"In the interests of the people of the United States"

60 years ago, a plan to save post-war Europe was unveiled

On June 5, 1947, US Secretary of State George Marshall delivered his famous speech at Harvard University, in which he announced a program of measures to restore post-war Europe. This program went down in history under the name “Marshall Plan,” which immediately became the subject of fierce political struggle. Churchill called it “the most selfless act in history,” and Stalin saw it as a plot to expand American imperialism in a Europe devastated by war and, as Moscow hoped and Washington feared, ripe for communism. The controversy between supporters of these two polar definitions continued throughout the Cold War period and, by and large, has not ended to this day. Meanwhile, the most successful definition of the “Marshall Plan” was given by one of its authors, William Clayton, who called the program “an action dictated by an extremely enlightened understanding of one’s own interests.”

Landscape after the battle

Of course, to look for the reasons for the emergence of the “Marshall Plan” solely in the “selflessness” of the United States or, on the contrary, in the “expansionist conspiracy of American imperialism” would be, to put it mildly, too superficial. The need for the “Marshall Plan” was dictated by the objective situation that had developed in post-war Europe by the spring of 1947. While the communist “iron curtain” was falling over its eastern part, Western Europe was experiencing a severe economic crisis, growing social tension and political instability, which, in turn, threatened the spread of communist sentiments. Especially when you consider that in countries such as France and Italy there were powerful communist parties, whose representatives were even members of the governments.

To assess the situation in Europe, a special commission was created under the US President, which noted that the European economy was in a deplorable state - long-term ties in industry, trade and finance had ceased to work, and management erosion had occurred. Output and per capita income fell below their 1938 levels. In Germany, Italy, and France, the decline reached 40-65% of the pre-war level. In more prosperous Britain, output in 1946 was 90% of 1937 levels. There was not only disorganization of monetary circulation as such, but also a lack of commodity supply, which led to high inflation rates - 50-70% per year, but in a number of countries, for example in Italy, they reached hundreds of percent.

The war also destroyed the unified system of trade, both internal and external. While the need for imports was increasing all the time.

The vitality of the Western European economy was supported solely by imports from North America. The countries of Western Europe, through their own production, could provide themselves with grain, cotton, aluminum, copper only by 40%, lead and zinc by 30%, lard and oil by 15%, and meat and fuel only by 10%. . Austria, for example, did not cover even half of its needs for basic food products with its own production. Due to the decrease in imports of these goods, Western Europe was threatened with famine. Which almost didn't happen.

Immediately after the war, imports from Western European countries were ensured mainly through the provision of subsidies and loans from the United States and Canada, as well as the use of their own gold and dollar reserves.

By 1947, the flow of revenue from these sources had dried up - due to the lack of dollars, Western Europeans were no longer able to pay for American supplies. There is a real prospect of reducing American merchandise imports to Western Europe by half, and dollar imports by 4/5, which would mean a collapse for the European economy.

As a result, the presidential commission came to the conclusion that without the restoration of the European economy, the crisis would worsen, which would entail a reduction in production and mass unemployment in the United States, as well as a likely seizure of power by the communists in countries friendly to America. In insisting on assistance to Europe, Deputy Secretary of State Dean Acheson emphasized: "It is necessary if we are to preserve our own freedoms and our own democratic institutions. Our national security requires it."

Thus, there was a clear understanding in Washington that the economic paralysis of Europe and the political catastrophe that would inevitably follow were a threat primarily to American interests. But at the same time, Washington also understood that the policy of consolidating the role of a “donor” acting on a charitable basis for the United States would not meet either American or European interests. Just by the beginning of 1947, the threat of crisis began to brew in the United States itself, as the factors that had supported American production at a high level in the early post-war years began to be exhausted. One of these factors was the greatly inflated exports to Europe. But by the summer of 1947 it began to fall due to the insolvency of the Europeans.

Even in Britain, which was relatively prosperous by the standards of that time, a financial crisis occurred, and the government was forced to reduce food imports, which led to a sharp rise in food prices.

In France, the Minister of Economy Pierre Mendes-France proposed to freeze wages and prices, at the same time block bank accounts and begin a forced exchange of banknotes in order to prevent inflation. And Finance Minister Rene Pleven developed his own economic rescue project, the basis of which was the issue of a large domestic loan. The communists, literally foaming at the mouth, demanded nationalization and the creation of a social protection system for the population at any cost. And they extracted one concession after another.

Salvation in unification

What was required was not just assistance in the form of supplies of goods, but an economic interaction that would ensure the self-sufficiency of the revival of Europe, would increase the return on American assistance and would fit into the next renewal of the technological base of the American economy that began in the late 40s.

One of the main points of the presidential commission's report was the need for monetary reform in European countries. But, on the one hand, it was necessary to reduce the volume of money supply, and on the other hand, considerable funds were needed to provide workers in key industries with enough products to “start” production.

Thus, immediate balancing of the budgets of Western European countries was considered unfeasible. The recovery of the financial system was seen not as a preliminary or final stage of economic revival, but as a process in which the reorganization of finances can contribute to the rise in production, but is itself dependent on this rise.

The conclusions contained in the report of the presidential commission formed the basis of Marshall's speech at Harvard University. The concrete development of the plan was undertaken by specialists from the State Department and the State Naval Coordination Committee, led by William Clayton, a businessman and diplomat, the US representative to the GATT (General Agreement on Tariffs and Trade) and the UN Economic Commission for Europe. He advocated the economic revival of Europe primarily in light of “the needs and interests of the people of the United States,” who “need markets, large markets, to buy and sell, since it is cheaper to protect ourselves by economic means, of which we have more than enough.”

But the true, so to speak, ideological father of the “Marshall Plan” was US President Harry Truman. Actually, the decision to name an unprecedented project after the Secretary of State was made for tactical reasons - Truman, unlike Marshall, did not enjoy the necessary support in Congress, which was supposed to approve appropriations for Europe.

A kind of forerunner of the Marshall Plan was the Truman Doctrine, adopted in March 1947. It provided for the provision of economic assistance to Turkey, Greece and, somewhat later, Italy, since they were threatened with “loss of freedom.” In Greece, the communists unleashed a civil war, in Italy the position of the Communist Party strengthened, and Türkiye was the object of comprehensive pressure from the USSR.

Proposals to participate in the “Marshall Plan” were sent to almost all European countries, including Turkey, with only Franco’s Spain excluded. Invitations were also sent to the so-called people's democracies. Washington hoped in this way to undermine Soviet dominance in Eastern Europe. The eminent diplomat and political scientist George Kennan stated then: “The doors to participation must be open to all European countries without exception, which will mean the complete unification of Europe. Ultimately, it will be increasingly difficult for the Soviets to keep them under their control.” However, it quickly became clear that these hopes were illusory: at a meeting in Paris of the foreign ministers of the USA, France, Great Britain and the USSR, Molotov rejected the “Marshall Plan” and defiantly left the meeting room. And following Moscow, the USSR's allies obediently abandoned the Marshall Plan.

True, by so clearly indicating its attitude to the American plan, Moscow indirectly encouraged non-communist European countries to participate in it. Marshall made his speech on June 5, 1947, and already on June 12, representatives of 16 Western European countries gathered in Paris. They discussed the amount of specific assistance needed for each. In the United States, a government committee was created to study the state of the American economy and its ability to provide such assistance. To prepare a formal request for assistance, 16 countries met almost continuously in Paris and met again at the Grand Palais on July 12. The Committee on European Economic Cooperation (CEEC) was formed, which was tasked with determining in just six weeks “the resources available to Europe and its needs” for 1948-1951.

The CEEC report was signed on September 22, 1947. It warned that without US help, Europe would face disaster. After this, in April 1948, the US Congress passed the Economic Assistance Act. For the first time in history, European countries were asked to overcome the crisis not alone, but through joint efforts. Also, for the first time, the victorious power (the USA) did not collect reparations from the defeated countries, but provided them with large-scale assistance.

In April 1948, in Paris, the ministers of 16 European states signed a corresponding convention. Initially, the participants in the Marshall Plan were Great Britain, France, Italy, Belgium, the Netherlands, Luxembourg, Sweden, Norway, Denmark, Ireland, Iceland, Portugal, Austria, Switzerland, Greece, and Turkey. Then its action was extended to Germany.

Conditions and goals

According to the Marshall Plan convention, its European participants had to fulfill the following conditions: refuse nationalization and encourage private investment; take measures to facilitate the exchange of goods; through intercountry cooperation, ensure the activation of the most efficient production; strengthen their currencies; give cooperation organizational support in the form of the Organization of European Economic Cooperation (OEEC), transformed from the EEEC.

Conventional wisdom about the Marshall Plan reduces it mainly to a “food intervention,” a kind of humanitarian aid. Indeed, about 70% of all gratuitous aid was allocated to food supplies. However, as noted in the report of the Presidential Commission on Foreign Assistance, despite the importance and necessity of food aid, the main goal of the Marshall Plan was to achieve economic independence of European countries, that is, to restore their ability to ensure the functioning and development of their own economies.

The Marshall Plan was seen as a tool to fuel a broken economy, which would create the conditions for economic revival. At the same time, both the USA and Europe understood that without a solid production base the chances of this happening were slim.

The United States, of course, also took into account its own interests: for example, the choice of goods for supply remained with the Americans and did not always correspond to the requests of European countries, the same applied to the financing of equipment purchases. In addition, the United States had certain benefits when accessing sources of raw materials and purchasing goods.

The financing of individual elements of the Marshall Plan was determined by the nature and type of supplies. The first type of supplies were the basic necessities needed to prevent famine. Every spring, allocations were made for food, fuel, and clothing. Year after year, as the European countries' own resources grew, these allocations were reduced. Since this kind of assistance does not pay for itself, and most Western European countries were unable to pay for supplies, the bulk of the latter came in the form of grants rather than loans. The local currency raised from the sale of these products was to be used by governments to reduce government budget deficits, reduce inflation rates and increase the supply of scarce resources (steel, cement, coal, petroleum products, power equipment, vehicles).

The second type of supply is industrial equipment. Here, financing was dominated by loans from the International Bank.

The third type is raw materials, agricultural machinery, industrial goods, spare parts, and so on. These supplies were financed under guarantees of the American government through the US Export-Import Bank, which created a special branch for these purposes.

An important place was given to the restoration and renewal of fixed production assets. In 1948-1951, it was planned to spend from 2 to 3 billion dollars on the restoration and development of iron and steel factories, 3-5 billion on machinery and equipment for mines, 3-4 billion on agricultural machinery. American assistance came in various forms - in the form of gratuitous gifts in dollars, gratuitous supplies of goods, but mainly in the form of loans. The total amount of funds spent under the Marshall Plan from April 3, 1948 to June 30, 1951 was about $17 billion (according to various estimates, this is about $150-170 billion in modern prices).

The OEEC distributed grants and loans in accordance with the dollar deficit of each country's balance of payments. Great Britain received 23% of the total volume of gratuitous assistance, France - 20%, Italy and Germany received approximately 10% each. Overall, about a third of Marshall Plan imports were agricultural products, but imports of capital goods also played a huge role. It is noteworthy that a significant part of the dollars intended for assistance remained in America, since the surplus American agricultural products allocated for these purposes had to be purchased in the United States itself. In addition, 25% of all wheat and wheat products shipped to Europe were to be imported in the form of flour, again produced in the United States.

The path to an economic miracle

In fulfilling their Marshall Plan obligations, Western European governments faced contradictions in their economic policies. On the one hand, the condition for American assistance was the renunciation of nationalization and plans that could infringe on private capital. On the other hand, restoration could only be achieved with the leading role of the state, which at first supplied the population with food, industry with raw materials, and tried to reduce unemployment. In some cases, it was necessary to nationalize industries that were incapable of self-sufficiency - railways, air transport, social services, and some sectors of heavy industry.

However, the experience gained within the PEEC has led to the development of a coherent approach to solving problems. It was allowed to stop the implementation of new projects until decisions were made on them during coordination. Conversely, decisions of the OEEC Council on desirable investments obligated member countries to use all opportunities to make such investments.

Industries whose development would reduce dependence on the United States were considered a priority for capital investment. Among them, “dollar-saving” and “dollar-profitable” ones stood out, that is, import-substituting and exporting. As American aid dwindled, other sources had to be found to meet needs. One of the search directions is to stimulate our own agriculture.

The level of government intervention in the economy varied. For example, France and Sweden have followed the path of state planning. In France, in particular, there was strict state control over credit; the main goal was not so much to increase production as to modernize it. The level of nationalization was high in Austria, Germany, and Belgium.

But in the UK, they were not fond of planning, but the nationalization was considered as a way of "salvation" of stagning industries, but not as a means of stimulating the growth of production efficiency. The economic policy was aimed primarily at achieving a high level of employment and improving the payment balance with a support of US financial assistance.

The relatively rapid restoration of the Italian economy also relied on the strengthening of state control, the growth of direct state investment and the modernization of industry. Unlike the UK, the Italian government allowed entrepreneurs to use assistance funds to finance equipment imports.

A special place in the Marshall Plan was devoted to West Germany - the country on the advanced line of confrontation with communism. In the early years of the implementation of the Marshall Plan, Germany received from the United States all types of assistance almost as much as the UK and France combined, and almost three times more than Italy. “Marshall Plan” along with the famous monetary reform of Ludwig Erhard (in 1948-1949, the director of the management of the Anglo-American zone of the occupation of Germany) became the basis for the “German economic miracle”.

The infusion of dollars into the economy of European states allowed to avoid hyperinflation and resume international trade and private investment, although most local currencies at that time were uncontented. Therefore, for example, American investors guaranteed that at any time they will be able to convert profit into dollars and freely export these funds.

At the first stage of the implementation of the Marshall Plan, the help was a significant part of the GDP of European countries. For example, in 1949, American money was provided by more than 11% of GDP GD, 12% of French GDP, 21.8% of Germany GDP and 33.6% of Italy GDP. Almost 15% of its budget, the United States spent on foreign assistance. And already in 1950, European economies demonstrated high growth rates. The level of production in industry exceeded the pre -war by 40%, in agriculture - by 20%. As a result, in 1951, the share of US assistance in the GDP of Great Britain decreased to 2%, in France - to 7.8%, in Germany - to 6.8%, in Italy - up to 8.7%.

During the implementation of the plan, a special mechanism for the distribution of assistance was created: the United States did not allow recipient states to spend these funds on "plugging holes" in state budgets. For example, 17% of all funds were consumed exclusively on the purchase of industrial equipment and cars. Later in developed countries, this principle has become the key for politics in relation to borrowing: borrowing to invest, rather than cover current expenses.

We can say that thanks to the “Marshall Plan” Europe and the whole world escaped a large -scale crisis similar to that that struck the world economy after the First World War.

Over the three years of implementation, the recovery plan made it possible to increase the production of products to Europe by $ 20 billion.

The high effectiveness of the Marshall Plan is largely explained by the fact that it was focused on the "expanding of narrow places" in the supply of production, on the electoral import of raw materials and materials. The introduction of American business practice to Europe made it possible to create modern European corporations that provided the European economic boom in the 60s. In 1997, President Clinton in his speech dedicated to the 50th anniversary of the Marshall Plan, quite rightly called him "the beginning of the path that led to an economic miracle."

The first step to the Union

The successful implementation of the Marshall Plan, of course, was a huge achievement of American foreign policy. A achievement based primarily on the very "enlightened understanding of their own interests." Such an understanding made it possible to complete the main tasks at that time: to prevent the economic crisis within the United States, ensuring export of American excess products to the Americans an educated market; To organize a world free trade system and with its help to restore Western Europe, primarily for the sake of restraining Soviet expansion.

In essence, the Marshall Plan was a turning point in history that ensured the world leadership of the United States and served as the first stage of Atlantic integration. By 1951, the plan actually turned into a program for providing American military assistance - the program "Mutual Safety Safety". Thus, ultimately the implementation of the Marshall Plan allowed to create a NATO block.

European integration also originates from the Marshall Plan - in fact, it was born from the OEES. In the 50s, this structure became the basis for the creation of the European Economic Community, which eventually turned into a European union.

Mikhail Kalishevsky