What was the Marshall Plan? Definition and meaning

The Marshall Plan was an American program to help Western Europe after World War II with financial aid worth nearly $13 billion (about $120 billion in the dollar’s 2016 value). Officially called the European Recovery Program, it is seen as the most successful international aid and nation building program ever.

The plan was named after the American Secretary of State at the time, General George Marshall.

At the end of World War II, General Marshall proposed giving aid to Western Europe to reconstruct its war-torn economies.

The United States and Canada gave approximately one percent of their GDPs between 1948 and 1952.

The Marshall PlanNamed after General George Marshall, the Marshall Plan was probably the most successful international aid program in history. It formed part of the ‘Truman Doctrine’ – President Harry Truman’s foreign policy strategy to counter Soviet geopolitical spread during the Cold War. (Images: 1. General George Marshall – oecd.org. 2. President Harry Truman – whitehouse.gov. 3. Washington Post – loc.gov/exhibits)

According to the Oxford Living Dictionaries, by definition, the Marshall Plan was:

“A program of financial aid and other initiatives, sponsored by the US, designed to boost the economies of western European countries after the Second World War.”

“It was originally advocated by Secretary of State George C. Marshall and passed by Congress in 1948. Official name European Recovery Program.”

Marshall Plan implementation decided locally

Unlike most aid programs today, how the Marshall Plan money was to be spent was decided by the European nations. That is probably why the whole arrangement was so successful.

The Organization for European Economic Cooperation (OEEC) administered the aid. In 1961, the OEEC became the OECD (Organization for Economic Co-operation and Development).

Devastation after WWII GermanyHad it not been for the Marshall Plan, famine in Germany and other parts of Europe may have killed millions of citizens. (Image: marshallfoundation.org)

The aid initially consisted of shipments of food, staples, machinery, and fuel from North America, and later included investment in industrial capacity.

Whenever an international aid plan to rebuild a war-torn economy today is discussed, the term ‘Marshall Plan’ will emerge somewhere.

Marshall Plan – the need

World War II left European economies devastated. Millions of people had been wounded or killed. Residential and industrial centers across France, Germany, the United Kingdom, Poland, Belgium, Italy and other parts of the continent lay in ruins.

Agricultural production had been so disrupted by war that many parts of Europe were on the brink of a major famine.

The transportation infrastructure was a fraction of what it had been before the war. The world’s only major power that had not been damaged in any significant way was the United States.

Gioanni Agnelli Marshal Plan quoteGiovanni ‘Gianni’ Agnelli (1921-20013), the richest person in modern Italian history, was an influential Italian industrialist and principal shareholder of Fiat. He controlled 4.4% of Italy’s GDP and 3.1% of the nation’s workforce. (Image: Wikipedia)

In an article –Introduction and Chronology of the Marshall Plan, written by Thorsten V. Kalijarvi, which today is kept at the US Library of Congress, the author wrote:

“Europe, prior to the Second World War, was a densely populated continent supported by a well-developed and integrated economy consisting of agriculture, industry, and trade.”

“The war shattered this economy and wrought such unprecedented destruction that two years after the defeat of Germany, the whole continent still floundered in an economic morass, and it was doubtful that Europe could every recover completely without the assistance of the United States.”

Before the Marshall Plan had started, from 1945 to the end of 1947, the US had already been helping the European recovery with direct financial aid. The US had been helping Turkey and Greece with military assistance, while the United Nations was providing humanitarian assistance.

General George Marshall

At the beginning of 1947, President Harry Truman appointed General George Marshall, who had been the architect of victory during World War II (WWII), to be Secretary of State.

Under General Marshall’s leadership, with expertise provided by William Clayton, George Kennan and others, the Marshall Plan concept was crafted within just a few months.

In a speech delivered at Harvard University on June 5th, 1947, he announced the Marshall Plan to the world. A plan aimed at rebuilding the economies as well as the spirits of Western Europe, primarily.

General Marshall said that the key to restoring political stability lay in revitalizing the economies of the region. He also believed that the prevention of the spread of communism across the continent was only possible with a politically stable and economically strong Western Europe.

From 1948 to 1952, the Western European nations GDPs (gross domestic products) grew at a rate never seen before in history.

The resulting economic prosperity, led primarily by coal and steel industries, helped shape the Common Market – today called the European Union.

The ‘Marshall Plan’ speech, 1947

The following quote is from General Marshall’s speech at Harvard University on June 5th, 1947:

“Aside from the demoralizing effect on the world at large and the possibilities of disturbances arising as a result of the desperation of the people concerned, the consequences to the economy of the United States should be apparent to all.”

“It is logical that the United States should do whatever it is able to do to assist in the return of normal economic health in the world, without which there can be no political stability and no assured peace. Our policy is directed not against any country or doctrine but against hunger, poverty, desperation and chaos.”

“Its purpose should be the revival of a working economy in the world so as to permit the emergence of political and social conditions in which free institutions can exist. Such assistance, I am convinced, must not be on a piecemeal basis as various crises develop.”

“Any assistance that this Government may render in the future should provide a cure rather than a mere palliative. Any government that is willing to assist in the task of recovery will find full co-operation I am sure, on the part of the United States Government. Any government which maneuvers to block the recovery of other countries cannot expect help from us.”

“Furthermore, governments, political parties, or groups which seek to perpetuate human misery in order to profit therefrom politically or otherwise will encounter the opposition of the United States.”

Video – Marshall Plan – Definition and Meaning

President Harry Truman’s appeal to the US Congress to approve aid to help the European nations rebuild and stop the Soviet Union’s expansion of communism across the continent became known as the Truman Doctrine. His appeal laid the groundwork for the Marshall Plan, a massive aid program to get Western Europe back on its feet.