Marshall Plan

Between 1948 and 1951 the United States gave about 13.3 billion dollars to seventeen Western European countries to help them recover from the Second World War. Officially called the European Recovery Program but known by the name of Secretary of State George C. Marshall, the programme aimed to rebuild shattered economies, lower trade barriers and modernise industry, and also to check the spread of communism. Its refusal by the Soviet bloc helped draw the economic dividing line of the Cold War across Europe.

By 1945 bombing had wrecked many of Europe's cities, factories, railways, bridges and docks, and most governments had drained their treasuries to fight the war. Recovery was slow. Food was scarce, especially after a drought and the harsh winter of 1946–47, and many people lived on 1,500 calories a day or less. In western Germany, bombing had destroyed some five million homes while about twelve million refugees arrived from the east. Strikes and unrest spread, and communist parties were strong in France and Italy. American officials came to believe that Europe could not recover without reviving German industry, and that poverty would play into Soviet hands.

On 5 June 1947, in a speech at Harvard University, Marshall offered American help for European reconstruction, describing it as aimed not against any country but against "hunger, poverty, desperation and chaos". The speech gave no figures. Instead it challenged the Europeans to draw up a joint plan, which Washington would then fund. The British and French foreign ministers, Ernest Bevin and Georges Bidault, moved quickly to organise a response.

The invitation was open to the Soviet Union, but at talks in Paris in July 1947 its foreign minister Vyacheslav Molotov walked out. Joseph Stalin then barred the countries of Eastern Europe from taking part; Czechoslovakia and Poland, which had wanted to attend, were forced to withdraw. Finland also stayed out to avoid antagonising Moscow. The Soviets denounced the plan as American imperialism and set up their own alternatives, the Molotov Plan and later Comecon.

Sixteen nations met in Paris and asked for 22 billion dollars; President Harry S. Truman cut this to 17 billion in his request to Congress. A Republican-controlled Congress, swayed by Senator Arthur Vandenberg and by fears of Soviet expansion, passed the Economic Cooperation Act, which Truman signed on 3 April 1948. The aid mostly took the form of American goods, at first food and fuel and later machinery and raw materials. Recipients sold them locally and placed the proceeds in counterpart funds used for further investment. The United Kingdom received about 26 per cent of the total, France 18 per cent and West Germany 11 per cent.

The years 1948 to 1952 brought the fastest growth in Europe's history, with industrial production up by 35 per cent. Historians still debate how much of this the plan caused; the aid amounted to less than 3 per cent of the recipients' combined national income, and several countries had already reached pre-war output before it began. Its political effects were arguably as important. It eased austerity, weakened communist parties in the west, and built the habits of co-operation that fed into NATO and the path to the Treaty of Rome. The plan ended in 1951, earlier than intended, as the cost of the Korean War and rearmament took priority.

Our 1945 map shows Europe at the end of the war, and our 1960 map shows the continent divided between Western Europe and the Soviet bloc.