The Marshall Plan

by Benn Steil

  126 Kennan to Douglas, May 11, 1949, in FRUS, 1949, III: 872–73.

  127 The United States Delegation at the Council of Foreign Ministers to Truman and Webb, May 24, 1949, in FRUS, 1949, III: 917; Interview with Acheson, Wire III, July 16, 1953, Folder: “July 15–16, 1953,” Box 79, Princeton Seminars File, Acheson Papers, Truman Library: 7–8 (italics added); The United States Delegation at the Council of Foreign Ministers to Truman and Webb, May 26, 1949, in FRUS, 1949, III: 923–24; Acheson, memorandum on CFM, undated [1949], Folder: “Notes for Meetings,” Box 78, Princeton Seminars File, Acheson Papers, Truman Library: 6.

  128 Acheson, off-the-record press conference, Folder: “January–June 1949,” Box 72, Press Conferences File, Secretary of State File, Acheson Papers, Truman Library: 2–5. See also interview with Acheson, Reel 2, July 16, 1953, Folder: “July 15–16, 1953,” Box 79, Princeton Seminars File, Acheson Papers, Truman Library: 31.

  129 Interview with Acheson, Wire III, July 16, 1953, Folder: “July 15–16, 1953,” Box 79, Princeton Seminars File, Acheson Papers, Truman Library: 5–6; Acheson, memorandum on CFM, undated [1949], Folder: “Notes for Meetings,” Box 78, Princeton Seminars File, Acheson Papers, Truman Library.

  130 The United States Delegation at the Council of Foreign Ministers to Truman and Webb, May 28, 1949, in FRUS, 1949, III: 928.

  131 Pechatnov and Edmondson (2001:144).

  132 Nitze (1989:72).

  133 Interview with Acheson, Wire III, July 16, 1953, Folder: “July 15–16, 1953,” Box 79, Princeton Seminars File, Acheson Papers, Truman Library: 8; The United States Delegation at the Council of Foreign Ministers to Webb, May 30, 1949, in FRUS, 1949, III: 929–30; “United States Delegation Minutes of the 12th Meeting of the Council of Foreign Ministers, Paris, June 4, 1949,” in FRUS, 1949, III: 954.

  134 Interview with Acheson, Wire III, July 16, 1953, Folder: “July 15–16, 1953,” Box 79, Princeton Seminars File, Acheson Papers, Truman Library: 8.

  135 Acheson, memorandum of conversation, May 30, 1949, in FRUS, 1949, III: 935–36.

  136 “United States Delegation Minutes of the First Part of the 20th Meeting of the Council of Foreign Ministers, Paris, June 14, 1949,” in FRUS, 1949, III: 997–99.

  137 State Department: https://2001-2009.state.gov/r/pa/ho/time/lw/107185.htm.

  138 Status of the CFM, June 7, 1949, Folder: “1949: Paris Conference [May–June],” Box 142, Conferences File, President’s Secretary’s Files, Truman Papers, Truman Library.

  139 Bohlen, memorandum of conversation, June 6, 1949, in FRUS, 1949, III: 960–62; Status of the CFM, June 7, 1949, Folder: “1949: Paris Conference [May–June],” Box 142, Conferences File, President’s Secretary’s Files, Truman Papers, Truman Library.

  140 George P. Hays to Joseph O’Hare, May 31, 1949, in FRUS, 1949, III: 803–4.

  141 George P. Hays to Joseph O’Hare, June 8, 9194, in FRUS, 1949, III: 807.

  142 Murphy, memorandum, “Comments on JCS Analysis,” June 1, 1949, in FRUS, 1949, III: 825–26.

  143 Acheson to Webb, June 5, 1949, in FRUS, 1949, III: 826–27.

  144 Webb, memorandum, “Meeting with the President, June 7, 1949,” in FRUS, 1949, III: 830.

  145 “Communiqué of the Sixth Session of the Council of Foreign Ministers,” June 20, 1949, in FRUS, 1949, III: 1062–65; Interview with Acheson, Wire IV, July 16, 1953, Folder: “July 15–16, 1953,” Box 79, Princeton Seminars File, Acheson Papers, Truman Library: 3–1; Acheson to Douglas, May 11, 1949, in FRUS, 1949, III: 873.

  146 Acheson, memorandum of conversation, June 11, 1949, in FRUS, 1949, III: 980.

  147 Acheson to Webb, June 14, 1949, in FRUS, 1949, III: 995.

  148 Harrington (2012:294).

  149 See, for example, Kempe (2011).

  150 Interview with Acheson, Wire V, July 16, 1953, Folder: “July 15–16, 1953,” Box 79, Princeton Seminars File, Acheson Papers, Truman Library: 1.

  151 Interview with Acheson, Wire IV, July 16, 1953, Folder: “July 15–16, 1953,” Box 79, Princeton Seminars File, Acheson Papers, Truman Library: 11–12. I corrected Acheson’s recollection of the verse he sang and guessed the corresponding one in Bevin’s tune; I changed “elevator” to “lift” in Bevin’s part of the dialogue.

  152 Interview with Acheson, Wire V, July 9, 1953, Folder: “July 8–9, 1953,” Box 79, Princeton Seminars File, Acheson Papers, Truman Library: 1–3; Bohlen (1973:286); CFM memorandum, undated, Folder: “Notes for Meetings,” Box 78, Princeton Seminars File, Acheson Papers, Truman Library; The United States Delegation to the Council of Foreign Ministers to Webb, June 20, 1949, in FRUS, 1949, III: 1038–39; Acheson, memorandum on CFM, undated [1949], Folder: “Notes for Meetings,” Box 78, Princeton Seminars File, Acheson Papers, Truman Library: 14.

  153 Acheson to Webb, June 14, 1949, in FRUS, 1949, III: 995; Acheson, memorandum on CFM, undated [1949], Folder: “Notes for Meetings,” Box 78, Princeton Seminars File, Acheson Papers, Truman Library: 15. See Beisner (2006:110–11) on Acheson’s leadership style.

  154 Ivan H. Peterman, Philadelphia Inquirer, May 5, 1949, quoted in Department of the Army to Office of Military Government for Germany, May 6, 1949, Folder: “Annexes,” Box 10, Military Government of Germany File, Panuch Papers, Truman Library; New York Times (May 5, 1949); Smith (1990:525, 686).

  155 Behrman (2007:247, 252); Presidential Address to Be Given in Honor of George C. Marshall by Chiefs of Mission of the Marshall Plan Countries, at the Carlton Hotel, Washington, June 5, 1949, Folder: “1949, June 6, Dinner for George C. Marshall,” Box 39, Presidential Speech File, Clifford Papers, Truman Library; Vandenberg (1952:489); Truman, “Address at a Dinner in Honor of George C. Marshall,” June 5, 1949, in Public Papers of the Presidents: Harry Truman, 1949; New York Times (June 6, 1949).

  156 The Nobel Prize presentation speech is here: http://www.nobelprize.org/nobel_prizes/peace/laureates/1953/press.html (Hambro, “Presentation Speech”). Marshall’s acceptance speech is here: http://www.nobelprize.org/nobel_prizes/peace/laureates/1953/marshall-lecture.html (“Nobel Lecture: Essentials to Peace”).

  157 Bark and Gress (1989:244); Editorial Note in FRUS, 1949, III: 275.

  158 Adenauer (1965:183–84); Schulze (1998:301). The American high commissioner was John J. McCloy; the British high commissioner was former military governor Sir Brian Robertson.

  159 Bark and Gress (1989:223).

  160 McCloy to Acheson, November 25, 1949, in FRUS, 1949, III: 353.

  161 “Memorandum of Conversation Prepared in the Office of the United States High Commissioner for Germany,” November 13, 1949, in FRUS, 1949, III: 313.

  162 Alan G. Kirk to Webb, October 1, 1949, in FRUS, 1949, III: 276.

  163 Reedy (August 27, 1950).

  164 Editorial Note in FRUS, 1949, III: 531–32; Walworth Barbour to Acheson, October 13, 1949, in FRUS, 1949, III: 534; Walworth Barbour to Acheson, October 15, 1949, in FRUS, 1949, III: 535–36; Dennis (2000:47, 53).

  165 Orwell (October 19, 1945).

  CHAPTER 13: SUCCESS?

  1 Pechnatov and Edmondson (2001:88).

  2 Golombek (1977 [1997]:304); Soltis (1984 [2002]:95–96); Shenk (2006:49, 170).

  3 Soltis (1984 [2002]:78, 159, 161, 172, 189).

  4 Kennan, National War College lecture, “Soviet Diplomacy,” October 6, 1947, Folder 41, Box 298, Unpublished Works, Writings, Kennan Papers, Mudd Library, Princeton University.

  5 During chess games with Lady Howe in London in 1774, Franklin negotiated to arrest the slide to war between Britain and the American colonies. Shenk (2006:89, 93–94); Franklin (December 1786).

  6 Stimson and McCloy agreed with Kennan that the United States and the Soviet Union should have their respective “orbits,” but for the opposite reason: they believed it would facilitate genuine cooperation. Isaacson and Thomas (1986 [2012]:239, 264, 275); Harriman to Cordell Hull, September 20, 1944, in FRUS: Diplomatic Papers, 1944, IV: 993.

  7 Isaacson and Thomas (1986 [2012]:246); Kennan to Bohlen, February 1945, Fo
lder: “Kennan, George F., letters. 1945,” Box 27, Research Material, Witness to History, Books, Writings, Speeches and Writings File, Bohlen Papers, Library of Congress.

  8 Burnham (1990:83); Washington to Foreign Office, telegram, June 3, 1947, T236/782, Treasury Papers, UKNA.

  9 Eurostat (2011:1).

  10 Mutual Security Agency (1952:24), Supplement; Brown and Opie (1953:249).

  11 Recovery was particularly strong in countries that were not primary theaters in the war (such as the U.K. and much of Scandinavia).

  12 Eichengreen and Uzan (April 1992:16–19).

  13 Transfers under the Mutual Security Agency—which extended military, economic, and technical assistance through August 1, 1953—boosted the Marshall aid total further. By the end of 1951, U.S. military support funds for western Europe amounted to nearly $5 billion annually—or $46 billion today. See Price (1955:162).

  14 Eichengreen and Uzan (April 1992). The authors look at growth out to 1954 to account for lagged effects.

  15 Eichengreen and Uzan (April 1992:33–34, 65–69). Reymen (2004) challenges Eichengreen and Uzan’s numbers and inferences, but does find broad and significant Marshall effects operating other than through investment, the current account, or government spending.

  16 “The decision was made to make our main effort in the ERP one of meeting dollar deficits.” ECA Industry Division official Sol Ozer, interview with Roy Foulke, May 12, 1953, Folder: “January–June 1953,” Box 1, Oral History Interview File, Price Papers, Truman Library.

  17 See, for example, Chenery and Bruno (March 1962), Bacha (April 1990), and McKinnon (June 1964) on mechanisms by which foreign aid can, in principle, increase growth by alleviating fiscal constraints.

  18 Eichengreen and Uzan (April 1992:22–26).

  19 It can be argued, however, as I explain further on, that the British Labour government would have had a more difficult time financing its nationalization and welfare state agenda without Marshall aid.

  20 Eichengreen and Uzan (April 1992:31–32, 65).

  21 Eichengreen and Uzan (April 1992:26–31); DeLong and Eichengreen (November 1991).

  22 Kindleberger (1984:10–11).

  23 See, for example, Berger and Ritschl (1995).

  24 The literature offers other explanations, which, in Eichengreen and Uzan’s words, may be “of a subtler nature” (April 1992:49–50). One is that Marshall aid moderated conflictual labor relations and paved the path for the famed European “social contract.” (See also Maier [Autumn 1977]; Hogan [1987]; and DeLong and Eichengreen [November 1991].) Since this corporatist model is clearly very different from the American, the connection may be more tenuous than subtle.

  25 Kennan to Acheson, May 23, 1947, in FRUS, 1947, III: 224.

  26 “Statement of Secretary Acheson before Senate Foreign Relations Committee concerning ERP,” February 8, 1949, Folder: “July–December 1951,” Box 73, Press Conferences File, Secretary of State File, Acheson Papers, Truman Library.

  27 Reichlin (1995) documents the different ways in which Marshall countries chose to address stabilization challenges. Germany, for example, tackled inflation much more quickly and aggressively than France. Milward (2004) and Esposito (1994) offer more critical takes on the degree to which the United States was able to use counterpart funds to promote financial stabilization. They argue that U.S. influence was highly constrained by the need to keep non-Communists in power in France and Italy.

  28 Milward (2004:62); Eichengreen and Uzan (April 1992:37).

  29 Policy Planning Staff, report, “Review of Current Trends: U.S. Foreign Policy,” PPS/23, February 24, 1948, in FRUS, 1948, I: 512.

  30 Robert Oshins, interview by Harry B. Price, May 4, 1953, Folder: “January–June, 1953,” Box 1, Oral History Interview File, Price Papers, Truman Library.

  31 Behrman (2007:232); Hoffman (April 21, 1949).

  32 Behrman (2007:199, 209, 249).

  33 Eichengreen and Uzan (April 1992:42).

  34 Former State Department official Lincoln Gordon (1984:55) recalled Harvard economist Seymour Harris discussing this.

  35 ECA (1948–1951), Reports to Congress, June 1948–June 1951; Mutual Security Agency (1951); Mitchell (2007), Europe; Crafts (1995:261–62); Burnham (1990:106–7).

  36 Minford (1993:120). Eichengreen and Uzan (April 1992:34) estimate additional growth of about 1 percentage point for the U.K. in the first year of the Plan. It was two to seven times this for Austria, Belgium, Denmark, France, Germany, Italy, and the Netherlands.

  37 Hooker, memorandum, September 20, 1946, 711.61/9-2046, RG 59, National Archives.

  38 State Department, policy statement, “Great Britain,” June 11, 1948, in FRUS, 1948, III: 1092.

  39 Casella and Eichengreen’s (1993) paper gives the Marshall Plan considerable credit for halting inflation in Italy, but it was published a year before the book-length study of Esposito (1994), which demonstrates convincingly that this priority was homegrown.

  40 In early May, De Gasperi suggested to U.S. ambassador James Dunn that it was not wise to form a government without the Communists, but allegedly came away with the clear message that Washington wanted a “purged Cabinet.” De Gasperi is reported to have told Communist leader Togliatti: “You have to understand [that] it is a matter of bread,” meaning U.S. aid. Casella and Eichengreen (1993:330, 338–39); Montanelli and Cervi (1985:150); James C. Dunn to Marshall, memorandum, “Current Economic and Financial Policies of the Italian Government,” May 7, 1947, in FRUS, 1947, III: 901; James C. Dunn to Marshall, May 6, 1947, in FRUS, 1947, III: 893; Marshall to Embassy in Italy, May 15, 1947, in FRUS, 1947, III: 904.

  41 Esposito (1994); Kindleberger (1984:11).

  42 New York Times (June 2, 1948); New York Times (July 13, 1948).

  43 Carlisle (2015:223).

  44 Beevor and Cooper (1994 [2004]:15, 321–24).

  45 Beevor and Cooper (1994 [2004]:325); Esposito (1994:46, 50); David K. E. Bruce to Hoffman, September 14, 1948, in FRUS, 1948, III: 649.

  46 Statistical Office of the United Nations (various years); OEEC (1957); Mitchell (2007), Europe.

  47 OEEC (1957); Mitchell (2007), Europe.

  48 Esposito (1994:94–107).

  49 Esposito (1994:109).

  50 Correlates of War Project (June 2010); Singer, Bremer, and Stuckey (1972).

  51 The National Advisory Council was one of two advisory boards set up by the Foreign Assistance Act of 1948 to aid the ECA administrator. It consisted of the secretary of the treasury, the secretary of state, the secretary of commerce, the Fed chairman, the chairman of the Export-Import Bank, and the ECA administrator (as long as the ECA existed). Its purpose was to “coordinate the policies and operations of the representatives of the United States on the [IMF and World Bank boards] and of all agencies of the Government which make or participate in making foreign loans or which engage in foreign financial, exchange or monetary transactions.” Source: Legislative History of the Foreign Assistance Act of 1948, P.L. 80-472.

  52 National Advisory Council Staff Committee to National Advisory Council, “Use of French Franc Counterpart,” January 29, 1951, Box 5, Subject Files, Progr. Div.-Country Desk Section, ECA/OSR, RG 469, National Archives.

  53 See, for example, David K. E. Bruce to Dean Acheson, September 1, 1950, in FRUS, 1950, III: 1384.

  54 Esposito (1994:48–54); Marshall, memorandum of conversation with Queuille and others, November 18, 1948, in FRUS, 1948, III: 677–82.

  55 Esposito (1994:129); “Meeting for Discussion of the Italian Program, Viminale Palace, Rome,” September 11, 1948, Box 40, Country Files, Adm. Serv. Div.-Comm. Rec. Section, ECA/OSR, RG 469, National Archives.

  56 Mitchell (2007), Europe.

  57 ECA (1949).

  58 Casella and Eichengreen (1993:339–40).

  59 Esposito (1994:133–42); ECA (1949:35).

  60 Esposito (1994:172–79).

  61 Esposito (1994:190–96); Acheson to U.S. Embassy in Rome, December 2, 1950, in FRUS, 1950
, III: 1501–2.

  62 Esposito (1994:196); Harlan Cleveland to Leon Dayton, October 20, 1950, Box 10, Country Files, Progr. Dev.-Country Desk Section, ECA/OSR, RG 469, National Archives.

  63 The Saar only reverted to (West) Germany in 1957.

  64 Gareau (June 1961:530).

  65 See, for example, Julius C. Holmes to Acheson, September 1, 1949, in FRUS, 1949, III: 270.

  66 Murphy to Marshall, November 5, 1948, Folder: “Misc. Correspondence, 1948 Campaign [2 of 2],” Box 22, Political File, Clifford Papers, Truman Library.

  67 Smith (1990:294); Stuart Symington to Truman, “Interview with General Clay,” July 25–30, 1946, Truman Papers, Truman Library.

  68 New York Times (March 7, 1947); Gimbel (1968:150, 153, 164).

  69 Wolf (1993:32); Bidwell (1970:22–24).

  70 Krengel (1958).

  71 “In response to the crisis [of the winter of 1947, which put strain on the transport system when canals froze], the military authorities directed all efforts to the improvement of transport and by August 1947 the situation was improving. In January 1948, the rail network, rolling stock and waterways were in a satisfactory state—no longer a constraint on the growth of economic activity.” Source: Carlin (1989:44).

  72 Berger and Ritschl (1995:218–20).

  73 OEEC (1957); ECA (1949–1950), Reports to Congress, April 1949–December 1950; Mitchell (2007), Europe; USAID (undated): https://eads.usaid.gov/gbk/.

  74 Statistical Office of the United Nations (1954:477).

  75 Berger and Ritschl (1995:221–22); Ritschl (June 15, 2012); Ritschl (June 25, 2012). The London Agreement placed some of Germany’s World War I reparations bonds, from the 1920s, on hold—pending future German reunification. In the 1960s and 1970s, when German reunification seemed less likely, the German debt authority purchased the debt back at a significant discount—it traded at 8 percent of face value in the 1970s. This reduced the payments that Germany actually had to incur after reunification. Source: Guinnane (August 13, 2015). Reunification in 1990 revived these debts from the 1920s, and the country began to repay them in 1995. Germany’s final payment of $94 million was made on October 3, 2010. Source: Suddath (October 4, 2010).