The Marshall Plan: Rebuilding Europe and Containing Communism

In 1947 Europe lay in ruins. Cities were broken, factories idle, and food was short. The United States offered a rescue plan. It rebuilt half a continent, and it also drew a line across it.

This lesson tells who proposed the Marshall Plan, how the money worked, who said no, and why people still argue about its motives.

1Why did Europe need rescuing?

The Second World War left much of Europe broken. Bombs had wrecked railways, ports and bridges. Many factories lay idle. Food was scarce, and winters were hard.

Most nations had also spent all their money on the war. They could not afford to rebuild alone.

America worried about the next step. In France and Italy, communist parties were strong. Hunger and anger could push voters their way. Washington feared that a poor Europe would drift toward Moscow.

Why does this matter? The plan was both a rescue and a strategy. Keep both ideas in mind as you read.

• War left ports, railways and factories in ruins.
• Governments had no money left to rebuild.
• US feared communist parties in France and Italy.

2How did the plan begin?

The plan followed the Truman Doctrine. On 12 March 1947, President Truman promised help to free peoples resisting pressure from outside. Britain could no longer pay to support Greece against a communist uprising. So America stepped in.

The Doctrine was about guns and loans for a few countries. Marshall’s idea was bigger. It aimed at the whole of Europe’s economy.

George Marshall was the Secretary of State. On 5 June 1947 he gave a speech at Harvard University. He said America would help Europe recover, if the Europeans agreed on a joint plan.

The offer was not a gift with no strings. Europe had to plan together, and America would then pay.

Why does this matter? Order is a favourite exam trap. The Truman Doctrine came first, in March 1947. The Marshall speech followed in June.

• 12 March 1947: Truman Doctrine.
• 5 June 1947: Marshall’s Harvard speech.
• Condition: Europe must make a joint plan.
• See the Cold War.

3How did the money work?

President Truman signed the plan into law on 3 April 1948. Its formal name was the European Recovery Program. It ran for about four years.

The European countries met and set up a body to share the aid out. This was the Organisation for European Economic Co-operation, or OEEC. Sixteen countries joined at the start.

In all, the United States gave about 13 billion dollars. Sources differ on the exact total. It depends on what you count as part of the plan.

The biggest share went to the United Kingdom, about 26 percent. France got around 18 percent. West Germany got about 11 percent.

Most of the aid came as grants. Only about 1.2 billion dollars of the total was loans. Much of the money bought goods, such as food, fuel, machines and raw materials.

A clever rule kept the money working. Firms paid for goods in their own currency into special government accounts. Recipients then used much of that money to invest in industry.

Why does this matter? The plan was not a pile of cash handed out. It was a managed programme, planned by Europeans and paid for by America.

• Signed 3 April 1948; official name European Recovery Program.
• About 13 billion dollars over roughly four years.
• Top shares: UK 26%, France 18%, West Germany 11%.
• Mostly grants; only about 1.2 billion were loans.

4Who said no to the plan?

The offer was made to all of Europe. Spain was left out, because Washington disliked its ruler, Franco. The Soviet Union was invited, though few expected it to say yes.

Moscow’s foreign minister, Molotov, went to Paris to talk. He then left and rejected the plan. The Soviets feared that taking aid would give America a say over their economy.

Some countries in the east wanted to take part. Czechoslovakia and Poland agreed to attend the talks. But the Czechoslovak foreign minister, Jan Masaryk, was called to Moscow. Stalin scolded him. Soon, the eastern states stayed out.

The Soviet answer was its own aid effort, called the Molotov Plan. It later became the Comecon trade group.

Why does this matter? The aid split Europe into two economic camps. It hardened the Cold War line.

• Molotov left Paris and rejected the plan.
• Czechoslovakia and Poland were pressed to stay out.
• Soviet reply: the Molotov Plan, later Comecon.
• Spain was left out by the US at first.

5Did the Marshall Plan work?

Most historians say it helped a great deal. By 1952 every taking nation had passed its pre-war output. Industry by 1951 stood at least 35 percent above 1938 levels.

The years from 1948 to 1952 were the fastest growth in European history. Farm output rose well past pre-war levels. The hunger of the early post-war years faded.

But the plan was not the only cause. Aid was only about 3 percent of the combined national income of the recipients from 1948 to 1951. Some scholars give more credit to each country’s own policies.

The plan also gave Europe a habit of cooperation. The OEEC was a training ground for later European bodies. It later became the OECD.

In 1951 the Marshall Plan was largely replaced by the Mutual Security Act. George Marshall won the Nobel Peace Prize in 1953.

Why does this matter? Do not say the plan alone caused Europe’s recovery. Say it helped, and it worked alongside local effort.

• Output at least 35% above 1938 by 1951.
• Aid was about 3% of recipients’ income.
• OEEC later became the OECD.
• Marshall: Nobel Peace Prize, 1953.

6Was it only about kindness?

The answer is no. America did care about Europe’s people. But it also had its own goals.

A rich, stable Europe was a good market for American goods. It also offered protection from communism. US leaders said openly that they wanted a strong West.

Critics say the plan gave America more political and economic power in Western Europe. Others reply that Europeans chose to join and gained much in return.

Today, people call any big rescue effort a “Marshall Plan” for some place. That phrase is a shorthand for large, planned aid.

Why does this matter? In an answer, give both sides. The plan helped Europe and also served American interests.

• Goals: recovery and containment.
• Critics see US influence and export markets.
• “Marshall Plan for X” = a large rescue effort.
• Read how the Cold War grew in Indochina.

7What are the exam traps?

• Official name: European Recovery Program, not “Marshall Treaty”.
• Truman Doctrine first (March 1947); Marshall speech later (June 1947).
• The Soviet bloc refused; it did not accept.
• Most aid was grants, not loans.
• Soviet answer: Molotov Plan; coordinating body: OEEC.