Marshall Plan Announced

In June 1947, U.S. Secretary of State George C. Marshall used a commencement speech at Harvard to propose a program of American economic aid to help Europe recover from the Second World War. Formally the European Recovery Program, it became known as the Marshall Plan. Over the next four years the United States provided roughly $13 billion in grants and loans, a vast sum for the time, and the effort became one of the defining initiatives of the early Cold War.

The background was a continent in ruins. Cities, railways, ports and farmland had been devastated, and the harsh winter of 1946-47 deepened shortages of food and fuel. Industrial production was sluggish, trade was disrupted, and many countries lacked the dollars needed to buy goods from abroad. American officials feared that economic misery would drive voters toward communist parties, which were strong in France and Italy, and that political instability would invite Soviet influence. Earlier aid, such as loans and relief programs, had not been enough, and the Truman Doctrine of March 1947 had already committed the United States to supporting Greece and Turkey.

Marshall's speech was notably brief and did not give a detailed program. He invited European governments to agree among themselves on their needs and to take the initiative in drawing up a plan, with American support to follow. Britain and France quickly convened talks, and the Soviet Union took part briefly before withdrawing, denouncing the plan as American interference. Moscow also pressured the countries within its sphere, including Czechoslovakia and Poland, to decline. Sixteen Western European nations ultimately joined a coordinating body, the Organisation for European Economic Co-operation.

Congress approved the program in 1948 after months of debate, helped by the shock of the communist takeover in Czechoslovakia that February. Aid arrived mostly as goods, including food, fuel, machinery and raw materials, and it helped governments stabilize currencies and rebuild industry. Western Germany was included, a controversial choice given the recent war, but one that reflected the view that European recovery depended on a revived German economy.

Historians continue to debate how much the plan itself caused Europe's rapid recovery. Some stress its role in easing shortages and encouraging cooperation, while others argue that recovery was already under way and that the aid mattered more as a boost to confidence and trade. Its political legacy is clearer. The plan bound Western Europe and the United States more closely together, hardened the division of the continent into East and West, and set a precedent for large-scale foreign aid. It also encouraged habits of economic cooperation that fed into later efforts at European integration.