What was the Marshall Plan?

The speech at Harvard

Three months after the Truman Doctrine, on June 5, 1947, George Marshall, the general who had run the American army through the war and was now Secretary of State, spoke at Harvard’s commencement. Marshall described a continent where farmers no longer sold food to the cities because the cities had nothing to sell them in return, and where governments were spending their last dollars on imported food and fuel. Then he named the target.

Our policy is directed not against any country or doctrine but against hunger, poverty, desperation, and chaos.

He added a warning: “Any government which maneuvers to block the recovery of other countries cannot expect help from us.” And he put the planning on the other side of the Atlantic. “This is the business of the Europeans,” he said; the initiative “must come from Europe,” and the program “should be a joint one.” America would pay for a plan the Europeans agreed among themselves.

Why Moscow walked out

Britain’s foreign secretary, Ernest Bevin, and France’s, Georges Bidault, moved within days and invited the Soviet foreign minister, Vyacheslav Molotov, to Paris. He arrived on June 27 with a large delegation and proposed that each country simply submit its own list of needs. A joint program, with Americans examining every country’s books, meant interference in internal affairs, he argued. When Bevin and Bidault held out for a joint plan, he left on July 2, warning, according to the British record, of “a division of Europe into two groups.” Soviet records released in the 1990s confirm that the Kremlin feared the plan would draw its neighbors into the Western economy.

Some of Moscow’s neighbors wanted the money. Czechoslovakia’s government voted to attend the next round; its leaders were called to Moscow, and on July 10 Prague backed out. Poland stayed away, and so did Finland. On July 12 sixteen countries opened their own conference in Paris: Austria, Belgium, Denmark, France, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Sweden, Switzerland, Turkey and the United Kingdom. The western zones of Germany, later West Germany, were brought in too. Europe’s economic map now followed Churchill’s line (the Iron Curtain).

The money and the goods

Congress debated through the winter. The Communist takeover in Prague in February 1948 helped settle the argument, and on April 3 Truman signed the Economic Cooperation Act. From 1948 to 1952 Congress appropriated about 13.3 billion dollars, according to the National Archives, mostly as grants rather than loans and much of it in kind: wheat, coal, cotton, fertilizer and machinery, in crates stamped with a shield and the words “For European Recovery.” Britain and France received the largest shares. A joint European body, the Organisation for European Economic Co-operation, ancestor of today’s OECD, shared it out. The name was Truman’s choice: a program bearing the general’s name stood a better chance in a Congress controlled by the other party.

Moscow’s answer

Moscow answered in kind. In September 1947, at a resort in Poland, it founded the Cominform, a bureau of Communist parties, and Andrei Zhdanov told the delegates the world had split into “two major camps,” presenting the Marshall Plan as a way of putting Europe under American control. In January 1949 the Soviet bloc set up its own economic organization, the Council for Mutual Economic Assistance, or Comecon. Washington’s own interest was real too: as the National Archives notes, the plan gave the United States markets and reliable trading partners. The western zones’ new currency of June 1948 grew out of the same recovery drive, and it set off the Berlin blockade (the Berlin Airlift).