Lifeline To A Sinking Continent

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When debate in Congress began in January 1948, it soon became clear that the program enjoyed powerful bipartisan support. Sen. Arthur Vandenberg of Michigan, a Republican and former isolationist, helped guide the measure through. As chairman of the influential Senate Foreign Relations Committee, Vandenberg negotiated a number of compromises that smoothed ruffled senatorial feathers without seriously diluting the program. Some conservatives, who otherwise might have opposed what critics labeled a “giveaway” with the United States as Santa Claus, were impressed by arguments that the program would benefit American business interests and especially would help prevent the spread of communism. This latter threat was dramatically underscored partway through the debates when a Communist coup overthrew the government of Czechoslovakia.

The Czech coup and Soviet moves in occupied Germany raised the threat of war with the Soviet Union. “Will Russia move first?” Truman asked Marshall. “Who pulls the trigger? Then where do we go?” In this atmosphere the Marshall Plan passed easily, with support even from those who usually opposed foreign aid programs. Truman signed it into law on April 3, 1948, as administration officials and leading members of Congress looked on. The initial appropriation, which was for a period that ran between April 3, 1948, and June 30, 1949 (the end of the fiscal year), totaled $5.85 billion. Within weeks freighters began leaving for Europe, and when the program became fully operational, there were, at any given time, about 150 ships at sea carrying Marshall Plan aid.

The Marshall Plan legislation provided for a new agency, the Economic Cooperation Administration (ECA), to help the Europeans administer the program. Paul Hoffman, a former president of the Studebaker automobile company, headed EGA/Washington, and Averell Harriman resigned as Secretary of Commerce to take over EGA/Europe. EGA missions were sent to each of the recipient nations.

 

In addition to distributing Marshall Plan aid, the ECA exercised approval over the use of what were called counterpart funds, sums European governments were required to set aside in their own currencies equal to the value of the goods they received free. The EGA administrators sought to have these funds provide investment capital for modernization and help stabilize currencies, with the ultimate goal of making Europe self-sufficient. They placed special emphasis on projects that would contribute to European economic integration.

The Marshall Plan contributed to and was affected by the growing hostility between the Soviet Union and the United States and its allies. In June 1948 the Soviets cut off rail and road access to the western sectors of Berlin, which lay deep within the Russian zone of occupied Germany. Stalin clearly hoped to obstruct German economic and political recovery in the threatened zones. Unwilling to abandon the Berliners, Truman avoided an armed confrontation by mounting a massive airlift that lasted ten months before the Soviets relented. The blockade hastened the formation of an independent German state, from what had been the western zones, and of the North Atlantic Treaty, whose signatories agreed that an attack on one must be considered an attack on all.

Events over the next two years drastically changed the nature of Marshall Plan aid. In September 1949 Truman announced that the Soviets had exploded their first atomic bomb, ending the American monopoly on nuclear weapons. Weeks later Chinese Communists proclaimed the formation of the People’s Democratic Republic of China, which many in the West perceived as an extension of Soviet power. Then in June 1950 Communist North Korea invaded the Republic of Korea in what appeared to be a Soviet-sponsored probe of Western resolve and raised fear of a Soviet military thrust into Western Europe. This fear sped up a process already under way: shifting the emphasis of Marshall Plan aid from recovery to rearmament. The ECA went out of existence at the end of 1951, six months earlier than originally planned, and subsequent help to the “Marshall Plan countries” was dispensed by the Mutual Defense Aid Program.

Between 1948 and 1951 Congress had authorized a total of $13,348,800,000 in Marshall Plan aid, an amount of course worth many times that in today’s currency. Most of it went to Great Britain, France, Italy, and West Germany, in that order. The United States provided a bewildering variety of items over the years, from orange juice and coal to the most sophisticated machinery. The ECA’s technical assistance and productivity programs sent teams of American experts to help modernize European industry and brought European managers and workers to observe American methods. Opponents of the program, who had warned that it would bankrupt the economy, could not have been more mistaken. The United States went through a period of exceptional prosperity during those years.