The Marshall Plan
On 5 June 1947 at a Conference at Harvard University Truman’s Secretary of State, George C. Marshall, announced the American plan for European reconstruction. In order to eliminate “hunger, poverty, desperation and chaos”, the real enemies of freedom and democracy, and to restore “the confidence of the European people in the economic future of their own countries”, Marshall proposed cash grants to all European nations subject to two conditions: European states were to co-operate in the distribution of American aid; and They had to progressively abolish trade barriers.
All European nations were invited to participate in the Marshall Plan, even the Soviet Union if it contributed some of its resources to the cause. Stalin called the Plan a capitalist plot and forced all countries under his control that had expressed interest in the Plan to withdraw. The British Foreign Secretary at that time, Ernest Bevin, told the UK Parliament that when the Marshall proposals were announced, he grabbed them with both hands. So did other European countries.
As a result of the Marshall Plan US$13.6 billion was transferred to Europe, in addition to US$9.5 billion in earlier loans and US$500 million in private charity.8 The Marshall Plan was a huge success as it helped to restore Western European trade and production while controlling inflation. By 1951 Western Europe was booming.
However, not only the Plan itself but, most importantly, the manner in which it was administered greatly contributed to the unity of Europe. Initially, 16 European countries participated in the Plan: Austria, Belgium, Denmark, France, Greece, Iceland, Ireland, Italy, Luxembourg, The Netherlands, Norway, Portugal, Sweden, Switzerland, Turkey and the United Kingdom. West Germany joined the Plan later, and thus through economic co-operation West Germany was reconciled with other European countries.
Under the leadership of France and the United Kingdom, the Committee for European Economic Co-operation was set up, and later replaced by the permanent Organization for European Economic Co-operation (OEEC), to plan and distribute American aid.
The main features of the administration of the Plan were:
- Co-operation among its participants in order to stabilize their economies;
- Intensified planning at the inter-governmental level and thus development of a global approach toward economic recovery;
- Limited nationalization in all participating States; and
- Co-operation between private and public sectors in order to free market forces, modernize production and raise productivity.
The success of reconstruction through centrally coordinated planning and co-operation made clear that the best way for Europe to recover its international prestige was to act as a single entity in world markets. As a result of economic co-operation within the framework of the Marshall Plan, various European organizations began to emerge in order to strengthen inter-governmental integration in political, military and economic matters. One of those organizations was the ECSC, established on the basis of the Schuman Plan.
