The Marshall Plan:
Design, Accomplishments, and Relevance to the Present¹

The Plan was a joint effort between the United States and Europe and among
European nations working together. Prior to formulation of a program of assistance,
the United States required that European nations agree on a financial proposal,
including a plan of action committing Europe to take steps toward solution of its
economic problems. The Truman Administration and the Congress worked together
to formulate the European Recovery Program, which eventually provided roughly
$13.3 billion of assistance to 16 countries.

Two agencies implemented the program, the U.S. Economic Cooperation
Administration (ECA) and the European-run Organization for European Economic
Cooperation. The latter helped insure that participants fulfilled their joint obligations
to adopt policies encouraging trade and increased production. The ECA provided
dollar assistance to Europe to purchase commodities - food, fuel, and machinery and
leveraged funds for specific projects, especially those to develop and rehabilitate
infrastructure. It also provided technical assistance to promote productivity,
guaranties to encourage U.S. private investment, and approved the use of local
currency matching funds.

....

Economic Integration. The United States had a view of itself as a model for the development of Europe, with individual countries equated with American states. As such, U.S. leaders saw a healthy Europe as one in which trade restraints and other barriers to interaction, such as the inconvertibility of currencies, would be eliminated. The ERP required coordinated planning for recovery and the establishment of the OEEC for this purpose. In 1949, the ERP Authorization Act was amended to make it the explicit policy of the United States to encourage the unification of Europe.²⁵ Efforts in support of European integration, integral to the original Plan, were strengthened at this time.

The Marshall Plan, A Strategy that Worked²

In Europe the clash of imported and native models provided the energy to set the great 1950s boom going. The European Recovery Program had supplied the spark to set the chain reaction in motion. In 1957 came the Treaty of Rome, which launched the European Economic Community. Although this scheme of fledgling economic integration was far less radical than the American visionaries of 1949 had demanded, of the inheritance left by the Marshall Plan and its promises, none was more concrete. This founding document initiated Europe's peaceful economic integration, a process that continues to this day.

Summary of the Department's Position on the Content of a European Recovery Plan³
 

• Essential Elements.  Concrete proposals for area-wide recovery of agriculture and basic industries -- coal, steel, transport, and power -- which are fundamental to viable European economy.
   
• Progressive replacement of bilateral trading arrangements by more effective multilateral arrangements for expanding intra-European trade, looking if possible, toward an eventual European Customs Union.
   
• "While in many respects the long-run gains of European economic integration in terms of specialization of production and economic location -- achieved ideally through both a customs and a currency union -- would be the most beneficial consequences of a recovery program, these goals must be put in perspective in relation to more urgent short-run needs.
   
• Role of the UN.  "Department supports fullest practicable use of United Nations bodies and specialized agencies in carrying out of program.  This includes continued international allocation of coal through ECE Coal Committee and food through IEFC Committees, and technical planning work in ECE Committees on transport and power.  Sympathetic to assignment to ECE of additional functions related to program.  But Dept recognizes that coordination of European program and integration of UN activities with needs of this special program will probably have to be retained in organization composed only of participants (including bizonal Germany).  In view possibilities systematic obstruction to ECE effectiveness, special European recovery organization must be able to handle entire program and must be prepared to assume promptly functions assigned to other organizations if they prove ineffective. 
   
• Continuing Organization.  Dept recognizes that present Conference cannot possibly make complete blueprint for European recovery over next several years.  Initial program must conform to all above elements, but many details of its application will remain for further study.  Modifications are also to be expected during negotiations with the U.S. before acceptance and in continuing development of any accepted program.  Emphasis should be given to major role of continuing organization of participating countries (plus bizonal German area), both in implementing and in progressively refining any agreed program.

The Marshall Proposal of Assistance to Europe⁴

The flow of goods may be impeded by insurmountable obstacles to trade.  These problems are being dealt with by the I.T.O., but it is possible that specific regional arrangements applicable to certain parts of Europe may establish definite areas of "freer trade".  This cannot,  however, be a short-run development; and then it is well not to forget that today the most formidable hindrances to normal trade are found in the foreign exchange regulations and the dwindling monetary reserves, necessitating a cut in imports - hindrances which should be partially, if not wholly, removed by the application of the Marshall programme. 

Main Objectives of American Policy:

1. Restore an international monetary system of sufficient stability for the most rigid controls to be removed

2. Reduce trade barriers to foreign trade, in particular quantitative restrictions and various obnoxious forms of discrimination (one of the provisions of the lend-lease agreements and now the principal objective of the International Trade Organization)

3. To contribute by sound loans to the reconstruction of war-stricken countries (one of the objectives of the International Bank for Reconstruction and Development)

[Different Stages of Tackling the problem.]  The methods of coordination applied by the European countries participating in the Marshall programme will be decided upon at the July meetings in Paris.  The first task will be to prepare a plan for action in the autumn of 1947.  But only a limited number of problems will find their solution at so early a date.  There are, of course, greater tasks confronting the European countries, including such questions as a freer movement of population, which may more easily be solved on a regional basis for Europe than for the world as a whole.