Marshall Plan

The Marshall Plan of 1948, officially called the European Recovery Program (ERP), was put forth by the United States as a blueprint to help rebuild Europe after the Second World War and keep Soviet communism from spreading throughout the continent. This guide was backed up by the finances necessary for reconstruction. It was also an effort to work toward the modernization of individual European countries. The Marshall Plan was a bipartisan call to action, first imagined and outlined by George Marshall, then US secretary of state, to rebuild and modernize Europe and help it to prosper, in part by removing trade barriers. Primary dimensions of the plan were put together by William Clayton and George Keenan, both officials with the State Department.

In the span of four years, USD$13 billion were spent on the project, in addition to the USD$12 billion spent between 1946, the year the War ended, and 1948 when the formal Marshall Plan came into effect. The United States offered to help the Soviet Union and its allies with their own reconstruction, but the offer was turned down.

During a meeting in June, 1947, it was decided that the plan would end in 1951. By the end of that year, the Marshall Plan was replaced when Harry Truman signed into law the new Mutual Security Act of 1951 in order to prevent future Soviet encroachment into the war-torn European countries. The Mutual Security Act planned to unite economic and military efforts interwoven with a great deal of technical aid. Direct aid went to the countries that joined the Organization for European Economic Co-operation. It called for the advancement and modernization of European nations during the days of the Cold War.

Periodically, the plans were replaced by newly outlined, newly devised ones and the oversight of each was different, shifting from one governmental department to another. Power to oversee the plan of 1951 went to the newly created Mutual Security Agency (MSA). At the end of 1953, the Reorganization Plan No. 7 went into effect and abolished the MSA, at which time the operations were transferred to the Foreign Operations Administration, and it was re-approved from year to year until the early 1960s.

While the Marshall Plan was being implemented the evolution and advancement of all European countries were at all-time highs, surpassing the days prior to WW II. The GDP of each nation was on the rise and artificial trade barriers were being reduced for the sake of economic growth. Europe prospered substantially over the next several decades. No one was really certain just how much of the economic growth could be attributed to the Marshall Plan, and some economists wondered if the growth might have occurred naturally without the injection of billions of US dollars.

Although some economic historians deemed the Marshall Plan "a great success," others, notably of the Revisionist school, argued the plan was "economic imperialism" in an attempt to control Western Europe the way the Soviets controlled Eastern Europe. Alan Greenspan credits German Minister of Finance Ludwig Erhard with Europe's recovery. Other critics suggest the Marshall Plan, inadvertently or purposefully, promoted corrupt government as a consequence of US foreign aid programs. The US Agency for International Development would seem to be one example of a disastrous, meddlesome organization that bears out that criticism.