How Did the Marshall Plan Help Further US Interests?

In the aftermath of World War II, much of Western Europe lay in ruins. France, Germany, and Italy had been ravaged by warfare. To prevent the rise of another totalitarian ruler from the ashes of Europe, the United States decided to remain active on the international scene and help rebuild the war-stricken continent. The Marshall Plan, created by US Secretary of State George C. Marshall, was proposed in 1947 and made into law the following year. Ultimately, it would give billions of dollars in economic aid to Western Europe, primarily to rebuild destroyed infrastructure. But was the economic aid without strings, or did it help further American interests? Here’s a look at the Marshall Plan and its Cold War effects.

The devastation of World War I was unprecedented, with large swaths of territory rendered unusable by trench warfare, minefields, unexploded ordnance, and the use of chemical weapons like mustard gas. Although the United States did provide some assistance in the aftermath of the war, it was largely in the form of loans and food aid rather than help rebuilding infrastructure. Economically wounded by war, many European societies underwent periods of radicalism after World War I.

Most famously, Russia experienced the Bolshevik Revolution as a result of the hardships of World War I. Russia’s poor performance in World War I led to the toppling of its tsarist monarchy and replacement by a communist government, triggering the lengthy and brutal Russian Civil War. At the end of this war, the Soviet Union was created. Its government was dedicated to spreading communism worldwide, upsetting many world powers who were opposed to communism, especially the United States.

Setting the Stage: Rise of Mussolini & Hitler

Germany suffered the most from the Great Depression in Europe, compounding its economic woes from the end of World War I. This downturn and desperation helped result in the rise of Adolf Hitler, who was appointed chancellor by ailing German president Paul von Hindenburg in early 1933. Similar to the New Deal in the United States, both Mussolini and Hitler gained popularity and bolstered their power during the mid-1930s by using deficit spending to improve their respective economies. By 1939, Hitler felt ready to embark on armed conquest to gain Lebensraum (living space) for Germany.

The destruction of World War I was quickly surpassed by that of World War II. Vast swaths of Europe, including major cities in Germany, France, Italy, and Eastern Europe, were decimated. Even cities in Britain faced direct destruction, thanks to German bombing and later use of the V-1 buzz bomb and V-2 rocket.

Civilians faced harsh shortages of important goods, including food. Scorched earth retreats to deprive advancing armies of resources had occurred both during the German advances of 1940-42 and the German retreats of 1944-45.

Unlike World War I, where Germany signed an armistice out of exhaustion, World War II required the Allies to fight all the way into Berlin, which finally fell in May 1945. This meant the destruction of many German cities, including through controversial firebombing. France, occupied by Germany for almost four years, lost thousands of factories, both to the Germans themselves and to the Americans and British, who were attacking German-controlled infrastructure. Italy, having switched sides to the Allies in 1943, also lost infrastructure as German occupiers retreated.

1947: George C. Marshall Proposes Generous Aid

General George C. Marshall, a World War I veteran, served on the Joint Chiefs of Staff during World War II and was praised for his administrative skill and ensuring that the US military was well organized and supplied. Immediately after the end of World War II, Marshall was sent to China to try and negotiate an end to the Chinese Civil War. Unfortunately, this was not successful, and Marshall returned to the United States in January 1947. President Harry S. Truman quickly named Marshall the next US Secretary of State. That June, in a commencement address at Harvard University, Marshall proposed a large aid package to Europe to ease the suffering of civilians.

Specifically, the aid would be targeted at rebuilding Europe’s infrastructure so that those nations could resume domestic production. This idea became popular and was formalized as the Economic Recovery Program (ERP). Commonly, it was known as the “Marshall Plan.” While it was not formally intended to protect Western European nations against communist encroachment, it did emphasize the free market. In December 1947, Truman proposed Marshall’s ideas to Congress. Only four months later, on April 3, 1948, Truman signed the ERP into law as the Economic Cooperation Act of 1948.

The formal Marshall Plan appropriations occurred over four years, from 1948 to 1952, with a total funding of $13.3 billion by Congress. Many Americans wanted to revitalize Western Europe quickly, particularly to prevent the spread of communism. Soviet Premier Joseph Stalin refused to allow any nations in the new Soviet bloc of central and eastern Europe to accept Marshall Plan aid. This had two results: it both strengthened animosity between West and East and encouraged Congress to generously fund the program – it would likely have received less funding if money were going to communists!

Of the funds appropriated by Congress, roughly a quarter went to Britain, almost 20 percent went to France, and 11 percent went to West Germany. In total, sixteen European countries received aid from the Marshall Plan. Allegedly, West Germany and Italy received less aid due to their World War II status as Axis Power aggressors. Switzerland, Sweden, and Portugal, who were not directly involved in the war, also received aid.

To receive aid, recipients had to agree to work toward free trade agreements within Europe and with the United States. Perhaps in a nod toward free market capitalism, recipients were encouraged to reduce public spending, thus increasing the economic role of the private sector.

Marshall Plan Projects

In the program’s early days, the immediate influx of aid helped alleviate shortages of goods. Over the longer term, there were projects to rebuild destroyed or damaged infrastructure, especially roads. Capital goods like tractors were in high demand, and their purchase under the Marshall Plan helped change labor dynamics in Western Europe – more men were available for industrial and white-collar work instead of agriculture. Factory equipment for steel production was also in high demand, as the war had destroyed many steel plants due to their value as military targets. In West Germany, Marshall Plan funds helped rebuild both the steel and coal industries, with coal being a vital energy source.

The rebuilding of destroyed factories, such as a French steel plant, allowed for the modernization of Europe’s industries. Many of Western Europe’s factories were far older than their North American counterparts, usually meaning they were less efficient. With new equipment, recipients of Marshall Plan aid became as productive as similar industries in America. As a result of American equipment and goods as aid, Western Europe became more familiar with American products and came to seek them out. This helped benefit American companies, as they would now sell more exports to Europe.

The Marshall Plan was not entirely based on an affinity for Western Europe. Countering the Soviet Union was a goal of the Plan, as the Soviets had reneged on agreements to allow Eastern European nations to hold free elections. After the Potsdam Conference in July 1945, US President Harry S. Truman had a distrust of Soviet premier Joseph Stalin and embarked on a policy of containment. This would be strengthened in 1949 after the victory of the communists in the Chinese Civil War. The American policy of containment was simple: to contain communism within its existing borders.

Seeing Stalin’s refusal to abide by agreements made at the Yalta and Potsdam conferences in 1945 made many Americans fear the potential spread of communism into Western Europe. These war-torn nations were desperate for aid, and citizens might even accept communism if it meant economic revitalization. To prevent the rise of communists in Western Europe, those economies needed to be rebuilt quickly. By providing economic aid, the United States was reducing radicalism and opportunities for the USSR to foment revolution. Simultaneously, the US was building trading partners for its own industries, providing a double benefit.

Marshall Plan & Truman Doctrine

The Marshall Plan is often seen as part of a larger, similarly-focused program known as the Truman Doctrine. Broader than the Marshall Plan, which was limited to economic programs and focused on Western Europe, the Truman Doctrine intended to provide economic, political, and military assistance to all democratic states that needed help resisting communism. These simultaneous programs help underscore the basic American goal of containing communism, especially in Europe. If economic aid under the Marshall Plan was insufficient to quell the rise of communists in a European country, the Truman Doctrine would allow military aid to bolster a government that was fearful of a potential communist uprising or coup d’état. 

Unveiled by President Truman in March 1947, a few months before George Marshall’s speech at Harvard, the Truman Doctrine began with aid to Greece and Turkey, which were directly on the periphery of the new Soviet bloc. The US decided to provide assistance to Greece and Turkey after Britain, struggling from its own World War II economic stresses, chose to halt its own aid. If the US’s European allies were suffering economically, they could not be expected to aid in the struggle against communist expansion. The initial offer of aid to Eastern Europe could also be seen as a diplomatic offensive against the USSR, making the US appear powerful and generous and forcing Joseph Stalin to appear ungrateful by refusing to allow the aid.

Closer economic ties between Western Europe and the United States generated by the Marshall Plan are credited with leading to the creation of the North Atlantic Treaty Organization (NATO) in 1949. Although the Berlin Airlift of 1948-49 is often explained as the military reason for the creation of the alliance, it is undeniable that the growing economic ties between the US and Europe assisted with the plans to create a unified military bloc. Without the Marshall Plan, it would likely have taken longer for Western European states to pursue a strong military alliance with the United States, especially one that calls for mutual response.

Economic ties helped reinforce military alliances, especially when it came to arms sales. If the United States supplied industrial equipment, European nations would have an incentive to purchase similarly manufactured military equipment as well. Increased mutual trade between the US and Western Europe provided a strong incentive to protect the region from communist encroachment, as such trade with America would likely be suspended if a communist government took over. Creating a strong export market in Europe gave American industries and policymakers reason to support generous funding for NATO.

Aftermath: America’s International Role?

However, America’s spending on rebuilding the economies of Western Europe was not without controversy. Some fiscal conservatives did not like the idea of using tax dollars to benefit other countries, even allies, while there were still struggling people in the United States. There were fears that the US would increasingly be seen as a checkbook by other countries, which would demand aid in exchange for avoiding communism. Some felt that the provision of generous aid, especially to former fascist powers West Germany and Italy, would intensify growing Cold War tensions. The Soviets, in the aftermath of a terrible war on their territory, were not eager to see the former Axis Powers rebuilt.

Ethically, there are some concerns about nation-building and whether people lose some of their autonomy when they accept foreign aid. Critics argue that America’s foreign aid is secretly influenced by a desire to control a territory rather than just humanitarian reasons. This debate continues today. Even when foreign countries request aid, does the receipt of American aid and assistance imply some degree of American control? One case study would be the Suez Crisis of 1956 – did the receipt of American aid through the Marshall Plan help force Britain and France to accept US demands that they end their military operation to retake the Suez Canal from Egypt?