Formation of the Marshall Plan
“It is now obvious that we grossly underestimated the destruction to the European economy by the war. We understood the physical destruction, but we failed to take fully into account the effects of economic dislocation on production… Europe is steadily deteriorating... Millions of people in the city are slowly starving...Only until the end of this year can England and France meet the above deficits out of their fast dwindling reserves of gold and dollars. Italy can’t go that long.” ~ Under Secretary William Clayton
In 1947, a European Aid Program was already under works at George Marshall's urging. With Under Secretary William Clayton’s vivid description of Europe, the announcement of the Marshall Plan was sped up. Marshall announced his idea to the world through a speech made at the 1947 Harvard University commencement.
"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. Our policy is directed not against any country or doctrine but against hunger, poverty, desperation and chaos. Its purpose should be the revival of a working economy in the world so as to permit the emergence of political and social conditions in which free institutions can exist." ~ George C. Marshall (Harvard Commencement speech)
The Marshall Plan
The Marshall Plan, or the European Recovery Program, was created officially through an Act of Congress signed in April 1948. The recovery plan was based on four endeavors: strengthening of Europe's industry, growth of foreign trade, creation and maintenance of financial stability and creation of cooperative spirit among European nations. Over three years, the US gave Europe $13 billion in aid (around $130 billion in today's currency). For a country to receive aid, it had to design a feasible plan for economic recovery. Additionally, the country could not embrace Communist ideals. The aid did not cover the cost of rebuilding Europe. Rather, it provided money for efficient use of resources.
Marshall Plan Propaganda
Photo Credits: George C. Marshall Foundation
Recognizing that the intimate economic and other relationships between the United States and the nations of Europe, and recognizing the disruption following in the wake of war is not contained by national frontiers, the Congress finds that the existing situation in Europe endangers the establishment of a lasting peace, the general welfare and national interest of the United States...Mindful of the advantages which the United States has enjoyed through the existence of a large domestic market with no internal trade barriers, and believing that similar advantages can accrues to the countries of Europe, it is believed to be the policy of the people of the United States to encourage these..." ~ from the pages of the Marshall Plan
"I believe that, in years to come, we shall look back
upon this undertaking as the dividing line between the old era of world affairs
and the new -- the dividing line between the old era of national suspicion,
economic hostility, and isolationism, and the new era of mutual cooperation to
increase the prosperity of people throughout the world...Our peoples are united in their determination to work together to deal with the basic problems of human life."
~President Harry S. Truman (on the Marshall Plan)
~President Harry S. Truman (on the Marshall Plan)