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The Marshall Plan

Grandfather Of All U.S. Foreign Aid Programs

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Updated February 05, 2012

The foreign aid program that the United States is hoping will prepare Afghanistan for life after American troops withdraw in 2014 is a direct descendant of another major aid program -- the post-World War II Marshall Plan. Between 1948 and 1951, the Marshall Plan pumped $13 billion worth in money and resources into western Europe to spur its redevelopment after the war.

Background

The Marshall Plan was both a product of lessons learned from earlier mistakes. Victorious allies in World War I had refused any type of assistance to rebuild defeated Germany. Rather, they insisted that Germany pay them reparations for war losses. (The U.S. ended up helping Germany make those payments.) The staggering recession that followed (which itself led into the Depression) merely made Germans angry and resentful. When Adolf Hitler promised them renewed prosperity, they gladly followed him.

The Clayton Memo

Post-war reconstruction did occur, but it was showing signs of slowing down by mid-1947. The United Nations Relief and Rehabilitation Agency (UNNRA) had helped with relief efforts, but had primarily moved to helping people that the war had displaced. Also, another aid agency was about to take it over. (The UNNRA got a bad rap in its own lifetime as disorganized and inefficient; its reputation has become better with more recent investigation.)

In May 1947, U.S. Under Secretary of State Will Clayton toured Europe and saw nations there on the brink of another disaster. A memo he wrote on May 27 drew a bleak picture if the United States did not further intervene.

"Europe is steadily deteriorating," Clayton wrote. "The political position reflects the economic. One political crisis after another merely denotes the existence of grave economic distress. Millions of people in the cities are slowly starving."

Clayton said coal production from the Ruhr area was so slow that the U.S. should manage it; French agricultural production was a full 25% below prewar levels; maritime countries had not returned to managing their own shipping. "Without further prompt and substation aid from the United States, economic, social, and political disintegration will overwhelm Europe," he wrote.

Clayton advised a grant of "6 or 7 billion dollars worth of goods a year for three years," to stimulate the European economy. He said the grant should consist of col, food, cotton, tobacco, and shipping services. Echoing the discontent of the time with the UNRRA, Clayton said, "we must avoid getting into another UNRRA. The United States must run this show."

Marshall Makes It Public

In 1947, President Harry Truman had appointed General George C. Marshall -- who had won widespread respect as U.S. Army Chief of Staff during the war -- to be the new secretary of state. After Clayton, Under Secretary Dean Acheson, and others had put together a preliminary European Recovery Program (ERP -- the official name of the Marshall Plan), Marshall announced it at Harvard commencement services on June 5, 1947.

Marshall noted that the previous decade of war had caused "the dislocation of the entire fabric of European economy." He reiterated what Clayton had told him, adding that "the feverish preparation for war and the more feverish maintenance of the war effort engulfed all aspects of national economies." Business and production systems were broken, he said, and the traditional rural/city division of labor was almost nonexistent.

Marshall said without U.S. assistance to enable the "return of normal economic health in the world . . . there can be no political stability and no assured peace." Such a statement surely had impact on a society fresh out of war.

Fight Against Hunger, Not Communism

Popular notions of the Marshall Plan cast it as an American attempt to prevent the spread of Communism. Truman and others effectively co-opted the Marshall Plan to support the Truman Doctrine (that the U.S. would help other countries fight the spread of Communism) which he had announced three months earlier. However, neither Marshall nor Clayton ever said anything about the ERP being a tool to fight Communism or contain the Soviet Union.

Clayton specifically said that a the U.S. needed to "save Europe from starvation and chaos (not from the Russians)," and Marshall said "our policy is directed not against any country or doctrine, but against hunger, poverty, desperation, and chaos."

Nevertheless, the Marshall Plan remains linked with the Truman Doctrine in the litany of measures the U.S. used to contain Communism.

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