Did the Marshall Plan Really Save Europe After World War II?

Truman Doctrine vs Marshall Plan

Prior to Marshall's speech, President Truman announced the Truman Doctrine in March 1947. Casting aside a former policy of nonintervention, Truman pledged U.S. support to any country resisting authoritarian rule. The president made this speech in response to the Greek government's civil war against the rising Communist Party, which the U.S. government believed had benefited from Soviet support. The fundamental foreign policy shift of the Truman Doctrine, soon followed by the Marshall Plan, coincided with the emergence of the Cold War.

What Was the Purpose of the Marshall Plan

The European Recovery Plan (the Marshall Plan's official title) had a publicized mission of economic salvation for Western Europe, with an intentional byproduct of Communist containment. Though the Soviet Union was initially invited to join the program, it quickly declined because of its refusal to disclose its economic and industrial assets. That exit provided the United States with a diplomatic avenue for rooting out Communism in exchange for assistance.

Conference of European Economic Cooperation

One of the prerequisites of the Marshall Plan was that European nations initiate the program. Rather than the United States stepping in and granting whatever amount it deemed necessary, the government left it up to European diplomats to work collectively and present a uniform request. To do so, British and French foreign ministers organized the Conference of European Economic Cooperation (CEEC) in Paris in July 1947. The CEEC, composed of 17 participating nations, initially asked the United States for $29 billion over four years. The U.S. government declined the sum, wanting greater detail on precisely how the countries would distribute and implement the grant.

While Congress haggled over the Economic Recovery Plan bill, a Soviet-backed coup erupted in the former Czechoslovakia in February 1948. That event set off Cold War alarm bells and instigated bipartisan consensus to pass the Marshall Plan into law.

When Was the Marshall Plan Enacted?

On April 3, 1948, President Truman signed the Economic Cooperation Act into law, approving $13 billion of monetary and export assistance over four years for participating countries. The bill also created the Economic Cooperation Agency to oversee the funding dispersal. That figure represented more than the sum of all previous foreign aid ever doled out by the United States [source: Schain]. In Europe, the Organization for European Economic Cooperation (OEEC) met the following week to hammer out the country-specific appropriations.

The­ Marshall Plan didn't happen inside a government-insulated vacuum. While officials hurriedly sketched out their plans for the foreign funding, a vast propaganda campaign also got underway. The participating countries publicly heralded the Marshall Plan as a saving grace with posters, leaflets and other media.

Marshall Plan Political Cartoon

One such booklet distributed by the Ministry of Economic Affairs in the Netherlands contained a cartoon proclaiming "Without the Marshall Plan, your bread would be bare and so would your children," above an image of towheaded children dressed in rags [source: Library of Congress].

The sheer size of the grant demanded the American public's approval as well, and that pro-Marshall Plan message extended into the United States. The May 1948 issue of Kiplinger was devoted to taking advantage of the Marshall Plan's economic ripple effect.

How Did the Marshall Plan Generate Economic Growth?

Certainly, U.S. industries profited from the jolt of exporting to Western Europe. After all, the lifeline wasn't just a pile of cash; it included foodstuffs, agricultural equipment and machinery. This also helped establish the United States as a longstanding trade partner and the global economic powerhouse of the second half of the 20th century.

During the Marshall Plan period, Western Europe's aggregate gross national product jumped by more than 32 percent; agricultural production rose 11 percent above the prewar level, and industrial output increased by a whopping 40 percent [source: Hogan]. This wasn't all due to the Marshall Plan: Local resources accounted for 80-90 percent of the capital formation. But what the Marshall Plan did was to provide support at a critical time.

"It facilitated essential imports, eased production bottlenecks, encouraged higher rates of capital formation, and helped to suppress inflation — all of which led to gains in productivity, to improvements in trade, and to an era of social peace and prosperity more durable than any other in Modern European history," wrote Michael J. Hogan in a 50th anniversary remembrance for the U.S. Diplomatic Mission to Germany.

Soviet Reactions to the Marshall Plan

Not surprisingly, the Soviet Union sat out of the celebratory jig over the Marshall Plan, and historians have since debated whether the plan exacerbated the Cold War tension. The Soviet Union fought back against Marshall Plan propaganda through the Communist Information Bureau, or Cominform. They also introduced a grant package called the Molotov Plan for Eastern bloc nations [source: Schaff]. Ironically, if the Soviet Union had remained involved in the Marshall Plan, the United States would've likely withdrawn its offer for economic support because it wouldn't finance a Communist government [source: Crawley].

Marshall Plan End Date

On Dec. 31, 1951, the Marshall Plan ended six months earlier than originally planned. The Korean War had shifted the U.S. foreign policy focus, and Western Europe was experiencing a wartime manufacturing boom. Two years later, George C. Marshall received the Nobel Prize for spearheading the European Recovery Plan.

The effects of the program have continued in Europe. The postwar years were the first time that Western European countries had worked as closely for mutual gain. That international cooperation demanded by the Marshall Plan laid the groundwork for the formation of the European Union (EU). In an interesting twist of economic fate, today's gross domestic product in the EU and the value of its currency exceeds that of the United States.