The Marshall Plan has become synonymous for massive help, for bringing about a herculaneum task and having a country rise again from the ashes. Originally designed to help Europe get back on track after the devastations of World War II, it has a much broader meaning today. In discussions about how to rebuild Ukraine at some point in the future, there’s again talk of the need for a Marshall Plan. However, it’s worthwhile to take a step back and look at what the original Marshall Plan was all about.
George Marshall is angry and annoyed when he enters his Washington D.C. office in the State Department on April 28, 1947. Marshall has only been U.S. Secretary of State for a few months. But the ex-general knows the European theater of war like no one else. Two years earlier, Britain’s Prime Minister Winston Churchill hailed the 66-year-old as the “true organizer of victory” over the Nazis.
Now George Marshall is afraid that the U.S. is in danger of squandering that victory. The minister has just come from Europe. He’s seen the rubble, the suffering, the poverty in Germany and elsewhere. If we’re not careful, “Europe will go to the dogs,” Marshall warns the critics, for whom aid to former enemies is already too expensive. He adds: “The European patient is dying while the doctors are still consulting.”
The ex-general, who fought in France in World War I, is a strategy expert. Economic malaise makes the populations of Western Europe vulnerable to communism, Marshall believes. In a speech at Harvard University on June 5, 1947, he talks about economics but has politics on his mind: “All who aim to make human misery a permanent condition for political or other gain will meet with the resistance of the United States.”
Such phrases, of course, are aimed at Moscow.
For West Germany in particular, the gigantic aid plan that bears Marshall’s name and earns him the Nobel Peace Prize in 1953, has a political impact that continues to shape the Federal Republic to this day. The Marshall Plan agreement is ratified by the West German parliament, the Bundestag, on January 26, 1951, making it the first treaty under constitutional law of the young republic – and one of its most important.
Yet back home in the U.S., Marshall has to fight to implement his vision, for it seems too expensive an undertaking even for the United States. “In order to sell the Marshall Plan to Congress, the looming communist danger had to be overstated,” writes German-American historian Fritz Stern in retrospect. 12.4 billion dollars are channeled into Western Europe within four years as the “European Recovery Program” (ERP). The annual budget of the U.S. at that time is just about 40 billion dollars. Calculated in today’s terms, the Marshall Plan is worth around 85 billion Euros. Germany, however, receives only 10.8 percent of this money, while Great Britain (24.7 percent), France (21 percent), and even Italy (11.7 percent) receive the bulk of the sum.
For the U.S., the enormous sums are the price of the new containment policy against the Soviet Union proclaimed by President Harry Truman in early 1947. The Marshall plan is one of its most effective instruments. Especially for West Germany, the new “containment” means a turning point. Immediately after the end of the war, the U.S. still treats the country as a “defeated enemy state.” In the fall of 1944, U.S. Treasury Secretary Henry Morgenthau is thinking aloud about dividing up the country and reducing it to an agrarian state. However, the Cold War is looming on the horizon, and the U.S. needs a healthy, prosperous West Germany – as a frontline state.
Nevertheless, many Germans are initially disappointed by the Marshall Plan. Instead of investing in destroyed infrastructure, the Economic Cooperation Administration (ECA), which distributes the aid money, only distributes more food, But such programs already exist, for example with the care packages or the U.S. Army’s Garioa aid program. In 1948, the first year of the Marshall Plan, barely a third of the supplies consist of industrial goods.
Ludwig Erhard, who later becomes Minister of Economics and Chancellor, criticizes the unbalanced prioritization of aid as early as 1948: “After the currency reform, we have no capital in Germany that would allow us to invest in any way.” Erhard, a strict regulatory politician, also scolds the Marshall Plan as a “planned economy” and full of bureaucracy.
However, there is a reason for the initially cautious approach. It has to do with the mistrust of ex-opponents. ERP beneficiaries such as France want to prevent Germany from once again becoming an industrial competitor. Only after an angry intervention by U.S. military governor Lucius D. Clay do things slowly change. By the second year, industrial goods already predominate: trucks, mining equipment or important raw materials such as cotton and crude oil are coming in.
Other things are also going wrong. Shipments of raw rubber and tires, for example, are so plentiful that there’s an unwanted surplus and are shipped back to the United States. The textile industry, on the other hand, is booming, benefiting from cotton deliveries from the U.S. and thus being able to clothe millions of Germans anew – even though the Marshall Plan mainly brings low-grade raw materials into the country. But the ERP has a second key to success: counterpart funds. For the goods from the U.S., German buyers have to pay the D‑mark equivalent into a special fund. After the currency reform of June 1948, considerable sums accumulate, which are granted as investment loans. Thanks to the Marshall Plan funds, West German power plants are able to significantly increase their output in a relatively short time.
While the direct economic impact of the Marshall Plan is disputed by some, there’s no doubt about its political success. For decades, it shaped a positive image of the U.S. among Germans. With closer political ties, more intense cultural bonds followed. Exchange programs were set up, scholarships were introduced, literature, film and music from the U.S. became a staple in German society. Although intended as an economical tool, the Marshall Plan reached way beyond that and changed the overall mood towards the U.S. But its success also deepened the rift between East and West.
Though the ERP program was originally open to any country, the Soviet Union declined the offer, instead forcing countries, such as Poland and Czechoslovakia, to decline as well. Eastern European countries could only watch enviously as Germany, the defeated nation, got back on track – with the help of the Marshall Plan.
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