The Marshall Plan Today - Research Paper Example

Paper on the Marshall Plan. The Marshall plan which was officially known as the European Recovery Program(ERP)was an initiative developed by America at the end of WWII whose aim was to help the European economies to recover hence overcoming the soviet communism which threatened to take over(DeCONDE, 2002, p95) The allied powers had bombed and leveled whole cities and the Germans had efficiently destroyed all cities which they had previously occupied, an American diplomat described it as “ the odor of death was everywhere,” there was no shelter available to the large masses of survivors of war and farmlands and crops despoiled with massive livestock deaths and slaughters. The WWII also produced the most radical change in international power structure in over 500 years. The ERP lasted for four years from the April of 1948. (WERNER, 2011, p402). America was responding to the problems and strife faced by the European nations, e.g. the rebuilding of devastated infrastructure by removing trade barriers hence modernizing industries and in the whole making Europe regain its prosperity once again. This is the birth of the Marshall plan however the term is used invariably top mean a “large scale economic rescue program” In the early stages the soviets were offered inclusion in the plan however they declined since they viewed acceptance of the offer would ultimately mean a US control over the soviet communism albeit a small degree(GILLON,2012, p18) HOW DID IT HELP INITIALLY Although Europe was aware that there were mixed motives behind the American aid plan, the European countries eagerly embraced the plan. On 12th July 1947 the following countries and others met in Paris to create the CEEC (committee of European Economic Cooperation), Austria, Denmark, Belgium, Greece, France, Ireland, Iceland, Luxemburg, Italy, among others (SULLIVAN, 1997, p16). At any one time there were 150 American ships plying the trade routes carrying the much needed commodities for factories to resume production. The factories were able to employ workers who in turn had the power to purchase goods, in a sense the European were given a new lease of life (MEE, 1984, p248). Between the years of 1948 – 1952, tons of fuel, food and finished products crossed the Atlantic to Europe. There was a rise in industrial production which reached the previous levels before the war by 1959.ERP was noted to have had the best impact in West Germany, here the foreign trade was doubled between the years 1949 & 1950and grew again by ¾ the following year. Steel production grew from 2.5 million tons to 14.5 million tons, unemployment decreased to nearly zero and houses were built hence West Germany could support its growing population which also include the refugees from East Germany (MEE, 1984, p255). In Short, the Marshall Plan exceeded its expectations because in just four years industrial production increased and grew by 2/3 and agricultural production by 25% which was the same rate which the GDP grew by, (AGNEW, 2004, p197). ERP’s intangible benefits were: promotion of dialog and economic cooperation between enemies, raising European moral and boosting their confidence of the future (AGNEW, 2004, p211) IMPLEMENTATION OF THE MARSHALLLL PLAN The very first aid that was substantial went to the twin economies of Greece and Turkey in January of 1947, the two countries were seen as the leaders of the anti-communism expansion factions in Europe, and they were also already getting aid from the turner doctrine. Britain was also an initial supporter of the two countries however they too had suffered under WWII and they pulled out in 1947 however they sent a request to US to continue with the Aid efforts. The ECA’s (Economic Cooperation Administration) official mission statement was to provide the boost that the European economies needed in order to promote European industrial production, bolster the economies while facilitating international trade especially by the US which needed Europe to gain enough wealth to afford the US Imports. An unofficial goal of the ECA was to contain the soviet influence over the European economies because there was increasing growth in the strengths of the communism parties in Italy, France and Czechoslovakia. The ERP money was transferred to the European States governments and the money was jointly administered by the ECA and the local governments. There was an ECA envoy placed in each European nation’s capital who usually was a business man of great renown, his work was to provide advice on the whole process of using the funds. Since the fund relied on cooperation between the various sectors of the economy panels of business, government and labor leaders were established in order to determine where and how the fund would be best used. The ERP’s fund was generally to be used to buy from the US, the European nations had already exhausted what was left in their foreign exchange reserves and were relying on the ERP fund as the only way to import goods to the nations. At the onset of the aid the funds were used to import the staple goods such as fuel and food, but with the passage of time the fund went to the purchase of goods that were to be relied on for the purpose of reconstruction which had been the initial intention of the fund. Later still, after the outbreak of the Korean War, the Aid was used in the strengthening of the Militaries of Western Europe. In 1951 the 13 Billion allotted funds were spent as such by Midyear, 3.2 Billion went to the purchase of food, feed, and fertilizer purchase, 3.4 billion to the import of raw materials and semi manufactured goods, 1.9 to machines, equipments and vehicles finally 1.6 went to fuel.(HOGAN, 1987, p415) Another program was also started which was the counterpart funds, this fund used the money from the ERP fund to start funds in the local currency. 60% of the fund was to be used in industrial investment according to ECA rules. This was huge in West Germany. This fund administered by the government played an important role in lending to private enterprises and played the crucial role in reindustrialization for example, 40% of the total money invested in the coal industry came from this fund (CRAFTS, TONIOLO, 1996, p464). EFFECTS AND CRITICISMS The ERP was planned to cease existence in 1953, indeed the increased costs of the Korean War and rearmament halted any efforts to extend its life, the plan was thus stopped in 1952 but other forms of American aid to Europe continued thereafter. The plan is credited to the fact that between the years of 1948 – 1952 there was exponential growth in Europe in fact the fastest growth rate ever recorded in Europe. Industrial production went up by 35% while the agricultural output exceeded substantially the pre – war levels (WETTIG, 2008, p145 The starvation and poverty levels associated with post war years disappeared in a few years and Western Europe had two decades of unprecedented growth that raised the standard of living dramatically. Although the Marshall Plan did not initiate this growth (Western Europe economies were showing signs of growth) it however sped up the overall growth rate. The ERP focused on raising the nutritional material for all citizens (especially children) so that it shed a positive light on the goals of the plan helping to defeat the communism threats. The Marshall Plan changed countries by “Americanizing” them for instance Austria took in popular culture e.g. Rock and Roll and Hollywood.(BISCHOF, PELINKA & STIEFEL, 2000, p174- 175) The Marshall Plan also had political effects which were equally important as their economic counterparts, the plan allowed Western Europe Nations to bring about political stability, they did this by relaxation of the austerity measures & rationing also by quieting discontent and the overall discomfort. Communist parties which had been strong in the early post-war years faded and were lost altogether in the years after the Marshall Plan. Trade relations that were started and fuelled by the Marshall plan helped in forging the North Atlantic Alliance which prevailed throughout the cold war. The Plan also helped to highlight the division in the continent since there was non - participation by the Eastern European Bloc of Nations. Since the Americans and most of the European leaders were of the view that European regional integration was necessary for the peace and prosperity of Europe, they used the Marshall Plan’s Guideline as a blueprint for later structures. The OEEC did not last long but it provided the testing ground for the structures which were later used by the European Coal & Steel Community which eventually ended up as the European Union. Other structures such as the European Economic Community (EEC) which was created by the 1957 Treaty of Rome worked towards the creation of a common market within 12 -15 years and an equal economic policy throughout the borders hence ensuring free and fair competition and ending of price manipulations (URWIN, 1995, p80) also can trace its roots to the Marshall Plan. REFERENCES Agnew, John ed. And J. Nicholas Entrikin, ed. The Marshall Plan Today: Model and Metaphor. New York: Routledge, 2004. HC240 .M375 2004 Bischof, Gunter, Anton Pelinka, and Dieter Stiefel. "Contemporary Austrian Studies." The Marshalll Plan in Austria. New Brunswick, NJ: Transaction, 2000. 174-75. Crafts, Nicholas, and Gianni Toniolo, eds. Economic Growth in Europe since 1945. Cambridge University Press, 1996. DeConde Alexander .Encyclopedia of American foreign policy (2002) Volume 1. Gillon Steven. M. “The American Paradox:A History of The United States Since 1945”(2007) ISBN-13: 978-1-133-30985-7 Hogan, Michael J. The Marshall Plan: America, Britain, and the Reconstruction of Western Europe, 1947–1952. Cambridge: Cambridge University Press, 1987. Mee, Charles L. Jr. The Marshall Plan: The Launching of the Pax Americana. New York: Simon and Schuster, 1984. HC240 .M385 1984 Sullivan, Scott. From War to Wealth: 50 Years of Innovation. Paris: Organization for Economic Co-Operation and Development, (1997). HC241 .S85 1997 Urwin, Derek W. The Community of Europe: A History of European Integration Since 1945. London: Longman, 1995. HC241 .U78 1995 Werner Lapsansky, J Emma. United States History: Modern America. Boston, MA: Pearson Learning Solutions, 2011. Wettig, Gerhard (2008). Stalin and the Cold War in Europe. Rowman & Littlefield. ISBN 0- 7425-5542-9  Read More