Transformative program was inspiration for several modern institutionsBy Michael Buchanan
Washington -- When President Bush touched down in Slovenia June 9 for his last major visit to Europe, he set foot on a continent that has reinvented itself. From the devastation and division of World War II to the thriving European Union of today, Europe has experienced a renewal that has roots 60 years ago in the American Marshall Plan.
On April 3, 1948, U.S. President Harry Truman signed the Economic Recovery Act of 1948, which became known as the Marshall Plan after a speech given at Harvard University by Secretary of State George Marshall. Soon after becoming law, American aid shipments were flooding into Europe, and European leaders were taking the first steps of coordination that would lead to the formation of the European Union.
By the time the Marshall Plan ended at the beginning of 1952 -- five years after Marshall’s initial speech -- the United States had invested $13.3 billion, and the years 1948 to 1952 had recorded the fastest economic growth in European history.
At the time, British Foreign Secretary Ernest Bevin called the plan “a lifeline to sinking men” and an act of “generosity … beyond belief.” In 1947, Europe survived one of the worst winters in recorded history, and experts were predicting financial and social collapse.
MARSHALL’S SPEECH
“I need not tell you that the world situation is very serious,” Marshall -- a former soldier widely respected for his honesty and administrative skills -- began after a few introductory remarks. He went on to describe dire economic and social breakdowns that were bankrupting the European continent as it struggled to recover from the devastation of World War II.
Two years after the end of the war, Europeans had no products to sell for hard currency. Because of the money shortage, farmers were not able to sell their food. This resulted in a breakdown of economic activity and fear of widespread starvation while families and governments rapidly drained their savings to buy necessities. In Germany, money was so worthless that most purchases were made by trading cigarettes.
“Thus, a very serious situation is rapidly developing which bodes no good for the world,” Marshall said. “The modern system of the division of labor upon which the exchange of products is based is in danger of breaking down.”
Over the next three to four years, Europe required massive amounts of imported food and essential products, but had no way to pay for them.
“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,” Marshall said. “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.”
Marshall’s initial speech offered few details. Before the United States could move forward with large amounts of aid, “there must be some agreement among the countries of Europe” about how to spend the money, he said.
EUROPEAN REACTION
Within weeks, European governments -- led by France and Britain -- began drafting Marshall’s spending plan. The first request, for $29 billion in aid over four years, was rejected by the United States. Eventually, the parties cut the request in half.
Congress funded the first $5 billion for 18 months, with the remaining money appropriated only after careful review. The spending plan actually concluded about six months early, due to the outbreak of the Korean War and to the improving economic situation in Europe.
As European leaders first met to discuss the plan in July 1947, an editorial in LIFE -- an influential U.S. weekly magazine -- stated: “What Americans like about the Marshall Plan is that it points toward the triumph of a rational idea.” While history often is far from rational, it continued, “the Marshall Plan is a reminder that problems do have rational solutions, that some ideas are better than others, and that it is even possible to think them up well in advance of a crisis.”
TODAY’S EUROPEAN INSTITUTIONS
The Marshall Plan’s requirement for economic coordination set in motion a series of events and policy decisions that evolved into the modern institutions of European cooperation.
In March 1948, Britain, France and the Benelux countries (Belgium, the Netherlands and Luxembourg) signed a treaty establishing a military pact, aimed at collective defense as well as fostering cultural and economic integration. They sought more U.S. involvement, and the negotiations led, in April 1949, to the founding of NATO, which continues to integrate the defense of its democratic member nations.
In May 1950, former French Prime Minister Robert Schuman proposed joint management of the French and West German coal and steel industries. The “Schuman Plan” led in 1951 to the formation of the European Coal and Steel Community by West Germany, France, Italy and the Benelux countries. This led, in 1957, to the Treaty of Rome, which established Europe’s first full customs union, the European Economic Community, which is considered the founding organization of the modern European Union.
On the 60th anniversary of Marshall’s speech, the EU encompassed 27 nations and 500 million people, with a combined gross domestic product (GDP) of $14 trillion, exceeding the GDP of the United States.
On April 3, 1948, U.S. President Harry Truman signed the Economic Recovery Act of 1948, which became known as the Marshall Plan after a speech given at Harvard University by Secretary of State George Marshall. Soon after becoming law, American aid shipments were flooding into Europe, and European leaders were taking the first steps of coordination that would lead to the formation of the European Union.
By the time the Marshall Plan ended at the beginning of 1952 -- five years after Marshall’s initial speech -- the United States had invested $13.3 billion, and the years 1948 to 1952 had recorded the fastest economic growth in European history.
At the time, British Foreign Secretary Ernest Bevin called the plan “a lifeline to sinking men” and an act of “generosity … beyond belief.” In 1947, Europe survived one of the worst winters in recorded history, and experts were predicting financial and social collapse.
MARSHALL’S SPEECH
“I need not tell you that the world situation is very serious,” Marshall -- a former soldier widely respected for his honesty and administrative skills -- began after a few introductory remarks. He went on to describe dire economic and social breakdowns that were bankrupting the European continent as it struggled to recover from the devastation of World War II.
Two years after the end of the war, Europeans had no products to sell for hard currency. Because of the money shortage, farmers were not able to sell their food. This resulted in a breakdown of economic activity and fear of widespread starvation while families and governments rapidly drained their savings to buy necessities. In Germany, money was so worthless that most purchases were made by trading cigarettes.
“Thus, a very serious situation is rapidly developing which bodes no good for the world,” Marshall said. “The modern system of the division of labor upon which the exchange of products is based is in danger of breaking down.”
Over the next three to four years, Europe required massive amounts of imported food and essential products, but had no way to pay for them.
“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,” Marshall said. “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.”
Marshall’s initial speech offered few details. Before the United States could move forward with large amounts of aid, “there must be some agreement among the countries of Europe” about how to spend the money, he said.
EUROPEAN REACTION
Within weeks, European governments -- led by France and Britain -- began drafting Marshall’s spending plan. The first request, for $29 billion in aid over four years, was rejected by the United States. Eventually, the parties cut the request in half.
Congress funded the first $5 billion for 18 months, with the remaining money appropriated only after careful review. The spending plan actually concluded about six months early, due to the outbreak of the Korean War and to the improving economic situation in Europe.
As European leaders first met to discuss the plan in July 1947, an editorial in LIFE -- an influential U.S. weekly magazine -- stated: “What Americans like about the Marshall Plan is that it points toward the triumph of a rational idea.” While history often is far from rational, it continued, “the Marshall Plan is a reminder that problems do have rational solutions, that some ideas are better than others, and that it is even possible to think them up well in advance of a crisis.”
TODAY’S EUROPEAN INSTITUTIONS
The Marshall Plan’s requirement for economic coordination set in motion a series of events and policy decisions that evolved into the modern institutions of European cooperation.
In March 1948, Britain, France and the Benelux countries (Belgium, the Netherlands and Luxembourg) signed a treaty establishing a military pact, aimed at collective defense as well as fostering cultural and economic integration. They sought more U.S. involvement, and the negotiations led, in April 1949, to the founding of NATO, which continues to integrate the defense of its democratic member nations.
In May 1950, former French Prime Minister Robert Schuman proposed joint management of the French and West German coal and steel industries. The “Schuman Plan” led in 1951 to the formation of the European Coal and Steel Community by West Germany, France, Italy and the Benelux countries. This led, in 1957, to the Treaty of Rome, which established Europe’s first full customs union, the European Economic Community, which is considered the founding organization of the modern European Union.
On the 60th anniversary of Marshall’s speech, the EU encompassed 27 nations and 500 million people, with a combined gross domestic product (GDP) of $14 trillion, exceeding the GDP of the United States.
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