US History: The Marshall Plan

1 US History: The Marshall Plan Following the conclusion of World War II (WWII), Europe faced many challenges, such as the need to reconstruct its damaged industrial centers and transportation infrastructure.

Therefore, the US came up with a program aimed to rehabilitee several European countries to stabilize the region for the survival of democratic institutions. The US was concerned that the post-war conditions such as unemployment and poverty would make western European voters embrace communism. Thus, the US devised a plan for the reconstruction of the western European economy. Although foreign policy experts and scholars have criticized the Marshall Plan, it was successful in its goals of preventing the economic deterioration of Europe after WWII, stagnation of world trade, and the expansion of communism.

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The Marshall Plan, which is also referred to as the European Recovery Plan, refers to a US program whose purpose was to provide aid to Europe after WWII’s devastation. The plan was proposed in 1948 by George C. Marshall, the US Secretary of State at the time, and was named after him. It was a four-year plan to provide funds to rebuild the continent, including cities, infrastructure, and industries that were destroyed during the war, and promote trade between the US and those countries. The plan also aimed to stop the spread of communism in Europe (Tarnoff, 2018). It also sought to stimulate production in Europe, increase trade among countries in the continent and also between these nations other parts of the world, and encourage the implementation of policies that would stabilize economies. The plan was designed jointly by Europe and the US and involved the provision of approximately $13.2 billion to sixteen western European countries (Magid, 2012). The UK was the largest recipient of the aid as it received $3.2 billion, followed by France, Italy, and West Germany, which got $2.7 billion, $1.5 billion, and $1.4 billion, respectively (Steil, 2018). It was implemented by two agencies, including Organization for European Economic Cooperation (OEEC) and the Economic Cooperation Administration (ECA) (Magid, 2012). President Harry Truman signed the plan into law in 1948.

There are various critiques of the Marshall Plan by foreign policy experts and scholars.

One of the criticisms is that the plan was unnecessary because it is difficult to prove that the aid led to the economic and political achievements witnessed in Europe after WWII (Tarnoff, 2018).

Critics claim that the aid was not much and could not have a significant impact on the recipient countries. They argue that the European economies were on the recovery path before the implementation of the Marshall Plan (Tarnoff, 2018). According to the critics, the European nations had moderately successful market conditions and longstanding capitalist traditions and would have recovered even without the US intervention (Magid, 2012). Another critique is that

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the plan was experimental and that the manner of allocating aid and the economic reform program had no scientific basis (Tarnoff, 2018). Some experts assert that the lack of economic growth in Europe was caused by a poor monetary policy that was resolved when the economic controls in place were lifted.

The Marshall Plan was successful because it met its objectives, including increased production, trade liberalization, containment of communism, economic integration, and improvement in the dollar gap and trade balance. One of the objectives of the plan was to increase production above levels attained before WWII. The plan exceeded the objective of increased industrial and agricultural production (Tarnoff, 2018). Western European countries achieved increased gross national products, and the plan made a significant contribution to the renewal of steel, chemical, and engineering industries in the region. As a result of the implementation of the Marshall Plan, Europe reached pre-war output levels and price stability within four years only (Magid, 2012). The plan also achieved the goal of trade liberalization as import restrictions were eliminated by OEEC members, leading to a significant increase in trade volume in Europe. The goal of the US to prevent the spread of communism was also achieved as a result of the Marshall Plan’s aid. European economic integration was also achieved, which eventually led to the creation of the European Union (Tarnoff, 2018). There was also an improvement in the dollar gap and trade balance after the implementation of the plan. The Marshall Plan paved the way for a twenty-year era of unsurpassed European prosperity between 1953 and 1973, with annual growth rates of .8 percent and no significant economic recessions (Magid, 2012). Thus, the Marshall Plan can be considered to have been a success.

Overall, the Marshall Plan succeeded in its objectives of preventing the economic deterioration of Europe after World War II, stagnation of world trade, and the expansion of

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communism. The plan was proposed by George Marshall, and it aimed at aiding European economic recovery after the devastation it suffered during WWII. The Marshall Plan has been criticized as it is difficult to prove that it contributed to the economic and political achievements in European countries. The plan has also been criticized for having no scientific basis. However, it was generally successful as most of its objectives were achieved, including increased production, trade liberalization, containment of communism, economic integration, and improvement in the dollar gap and trade balance.

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Magid, J. (2012). The Marshall Plan. Advances in Historical Studies, 1(1), 1-7.

Steil, B. (2018). The Marshall Plan: Dawn of the Cold War. Oxford University Press.

Tarnoff, C. (2018). The Marshall Plan: Design, accomplishments, and significance.

Congressional Research Service.