Essay: The Marshall Plan (European Recovery Program)

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  • The Marshall Plan (European Recovery Program)
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The Marshall Plan, officially called the European Recovery Program, was a key moment in the cold war as it affected all of Europe. It also, potentially more importantly, changed the dynamic between the superpowers. The Marshall plan was as a result of American self-interest. There are three dimensions to the motives behind Marshall Aid: Political, Economic and Social. The Marshall plan was a result of self interest, if within these three areas the US designed the plan in such a way that they would be able to gain, financially and/or politically. Historians generally agree that the Marshall plan was motivated by a combination of the three areas but they put more emphasis on different aspects of the three areas. Oliver Edwards gives a very credible interpretation where the focus is on improving social conditions in an attempt inhibit the increasing support the communist party was enjoying , he also suggests there was a desire to create a captive American export market. Both of these areas are corroborated by other historians and primary sources, George C. Herring corroborates this interpretation by also saying ‘the administration sought to use U.S. aid to check an alarming leftward drift in European politics.’ Another strong interpretation is Martin McCauleys, who suggests that the reduction of the financial burden on the American taxpayer was the central aim of the Marshall plan, this is certainly credible as it is backed up by correspondence between Truman and Herbert Hoover discussing the issue and solutions prior to the creation of the Marshall plan. However the interpretation seems to lack the necessary width as it focuses on the economic aims and fails to give enough credit to other major factors such as the political. There are also interpretations that are weaker but cannot be discounted such as Niall Ferguson’s’ who emphasises the Americans desire to improve economies and militaries linked to their own. This interpretation is supported by the strong anti-communist feeling at the time but weakened by the consensus among historians that social revolution was much more likely than Soviet aggression in Europe, therefore supporting Oliver Edwards interpretation. The strongest interpretation, however is Diane B. Kunz’s, she agrees with Oliver Edwards on the political aim of improving social conditions which would reduce the communist support in Western Europe. Diane B. Kunz also attributes credit to reducing the financial burden on taxpayers, which is supported by Martin McCauley and it is backed up by correspondence between key policy makers at the time. No credible interpretation suggests that the Marshall plan was altruistic and not in the US’ interest. Despite the administration knowing about the ‘long-suffering peoples’ in Europe and Truman’s acceptance of responsibility in their occupied areas, the Marshall plan was not just a recovery programme, but an attempt to capitalise on post-war Europe. The first section will look at the political aims of the Marshall plan, the second section will evaluate the arguments and interpretations that focus on the economic intentions of the Marshall plan, and the third will be around the social aims which will largely suggest the plan is altruistic as the social aims were about improving conditions for people in Europe and therefore were not of direct benefit to the US, however the altruistic motivations behind the marshall plan were not completely benevolent.

Political motivations behind the Marshall Plan.

In the late 1940s there was increasing fear of democratic social revolution in Western Europe as the horrendous living standards and economic displacement which was preventing recovery caused people to look to the radical left for a solution. After the extremely cold winter of 1946-1947 and coal shortages there were food riots in the western occupation zones in Germany. Oliver Edwards says that the ‘Americans had long believed that people who were hungry and unemployed were likely to turn to extreme of the left for solutions to their problems.’ The increase in support for the left in Europe was scaring the policy makers in Washington. This is corroborated by Diane B. Kunz’s view that Americans feared ‘a hungry, suffering electorate might vote communist governments into power’, Kunz and Edwards’ interpretation corroborate each others, as they both focus on the Americans knowledge and concern about how terrible living conditions can sway the electorate, this therefore increases the credibility of the argument. This is also backed up by Kennan’s analysis of the Soviet threat as one of propaganda aimed at promoting social revolution by those within ‘poverty-stricken states rather than a direct military invasion’. Marshall assigned Kennan to direct a new policy planning unit, the analysis therefore would affect policy and in turn the Marshall plan, this increases the validity of the interpretation. Truman’s speech to congress explains the American viewpoint well;

The seeds of totalitarian regimes are nurtured by misery and want. They spread and grow in the evil soil of poverty and strife. They reach their full potential when the hope of a people for a better life has died. We must keep that hope alive. If we falter in our leadership, we may endanger the peace of the world – and we shall surely endanger the welfare of our own nation.

Despite the clear message of his speech it is not as useful as it seems in understanding the Marshall plans motives, Truman knew what he had to say to get the Marshall plan passed by congress, he knew that an anti-communist plan would be supported. A plan to improve the economies in western Europe on a social basis or to create an export market for the US, it probably would not have been accepted, meaning the anti-communist rhetoric may not have been the most significant reason behind the plan. However the anti-communist agenda Truman gave is definitely accurate to some extent, the fear of soviet expansionism was evident at the Potsdam conference when Truman accused Stalin of not sticking to the democratic agreement made at Yalta. Despite the speech’s failure to acknowledge the other motives, it does not mean the one it does acknowledge has its validity decreased. The source also gives a insight into how the political motivations of the plan were in America’s self interest; not only would the peace of the world be endangered but so would the welfare of America. The tone of the speech is very much about what will happen to the US if they do not act rather than what will happen if they do. In France and Italy communist parties were in coalition governments and received about 20 percent of the vote, Italian elections were coming up in April 1948 and there was a possibility of a communist victory. Communist party members in Italy had grown to two million and the fear was so great that there was a campaign to encourage Italian-Americans to send letters urging family members in Italy not to vote communist in the election; 10 million letters were sent. This backs up the Truman administration being very fearful of communists gaining power. The legislation for the Marshall plan was only passed by the traditionally isolationist congress after the coup in Czechoslovakia showed the Soviets to be expansionist. Communist victories would mean European governments seeking closer ties with Moscow, giving them more control over Europe and affecting the global balance of power. Oliver Edward’s and Diane B. Kunz’s interpretation are therefore very strong and supports the Marshall plan being as a result of American self-interest.

The Truman administration knew relations between the superpowers had broken down by 1947, as shown by Truman signing off on Churchill’s iron curtain speech. Therefore a desire to improve both the economies and militaries within their sphere of influence was only natural, this is possibly one of the Marshall plans aims. Although this is the weakest argument it cannot be totally discounted. Niall Ferguson more so than any other historian indicates that the Americans used Marshall aid to improve economies and militaries in allied countries. ‘The essence of American “hegemony” was the preferential treatment of American allies when it came to the allocation of loans and grants (whether for development or military purposes).’ This interpretation is corroborated by Walter LaFeber who says Kennan ‘insisted that any aid, particularly military supplies, be limited and not given to just any area where communists seemed to be enjoying some success’, the fear of communists taking over an area where the Americans gave military supplies was significant, therefore supporting Niall Ferguson’s interpretation that the communists were potentially a military threat. Kennan, in 1951, said ‘the greatest danger that could confront the United States security would be a combination’ ‘of the Central European and the Russian military-industrial potentials’, therefore avoiding feeding those who potentially could turn against them was important. Kennan said this in 1951, after Cominform was implemented, before it was however the Americans thought they could decrease the Eastern European states dependence on the USSR through improving their economy, therefore going against what Kennan said in 1951. In 1951 a deal between the US and Yugoslavia was signed that would give Yugoslavia 150 million as Tito had been expelled from Cominform for following a different line to Stalin. The fear of the combined forces of Central Europe and Russia will have been present when the Marshall plan was being created, which means they are unlikely to have planned to put a lot of military in Central Europe until later, when Europe was clearly divided. Diane B. Kunz’s and most historians interpretation disagree with that of Niall Ferguson’s because as Diane B. Kunz put it ‘the administration were not worried about Soviet tanks in Paris or Rome’. But instead social revolution due to poor economic conditions. This interpretation is not very strong but it does not support the Marshall plan being altruistic, instead it goes some way to corroborating Oliver Edwards interpretation. The argument and in turn Niall Ferguson’s interpretation is quite weak as it is questioned by numerous interpretations.

Germany was strategically very important in Europe in 1947 as there was a large amount of uncertainty as to what would happen to it; whether it would reunify and, a question more prevalent in the minds of Americans and Soviets, if it did reunify which side would it align itself with or would it remain neutral. The Americans took the position that to prevent the Soviets from benefiting from it’s industrial power, they were not going to allow a reunified Germany. Robert J. McMahon, suggests that as a secondary purpose the Marshall plan was driven by the desire to divide Germany into definitive blocs. McMahon states the Americans preferred ‘to divide the country rather than to run the risk of a reunified Germany that might over time align itself with the Soviet Union.’ Marshall’s insistence that Germany take part in the plan caused any hopes of German reunification to be dashed. Cominform was founded as a direct result of the plan, it was used to instruct countries the Soviet sphere what line they should follow and in this case specifically to not take aid from the US. Chief Russian delegate Andrei Zhdanov said the Marshall Plan was a concerted strategy to forge a western alliance that would serve as a ‘jumping off place for attacking the Soviet Union’, speaking in September 1947, he said the world was now divided into ‘two camps’. However Andrei Zhdanov was the architect of much of the propaganda from 1945 meaning he is not a credible source. Furthermore the context in which Zhdanov made his statement is intrinsic in understanding it, it was made at the conference which established cominform, meaning it was almost justifying the formation of cominform. However the Soviets feeling need for cominform shows their view of the Marshall plan; that it was aggressive and gave them control over the west meaning they needed control of the east. Zhdanov’s statement that the world is now divided into two camps is accurate as the Marshall plan and Cominform gave both superpowers political sway in their spheres of influence, although there is debate whether the east and west were already divided as stated in Churchill’s iron curtain speech, the world was more divided than ever after the Marshall plan. A high-ranking diplomat privately admitted that America would not agree with any terms that the Russians would accept, the fear of a reunified Germany that over time may align itself with the Soviets meant dividing the country was the preferred option. There were other factors in the division of Germany such as the Berlin Blockade and the currency issues in Berlin, so the Marshall plan instead of dividing Europe it instead reinforced the divisions that were already taking place in Germany and Europe. The strength of this interpretation lies in the effects of the Marshall Plan as it caused Europe to fall into two now more easily defendable blocs. However there is little to suggest in the correspondence between policy makers dividing Europe was a goal of Marshall aid, furthermore it would not have been a publicised aim as they did want to be blamed for the division of Europe. This interpretation is corroborated by Michael J. Hogan who says the man-power, markets and industrial potential were strategic assets and must not be controlled by a hostile power. Michael J. Hogan suggests the same as McMahon; that the Americans preferred to divide Europe, rather than risk any part of it falling into the hand of the Soviets. The Americans were not afraid of a Military invasion but instead that through worsening social conditions, allegiances with the Soviets would be formed and they would gain/lose control of Europe’s vast industrial potential. Robert J. McMahon’s interpretation is very credible but fails to deal with the wider financial aims of industry helping the rest of Europe. McMahon’s interpretation is also closely linked to Diane B. Kunz and Oliver Edwards’ interpretation as dividing Europe would enable the Americans to more easily stop Soviet expansionism into Western Europe.

Economic motivations behind the Marshall Plan

There was pressure from congress for Truman to reduce the financial burden of supporting European recovery, despite the Marshall plan making up half of American aid for the period, it put practices in place that would aid recovery for example countries were given American financial advisors to help with recovery. Martin McCauley puts great emphasis on the Americans desire to reduce ‘the burden of occupational costs, as well as the expense of propping up the German economy.’ In January 1947 Truman asked Herbert Hoover to report, for the second time, on the food requirements of the people in their occupied zones, especially in Germany. In response Herbert Hoover agreed and suggested he also inquire into ‘what further immediate steps are possible to increase their exports and thus their ability to become self-supporting’ without such ‘the congress and the taxpayer are left without hope’. The message from Hoover is clear; both congress and the taxpayer will not be happy to continue shouldering the financial burden of supporting German and European recovery. Despite Hoover and Truman being friends the tone of the letter is that of a stern warning, the letter is not public so it’s purpose is purely to inform Truman so what he says will not affect the way the public view him which means the warning to Truman is sincere. This therefore, supports Martin McCauley’s interpretation, as there was growing discontent among congress and taxpayers at having to support Europe, hence the reduction of this was an aim of the Marshall plan. Marshall was tasked with coming up to a solution; the Marshall plan was used to increase production in and exports from Germany, at the same time the economies of western Europe were tied together, this aided recovery and in turn decreased the financial burden on American taxpayers.This is supported by the fact the collapse of Europe would have cost the Americans much more than it did through aid and recovery. Diane B. Kunz corroborates this interpretation by stating Truman and his administration ‘viewed the Marshall plan, with a longer-range vision’ ‘,it would help Western Europe rebuild the industrial base that was the key to European prosperity, eventually obviating the need for further American assistance.’ Kunz’s interpretation adds credibility McCauleys as they both focus on the plan’s ability to reduce financial burden on the taxpayer. The interpretation can be seen in action in the years following the plan; from 1946 to 1952 economic aid accounted for nearly 2 percent of US GNP, half of which was Marshall aid, in the following decade it dropped below 1 percent. The interpretation therefore is very strong as it can be seen in effect, Europe’s reliance on America for support is reduced and with it the burden on the American taxpayer.

The creation of a captive market in Europe was not the primary purpose of the Marshall plan but rather the Americans may have been fortuitous, in that their primary aims lined up with this secondary aim. More likely however is that the creation of an American market in Europe was intentional and deliberate, and therefore was in America’s self-interest. Oliver Edward’s interpretation is supported by many historians interpretations. Creating a captive market for American goods in Europe was a secondary motive behind the political and reducing the financial burden on the taxpayer. Oliver Edwards states that Marshall aid would create a market in Europe and ‘help American farmers and businessmen threatened by falling domestic demand after the end of the second world war’. This interpretation is supported by Martin McCauley who suggests the Marshall plan had a political and economic goal. ‘It’s political goal was to contain communism, its economic aim was to bring prosperity to Europe and thereby to provide export markets for the US economy’. The Atlantic Charter which set out the principles the postwar world should be built agreed upon by Churchill and Roosevelt in 1941. The first point says ‘no territorial gains were to be sought by the United States or the United Kingdom’, which advocates the idea that the Americans were not looking to benefit from the devastated states of Europe. However it fails to state that it will not attempt to gain financially from the situation, reparations are owed, but the omission that they would not profit from postwar Europe alludes to the idea that they will attempt to gain or that they are unwilling to state that they will not attempt to gain. This is backed up by talks in Paris in 1947 as they were in built around the assumption aid was to be organised centrally not bilaterally and that economies were to be open up and do more trade with both the US and the rest of Europe. American funds given through aid to Europe were to be used to purchase American supplies, an example of this is the American oil companies wanting to sell oil to the Europeans but the Europeans wanted to buy crude oil and buy refineries, when the American oil companies complained the Economic Cooperation Administration denied Europeans money to build refineries. Oliver Edwards interpretation, therefore, is strong because it shows appreciation for other motivations such as the financial burden on US taxpayers, and even the supposedly altruistic Atlantic Charter has implications of American financial gain from Europe which adds to the credibility of Oliver Edwards interpretation.

One of the United States most significant aims for foreign policy during the period after the first world war was the reduction of international trade barriers. As Michael J. Hogan said ‘Truman wanted reintegration of Europe and the US into a multilateral system of world trade’. This is another factor contributing to the ideological disagreement between the US and USSR as autarkic economies ,such as the one Stalin desired, this would not work within the global system the US wanted to implement. The desire to reduce trade barriers was evident in previous attempts to provide economic aid, in May 1946 a loan was negotiated between France and the US, the US wrote off $2.25 billion of wartime loans and gave hundreds of millions of dollars in credits and promised low-interest loans to come. In return, Paris pledged to abandon protectionist import quotas and allow Americans and other foreign products freer entry. US loans and financial aid was used throughout this period to improve international aid and create closer cooperation internationally. This interpretation is backed up by Niall Ferguson who suggests the US ‘embarked on a sustained push to reduce international trade barriers through multinational negotiations’. This interpretation and the argument for the Marshall plan to be as a result of American self-interest is supported by the US’ loan deals prior to the Marshall plan; a loan to the British in 1946 was used by the Americans to impose substantial requirements such as sterling-dollar convertibility, lower tariffs, and participation in an international trade conference. Michael J. Hogan’s interpretation is very strong as it is in line with the Americans foreign policy aims at the time, however it is not completely convincing that a desire to implement a multilateral system of world trade and therefore other interpretations such as Diane B. Kunz and Oliver Edwards as they give an interpretation which the Marshall plan can be seen achieving.

Social motivations behind the Marshall Plan

No credible interpretation claims that Marshall aid was carried out purely due to altruistic aims and in turn to improve the social conditions in Europe. However it was possibly a significant factor, as the desire to improve living standards for those in dire situations is very powerful. The plan was rationalised in government as a method of containment that would also improve the living standards in Europe although containment was the much more powerful motivator of the two, the public reasons given were both political and altruistic as well. A large portion of George C. Marshall’s speech announcing the European Recovery Program was dedicated to informing the public about the terrible conditions in Europe. Truman knew that conditions in Europe were bleak so in a letter to Hoover, he asks for a ‘food survey’ in the areas ‘occupied by our forces and for which we, therefore, have a direct responsibility’. The letter is a private correspondence to inform Hoover of his task, it was produced in January 1947, the report produced thereafter would have affected the construction of the recovery program as the needs of Europe would be used to determine amount of aid given. The Marshall plan was aimed at recovery and therefore gradually bringing Europe back to the state it in was pre-war, with changes in how it was run economically but socially the same. However it also had to solve the French fear of a powerful Germany and this was done not only through Marshall aid but other things such as assurances when West Germany was included in NATO. France desperately needed German reparations, which were replaced by US credits, and bringing the French and German economies closer together reduced the French fear of a German economic power. The French problem is an example of a slightly altruistic outcome of the Marshall plan, it was a known issue but to improve it was not a key aim of the Marshall plan. The improvement came about as European economies were tied closer together which was aligned with other aims of the plan, such as multilateral trade, and US credits were to be given as part of the plan which decreased the requirement of German reparations. This benefitted the French and could be seen as altruistic but in actual fact it was a means of achieving their other aims through which the improvement in relations and living standards was brought about. Another consequence of the plan was that it provided a huge psychological boost and restored optimism to those in West Europe, this was again an almost inevitable consequence of aid. Giving countries aid, improving their economy, trade, and living standards is bound to increase optimism and hope for improvement. However as stated at the beginning of this section the desire to improve people’s living standards was possibly a driving factor of the program, the desire for a global improvement was shown in the 1941 Atlantic charter, where Roosevelt and Churchill agreed on terms that the post-war world should be predicated such as; ‘global economic cooperation and advancement of social welfare’ and that they ‘would work for a world free of want and fear’. This demonstrates the Americans high-mindedness in the 1940s although it was a statement of policy which the vast majority of the electorate would agree, it was not legal or a plan to deal with specified issues. This decreases its impact as the time but does not decrease the credibility it lends to the mindset of American policymakers at the time. The structure of Marshall aid itself suggests the plan was altruistic; 20% were loans 80 % were grants, the first shipments were food and fertilisers then machines to improve agriculture efficiency, both of which would improve living standards suggesting its altruistic. The improvement in social and economic conditions that could be put down to American policy makers altruism were in reality, a way of containing communism, in this sense the improvement in living standards were a means to an end for the Truman administration. This furthers the argument for the Marshall plan being as a result of American self interest.

Conclusion

The political dimension of the Marshall plan is the most important, communists gaining power democratically especially in France and Italy was a serious concern for the Truman administration with them commanding about 20 percent of the vote. Social revolution was much more likely than military invasion by the Soviets, which decreases the validity of Niall Ferguson’s interpretation, and increases the validity in Diane B. Kunz and Oliver Edwards’ interpretation. Robert J. McMahon’s interpretation that the Marshall plans purpose was to divide Europe is accurate to some extent, as it did, at least in part cause the division of Europe, however there is very little evidence from the time which suggest this was an intentional consequence of Marshall aid. The most credible interpretation in the political section is Diane B. Kunz and Oliver Edwards and therefore the political aims of the plan were as a result of American self-interest. The Economic aspect of the Marshall plans intentions are also due to American self-interest, Martin McCauley says the most significant of which was as Herbert Hoover said to reduce the support paid by the American taxpayer, Diane B. Kunz corroborates this argument. This was a significant aim particularly because the US congress was becoming increasingly less willing to fund the reconstruction of Europe. Oliver Edwards’ interpretation is that the US wanted to create a captive market in Europe, which is reinforced by Martin McCauley and backed up by Truman who believed for America’s economy to thrive a large export market was required. It was however a secondary aim, the plan was not based around creating trade but instead by the economies recovering, increased trade would be a by-product. The desire for multilateral trade goes hand in hand with the market in Europe, the US throughout the period wanted to decrease trade barriers, as they were an economic power they were able to dominate markets when could access them with no restrictions. The US had shown they were willing to use aid to reduce trade boundaries, for example the French loan in May 1946, Michael J. Hogan’s interpretation therefore is strong, meaning all of the economic aims of the Marshall plan were in the US’ interest. The improvement of social conditions in Europe were not altruistic, they were a means to an end, they reduced support for capitalism and were a by product of improving economies to reduce the financial burden on the American taxpayer. However there was knowledge of the terrible living standards in Europe due to both the physical damage and loss of life and the economic displacement which was inhibiting recovery, Truman wanted to improve these conditions in part because he saw the occupied areas of europe as the US’ responsibility, in these aspect of the marshall plan’s causes for being made were altruistic. The Marshall plan, however was overwhelmingly due to American self-interest, there was need for aid in Europe 0but the previous loans were benefiting the countries in Europe, the Marshall plan allowed the US to benefit both politically and economically.

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