The speech that made Europe
When George Marshall, Truman's secretary of state and former commander in chief of the US army visited Harvard to receive his honorary title in June 1047, the decision wasn't deemed too important by the press. The historians say his hosts at the university didn't know what he would say in his speech. But that speech marked the beginning of changes of enormous scale across post-war Europe. Within a single short paragraph, Marshall described the devastation in Europe and said it was logical that America would do whatever it takes to help restore the economic health of the world, because without a stable economy there could be no peace and stability anywhere. That day is considered the birthday of the Marshall Plan.
At that time, the European economies were ruined, the countries barely able to hold it together, trade was dead, as were the connections between the nations. The plan that Marshall and his advisors Dean Acheson and George F Kennan created intended not just to help the recovery. It would increase cooperation between the countries because this would put Europe's evil genie back into the bottle, nationalism. The other purpose was of course to stop the Sovietisation of Europe, because the communist parties had started to gain influence at an alarming rate: in Greece, Italy, France, Germany. The communist coup in Czechoslovakia in February 1948 provided the proof that finally convinced Congress that it should act swiftly.
A few days after Marshall's speech, the British and French foreign ministers met to plan a forum where the European countries would state their involvement in the initiative. The plan was formally opened to the socialist bloc as well, but the US knew very well the USSR would not accept it, because it would mean Germany would have to be treated as a united state. And that proved true: the Soviet foreign minister Molotov flounced from the Paris conference, and Moscow pressured all its socialist satellites to reject the plan, calling it "American imperialism". So 18 European countries remained on board, those that were not in the socialist bloc. Spain also remained out.
The result of the Marshall plan exceeded all expectations. For the period 1948-1951, the US donated 13 billion dollars (now 130 billion) to the European countries, and the scheme involved special agencies for each country that provided US goods like food, fuel, machines, and supervised how the money was being spent. Germany mostly used the funds for food, Italy and Greece restored their transport infrastructure, France made industrial investment, Britain paid some debts to support its currency. As one of the US historians noted, that speech quickly became a big international adventure, which inspired a lot of people and meant a lot to many people.
One of the elements of the Marshall Plan that is often overlooked is the forgiving of Germany's debt, and the encouragement of the other countries to do trade with Germany. Between 1948 and 1955, Germany's debts were practically written off, and the countries that were beneficients of the Marshall Plan were obligated not to demand their debts from Berlin while the country was paying back the US aid. In result, the German debt decreased from 300% of the GDP in 1948 to 20% by the end of the 50s. In the meantime, countries like France and Britain were still struggling with debt in the area of 200% of the GDP.
The success of the program was partly because it was not disconnected from the administration, and because it was being managed by Paul Hoffman, a businessman and former chairman of the Studebaker Corporation. At the end of that period, the economies had surpassed their pre-war levels, and European trade had increased dramatically. But more importantly, it had changed its direction. Now, instead of trading with their colonies, the European countries were relying on each other much more. The Paris conference gave rise to the Organisation for European Economic Cooperation, OECD. Six years later, the Rome accords came, starting the European Union.
The USSR also turned out correct in their fears: Marshall became the basis upon which the North Atlantic alliance was built. At the start of the Korea War in 1951 and the beginning of the Cold War, the US realised that re-arming the militaries of the West European countries and turning special attention to helping their military industrial complex (rather than just transferring US military equipment there) was crucial. This gave a push to turning NATO from a mere political consultative club into a real defense organisation.
It is a little-known fact that the plan was also accompanied by a large-scale propaganda where dozens of journalists and movie directors were passionately convincing the public in favour of the plan, persuading them to overcome their political differences, which the US feared could hinder the plan's adoption.
Now 70 years after this huge idea was conceived an realised, the plan's success continues to inspire politicians all over the world. In fact, the EU funds are de facto embodiment of the same idea. They are the tax that West Europe is paying for the development of other parts of the continent that could then be added to the big European family, for the sake of everyone's prosperity. Now other regions want a similar plan for themselves, like Africa, Greece, even the French city suburbs. Indeed, some ideas are so good that they end up living very long.
At that time, the European economies were ruined, the countries barely able to hold it together, trade was dead, as were the connections between the nations. The plan that Marshall and his advisors Dean Acheson and George F Kennan created intended not just to help the recovery. It would increase cooperation between the countries because this would put Europe's evil genie back into the bottle, nationalism. The other purpose was of course to stop the Sovietisation of Europe, because the communist parties had started to gain influence at an alarming rate: in Greece, Italy, France, Germany. The communist coup in Czechoslovakia in February 1948 provided the proof that finally convinced Congress that it should act swiftly.
A few days after Marshall's speech, the British and French foreign ministers met to plan a forum where the European countries would state their involvement in the initiative. The plan was formally opened to the socialist bloc as well, but the US knew very well the USSR would not accept it, because it would mean Germany would have to be treated as a united state. And that proved true: the Soviet foreign minister Molotov flounced from the Paris conference, and Moscow pressured all its socialist satellites to reject the plan, calling it "American imperialism". So 18 European countries remained on board, those that were not in the socialist bloc. Spain also remained out.
The result of the Marshall plan exceeded all expectations. For the period 1948-1951, the US donated 13 billion dollars (now 130 billion) to the European countries, and the scheme involved special agencies for each country that provided US goods like food, fuel, machines, and supervised how the money was being spent. Germany mostly used the funds for food, Italy and Greece restored their transport infrastructure, France made industrial investment, Britain paid some debts to support its currency. As one of the US historians noted, that speech quickly became a big international adventure, which inspired a lot of people and meant a lot to many people.
One of the elements of the Marshall Plan that is often overlooked is the forgiving of Germany's debt, and the encouragement of the other countries to do trade with Germany. Between 1948 and 1955, Germany's debts were practically written off, and the countries that were beneficients of the Marshall Plan were obligated not to demand their debts from Berlin while the country was paying back the US aid. In result, the German debt decreased from 300% of the GDP in 1948 to 20% by the end of the 50s. In the meantime, countries like France and Britain were still struggling with debt in the area of 200% of the GDP.
The success of the program was partly because it was not disconnected from the administration, and because it was being managed by Paul Hoffman, a businessman and former chairman of the Studebaker Corporation. At the end of that period, the economies had surpassed their pre-war levels, and European trade had increased dramatically. But more importantly, it had changed its direction. Now, instead of trading with their colonies, the European countries were relying on each other much more. The Paris conference gave rise to the Organisation for European Economic Cooperation, OECD. Six years later, the Rome accords came, starting the European Union.
The USSR also turned out correct in their fears: Marshall became the basis upon which the North Atlantic alliance was built. At the start of the Korea War in 1951 and the beginning of the Cold War, the US realised that re-arming the militaries of the West European countries and turning special attention to helping their military industrial complex (rather than just transferring US military equipment there) was crucial. This gave a push to turning NATO from a mere political consultative club into a real defense organisation.
It is a little-known fact that the plan was also accompanied by a large-scale propaganda where dozens of journalists and movie directors were passionately convincing the public in favour of the plan, persuading them to overcome their political differences, which the US feared could hinder the plan's adoption.
Now 70 years after this huge idea was conceived an realised, the plan's success continues to inspire politicians all over the world. In fact, the EU funds are de facto embodiment of the same idea. They are the tax that West Europe is paying for the development of other parts of the continent that could then be added to the big European family, for the sake of everyone's prosperity. Now other regions want a similar plan for themselves, like Africa, Greece, even the French city suburbs. Indeed, some ideas are so good that they end up living very long.