Getting Germany Back on Track

By Markus Ziener

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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Markus Ziener is a pro­fes­sor of jour­nal­ism at the Hochschule für Medi­en, Kom­mu­nika­tion und Wirtschaft (HMKW), Uni­ver­si­ty of Applied Sci­ences, in Berlin. He’s also a reg­u­lar con­trib­u­tor to the Los Ange­les Times, The Straits Times (Sin­ga­pore), Neue Zürcher Zeitung, and Deutschlandfunk/Deutschlandradio. He serves as Vis­it­ing Senior Fel­low at the Ger­man Mar­shall Fund Berlin.