Marshall Plan

DEFINITION of 'Marshall Plan'

The Marshall Plan was a U.S.-sponsored program implemented following World War II to aid European countries that had been destroyed as a result of the war. It was laid out by U.S. Secretary of State George Marshall during an address at Harvard University in 1947. The plan was authorized by Congress as the European Recovery Program (ERP).

BREAKING DOWN 'Marshall Plan'

The Marshall Plan gave more than $13 billion in aid to European nations and was key in revitalizing their post-war economies. By the time U.S. funding ended in 1951, the economies of all the European recipients had surpassed pre-war levels. For this reason, the plan was considered a success. The cornerstone of the Marshall Plan lay in a simple concept. The secretary of state believed the stability of European governments depended on the economic stability of the people. Europe needed to rebuild transportation hubs, roads, agriculture, factories and cities that suffered major losses during the long war. The United States was the only major power that had not suffered damage during the war. It made sense that America step in to help rebuild.

Marshall also saw communism as a threat to European stability. The Soviet Union's sphere of influence increased during World War II, and tensions between eastern and western Europe intensified. The Soviet Union believed the Marshall Plan was a way to meddle in internal affairs of European countries. That belief prevented Poland and Czechoslovakia from accepting assistance from the United States.

Implementation

The $13 billion plan started with shipments of food and staples to European ports in the Netherlands and France. Tractors, turbines, lathes and other industrial equipment, and the fuel to power the machines, arrived soon afterward. Between 1948 and 1951, as much as 3% of what Americans produced went to the recovery effort in Europe. Accounting for inflation, the $13 billion aid package was worth $88 billion 50 years after Congress approved the plan.

The Marshall Plan was more than an economic one. The secretary of state thought the cooperation of all European nations would lead to greater unity. The foundations of the plan led to the creation of NATO as a defensive alliance against any future aggressors. Marshall earned the Nobel Peace Prize in 1953 for his efforts, but the lasting effects of the plan went well into the future.

Effects

The reliance on American aid opened up trading avenues between Europe and the United States. The call for unity among European nations formed the basic idea behind the European Union. Without American intervention, Europe's vast network of railroads, highways and airports would not exist in contemporary society. As President Harry Truman said, the United States was the "first great nation to feed and support the conquered."

Trading Center