THE BIRTH OF THE MARSHALL PLAN
THE ECONOMIC SITUATION IN EUROPE The fiasco of the Moscow meeting of the Council of Foreign Ministers in March 1947 convinced the Western Powers of the urgent necessity of striking out a new course independent of the Soviet Union. Total economic disintegration in Europe was imminent. Moreover, as George F. Kennan observed, 'it was plain that the Soviet leaders had a political interest in seeing the economies of the Western European peoples fail under anything other than communist leadership.' At this critical moment in European history, the United States was the only country in the world capable to shore up the ailing European economies. The new American Secretary of State proposed to do just that.
General George C. Marshall had been a capable military strategist during the Second World War. He proved himself an even better statesman. As Secretary of State under President Truman(1947-9) Marshall worked closely with George F. Kennan n the implementation of 'containment' politics and the Truman Doctrine. A key clement of this policy was the European Recovery Program, better known as the Marshall Plan, which was developed in response to Secretary Marshall's famous Harvard Address of 7 June 1947. The plan was not only in the best American tradition of humanitarian help to the needy — it was also intelligent politics. It is interesting to note that the recovery plan originally envisaged by Marshall was designed to promote the economic recovery of Europe on both sides of the iron curtain. The countries in the Soviet sphere of influence were thus to benefit as much from American aid as were the Western democracies. Of course, such aid would have necessarily placed the beneficiary States in a position of relative dependence on the benefactor. Understandably, the Soviet Union was not enthusiastic about promoting ties of its satellites with any other Great Power. It therefore took steps to prevent any of the Eastern European countries from participating in a programme which it termed an imperialistic ploy of the West. Only Czechoslovakia had affirmatively answered the invitation of Foreign Ministers Bevin and Bidault to the 1947 conference in Paris in which a joint recovery plan for Europe was to be discussed. After a visit to Moscow by Premier Klement Gottwald and Foreign Secretary Jan Masaryk, Czechoslovakia withdrew its acceptance to attend the conference.
The Soviet Union further boycotted the Marshall Plan by organizing a rival recovery programme for Eastern European nations, to be known as the 'Molotov Plan'. The Cominform, with headquarters in Belgrade, coordinated trade agreements within the Soviet sphere and diverted to the East a large volume of trade that had previously flowed to Western Europe. In October 1947 the Cominform urged Communists everywhere to help defeat the Marshall Plan as an instrument for 'world domination by American imperialism'. The Marshall Plan withstood the challenge. On 12 July 1947 representatives of Austria, Belgium, Denmark, France, Greece, Iceland, Ireland, Italy, Luxemburg, the Netherlands, Norway, Portugal, Sweden, Switzerland, Turkey and the United Kingdom met in Paris to discuss common economic problems. Occupied Germany, which was in a far more desperate situation than any of the other nations, was not a participant in this initial conference. However, all three Western occupants were themselves from the beginning the principal parties in the programme.
Although from 1945 to 1947 the Allies had implemented a harsh peace upon Germany, economists soon recognized that Western Europe could only recover when the principal industrial nations, including Germany, returned to a healthy economy. As General Lucius Clay aptly stated, 'it was apparent that Western Europe could not recover if there was an economic vacuum left in Germany.'
THE ECONOMIC SITUATION IN GERMANY In 1947 the economic situation in occupied Germany could hardly have been bleaker. Industrial output was only 27 per cent of pre-war volume.37 This alarming decline was attributable partly to the extensive dismantling of German industries pursuant to the Potsdam policy of taking 'reparations in kind', partly to wartime devastation, partly to the economic disruptions caused by the zonal division of Germany, and partly to inadequate manpower, since millions were still prisoners of war and those who were in Germany could hardly work efficiently because they were too weakened by undernourishment and disease."
The removal of plant and equipment from Germany beyond what could be effectively used elsewhere was one of the first Morgenthauist policies to run into extensive criticism from influential persons in the United States and Great Britain. Dismantled German plants were rusting away in warehouses throughout the Soviet Union, Poland and even France. This represented a net loss to European as well as to German output and was retarding the recovery of the continent as a whole.
Since most of the industrial dismantling went to the Soviet Union, the problem was solved in the Western occupation zones when in the spring of 1946 shipments were stopped. General Clay explained his decision to the irate Russians by quoting to them Points 14 and 15 of Article III of the Potsdam Protocol which required that during Four-Power occupation Germany should be treated as a single economic unit and that essential
commodities be equitably distributed between the several zones, so as to produce a balanced economy throughout Germany and reduce the need for imports. Since the Soviet Union was not pooling resources with the other occupation Powers but extracting maximum reparations out of its zone without giving an accounting to the other Powers, the dismantling of plants in the West for the benefit of the Soviet Union was cancelled.
The economic disruptions occasioned by Germany's zonal partition also continued to plague the recovery of the area. The Soviet zone oriented itself more and more toward the East and the French zone stagnated, partly because of France's unwilling-ness to co-operate in any all-German programme until the question of the Saar was solved in France's favour and partly because of her fear of a revival of Germany's strength.
But the recovery of Western Europe could not be made to wait for the unification of all of Germany. Even before Secretary Marshall's Harvard address the American and British zones had merged in common economic endeavour. The extension of this bi-zonal occupation to include the French zone, however, was not achieved until 8 April 1949, the same date of the entry into force of the Occupation Statute." The establishment of the Federal Republic of Germany followed on 24 May 1949.
Millions of dollars of Marshall Plan funds were poured into the young Federal Republic, and the rapid recovery of its economy exceeded by far the hopes of the United States government, which in fact had devoted only a relatively small percentage of Marshall Plan funds to the German recovery programme.
For the period from 3 April 1948 to 30 June 1952, the Marshall Plan allocated 3,176 million dollars to the United Kingdom, 2,706 million to France, 1,474 million to Italy and only 1,389 million to Western Germany. Yet, the biggest results were to be seen in Germany:
the effects had been prodigious, equalled in no other European country, although Germany got only a relatively small proportion of Marshall Plan aid. Europe received in all $20,000,000,000 from the United States; in 1954 the figures per capita had amounted to $39 for Germany as against $72 for France, $77 for England, $33 for Italy and $104 for Austria. But in Germany the help came at precisely the right time, when the accumulated pressures for both physical and psychological reconstruction had reached a bursting point. This phenomenal success of the Marshall Plan in Germany was to contribute materially to the success of the plan in the rest of Europe, and indubitably led to the early assumption of full sovereignty by the Federal Republic of Germany on 5 May 1955.
Pursuant to the 'Agreement between the Federal Republic of Germany and the United States of America regarding the settlement of the claim of the United States of America for post-war economic assistance to Germany' dated 27 February 1953 the Federal Republic agreed to repay one billion dollars of Marshall Plan Aid to the United States over a period of thirty years. Grateful to have had a helping hand at a time when survival was at stake, the Federal Republic of Germany has already repaid the entire amount.
- Alfred M. de Zayas, Nemesis at Potsdam: The Expulsion of the Germans from the East (Third Revised Edition) , Bison Books, 1989 (original edition: 1977), pp.136-140. Footnote numbering not reproduced.
