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The Marshall Plan Revisited

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It's hard to imagine today that 50 years ago much of Europe's industrial production had been destroyed. Germany lay in ruins. Britain, France, Italy, the Netherlands and other European countries had been badly mauled and were exhausted.

All across the Continent, villages, towns and cities had been pounded into rubble. Transportation was unreliable or nonexistent. Roads, bridges and railroads lay wrecked and demolished. Tens of millions of men, women and children had been killed or maimed. Millions more struggled just to find food to eat and a dry place to sleep at night. For many the peaceful and prosperous life widely known a decade earlier was a shattered, far-off memory.

The fallout of World War II

Western Europe had just seen decades of progress battered into dust in the firestorm of World War II. The economy was in shambles; Britain faced a desperate shortage of coal and electrical power. Trade was paralyzed, and factories had been crippled across Europe. Farms, mines and manufacturing concerns struggled to provide food, shelter, clothing and power to the war's survivors. Nothing came easy on a continent on which neighboring countries had spent six years fearing and hating each other, killing and being killed.

A shattered Europe was starved for capital to reinvest in industry; capital with which to relieve a crippling debt burden; capital to enable Europeans to get their people back to work and adequately feed them.

The particularly severe winter of 1946-47 only exacerbated the problems and shortages. Reconstruction required products from the United States, and the Europeans simply did not have the dollars to purchase such material.

Few could imagine how the misery would end. But end it did, and the Europe of today is vastly different. What made this recovery possible?

This year marks the 50th anniversary of the enactment of a remarkable and visionary strategy: the Marshall Plan, as it came to be called. It was an American plan that provided for the reconstruction across Europe of economic and political systems badly damaged by war.

Europe owes much to George C. Marshall's understanding and foresight. But how did this plan come about, and what did it do for Europe?

During the spring of 1947, after George Marshall (who had served as a general in the U.S. Army during the war) had been appointed U.S. secretary of state, the gravity of the European situation became apparent to American leadership. True, a small-scale recovery was already under way, fueled by a little-publicized infusion of aid from America, mainly in the form of loans.

From July 1945 until December 1947 America pumped roughly $11 billion into Europe. But this aid was oriented toward relief and was largely unfocused. It had not achieved the progress that had been hoped for. A more coherent and effective approach was necessary.

In March 1947 Secretary Marshall attended the foreign ministers' conference in Moscow. Political and economic developments were not promising. The East-West ideological divide was becoming even more pronounced. Alarmed at the failure of the conference, on his return from Moscow Mr. Marshall declared that "the patient is sinking while the doctors deliberate."

Over the next six weeks the secretary set his department working feverishly to come up with a workable solution. The plan that eventually emerged was simple and far-sighted and broke new ground. America would commit itself to provide, over several years, aid to European countries that would agree to respond cooperatively. Remarkable as it may seem from a Cold War perspective, this plan even envisioned including the Soviet Union and its newly acquired Eastern European satellites.

The goals were straightforward: alleviate the dollar shortage; provide a catalyst for recovery; head off any reversion to authoritarian solutions, thus alleviating the developing communist threat.

The new program would target investment and reconstruction. It would include what we now call technology transfer and involve advisers in economic modernization. America envisaged a rebuilt Europe in which nations would act together, cooperating as the American states had done for decades. Modern production methods America had mobilized so successfully during the war effort would be emulated.

This new aid would be sustained over several years and targeted in a way that would help alleviate balance-of-payments problems. It would stress productivity and cooperation between capital and labor across the region, and emulate the United States' productive political economy. This plan was publicized as "a hand-up," not a handout.

An outline for restoration

On June 5, 1947, George Marshall launched the program during the now-famous Harvard University graduation ceremonies at which he received his own honorary degree. In modest and understated tones he described the dangerous situation in Europe and laid out the rationale for American involvement in nothing less than the rebuilding of Europe.

In what has been called the "ultimate commencement address" of around 1,200 words-which took only 12 minutes to deliver-Mr. Marshall argued that Europe "must have substantial additional help or face economic, social and political deterioration of a very grave character."

He noted that "it is logical that the United States should do whatever it is able to do to assist in the return of normal economic health in the world, without which there can be no political stability and no assured peace."

He made the case for why his plan was needed: "Our policy is directed not against any country or doctrine but against hunger, poverty, desperation and chaos."

The basis of the project, he said, was to be a partnership. "It would be neither fitting nor efficacious for this government to undertake to draw up unilaterally a program designed to place Europe on its feet economically. The initiative, I think, must come from Europe."

Mr. Marshall added two handwritten paragraphs at the end of the speech to emphasize concerns he had voiced at the start: "It is virtually impossible at this distance merely by reading or listening, or seeing photographs and motion pictures, to grasp at all the real significance of the situation. And yet the whole world of the future hangs on a proper judgment" (emphasis added).

The State Department was concerned about initial adverse reaction, and the speech was purposely understated and short on specifics. American publicity was muted. Many people failed at first to grasp the importance of the discourse.

However, such was not the case in Europe. Foreign Secretary Ernest Bevin of Britain heard the speech and its dramatic offer on the BBC news and immediately telephoned the French foreign minister, Georges Bidault. Both governments quickly affirmed their acceptance of the offer.

A continent begins to rebuild

Mr. Bevin and Mr. Bidault rapidly organized a unified European response. The next month 16 European nations met in Paris to outline a joint recovery plan. The Soviet Union and countries under its control declined to participate. Western Europe worked with U.S. State Department officials to draft an acceptable proposal.

But progress was slow, and it took two months to draft a suitable plan. Not until December was the first official version of the plan submitted to Congress.

So the Marshall Plan, officially called the European Recovery Program, came into being. On April 3, 1948, the United States Congress passed into law the Economic Cooperation Act, which outlined a massive and far-reaching program of European aid.

A new agency in Washington called the European Cooperation Administration administered the program. In Paris a separate agency called the Organization for European Economic Cooperation coordinated and approved each nation's recovery plans. This later became the Organization for Economic Cooperation and Development.

By the end of 1952 the Marshall Plan had channeled more than $13 billion to the cause of rescuing Europe and setting it back on its feet. This represented between 5 and 10 percent of the U.S. federal budget over the lifetime of the program, or about 2 percent of gross national product over the same period. At today's dollar values this represents a staggering $88 billion that America committed to provide for a single program in the cause of European recovery.

Foundation for growth and recovery

The plan served as a substantial stimulus in expanding European agricultural and industrial production; it helped restore sound currencies, budgets and finances; it stimulated trade among European countries and between Europe and the rest of the world.

During the program's four years of operation, the participating countries saw their combined gross national product rise more than 30 percent and industrial production increase by 40 percent over prewar levels. Improvements in agriculture were less successful but still rose 9 percent while feeding a population increase of many millions over the period. Steel production rose above prewar levels by more than 20 percent, and oil refining rose fourfold. Coal production did not improve so rapidly but rose 27 percent higher than 1947 levels.

Harder to quantify was the amazing psychological boost to morale. Almost overnight Europe's mood changed substantially.

The United States viewed itself as a model for the development of Europe, with the relationship among American states viewed as a pattern for relationships among the countries of Europe. By 1949 it became the explicit policy of the Marshall Plan to encourage the unification of Europe. Clearly, substantial groundwork was laid with respect to this ongoing quest.

Of course, these were the early days of the Cold War. Perhaps the greatest inducement to America for setting up the Marshall Plan was the containment of communism. By rescuing Europe, America hoped to so change the political and economic landscape that communism would be neutered. In this she largely succeeded.

The Marshall Plan dramatically strengthened the role of American power and prestige in Europe. It played its part in paving the way for the North Atlantic Treaty of 1949, which brought the North Atlantic Treaty Organization (NATO) into existence.

America saw that a partnership between herself and a strong, united Europe, sharing the same essential values of freedom and democracy, provided the best means to combat communism and other regional and global challenges. It would provide the essential platform on which a truly worldwide system of free trade could be built.

The legacy

George Marshall, who died in 1959, is best remembered and honored for the plan that bears his name. In 1953 he was awarded the Nobel Peace Prize for his contribution to European recovery.

The Marshall Plan encouraged joint efforts and cooperation between America and Europe, and laid the groundwork for the integration of Europe that has progressed to become the European Community of today. Its purpose was to encourage otherwise weak and divided countries to cooperate so they could become strong politically and economically and play their full role in the community of free nations.

The Marshall Plan is considered by many to have been the most effective of all American foreign-aid programs. It succeeded in preventing the deterioration of European economies and in so doing helped to offset communism. It led to stable and prosperous free economies. It cemented the special transatlantic relationship that has existed between America and Europe from that time.

The spirit of George Marshall lives on as America and Europe work toward the same grand vision of shaping the peace, freedom and prosperity of the world based on democratic values.

Will America and Europe succeed in accomplishing this millennial vision? We need to be aware of some serious impediments to its attainment.

Not least, we need to be aware of what biblical prophecy has to say regarding our future. The picture it paints is rather different from what America and Europe expect. Many unpleasant surprises lie ahead, according to Scripture. The eventual outcome is even more dramatic than we can imagine. (Be sure to read "Needed: A Viable Plan to Rescue the World" for further details.)

For further information about the Marshall Plan, consult the George C. Marshall Foundation Web site and other linked sites on the Internet. The site is at www.GCMarshallfdn.org/index.html. GN