Beugel, From Marshall Aid to Atlantic Partnership, p.187.

[26]For European Recovery: The Fiftieth Anniversary of the Marshall Plan”, p.37.

[27] J. Blocker, ”Europe: How the Marshall Plan Took Western Europe From Ruins To Union”.

[28] Ibid.

[29] S.D. Parrish and M. M. Narinsky, ”Working Paper #9: New Evidence on the Soviet Rejection of the Marshall Plan, 1947”, http://cwihp.si.edu/cwihplib.nsf/, 1993.

[30] S.D. Parrish and M. M. Narinsky, ”Working Paper #9: New Evidence on the Soviet Rejection of the Marshall Plan, 1947”, http://cwihp.si.edu/cwihplib.nsf/, 1993.

[31] Ibid.

[32] Ibid.