What Is the 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).

Key Takeaways

  • The Marshall Plan is named for U.S. Secretary of State George Marshall, who proposed it in 1947.
  • The plan gave $13 billion in foreign aid to European countries that had been devastated physically and economically by World War II.
  • By the time the plan ended, in 1951, all the countries who received aid saw their economies grow to better than prewar levels.

Understanding the Marshall Plan

The Marshall Plan gave more than $13 billion in aid to European nations—including its World War II enemies, Germany and Italy—and was crucial in revitalizing their post-war economies. By the time U.S. funding ended, in 1951, the economies of all the European recipients had surpassed prewar levels. For this reason the plan was considered a success.

The definition of the Marshall Plan lay in a simple concept. The secretary of state believed that 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.

The U.S. proposed the Marshall Plan because it was the only country in World War II that had not suffered damage as a result of the fighting.

History of the Marshall Plan

Marshall 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 that the Marshall Plan was a way to meddle in the internal affairs of European countries. That belief prevented Soviet satellite countries, such as Poland and Czechoslovakia from accepting assistance from the United States. It also caused, at least in part, the Soviet Union’s economy to be significantly outpaced by those of Western Europe and the U.S.

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, plus 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 is worth more than $130 billion in 2019 dollars.

The Marshall Plan was more than an economic one. The secretary of state thought that the cooperation of all European nations would lead to greater unity. The foundation 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.

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.”