How the Marshall Plan Worked


Announcer: Welcome to Stuff You Missed in History Class from howstuffworks.com.

Candace Gibson: Hello, and welcome to the Podcast. I'm Editor Candace Gibson joined by staff writer, Jane McGrath.

Jane McGrath: Hey there.

Candace Gibson: Hey, Jane. I think in today's society it wouldn't be so crazy if the government issued a statement and said, a lot of our friends are in financial distress and we're going to give them a whole bunch of money to bail them out and make it better.

Jane McGrath: It seems pretty familiar today but something exactly like that happened right after World War II.

Candace Gibson: Yeah, and ironically enough, we know that today Europe's economy is doing I think a hair better than ours. We know at least that their unit of currency has a little bit more punch than the American dollar, but after World War II ended in 1945, the situation in Western Europe was really, really dire. We're talking about a quarter of Germany's housing in the cities was just demolished. There had been a 70 percent decline in the gross domestic products and when they seem to be slowly getting their acts back together, the winter of 1946 was so harsh that the wheat harvest was completely knocked off and what's more, you have Western Europe's neighbors over to the east trying to tempt them with the fruits of communism and socialism.

Jane McGrath: Yeah, that's true and not to belabor the point of how bad they were doing over in Europe but about a third of the - more than a third actually, the European industry was destroyed which is just sort of crazy to think about and 60 million unemployed, 100 million were going hungry and there were a lot of efforts to try to improve this that didn't - it wasn't doing enough. For instance, United Nations tried to help with the UNRA by offering supplies but these supplies were basically food and medical supplies and this wasn't exactly helping them get back on the - the industry back on track.

Candace Gibson: Right. It would sustain them but not help them thrive and flourish to pre-war levels and we know that President Truman had extended the Truman Doctrine which said that the United States would offer support to any nation resisting authoritarian regimes. So, that was significant too, but again, we're talking about people who - very desperately needed money to get things rolling again. And, so, on June 5th, 1947, there was a commencement ceremony at Harvard and George Marshall was going to be receiving an honoree doctorate degree from Harvard and he'd been asked to say a few words and he sort of cryptically wrote in the letter that he would say a few words and maybe more.

Jane McGrath: Yeah, and he - his speech, I read it when I was preparing for the podcast and it's really good. It just lays things out very clearly for someone to understand and what he says is actually pretty familiar to stuff that you hear today in the news of political speeches in that he was explaining how the economic situation was enormously complex and that the average man on the street couldn't really understand what was going wrong and how to fix it. And he laid it all out and he said the breakdown of the business structure of Europe was complete and basically explaining that raw materials and fuel were in short supply. The Europeans machinery for their farming and everything like that was lacking and worn out so basically what you have is a situation where the farmer, he can't buy the materials he needs for ready money so what's the good of selling his produce if he can't buy what he needs.

Candace Gibson: And Marshall even famously said our policy is not directed against any country or doctrine but against hunger, poverty, desperation and chaos and who was anyone to argue with that. And he choose the perfect forum to do it, too.

Jane McGrath: Yeah, it's interesting. People love quoting that and I think it's a great quote because it shows that Marshall is trying to sort of distance himself from the effort - from the argument that this plan will contain communism. He wants to sort of distance himself from the politics involved in it and just sort of focus on the hunger and just the horrible poverty that was going on.

Candace Gibson: Exactly. And he knew that it was going to take a lot of effort to get people in Washington to get on board with the Marshall Plan, what later came to be known as the European Economic Recovery Plan. Is that right?

Jane McGrath: Yeah, and it was known as the Marshall Plan in the news. I think that I read that Marshall himself didn't really like calling it the Marshall Plan. Obviously, it was a joint effort. There were lots of people involved. He didn't exactly write every word of it. It was known as Marshall's Plan because he did advocate it and campaign for it so vigorously.

Candace Gibs on: Right. So, on that very famous day at Harvard during the commencement ceremony, he knew who he was going to be talking to. He was going to be talking to a captive audience, people who were pretty friendly, and the media. So, the idea was to get them on board with this plan first and then any adversaries in Washington. And, of course, people balked when they heard the numbers involved with this plan and the United States had actually asked Europe how much money do you think you need over how many years to get things back on track, and Europe had said $29 billion. And they didn't really have a set system as to how they were going to delineate these funds and how it was actually going to work to support the European economies. What the Marshall Plan was doing was saying that $13 billion in aid would be given to Western European countries over the span of four years and that was still a pretty tough pill to swallow.

Jane McGrath: Yeah, Marshall, after he got this agreement from the European countries who got together to do it, like Candace mentioned, it was a part of a condition that the European countries had to say what they wanted rather than the U.S. coming in and saying we're going to give you X amount. So, once that got figured out, Marshall had to come back to the U.S. and argue in front of congress to say - for them to pass this bill and so he went on a tour around the country, in addition to speaking in testimony in front of congress, he wanted to win over the public and he gave a tour of speeches to promote the plan to unions like businessmen and farmers, etcetera.

Candace Gibson: And I was reading on a website that was established for the 50th Anniversary of the Marshall Plan, it was a website sponsored by U.S. Aid and the website was explaining that basically you had two different camps of people who were opponents of the Marshall Plan. You had people on the right who thought it was a type of global new deal and then you had people on the other side who thought that the United States was going into Europe and act like it was trying to control the countries, trying to colonize them, trying to impose its powers and its ways of doing things but I think that's what's so significant about Marshall being proactive. He didn't just offer people a helping hand and say, hey, I'm going to scoop you up. He made the countries do the work and say how exactly they were going to formulate their own plans once they had the financial assistance to do so.

Jane McGrath: Yeah, and the isolationists had a point, I mean, obviously we had this tradition in America ever since Washington's speech that we shouldn't get entangled in foreign affairs and the isolationists were afraid of this happening and so were the Soviet's actually and that's -

Candace Gibson: Oh, definitely.

Jane McGrath: Yeah, the Soviets were very scared of this. Initially, the U.S. was going to include the USSR in this aid but the Soviets pulled themselves out really early in the plan because they saw this whole plan as basically the U.S. trying to exert its own influence over Europe and they didn't want to be involved in it. They didn't want to be controlled by U.S. holding their purse strings basically.

Candace Gibson: Right, and I think the Soviet's, trying to think from their perspective for a minute here, you know, there country had been ravaged as well and according to the ideal principles of communism, speaking just theoretically here for a moment, the idea to work for the common good, to share what resources there were, it wasn't a terrible idea. It's just that communism in practice, as we know, didn't work out so well for the Soviet Union and I think that these ideologies were filtering west and we know for sure that there were communist uprisings in Czechoslovakia and then even a small one in France and Italy and there was one that up rose in Greece and the Greek government was so fast and strong to squelch it that that's what really got the United States thinking we should be helping out Western Europe. They are making an effort to contain communism and we do need to give them aid.

Jane McGrath: Yeah, and there was this theory known as the Domino Theory that when one country fell under communist rule, that the surrounding neighboring countries would succumb to it, basically. That the influence would spread geographically.

Candace Gibson: And you have to think because these countries are so tightly packed together on the European continent, they're trading with each other, you know, they're all passing through one another. They're all in a really bad situation so it was entirely plausible that that could happen. But, in Washington, I think a pretty big development came when a senator named Arthur Vandenberg, he was the chairman of the Foreign Relations Committee. He got on board with the Marshall Plan and he was known for being someone who took a strict isolationist and he was quoted as saying, "In the name of peace, stability and freedom, it deserves prompt passage. In the name of intelligent American self-interest, it envisions a mighty undertaking worthy of our faith and that presented a unique perspective. The idea that if you were truly an intelligent, hard-working American who wants to see the fruits of your labor, you're going to want to piece Europe back together because, in the end, it's going to benefit you. And that's the kind of math that Americans like to hart. Am I right?

Jane McGrath: Yes, that's true. And it's important to note some of the hard things that even, you know, everyone was well-intentioned. They didn't want to see this hunger and poverty go on in Europe but at the same time, Marshall had to answer questions to congress like can American farmers even support it, do we have the facilities to sustain ourselves and Europe.

Candace Gibson: So, ultimately, the plan was put into practice and it was meant to continue for four years and it actually got shut down a little early on December 31st, 1951 because that's when the Korean War really took off and also Europe was showing such improved progress that the United States felt like it was time to sort of shut it down. And we'd - at that moment, established a precedent of United States foreign relations.

Jane McGrath: Yeah, and it's curious some of the reverberating effects of the Marshall Plan. Some good, some not so good. For instance, the Soviet's, when they pulled out, they started offering their own version called the Molotov Plan to their eastern blocks and they sort of lifted the curtain or the iron curtain - the famous term that refers to their control of the eastern bloc nations and so us offering this Marshall Plan to try to contain communism also contained communism in that block in a way but there are some really good effects as well. I mean, arguably, the Marshall Plan set the stage for military cooperation of things like the European Union and North Atlantic Treaty Organization.

Candace Gibson: Definitely and we saw west Germany starting to rearm again to restock its arsenals and to rebuild its housing and no European nations ever fully succumbed to communism and then we see that the gross domestic product is back up. Industries are producing again and so, overall, the Marshall Plan while not fully realized in its length in its original parameters, it was a success and Marshall went on to be awarded the Nobel prize, too.

Jane McGrath: Yeah, and there's very few things that I think we can say about these political plans in the 20th Century that were a huge success. Like, nobody ever says that about anything but the Marshall Plan.

Candace Gibson: Yeah, it was a pretty huge success and ironically enough if you look at today and right now as we're recording this podcast we know that the G20 Summit is occurring over in Europe and conditions in Europe, like we said, are arguably a little better than they are in the United States. We had said back - during the time of post World War II that we wouldn't talk to any nations who were involved with communism and now one of the biggest players in the world economy is China, a communist nation. So, it's really important I think to know the history of foreign relations and foreign aid so that we can understand the choices and the events that are happening around us today.

Jane McGrath: Yeah, and how significant it was, for instance, when Nixon started recognizing China, and even under the communist rule, it was huge compared to how soon after this was the - after the Marshall Plan.

Candace Gibson: And I think there comes a point when you have to say I don't agree with your politics but I can't deny any longer that you're making a huge contribution in the world markets.

Jane McGrath: True.

Candace Gibson: So, we tackle modern issues like this on our blog, even if you don't get to hear us podcast every day, you can get a little snippet of Candace and Jane on the Stuff You Missed in History Class Blog.

Jane McGrath: That's right. We tackle news events and just things that interest us and even your mail every Friday if you write in for - a suggestion for a podcast and we're not able to do immediately, we'll often write a blog about it so check that out.

Candace Gibson: We do. So, if you want to read more about the Marshall Plan or World War II or any of the communist leaders who tried to shut down the Marshall Plan, be sure to check out our website at howstuffworks.com.

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