The Marshall Plan

by Benn Steil

  ON JUNE 26, HILDE SPIEL, the Vienna-born writer who had settled in London before the war, talked her way onto an American military aircraft from Frankfurt to Berlin. Warned of the risk of hostile Soviet air maneuvers, she was ordered to don a parachute. The plane shook violently as it entered the narrow, turbulent corridor permitted by the Soviets.

  Disembarking unsteadily after vomiting, she found a city in a state of high tension. Berliners out scavenging for food returned to crumbling homes with no electricity, the main source having been cut off in the East. The drone of Allied supply planes overhead was relentless. The roars frightened Spiel, reminding her of the Blitz. But, strangely, the enemy was still invisible. At the theater, Russians greeted her as before. She didn’t know what to make of it.30

  A currency war had just broken out, but the effects had yet to sink in. A week earlier, on June 18, Clay, with Robertson and Koenig, the British and French military governors, had given Sokolovsky a mere few hours’ notice before publicly declaring the currency changeover in the west of the country (though not Berlin), which would take place on Sunday the 20th. The angry Russian general called the move “illegal” and promised “actions to protect the economy of the Soviet zone.”31

  On June 19, the Soviets announced that “banknotes issued in the Western occupation zones will not be allowed to circulate in the Soviet zone or in ‘Greater Berlin,’ which is situated in the Soviet zone and is economically a part thereof.” Fearing disorder in the Eastern zone, which would be flooded with old reichsmarks declared worthless in the West, Moscow also blocked all interzonal passenger traffic and incoming road traffic, while instituting an inspection regime for inbound trains. Use of the deutschmark in the east was banned.

  Refusing to acknowledge the legitimacy of the transport restrictions, Clay, after warning Soviet officials, sent in a train to challenge them. Following a thirty-six-hour standoff, its crew was overpowered and a Soviet locomotive hauled it back to Helmstedt, on the western frontier.

  Unable to provision his garrison by ground, Clay began ferrying in supplies by air.32 As tensions climbed, currency experts from each side argued bitterly over solutions for Berlin. On June 22, the Americans offered a proposal for a new Berlin currency, under four-power administration. The Soviets rejected it. The British offered a compromise, with the Allies accepting the Soviet mark but placing it under four-power control. Western access rights would be restored. The Soviets, however, spurned all notions of combined control or guaranteed access rights. “We give notice to you and to the German population of Berlin,” they told the Allies, “that we shall apply . . . sanctions that will ensure that only one currency will circulate in Berlin” as of June 26, “the currency of the Soviet zone.”33 This, Clay concluded, “would have placed Berlin financially completely in Soviet hands.”34 The Allied governors declared the Soviet decree invalid in the west of the city, and threatened to introduce the deutschmark in their sectors if the Soviets went ahead.

  The local Berlin city government, the Magistrat, which functioned with limited authority allowed it by the ACC, now found itself in an impossible political situation. Whose orders would it obey? After emotional debate, it ruled that the Soviet order did not apply outside the Soviet sector. But the elected City Council had the final word. On June 23, the Soviets shuttled in hundreds of SED demonstrators in army trucks hours in advance of its 4 p.m. meeting. With raucous commotion in the hall delaying the start for several hours, the members voted to back the Magistrat. As legislators exited the building into the throngs of protesters, Soviet-sector police helped them identify those who had voted with the West. Many were severely beaten.

  That same day, the Soviets announced the introduction of their own east mark into Berlin and eastern Germany, effective June 24. Gummed stamps were attached to old reichsmark bills until new bills were ready. On the 24th, Allied officers declared the Soviet initiative null and void in West Berlin and introduced the deutschmark into the city. To keep room for compromise, though, the bills were stamped with a “B” to distinguish them from non-Berlin deutschmarks. This would facilitate withdrawal at a later date.

  Sokolovsky announced that the Allied military government had ceased to exist, and began isolating the three western sectors with a full-scale blockade. He suspended all road, rail, and barge traffic to and from the sectors owing to unspecified “technical difficulties.” He cut off electricity and food supplies from the east because of “coal shortages” and the need to prevent western currency from circulating illegally. He moved eight Soviet combat divisions into assembly points near the interzonal border. Reports emerged of Russian barrage balloons being placed near Tempelhof airfield in the American sector to disrupt landings.

  The French had once again been dragged along against their will. Berlin Commandant General Jean Ganeval warned Clay of “incalculable consequences which will undoubtedly not be confined to Berlin.” Bidault thought “the Western powers [would] find it very difficult to stay there for more than a few weeks unless there [were] a radical change in relations with the Soviet authorities.” Those authorities were in turn receiving reports from their “leading comrades in [eastern] Germany,” indicating that “the Western powers would [soon] be forced to . . . surrender their positions in Berlin to the Soviet Union.”

  Clay remained defiant. By the end of June, 480 relief flights were landing each day, one plane every three minutes. “I may be the craziest man in the world,” he told Berlin’s SPD leader Ernst Reuter, “but I’m going to try the experiment of feeding this city by air.”35

  A BLACK MARKET MONEY EXCHANGE sprang up near west Berlin’s zoo train station, by the Tiergarten. East marks, which circulated freely in the west, traded at four or five to one against west marks, which were banned in the east. Newspapers sold in east marks, though their printing was paid for in west marks. Sugar sold in east marks; raisins in west marks. Potatoes were priceless, having not been seen in weeks. Still, most Berliners, 84 percent in one poll, believed the Allies would sustain the city with adequate food. When the Soviets offered to feed West Berliners who registered in the East a mere 2,050 (out of 2.4 million) showed up.36

  In western Germany broadly, the new Allied currency, combined with price decontrols and other liberalizing reforms overseen by bizonal economics director Ludwig Erhard, had an immediate regenerative effect on business. “Almost overnight, hoarded goods in manufacturing plants began to move to the stores,” Clay wrote to Byrnes. “Even fruits and vegetables from the farm once more went on sale in the market place. . . . Germany is going back to work. . . . [T]he people on the street visibly have taken a new hold on life.”37

  Yet at the time the outlook was ominous. There were now two police forces in the city. Two water and sewage systems. Two gas and light systems—though those in the West operated only during daylight.

  Hilde Spiel could feel the change that had swept over Berlin since she arrived a few short weeks ago. Russian officials she knew well were now indifferent or hostile. Being no cold warrior herself, she was dismayed by the change. “Between us and the Russians,” she lamented in her diary, “it is all over.”

  The East Berlin Tägliche Rundschau newspaper announced that the Soviet Military Administration was now “the only legitimate occupation authority” in the city. Rumors spread rapidly, fueled by radio reports, that the water supply was threatened by a power cutoff to the city sewage plants and that the western powers were evacuating. As Clay and other Allied authorities tried to reassure Berliners, Reuter and fellow city leaders organized mass meetings—one bringing out over eighty thousand—to rally resistance, to call out the Communists for using starvation as a weapon, and to appeal to the Allies for protection and support.38

  The Soviets, meanwhile, struggled to communicate one message to Germany and another about Germany to the nations they dominated in the East. In an effort to, on the one hand, undermine the “so-called Marshall plan,” the Warsaw Declaration of the East bloc foreign ministers condemned it for placing
West German industry into “the fetters of the American . . . capitalist monopolies.” One of the centerpieces of this policy, it said, was currency reform, the creation of a new west mark, which by serving the interest of such monopolies created unemployment and misery. Western Germany was being forced into “enslavement,” put to the service of “the military-strategic aims” of Washington and London and the emerging western security alliance. In an effort to, on the other hand, justify the Soviet Union’s ever-expanding control in eastern Europe, the declaration invoked the specter of German “militarism,” which the Anglo-American plan sought to revive and direct eastward.39 In the end, the Soviets failed to convince either Germans or their East European victims that they were defending them or their interests.

  Soviet and western soldiers and police intermingled in Berlin in an atmosphere of crisis. When Sokolovsky’s car was stopped for speeding in the western zone, guns were drawn and angry words exchanged before the two sides backed down. The general returned to his headquarters without further incident. But a mistake on either side could have triggered a violent confrontation that would have been difficult to contain.

  An intense, belated debate now raged within the Truman administration over Western vulnerability in Berlin. How far would the Soviets go? Would they starve Berliners? How would they react if ignored or resisted? Was the Allied presence in Berlin still tenable? What were the costs of withdrawing?

  “We are in Berlin by right,” an emotional Kennan wrote to a friend, “and do not propose to be ridden out by any blackmail.” The United States could not abandon Berlin, or “the world would know well enough that we are turning 2,400,000 people over to all the rigors and terrors of totalitarian rule.”40 Others in the administration, however, were unsure it could be avoided, the president included—though he was determined to try.

  For his part, Stalin was unwilling to part with Moscow’s unassailable right under Potsdam: veto power over the political architecture of Germany—all of it. “The most complete expression of [America’s] aggressive interests is the incorporation of West Germany and the Ruhr . . . into the ‘Marshall Plan,’ ” wrote foreign ministry official D. Ignatiev:

  In order to preserve the military-industrial potential of the Ruhr and Western Germany as a whole, the Americans presented demands for the cessation of the dismantlement of German factories for reparations. . . . [This was] in violation of all existing quadripartite arrangements of the occupying powers. . . .

  “The Marshall Plan” is aimed at the transformation of the Ruhr and the whole of West Germany into the main military-industrial base of American imperialism in Europe and the transformation of Marshallized countries in the areas dependent on this base. . . .

  The Anglo-American economic policy in West Germany promotes German revisionist elements, which are campaigning against the Yalta and Potsdam decisions on the demilitarization of Germany and its obligations for damages caused by German aggression.41

  “If we were to lose Germany,” Molotov told satellite foreign ministers at a gathering in Warsaw on June 24, “we would have lost the war.”42 Two weeks later, as British intelligence would discover, Moscow secretly informed the ministers of its intention to take control of all Berlin.43

  The emerging showdown between Washington and Moscow, which would spread over the entire globe during the coming half century, for now seemed oddly fixed on a single city in central Europe. Berlin was a geopolitical black hole, one that was set to absorb ever more of the diplomatic energies of the two former war allies.

  BY LEGEND, THE “BERLIN AIRLIFT” was a bold and decisive response to defeat the blockade and prevent humanitarian disaster. Yet as a strategy it was neither bold nor decisive; it was neither intended to beat the blockade nor to feed Berliners indefinitely. No one in the Truman administration believed, at the time, that an airlift was more than a short-term expedient to keep options open. Defeating the blockade, it seemed certain, would require a military challenge. As for humanitarian concerns, these were raised primarily by those who believed the Allies needed to withdraw from the city. Moscow would then bring in supplies to curb unrest.

  Anticipating escalation after the Soviets shut down interzonal travel, the U.S. Army had begun to position supplies for an “air ferry” on June 18, a week before the full blockade began. The first C-47 flights flew in 5.9 tons of supplies to Tempelhof airfield on June 21. British Dakotas landed their first 6.5 tons at Gatow airfield on the 24th. Soon, massively laden planes would be rumbling over the city’s tattered roofs in quick succession, landing as often as one every three minutes. The Allies also began hitting back with a “counter-blockade,” halting shipments and traffic by rail and barge from western Germany into the eastern part. Allied officials wryly blamed “technical difficulties” of their own. Sokolovsky was, according to American intelligence reports, “greatly shocked” to discover how dependent the East was on coal, steel, machine tools, and industrial commodities from the West.44

  On July 3, the military governors reassembled in Berlin for a last effort to defuse the crisis on the ground.45 The atmosphere was heated. “How long do you plan to keep it up?” Clay demanded of Sokolovsky. “Until you stop your plans for a West German government,” he replied.46

  Truman had at first downplayed the crisis, referring to it as the “German currency squabble with Russia.” But Sokolovsky’s response made clear that the B-mark issue was secondary. As with the Marshall Plan, Stalin’s real concern was the political and military agenda that lay behind American economic interventions. Forever traumatized by the Nazi invasion in 1941, he was determined never again to leave his country vulnerable to German military capacity and intentions.

  The timing was, however, also inauspicious for compromise. Only a few days earlier, Stalin had expelled Tito’s Yugoslavia from the Cominform. This was “a new factor of . . . profound significance [that] has been introduced into the world communist movement by the demonstration that the Kremlin can be successfully defied by one of its own minions,” Kennan observed. “By this act, the aura of mystical omnipotence and infallibility which has surrounded the Kremlin power has been broken. The possibility of defection from Moscow, [heretofore] unthinkable, will from now on be present in one form or another.”47 With dangerous division within his own ranks, Stalin could ill-afford to show weakness over Germany.

  As for Truman, he told his staff that there was “nothing to negotiate. . . . Russia has never kept any of the agreements she has made.”48 Yet for all his legendary toughness, he was unwilling to confront Stalin at this stage. He pledged only to stay “as long as we could” without armed conflict. Nothing in the history of air logistics, north Europe’s weather, or Soviet behavior suggested that anything more was a responsible objective. An incident with Soviet personnel hampering western traffic could escalate into war. He feared an accidental conflict more than a deliberate one, with a “trigger-happy Russian pilot or hotheaded Communist tank commander” setting off a spiral of deadly response and counter-response.

  An airlift, however, was “obviously no solution,” Bohlen said. Clay initially saw it provisioning his garrisons only. It could not possibly, he told Pentagon officials, belying his earlier bluster, “supply the German civilian population with adequate coal and food.” Bevin took it as given that it would not “be possible to feed two million Germans” by air. He hoped only that a “big display [of] strength and determination” would boost German morale. “Such humanitarian action in the face of the ruthless Soviet policy of starving the Germans [for] political advantage,” he believed, “would show the Russians up in . . . world opinion.”

  Reuter agreed that Berliners would rally behind a show of will, but stressed that the city had barely a month’s supply of food left.49 It needed 1,300 tons a day, plus another 2,000 tons of coal, which required a much larger air operation. In Washington, the consensus was that the Allies had a two-month window to resolve the standoff. Ganeval thought the situation would be “absolutely hopeless” by the end of
July. The Soviets would then have “a knife at our throat.” Army chief of staff Omar Bradley agreed: “We must decide now whether we are willing to fight.”50

  Preparing to settle in for a diplomatic struggle, Truman was anxious to document the sources of Allied legal rights in the city. Yet the mass of diplomatic files assembled since Yalta offered the most meager basis for such rights. Ambassador Murphy blamed “a defective [wartime] agreement” with the Soviets, motivated by a naive American “outburst of faith and good will.”51 Faced now with the possibility of war if Truman were too aggressive, and a calamitous loss of credibility if he were too weak, impassioned advisers urged the president to move decisively in different directions.

  Clay led the hawkish wing. “I am convinced,” he cabled the Army in Washington, “that a determined movement of [armed] convoys . . . would reach Berlin and [would] prevent rather than build up Soviet pressures which could lead to war.” The Russians, he argued, did not want war. Intelligence reports indicated no abnormal troop movements, stockpiling activities, or other military preparations. They would therefore not likely interfere. The blockade was intended to drive out the B-mark and halt the creation of a West German government, not to starve the population. The latter would, in Murphy’s words, only undermine “Soviet political aims in Germany.” “Nevertheless,” Clay conceded, “I realize fully the inherent dangers in this proposal since once committed we could not withdraw.”52

  An armed convoy was a sound strategy if the Soviets were bluffing, but Clay was not consistently of that view. He had in fact told the French and British that war over Berlin was “inevitable” within eighteen months. If this were so, a convoy was reckless. There were only 6,500 western troops in Berlin, compared with 318,000 Soviet ones in Berlin and the surrounding eastern zone. Lieutenant General Curtis LeMay, commander of U.S. Air Forces in Europe, thought Soviet forces could overrun West Berlin in eight hours. Bevin and Robertson shared Clay’s assessment that the Soviets were bluffing, but thought the convoy scheme flawed. Robertson pointed out that the Soviets could simply stretch tanks out across the autobahn to block it. This would oblige Allied forces to shoot their way through, triggering escalation, or retreat.53 Lovett argued that the Soviets would just cut bridges in front of and behind the convoys, stranding them by blocking their advance and retreat.