Marshall Plan

The reconstruction plan, developed at a meeting of the participating European states, was drafted on June 5, 1947. It offered the same aid to the Soviet Union and its allies, but they refused to accept it, under Soviet pressure (as was the case for Finland's rejection) as doing so would allow a degree of US control over the communist economies.[15][16][17] Secretary Marshall became convinced Stalin had no interest in helping restore economic health in Western Europe.[18]

European Recovery Program expenditures by country. The Eastern Bloc is not included.

President Harry Truman signed the Marshall Plan on April 3, 1948, granting $5 billion in aid to 16 European nations. During the four years that the plan was in effect, the United States donated $17 billion (equivalent to $231.42 billion in 2022) in economic and technical assistance to help the recovery of the European countries that joined the Organisation for European Economic Co-operation. The $17 billion was in the context of a US GDP of $258 billion in 1948, and on top of $17 billion in American aid to Europe between the end of the war and the start of the plan that is counted separately from the Marshall Plan.[19] The Marshall Plan was replaced by the Mutual Security Plan at the end of 1951; that new plan gave away about $7.5 billion annually until 1961 when it was replaced by another program.[20]

The ERP addressed each of the obstacles to postwar recovery. The plan looked to the future and did not focus on the destruction caused by the war. Much more important were efforts to modernize European industrial and business practices using high-efficiency American models, reducing artificial trade barriers, and instilling a sense of hope and self-reliance.[21]

By 1952, as the funding ended, the economy of every participant state had surpassed pre-war levels; for all Marshall Plan recipients, output in 1951 was at least 35% higher than in 1938.[22][upper-alpha 2] Over the next two decades, Western Europe enjoyed unprecedented growth and prosperity, but economists are not sure what proportion was due directly to the ERP, what proportion indirectly, and how much would have happened without it. A common American interpretation of the program's role in European recovery was expressed by Paul Hoffman, head of the Economic Cooperation Administration, in 1949 when he told Congress Marshall aid had provided the "critical margin" on which other investment needed for European recovery depended.[23] The Marshall Plan was one of the first elements of European integration, as it erased trade barriers and set up institutions to coordinate the economy on a continental level—that is, it stimulated the total political reconstruction of Western Europe.[24]

Belgian economic historian Herman Van der Wee concludes the Marshall Plan was a "great success":

It gave a new impetus to reconstruction in Western Europe and made a decisive contribution to the renewal of the transport system, the modernization of industrial and agricultural equipment, the resumption of normal production, the raising of productivity, and the facilitating of intra-European trade.[25]

By the end of World War II, much of Europe was devastated. Sustained aerial bombardment during the war had badly damaged most major cities, and industrial facilities were especially hard-hit. Millions of refugees were in temporary camps.[26] The region's trade flows had been thoroughly disrupted; millions were in refugee camps living on aid from the United States, which was provided by the United Nations Relief and Rehabilitation Administration and other agencies. Food shortages were severe, especially in the harsh winter of 1946–47. From July 1945 through June 1946, the United States shipped 16.5 million tons of food, primarily wheat, to Europe and Japan. It amounted to one-sixth of the American food supply and provided 35 trillion calories, enough to provide 400 calories a day for one year to 300 million people.[27]

Especially damaged was transportation infrastructure, as railways, bridges, and docks had been specifically targeted by airstrikes, while much merchant shipping had been sunk. Although most small towns and villages had not suffered as much damage, the destruction of transportation left them economically isolated. None of these problems could be easily remedied, as most nations engaged in the war had exhausted their treasuries in the process.[28]

The only major powers whose infrastructure had not been significantly harmed in World War II were the United States and Canada. They were much more prosperous than before the war, but exports were a small factor in their economy. Much of the Marshall Plan aid would be used by the Europeans to buy manufactured goods and raw materials from the United States and Canada.

After Marshall's appointment in January 1947, administration officials met with Soviet Foreign Minister Vyacheslav Molotov and others to press for an economically self-sufficient Germany, including a detailed accounting of the industrial plants, goods and infrastructure already removed by the Soviets in their occupied zone.[46] Molotov refrained from supplying accounts of Soviet assets. The Soviets took a punitive approach, pressing for a delay rather than an acceleration in economic rehabilitation, demanding unconditional fulfillment of all prior reparation claims, and pressing for progress toward nationwide socioeconomic transformation.[47]

After six weeks of negotiations, Molotov rejected all of the American and British proposals.[47] Molotov also rejected the counteroffer to scrap the British-American "Bizonia" and to include the Soviet zone within the newly constructed Germany.[47] Marshall was particularly discouraged after personally meeting with Stalin to explain that the United States could not possibly abandon its position on Germany, while Stalin expressed little interest in a solution to German economic problems.[47]

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The Marshall Plan Speech

After the adjournment of the Moscow conference following six weeks of failed discussions with the Soviets regarding a potential German reconstruction, the United States concluded that a solution could not wait any longer. To clarify the American position, a major address by Secretary of State George Marshall was planned. Marshall gave the address at Harvard University on June 5, 1947. He offered American aid to promote European recovery and reconstruction. The speech described the dysfunction of the European economy and presented a rationale for US aid:

The modern system of the division of labor upon which the exchange of products is based is in danger of breaking down. ... Aside from the demoralizing effect on the world at large and the possibilities of disturbances arising as a result of the desperation of the people concerned, the consequences to the economy of the United States should be apparent to all. It is logical that the United States should do whatever it is able to do to assist in the return of normal economic health to the world, without which there can be no political stability and no assured peace. Our policy is not directed against any country, but against hunger, poverty, desperation and chaos. Any government that is willing to assist in recovery will find full co-operation on the part of the United States. Its purpose should be the revival of a working economy in the world so as to permit the emergence of political and social conditions in which free institutions can exist.[48]

Marshall was convinced that economic stability would provide political stability in Europe. He offered aid, but the European countries had to organize the program themselves.

The speech, written at Marshall's request and guidance by Charles Bohlen[49] contained virtually no details and no numbers. More a proposal than a plan, it was a challenge to European leaders to cooperate and coordinate. It asked Europeans to create their own plan for rebuilding Europe, indicating the United States would then fund this plan. The administration felt that the plan would likely be unpopular among many Americans, and the speech was mainly directed at a European audience. In an attempt to keep the speech out of American papers, journalists were not contacted, and on the same day, Truman called a press conference to take away headlines. In contrast, Dean Acheson, an Under Secretary of State, was dispatched to contact the European media, especially the British media, and the speech was read in its entirety on the BBC.[50]

In the audience at Harvard was International Law and Diplomacy graduate student Malcolm Crawford, who had just written his Master's thesis entitled "A Blueprint for the Financing of Post-War Business and Industry in the United Kingdom and Republic of France." Crawford's thesis was read by future Supreme Court Justice Abe Fortas and presented to President Truman as the solution for Marshall's proposal. It was Crawford's thesis which provided the key to selling the Marshall Plan to Congress by laying out the idea of "strategic partnerships." Instead of the Federal government granting money directly to Europe, American businesses would provide technology, expertise, and materials to Europe as a strategic partner, and in exchange, the Federal government would purchase stock in the US businesses to reimburse them. In this way, Europe would receive the aid it needed, American businesses would receive capital investment, and the federal government would make a profit when the stock was sold.[51]

Eastern Bloc
Republics of the USSR Armenia Azerbaijan Byelorussia Estonia Georgia Kazakhstan Kirghizia Latvia Lithuania Moldavia Russia Tajikistan Turkmenia Ukraine Uzbekistan
Allied and satellite states Afghanistan Albania (until 1961) Angola Benin Bulgaria China (until 1961) Congo Cuba Czechoslovakia East Germany Ethiopia Grenada Hungary Kampuchea Laos Mongolia Mozambique North Korea Poland (until 1989) Romania Seychelles Somalia (until 1977) South Yemen Vietnam (North Vietnam, PRG) Yugoslavia (until 1948)
Related organizations Warsaw Pact Comecon Cominform World Federation of Trade Unions World Federation of Democratic Youth
Dissent and opposition Anti-Soviet partisans Albania Bulgaria Croatia Poland Romania Serbia Ukraine Guerrilla war in the Baltic states Soviet occupation Estonia Latvia Lithuania Operation Jungle Protests and uprisings Poland 1944–1989 Poznań 1956 1980–89 Plzeň 1953 East Germany 1953 Georgia 1956 Hungary 1956 Novocherkassk 1962 Prague 1968 Invasion Moscow Czechoslovakia 1976–90 Romania 1977 Kazakhstan 1986 Brașov 1987 Tbilisi 1989 Baku 1990 Lithuania 1991 Riga 1991
Cold War events Marshall Plan Czechoslovak coup Tito–Stalin split Berlin Blockade Korean War Secret Speech Sino-Soviet split Albanian–Soviet split De-satellization of the Socialist Republic of Romania Berlin Wall Cuban Missile Crisis Vietnam War Cuban intervention in Angola Afghan War 1980 Moscow Olympics 1984 Los Angeles Olympics Gulf War
Fall Singing Revolution Polish Round Table Agreement Revolutions of 1989 Fall of the Berlin Wall January Events Barricades in Latvia Breakup of Yugoslavia Yugoslav Wars End of the Soviet Union Post-Soviet conflicts Fall of communism in Albania Dissolution of Czechoslovakia

British Foreign Secretary Ernest Bevin heard Marshall's radio broadcast speech and immediately contacted French Foreign Minister Georges Bidault to begin preparing a quick European response to (and acceptance of) the offer, which led to the creation of the Committee of European Economic Co-operation. The two agreed that it would be necessary to invite the Soviets as the other major allied power. Marshall's speech had explicitly included an invitation to the Soviets, feeling that excluding them would have been a sign of distrust. State Department officials, however, knew that Stalin would almost certainly not participate and that any plan that would send large amounts of aid to the Soviets was unlikely to get Congressional approval.[52]

Congress, under the control of conservative Republicans, agreed to the program for multiple reasons. The 20-member conservative isolationist Senate wing of the party, based in the rural Midwest and led by Senator Kenneth S. Wherry (R-Nebraska), was outmaneuvered by the emerging internationalist wing, led by Senator Arthur H. Vandenberg (R-Michigan). The opposition argued that it made no sense to oppose communism by supporting the socialist governments in Western Europe; and that American goods would reach Russia and increase its war potential. They called it "a wasteful 'operation rat-hole'"[68] Vandenberg, assisted by Senator Henry Cabot Lodge Jr. (R-Massachusetts) admitted there was no certainty that the plan would succeed, but said it would halt economic chaos, sustain Western civilization, and stop further Soviet expansion. Senator Robert A. Taft (R-Ohio) hedged on the issue. He said it was without economic justification; however, it was "absolutely necessary" in "the world battle against communism." In the end, only 17 senators voted against it on March 13, 1948[69] A bill granting an initial $5 billion passed Congress with strong bipartisan support. Congress eventually allocated $12.4 billion in aid over the four years of the plan.[70]

Congress reflected public opinion, which resonated with the ideological argument that communism flourishes in poverty. Across America, multiple interest groups, including business, labor, farming, philanthropy, ethnic groups, and religious groups, saw the Marshall Plan as an inexpensive solution to a massive problem, noting it would also help American exports and stimulate the American economy as well. Major newspapers were highly supportive, including such conservative outlets as Time magazine. Vandenberg made sure of bipartisan support on the Senate Foreign Relations Committee. The Solid Democratic South was highly supportive, the upper Midwest was dubious, but heavily outnumbered. The plan was opposed by conservatives in the rural Midwest, who opposed any major government spending program and were highly suspicious of Europeans.[71] The plan also had some opponents on the left, led by Henry A. Wallace, the former vice president. He said the plan was hostile to the Soviet Union, a subsidy for American exporters, and sure to polarize the world between East and West.[72] However, opposition against the Marshall Plan was greatly reduced by the shock of the communist coup in Czechoslovakia in February 1948. The appointment of the prominent businessman Paul G. Hoffman as director reassured conservative businessmen that the gigantic sums of money would be handled efficiently.[73]

Turning the plan into reality required negotiations among the participating nations. Sixteen nations met in Paris to determine what form the American aid would take, and how it would be divided. The negotiations were long and complex, with each nation having its own interests. France's major concern was that Germany not be rebuilt to its previous level of might. The Benelux countries (Belgium, Netherlands, and Luxembourg), despite also suffering under the Nazis, had long been closely linked to the German economy and felt their prosperity depended on its revival. The Scandinavian nations, especially Sweden, insisted that their long-standing trading relationships with the Eastern Bloc nations not be disrupted and that their neutrality not be infringed.[74]

The United Kingdom insisted on special status as a longstanding belligerent during the war, concerned that if it were treated equally with the devastated continental powers, it would receive virtually no aid. The Americans were pushing the importance of free trade and European unity to form a bulwark against communism. The Truman administration, represented by William L. Clayton, promised the Europeans that they would be free to structure the plan themselves, but the administration also reminded the Europeans that implementation depended on the plan's passage through Congress. A majority of Congress members were committed to free trade and European integration and were hesitant to spend too much of the money on Germany.[74] However, before the Marshall Plan was in effect, France, Austria, and Italy needed immediate aid. On December 17, 1947, the United States agreed to give $40 million to France, Austria, China, and Italy.[75]

Agreement was eventually reached, and the Europeans sent a reconstruction plan to Washington, which was formulated and agreed upon by the Committee of European Economic Co-operation in 1947. In the document, the Europeans asked for $22 billion in aid. Truman cut this to $17 billion in the bill he put to Congress. On March 17, 1948, Truman addressed European security and condemned the Soviet Union before a hastily convened Joint Session of Congress. Attempting to contain spreading Soviet influence in the Eastern Bloc, Truman asked Congress to restore a peacetime military draft and to swiftly pass the Economic Cooperation Act, the name given to the Marshall Plan. Of the Soviet Union Truman said, "The situation in the world today is not primarily the result of the natural difficulties which follow a great war. It is chiefly due to the fact that one nation has not only refused to cooperate in the establishment of a just and honorable peace but—even worse—has actively sought to prevent it.[76]

Members of the Republican-controlled 80th Congress (1947–1949) were skeptical. "In effect, he told the Nation that we have lost the peace, that our whole war effort was in vain.", noted Representative Frederick Smith of Ohio. Others thought he had not been forceful enough to contain the USSR. "What [Truman] said fell short of being tough", noted Representative Eugene Cox, a Democrat from Georgia, "there is no prospect of ever winning Russian cooperation." Despite its reservations, the 80th Congress implemented Truman's requests, further escalating the Cold War with the USSR.[76]

Truman signed the Economic Cooperation Act into law on April 3, 1948; the Act established the Economic Cooperation Administration (ECA) to administer the program. ECA was headed by economic cooperation administrator Paul G. Hoffman. In the same year, the participating countries (Austria, Belgium, Denmark, France, West Germany, the United Kingdom, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Sweden, Switzerland, Turkey, and the United States) signed an accord establishing a master financial-aid-coordinating agency, the Organisation for European Economic Co-operation (later called the Organisation for Economic Co-operation and Development or OECD), which was headed by Frenchman Robert Marjolin.

First page of the Marshall Plan

According to Armin Grünbacher:

The U.S. government did not give money directly to the participating countries so that they could buy whatever they thought they needed. Instead the U.S. delivered the goods and provided services, mainly transatlantic shipping, to the participating governments, which then sold the commodities to businesses and individuals who had to pay the dollar value of the goods in local currency ("counterparts") into so-called ERP Special Accounts that were set up at the country's central bank. This way of operation held three advantages: the provision of U.S. goods to Europe without European dollar payments helped to narrow the dollar gap that strangled European reconstruction; the accumulated funds could be used for investments in long-term reconstruction (as happened in France and Germany) or for paying off a government's war debts (as in Great Britain); and the payments of the goods in local currencies helped to limit inflation by taking these funds temporarily out of circulation while they were held in the Special Accounts.[77]

The ECA's official mission statement was to give a boost to the European economy: to promote European production, to bolster European currency, and to facilitate international trade, especially with the United States, whose economic interest required Europe to become wealthy enough to import US goods. Another unofficial goal of ECA (and of the Marshall Plan) was the containment of growing Soviet influence in Europe, evident especially in the growing strength of communist parties in France, and Italy.

The Marshall Plan money was transferred to the governments of the European nations. The funds were jointly administered by the local governments and the ECA. Each European capital had an ECA envoy, generally a prominent American businessman who would advise on the process. The cooperative allocation of funds was encouraged, and panels of government, business and labor leaders were convened to examine the economy and see where aid was needed. The recipient nations were represented collectively by the Organisation for Economic Co-operation and Development (OECD), headed by British statesman Oliver Franks.[78]

The Marshall Plan aid was mostly used for goods from the United States. The European nations had all but exhausted their foreign-exchange reserves during the war, and the Marshall Plan aid represented almost their sole means of importing goods from abroad. At the start of the plan, these imports were mainly much-needed staples such as food and fuel, but later the purchases turned toward reconstruction needs as was originally intended. In the latter years, under pressure from the United States Congress and with the outbreak of the Korean War, an increasing amount of the aid was spent on rebuilding the militaries of Western Europe. Of the some $13 billion allotted by mid-1951, $3.4 billion had been spent on imports of raw materials and semi-manufactured products; $3.2 billion on food, feed, and fertilizer; $1.9 billion on machines, vehicles and equipment; and $1.6 billion on fuel.[79]

Also established were counterpart funds, which used Marshall Plan aid to establish funds in the local currency. According to ECA rules, recipients had to invest 60% of these funds in industry. This was prominent in Germany where these government-administered funds played a crucial role in lending money to private enterprises which would spend the money rebuilding. These funds played a central role in the reindustrialization of Germany. In 1949–50, for instance, 40% of the investment in the German coal industry was by these funds.[80]

The companies were obligated to repay the loans to the government, and the money would then be lent out to another group of businesses. This process has continued to this day in the guise of the state-owned KfW bank, (Kreditanstalt für Wiederaufbau, meaning Reconstruction Credit Institute). The Special Fund, then supervised by the Federal Economics Ministry, was worth over DM 10 billion in 1971. In 1997 it was worth DM 23 billion. Through the revolving loan system, the Fund had by the end of 1995 made low-interest loans to German citizens amounting to around DM 140 billion. The other 40% of the counterpart funds were used to pay down the debt, stabilize the currency, or invest in non-industrial projects. France made the most extensive use of counterpart funds, using them to reduce the budget deficit. In France, and most other countries, the counterpart fund money was absorbed into general government revenues, and not recycled as in Germany.[81]

The Netherlands received US aid for economic recovery in the Netherlands Indies. However, in January 1949, the American government suspended this aid in response to the Dutch efforts to restore colonial rule in Indonesia during the Indonesian National Revolution, and it implicitly threatened to suspend Marshall aid to the Netherlands if the Dutch government continued to oppose the independence of Indonesia.[82]

At the time the United States was a significant oil producing nation—one of the goals of the Marshall Plan was for Europe to use oil in place of coal, but the Europeans wanted to buy crude oil and use the Marshall Plan funds to build refineries instead. However, when independent American oil companies complained, the ECA denied funds for European refinery construction.[83]

Technical Assistance Program

Construction in West Berlin with the help of the Marshall Plan after 1948. The plaque reads: "Emergency Program Berlin – with the help of the Marshall Plan"

US aid to Greece under the Marshall Plan

A high priority was increasing industrial productivity in Europe, which proved one of the more successful aspects of the Marshall Plan.[84] The US Bureau of Labor Statistics (BLS) contributed heavily to the success of the Technical Assistance Program. The United States Congress passed a law on June 7, 1940, that allowed the BLS to "make continuing studies of labor productivity"[85] and appropriated funds for the creation of a Productivity and Technological Development Division. The BLS could then use its expertise in the field of productive efficiency to implement a productivity drive in each Western European country receiving Marshall Plan aid. Counterpart funds were used to finance large-scale tours of American industry. France, for example, sent 500 missions with 4700 businessmen and experts to tour American factories, farms, stores, and offices. They were especially impressed with the prosperity of American workers, and how they could purchase an inexpensive new automobile for nine months work, compared to 30 months in France.[86]

By implementing technological literature surveys and organized plant visits, American economists, statisticians, and engineers were able to educate European manufacturers in statistical measurement. The goal of the statistical and technical assistance from the Americans was to increase productive efficiency of European manufacturers in all industries.

To conduct this analysis, the BLS performed two types of productivity calculations. First, they used existing data to calculate how much a worker produces per hour of work—the average output rate. Second, they compared the existing output rates in a particular country to output rates in other nations. By performing these calculations across all industries, the BLS was able to identify the strengths and weaknesses of each country's manufacturing and industrial production. From that, the BLS could recommend technologies (especially statistical) that each individual nation could implement. Often, these technologies came from the United States; by the time the Technical Assistance Program began, the United States used statistical technologies "more than a generation ahead of what [the Europeans] were using".[85]

The BLS used these statistical technologies to create Factory Performance Reports for Western European nations. The American government sent hundreds of technical advisers to Europe to observe workers in the field. This on-site analysis made the Factory Performance Reports especially helpful to the manufacturers. In addition, the Technical Assistance Program funded 24,000 European engineers, leaders, and industrialists to visit America and tour America's factories, mines, and manufacturing plants.[87] This way, the European visitors would be able to return to their home countries and implement the technologies used in the United States. The analyses in the Factory Performance Reports and the "hands-on" experience had by the European productivity teams effectively identified productivity deficiencies in European industries; from there, it became clearer how to make European production more effective.

Before the Technical Assistance Program even went into effect, United States Secretary of Labor Maurice Tobin expressed his confidence in American productivity and technology to both American and European economic leaders. He urged that the United States play a large role in improving European productive efficiency by providing four recommendations for the program's administrators:

1. That BLS productivity personnel should serve on American-European councils for productivity;
2. that productivity targets (based on American productivity standards) can and should be implemented to increase productivity;
3. that there should be a general exchange and publication of information; and
4. that the "technical abstract" service should be the central source of information.[85]

The effects of the Technical Assistance Program were not limited to improvements in productive efficiency. While the thousands of European leaders took their work/study trips to the United States, they were able to observe a number of aspects of American society as well. The Europeans could watch local, state, and federal governments work together with citizens in a pluralist society. They observed a democratic society with open universities and civic societies in addition to more advanced factories and manufacturing plants. The Technical Assistance Program allowed Europeans to bring home many types of American ideas.[87]

Another important aspect of the Technical Assistance Program was its low cost. While $19.4 billion was allocated for capital costs in the Marshall Plan, the Technical Assistance Program only required $300 million. Only one-third of that $300 million cost was paid by the United States.[88]

West Germany and Austria

1960 West German stamp honoring George Marshall

The Marshall Plan was implemented in West Germany (1948–1950), as a way to modernize business procedures and utilize the best practices. The Marshall Plan made it possible for West Germany to return quickly to its traditional pattern of industrial production with a strong export sector. Without the plan, agriculture would have played a larger role in the recovery period, which itself would have been longer.[94][95][96] With respect to Austria, Günter Bischof has noted that "the Austrian economy, injected with an overabundance of European Recovery Program funds, produced "miracle" growth figures that matched and at times surpassed the German ones."[97]

Marshall Aid in general and the counterpart funds in particular had a significant impact in Cold-War propaganda and economic matters in Western Europe, which most likely contributed to the declining appeal of domestic communist parties.[77]

The Marshall Plan aid was divided among the participant states on a roughly per capita basis. A larger amount was given to the major industrial powers, as the prevailing opinion was that their resuscitation was essential for general European revival. Somewhat more aid per capita was also directed toward the Allied nations, with less for those that had been part of the Axis or remained neutral. The exception was Iceland, which had been neutral during the war, but received far more on a per capita basis than the second highest recipient.[98]

The table below shows Marshall Plan aid by country and year (in millions of dollars) from The Marshall Plan Fifty Years Later.[4] There is no clear consensus on exact amounts, as different scholars differ on exactly what elements of American aid during this period were part of the Marshall Plan.

Country	1948/49 ($ millions)	1949/50 ($ millions)	1950/51 ($ millions)	Cumulative ($ millions)
Austria	232	166	70	468
Belgium and  Luxembourg	195	222	360	777
Denmark	103	87	195	385
France	1,085	691	520	2,296
West Germany	510	438	500	1,448
Greece	175	156	45	376
Iceland	6	22	15	43
Ireland	88	45	0	133
Italy and  Trieste	594	405	205	1,204
Netherlands	471	302	355	1,128
Norway	82	90	200	372
Portugal	0	0	70	70
Sweden	39	48	260	347
Switzerland	0	0	250	250
Turkey	28	59	50	137
United Kingdom	1,316	921	1,060	3,297
Totals	4,924	3,652	4,155	12,731

The Marshall Plan, just as GARIOA, consisted of aid both in the form of grants and in the form of loans.[99] Out of the total, US$1.2 billion were loan-aid.[100]

Ireland which received US$146.2 million through the Marshall Plan, received US$128.2 million as loans, and the remaining US$18 million as grants.[101] By 1969 the Irish Marshall Plan debt, which was still being repaid, amounted to 31 million pounds, out of a total Irish foreign debt of 50 million pounds.[102] The UK received US$385 million of its Marshall Plan aid in the form of loans.[100] Unconnected to the Marshall Plan the UK also received direct loans from the US amounting to US$4.6 billion.[100] The proportion of Marshall Plan loans versus Marshall Plan grants was roughly 15% to 85% for both the UK and France.[103]

Germany, which up until the 1953 debt agreement had to work on the assumption that all the Marshall Plan aid was to be repaid, spent its funds very carefully. Payment for Marshall Plan goods, "counterpart funds", were administered by the Reconstruction Credit Institute, which used the funds for loans inside Germany. In the 1953 debt agreement, the amount of Marshall Plan aid that Germany was to repay was reduced to less than US$1 billion.[104] This made the proportion of loans versus grants to Germany similar to that of France and the UK.[103] The final German loan repayment was made in 1971.[105] Since Germany chose to repay the aid debt out of the German Federal budget, leaving the German ERP fund intact, the fund was able to continue its reconstruction work. By 1996 it had accumulated a value of 23 billion Deutsche Mark.[106]

The Central Intelligence Agency received 5% of the Marshall Plan funds (about $685 million spread over six years), which it used to finance secret operations abroad. Through the Office of Policy Coordination money was directed toward support for labor unions, newspapers, student groups, artists and intellectuals, who were countering the anti-American counterparts subsidized by the communists. The largest sum went to the Congress for Cultural Freedom. There were no agents working among the Soviets or their satellite states.[107] The founding conference of the Congress for Cultural Freedom was held in Berlin in June 1950. Among the leading intellectuals from the US and Western Europe were writers, philosophers, critics and historians: Franz Borkenau, Karl Jaspers, John Dewey, Ignazio Silone, James Burnham, Hugh Trevor-Roper, Arthur Schlesinger Jr., Bertrand Russell, Ernst Reuter, Raymond Aron, Alfred Ayer, Benedetto Croce, Arthur Koestler, Richard Löwenthal, Melvin J. Lasky, Tennessee Williams, Irving Brown, and Sidney Hook. There were conservatives among the participants, but non-communist (or former communist) leftists were more numerous.[108]

One of the numerous posters created to promote the Marshall Plan in Europe. Note the pivotal position of the American flag. The blue and white flag between those of Germany and Italy is a version of the Trieste flag with the UN blue rather than the traditional red.

The Marshall Plan was originally scheduled to end in 1953. Any effort to extend it was halted by the growing cost of the Korean War and rearmament. American Republicans hostile to the plan had also gained seats in the 1950 Congressional elections, and conservative opposition to the plan was revived. Thus the plan ended in 1951, though various other forms of American aid to Europe continued afterward.

The years 1948 to 1952 saw the fastest period of growth in European history. Industrial production increased by 35%. Agricultural production substantially surpassed pre-war levels.[70] The poverty and starvation of the immediate postwar years disappeared, and Western Europe embarked upon an unprecedented two decades of growth that saw standards of living increase dramatically. Additionally, the long-term effect of economic integration raised European income levels substantially, by nearly 20 percent by the mid-1970s.[109] There is some debate among historians over how much this should be credited to the Marshall Plan. Most reject the idea that it alone miraculously revived Europe, as evidence shows that a general recovery was already underway. Most believe that the Marshall Plan sped this recovery, but did not initiate it. Many argue that the structural adjustments that it forced were of great importance. Economic historians J. Bradford DeLong and Barry Eichengreen call it "history's most successful structural adjustment program."[110] One effect of the plan was that it subtly "Americanized" European countries, especially Austria, through new exposure to American popular culture, including the growth in influence of Hollywood movies and rock n' roll.[111]

The political effects of the Marshall Plan may have been just as important as the economic ones. Marshall Plan aid allowed the nations of Western Europe to relax austerity measures and rationing, reducing discontent and bringing political stability. The communist influence on Western Europe was greatly reduced, and throughout the region, communist parties faded in popularity in the years after the Marshall Plan. The trade relations fostered by the Marshall Plan helped forge the North Atlantic alliance that would persist throughout the Cold War in the form of NATO. At the same time, the nonparticipation of the states of the Eastern Bloc was one of the first clear signs that the continent was now divided.

The Marshall Plan also played an important role in European integration. Both the Americans and many of the European leaders felt that European integration was necessary to secure the peace and prosperity of Europe, and thus used Marshall Plan guidelines to foster integration. In some ways, this effort failed, as the OEEC never grew to be more than an agent of economic cooperation. Rather, it was the separate European Coal and Steel Community, which did not include Britain, that would eventually grow into the European Union. However, the OEEC served as both a testing and training ground for the structures that would later be used by the European Economic Community. The Marshall Plan, linked into the Bretton Woods system, also mandated free trade throughout the region.

Dutch 10 guilder coin commemorating the 50th anniversary of the Marshall Plan, 1997.

While some historians today feel some of the praise for the Marshall Plan is exaggerated, it is still viewed favorably and many thus feel that a similar project would help other areas of the world. After the fall of communism, several proposed a "Marshall Plan for Eastern Europe" that would help revive that region. Others have proposed a Marshall Plan for Africa to help that continent, and US Vice President Al Gore suggested a Global Marshall Plan.[upper-alpha 3] "Marshall Plan" has become a metaphor for any very large-scale government program that is designed to solve a specific social problem. It is usually used when calling for federal spending to correct a perceived failure of the private sector.

Nicholas Shaxson comments: "It is widely believed that the plan worked by offsetting European countries' yawning deficits. But its real importance ... was simply to compensate for the US failure to institute controls on inflows of hot money from Europe. ... American post-war aid was less than the money flowing in the other direction."[113] European hot money inflated the US dollar, to the disadvantage of US exporters.

The Organisation for European Economic Co-operation (OEEC) took the leading role in allocating funds, and the OEEC arranged for the transfer of the goods. The American supplier was paid in dollars, which were credited against the appropriate European Recovery Program funds. The European recipient, however, was not given the goods as a gift but had to pay for them (usually on credit) in local currency. These payments were kept by the European government involved in a special counterpart fund. This counterpart money, in turn, could be used by the government for further investment projects. Five percent of the counterpart money was paid to the US to cover the administrative costs of the ERP.[114] In addition to ERP grants, the Export-Import Bank (an agency of the US government) at the same time made long-term loans at low interest rates to finance major purchases in the US, all of which were repaid.

In the case of Germany, there also were 16 billion marks of debts from the 1920s which had defaulted in the 1930s, but which Germany decided to repay to restore its reputation. This money was owed to government and private banks in the US, France, and Britain. Another 16 billion marks represented postwar loans by the US. Under the London Debts Agreement of 1953, the repayable amount was reduced by 50% to about 15 billion marks and stretched out over 30 years, and compared to the fast-growing German economy were of minor impact.[115]

Large parts of the world devastated by World War II did not benefit from the Marshall Plan. The only major Western European nation excluded was Francisco Franco's Spain, which was highly unpopular in Washington. With the escalation of the Cold War, the United States reconsidered its position and in 1951 embraced Spain as an ally since it was encouraged by Franco's aggressive anti-communist policies. Over the next decade, a considerable amount of American aid would go to Spain but less than its neighbors had received under the Marshall Plan.[116]

The Soviet Union had been as badly affected as any other part of the world by the war. The Soviets imposed large reparations payments on the Axis allies that were in its sphere of influence. Austria, Finland, Hungary, Romania, and especially East Germany were forced to pay vast sums and ship large amounts of supplies to the Soviet Union. Those reparation payments meant the Soviet Union itself received about the same as 16 European countries received in total from Marshall Plan aid.[117]

In accordance with the agreements with the Soviet Union, shipment of dismantled German industrial installations from the west began on March 31, 1946. Under the terms of the agreement, the Soviet Union would in return ship raw materials such as food and timber to the western zones. In view of the Soviet failure to do so, the western zones halted the shipments east, ostensibly on a temporary basis, although they were never resumed. It was later shown that the main reason for halting shipments east was not the behavior of the Soviet Union but rather the recalcitrant behavior of France.[118] Examples of material received by the Soviets were equipment from the Kugel-Fischer ballbearing plant at Schweinfurt, the Daimler-Benz underground aircraft-engine plant at Obrigheim, the Deschimag shipyards at Bremen-Weser, and the Gendorf powerplant.[119]

The Soviets established COMECON as a riposte to the Marshall Plan to deliver aid for Eastern Bloc countries, but that was complicated by the Soviet efforts to manage their own recovery from the war. The members of Comecon looked to the Soviet Union for oil and in turn provided machinery, equipment, agricultural goods, industrial goods, and consumer goods to the Soviet Union. Economic recovery in the East was much slower than in the West, resulting in the formation of the shortage economies and a gap in wealth between East and West. Finland, which the Soviets forbade from joining the Marshall Plan and was required to give large reparations to the Soviets, saw its economy recover to pre-war levels in 1947. France, which received billions of dollars through the Marshall Plan, similarly saw its average income per person return to almost pre-war level by 1949.[120] By mid-1948 industrial production in Poland, Hungary, Bulgaria, and Czechoslovakia had recovered to a level somewhat above pre-war level.[121]

German sign indicating "agriculture counseling supported by the overseas aid program of the U.S.A."

Bradford DeLong and Barry Eichengreen conclude it was "History's Most Successful Structural Adjustment Program." They state:

It was not large enough to have significantly accelerated recovery by financing investment, aiding the reconstruction of damaged infrastructure, or easing commodity bottlenecks. We argue, however, that the Marshall Plan did play a major role in setting the stage for post-World War II Western Europe's rapid growth. The conditions attached to Marshall Plan aid pushed European political economy in a direction that left its post World War II "mixed economies" with more "market" and less "controls" in the mix.[110]

• Dulles' Plan
• Foreign policy of the United States
• Timeline of United States diplomatic history
• Milton Katz
• GITP (example of a company that was built with Marshall aid)

• Media related to Marshall Plan at Wikimedia Commons
• Marshall Plan from the National Archives
• George C. Marshall Foundation
• The German Marshall Fund of the United States
• Excerpts from book by Allen W. Dulles
• Speech by J.F. Byrnes, United States Secretary of State, Restatement of Policy on Germany, Stuttgart, September 6, 1946. The speech marked the turning point away from the Morgenthau Plan philosophy of economic dismantlement of Germany and toward a policy of economic reconstruction.
• Marshall Plan Commemorative Section: Lessons of the Plan: Looking Forward to the Next Century
• Truman Presidential Library online collection of original Marshall Plan documents from the year 1946 onward Archived 2019-03-29 at the Wayback Machine
• "The Tragedy of American Diplomacy? Rethinking the Marshall Plan" by Michael Cox and Caroline Kennedy-Pipe and Response by Marc Trachtenberg, both published in the Journal of Cold War Studies, vol. 7, no. 1 (Winter 2005)
• Speech by George Marshall on June 5, 1947 at Harvard University (original recording)
• As delivered transcript of Marshall Plan speech on June 5, 1947 at Harvard University