The Marshall Plan — Rebuilding Europe

Blueprint for Recovery, continued ...

The use of counterpart funds provides another example of how the Marshall Plan worked as a shared enterprise. These funds comprised the local currency equivalent of American grants, which the Economic Cooperation Act required participating countries to set aside in special accounts jointly controlled by the ECA and the governments involved. Such an arrangement forced both sides to negotiate their differences, which sometimes were considerable, and to reach an agreement that made expenditures possible. In Britain, counterpart funds were used to liquidate the Bank of England’s short-term public debt. In the Netherlands, they helped to contain inflation, underwrite a program of land reclamation, and provide low-cost housing for industrial workers. In France, they supported the Monnet Plan for industrial modernization and re-equipment. In Italy, they were earmarked for a variety of industrial and agricultural projects and for a public-works program to absorb part of the large pool of unemployed labor.

All across Europe, the landmarks of this joint enterprise still stand. In Berlin, Marshall aid reconstructed a power station that had earlier been dismantled as reparations. In Austria, it played a part in building the Limberg Dam and other components in a vast hydroelectric project. In Greece, it helped to reopen the Corinth Canal and restore the famous Orient Express, which once again linked Greece to Western Europe. And in other participating countries, it went to upgrade the manufacturing, mining, transportation, and communications industries. Some of the most notable projects included the Usinor steel mills and the Génissiat hydroelectric project in France, the Finsider and Falck steel plants in Italy, the Margram rolling mill in Great Britain, and the Donawitz and Linz steel mills in Austria.

The Path to Prosperity

The spirit of cooperation evidenced in the execution of the Marshall Plan was born of more than need. Americans and Europeans were linked by a system of shared values. In the 20th century, a commitment to productivity formed part of the common culture, and one particularly important to a program of economic recovery. The goal was to promote industrial efficiency in Europe. The vehicles for achieving this goal included a variety of technical assistance projects, engineering schemes, and productivity surveys launched in Europe with the aid of American experts, and a host of productivity teams of European workers and managers who came to the United States to study agricultural and industrial production methods. Out of these efforts, all believed, would come a new day of economic progress and social stability in Europe. By the middle of 1951, the Economic Cooperation Administration had expended nearly $30 million on a dazzling array of technical assistance projects. In addition to projects that aimed at increasing efficiency and raising productivity in industry and agriculture, the list included a plan to expand electric power facilities in Greece, a program of veterinary research in Britain, and a number of schemes to improve public administration in Italy, Greece, and other participating countries.

By that time, moreover, hundreds of European productivity teams had toured the United States and scores of American experts had traveled to the participating countries and their overseas territories. The ECA maintained 372 experts overseas in the second quarter of 1951 alone and sponsored 145 productivity teams involving more than 1,000 European labor, management, and agricultural representatives. In addition, the ECA used technical assistance funds to conduct seminars for European managers, to sponsor training programs for European engineers, and to distribute technical and scientific information through films, literature, and exhibits.

As in other areas, the Europeans cooperated in these projects and made a contribution of their own. Labor and management leaders from Great Britain and the United States organized the Anglo-American Council on Productivity. By the end of 1951, the council had sponsored visits to the United States by 66 British productivity teams, disseminated over 500,000 copies of their reports, and published major studies on standardization and simplification in industry.

Other participating countries followed this example. They organized national production councils and worked through the Organization for European Economic Cooperation to launch an intra-European technical assistance program under which national groups of cooperating labor, management, and professional leaders began exchanging technical information and production data.

The results of this dissemination are impossible to estimate, but neither the ECA nor the participating countries doubted that technical assistance added measurably to Europe’s economic revival. In France, technical assistance enhanced the Monnet Plan for industrial redevelopment. In Germany, it accelerated earlier trends toward the rationalization of industry. In other countries, it led to improved engineering and marketing methods, to important technological adaptations, and to the spread of industrial planning, the growth of automation, and the better organization of production.

The integration of the Western European economies also looms as one of the great achievements of the postwar era and one for which the Marshall Plan can take a due share of credit. The architects of the Marshall Plan celebrated the benefits of economic integration and did what they could to bring it about. The strategic assumptions behind their policy held that an integrated economic order, particularly one headed by central institutions, would help to channel the revitalized strength of the Federal Republic of Germany in a constructive way. Economic integration would reconcile West Germany’s recovery with the security concerns of her neighbors, thereby creating a unit of power in the West sufficient to contain Soviet power in the East.

With these goals in mind, the designers of the Marshall Plan tried to strengthen the OEEC and liberalize intra-European trade so that coordinated planning and normal market forces could weld separate economies into a single productive unit. They also encouraged the Council of Europe and helped to found the European Payments Union, forerunner of the European Monetary System. In addition, they threw their weight behind the Schuman Plan (proposed in 1950) and the coal and steel community that grew out of it, just as they would support the larger European Economic Community that followed.

The Birth of New Europe

The Europeans were less enamored than the Americans with the integrative powers of the market. The British government rejected integration altogether, and the other participating governments refused to go as far in this direction as the Americans wanted. Nor did the Marshall Plan preclude the British from pursuing socialist policies, the French from adopting a modernization scheme that assigned the state a greater role than the Americans thought desirable, or the Germans and Italians from following fiscal and monetary strategies at odds with those favored in the Economic Cooperation Administration. American policy succeeded in large part because it encouraged participating countries to exercise a high degree of autonomy within the framework of the Marshall Plan. Although an American plan, it placed a premium on European self-help and did not break down when the Europeans devised plans and programs of their own.

There were differences, to be sure, but they were always overshadowed by the common vision that bonded the American Marshall Planners to their friends and allies on the other side of the Atlantic. Together they saw a new Europe emerging from the rubble and the ruin of war with restored life and fresh vitality. And who can say that they did not go a long way toward turning the dream into reality? Viewed against the pattern of bilateralism that existed in 1947 or from the perspective of the Treaty of Rome concluded a decade later, it seems clear that recovery planners helped to set Western Europe on a road that led from the economic autarchy of the 1930s to the Common Market of the 1960s. Nor was this the only gain. Through the Organization for European Economic Cooperation and the Council of Europe, through the European Payments Union and the Schuman Plan, this generation of American and European policy makers also created an institutional framework that stood in lieu of a final peace settlement in the West. It was this framework that set the stage for a historic rapprochement between ancient enemies and led to West Germany’s reintegration into the North Atlantic community. The Marshall Plan, as defined by Marshall in his historic commencement address, was “directed ... against hunger, poverty, desperation, and chaos.” Measured against this criterion, it must be judged a great success. It succeeded in the revival of economic growth, the containment of Soviet expansion, and the stabilization of democratic politics. It also laid a hardy foundation for transatlantic cooperation on a myriad of economic and political issues — and for an Atlantic community that remains vital and growing today.

Next>>> George Catlett Marshall