You are on page 1of 17

History Internal Assessment

Candidate Name: Matthew James Ratty Sumption Candidate Number: 000817-068 Centre Number: 000817 Centre Name: St Georges British International School Rome Word Count: 1998 words Title: To what extent was the Marshall Plan motivated purely by American economic self interest?

Section A- Plan of Investigation

The purpose of this investigation is to assess the degree to which the Marshall Plan of 1948 was motivated by the economic self interest of the United States. To address this question I will investigate the European and American socio-political and economic situations post war, the subsequent American/ Soviet diplomatic divergence, the nature of American foreign policy after 1945 and the detailed specifics of the Marshall Plan. This will be accomplished through the balanced evaluation of evidence from a variety of academic sources, including information from national archives and contemporary newspapers. In Section C I will evaluation two relevant sources; Source A is a memorandum by the American Undersecretary for Economic Affairs Will Clayton which recommends an economic aid package to Europe. Source B is an American cartoon by David Marcus, depicting the Marshall Plan as a method of containing communism. All evidence will then be critically analysed to deduce whether American economic considerations were the principal motivating factors behind the Marshall Plan. Word Count: 163 words

Section B- Summary of Evidence

Europe in the aftermath of the Second World War was a continent prostrate, devastated by the legacy of a six year conflict. 1 The United States emerged from the war as the most powerful nation in the world.2 Her robust economy had been revitalised by war effort

Robert J. McMahon, The Cold War: a very short introduction, (Oxford: Oxford University Press, ), p.3, Ibid. p.6 %20introduction&hl=en&pg=PP11#v=onepage&q&f=false, (accessed 18th June)


requirements; Gross Domestic Product doubled between 1941 and 1945 - lifting the country out of the Great Depression. 3 With European capacity shattered, American exports flooded European markets; by 1947 Western Europe was importing $3 billion more from North America and $3.7 billion less from the rest of the world. 4 The American-Soviet relationship soured following the wartime conferences, heralding a political divergence, hardening into mutual distrust and direct confrontation. In Eastern Europe a process of systematic sovietisation took place, in which Kremlin directed communists exerted control through methods of terror, coercion, fraud and espionage.5 With over 100 million people in 11 countries under communism,6 by late 1947 only Czechoslovakia remained immune to Soviet political control, falling to a crackdown in February 1948.7 The nature of American foreign policy shifted, from seeking accordance with the USSR to the hard-line stance adopted by the Truman administration. George Kennans influential Long Telegram of February 1946, coupled with Winston Churchills Iron Curtain speech at Fulton, Missouri, and Clark Cliffords memorandum of the same year convinced the administration of the inherent hostile expansionism of Soviet foreign policy and the need for containment'; 8 a strong response to every Soviet action9. This interventionist direction was crystallized by the Truman Doctrine of March 1947. The United States would provide assistance to any regime threatened by communism, a reversal of the Monroe Doctrine which promulgated American isolation.
3 4

Ibid, p.6 Melvyn P. Leffler, A Preponderance of Power: National Security, The Truman Administration and the Cold War, (Stanford: Stanford University Press, 1992), p.159,
id=pIIeG_yn72wC&lpg=PR19&ots=-NdsxTMwKp&dq=The%20Cold %20War&lr&hl=en&pg=PR19#v=onepage&q&f=false, (accessed 19th June).

Martin McCauley, The Origins of the Cold War 1941-1949 Second Edition, (New York: Longman Group Limited,1995), pg. 83 6 John W. Mason, The Cold War 1945-1991, (London: Routledge, 1996), p.6 7 Henry Kissinger, Diplomacy, (New York: Touchstone, 1995), pg. 442 8 Kissinger, p450 9 McCauley, p.74

Greece and Turkey jointly received $400 million to prevent communist takeover.10 For Europe, 1947 was a year of total crisis. A meagre harvest in 1946, coal shortages, and a severe winter, 1946-1947, conspired to cause starvation,11 food riots and general despair.12 In this desperate situation support for left-wing parties swelled, with communist parties in France and Italy commanding as much as 20% of the vote. 13 Economic recovery was paralysed due to the lack of raw materials, shortage of skilled labour and severe transport difficulties, with industrial production at only 88% of its 1938 volume and exports at 59%.14 This led to a dollar shortfall as nations depleted their limited dollar reserves on American imports, culminating in acute balance of payments problems.15 An April 1947 CIA report feared economic collapse and communist accession to power.16 Into this arena stepped America. The United States had already extended $9 billion in aid to Europe by 1947, 17 however SWNCC18 studies regarding an aid program concluded that communists would take advantage of European plight and American exports could only be ensured for 12-18 months, having a depressing effect on business activity and employment.19 Secretary of State George Marshall had just returned from the Moscow Council of Foreign Ministers; convinced that the Soviets wanted to stall European recovery for political gain
10 11

Hugh Higgins, The Cold War, (London: Heinemann Educational Books Ltd. , 1974), p.43 Oliver Edwards, The USA and the Cold War, 1945-63 Second Edition, (London: Hodder Education, 2002), p.45 12 Tony Judt, Postwar, A History of Europe Since 1945, (London: Pimlico, 2007), p.86 13 Edwards, p.45 14 Michael J. Hogan, The Marshall Plan: America, Britain and the Reconstruction of Western Europe, (Cambridge: Cambridge University Press, 1987), p.30,, (accessed 18th June). 15 Leffler, p.159 16 Judt, p.89, 95 17 Hogan, p.30 18 The State-War-Navy Coordinating Committee 19 Michael Wala, The Council on Foreign Relations and American Foreign Policy in the Early Cold War, (Oxford: Berghahn Books, 1994), p.110,
id=vBiqdx0mkKMC&lpg=PA111&ots=qH25jWwMjZ&dq=William%20Clayton %20memo&pg=PP8#v=onepage&q&f=false, (accessed 19th June, 2010).

and that action was urgently required.20 In early May he asked George Kennans PPS21 to design the framework for an economic aid program.22 On May 23rd Kennans report judged that an offer of aid would be an essential stimulus to European morale, 23 and the May 27th memorandum from Undersecretary for Economic Affairs William Clayton stressed the desperation in Europe and the negative effect its collapse would have on the American economy; he recommended an aid package of $6-7 billion a year for three years. 24 Days later in his Harvard Commencement Address on June 5th, Marshall announced an American aid package available to every European nation. 25 Ministers, including Soviet Union delegates, met in Paris to define the details of the European Recovery Plan.26 The Soviets, however, labelled the plan as expansionist, withdrawing from talks and forbidding any Eastern European country from applying for Marshall Aid. 27 After protracted negotiations the European Cooperation Act was passed in Congress 28 and signed into law in April 194829. It granted over $13 billion in grants and counterpart funds to 16 cooperating nations over four years, 30 with

John Gimbel, The Origins Of The Marshall Plan, (Stanford: Stanford University Press, 1976), p.8, ,

(accessed 19th June, 2010). 21 Policy Planning Staff 22 5. Michael Wala, The Marshall Plan and the Origins of the Cold War in The United States and Germany in the Era of the Cold War, 1945-1968, A Handbook Volume 1, ed. Phillip Gassert, Getlef Junker, (Cambridge: Cambridge University Press, 2004), p.74,
id=y8VfD4IgVZsC&lpg=PP1&dq=The%20United%20States%20and%20Germany%20in%20the%20Era%20of %20the%20Cold%20War&hl=en&pg=PA73#v=onepage&q&f=false, (accessed 19th June, 2010).
23 24

Ibid. Leffler, p.159 25 Higgins, p.46 26 John W. Young, The Longman Companion to America, Russia and the Cold War, 1941-1998 Second Edition, (New York: Addison Wesley Longman Limited, 1999), p.170 27 Higgins, p.46 28 The National Archives, Featured Document: The Marshall Plan, (Accessed 20th June, 2010). 29 On This Day in History, Aid Bill is Signed by Truman as Reply to Foes of Liberty, (Accessed 20th June, 2010)

7. Imanuel Wexler, The Marshall Plan in Economic Perspective: Goals and Accomplishments, in The Marshall Plan: Fifty Years After, ed. Martin Schain, (New York: Palgrave, 2001) p.148, cont. overleaf Cont.
%20Marshall%20PLan%20Fifty%20years%20after&hl=en&pg=PR5#v=onepage&q&f=false, (accessed 20th June, 2010).

the stated aims of increasing European production, foreign trade, financial stability and economic cooperation.31 Word Count: 684 words

Section C- Evaluation of Sources

Source A - see Appendix A On 27th May 1947, Undersecretary of State for Economic Affairs William L. Clayton wrote a memorandum to Secretary of State George C. Marshall, with the purpose of describing the crisis in Europe and convincing Marshall of the necessity of American intervention. The source is valuable to a historian studying the Marshall Plan because it documents the views of an important official (Presidentially appointed) who has first-hand views on the situation in Europe in 1947, and presents informed factual detail about the economic crisis facing much of Europe, highlighting the genuine fear of European collapse. Significantly the memorandum identifies the principal motivations behind an American aid program for Europe. Furthermore, the fact that it originated from a prominent diplomat, and was addressed directly to Marshall, means it may have influenced the view of government. The limitations of the source are that it is demonstrates a personal, one-sided perspective of the European situation, and therefore cannot represent the views of the United States government as a

14. Robert E. Wood, From the Marshall Plan to the Third World in Origins of the Cold War: An International History Second Edition, ed. Melvyn P. Leffler, David S. Painter, (New York: Routledge, 2005) p.240,
%20War%3A%20An%20International%20History%20Second%20Edition&hl=en&pg=PR8#v=onepage&q&f=false ,

(accessed 20th June, 2010).

whole. It is a memorandum, not a government document; therefore the information therein may be superficial regarding statistics or specific details. Source B see Appendix B This cartoon by Edwin Marcus was published in the New York Times on March 14th, 1948. The purpose of the cartoon is inform the public and to encourage the immediate passage of the Marshall Plan in the face of the communist threat to Western Europe. The cartoon has value because it highlights the existence of the view of the time that the Marshall Plan was motivated by the need to contain expansionist communism and protect Western Europe. Given that the New York Times was an influential, widely read newspaper, the cartoon is valuable because it may have influenced or reflected popular opinion surrounding the Marshall Plan. The limitation of the cartoon is that it was commissioned by a newspaper with definite views to convey, therefore it is a subjective representation of events of the time. A simple, understandable message is purported which may lack factual depth or historical accuracy. It is also unknown whether this view reflected opinion of the time or had any influence. Word Count: 346 words

Section D- Analysis
When viewed against the wider background of the Cold War, this investigation is central because it scrutinises the motivations behind a major American foreign policy decision which wielded massive influence over Europes economic and political future, and developments in the Cold War. It analyses the principal influences 7

which drove American policy at a critical stage in the opening act of the superpower rivalry. Winston Churchill hailed the Marshall Plan as the most unselfish act in history,32 yet despite the altruistic oratory in Marshalls Harvard address, it is difficult to distinguish the rhetoric from the genuine motivation. As Galbraith asserts, whilst goodwill was undoubtedly present amongst U.S. policymakers, philanthropy alone would not have sanctioned the enormous monetary costs of the endeavour, 33 and in reality it may have acted more as a justification for financial assistance than a motive in itself.34 So what were the genuine motives behind the Marshall Plan? Orthodox historians have contended they were political, with the Marshall Plan acting as the economic extension of the Truman Doctrine, aimed at curtailing communist influence in Western Europe. With American policy defined by the Doctrine, in 1947 Western Europe appeared threatened both by the encroaching sovietisation behind the Iron Curtain and the risk that the severe socio-economic distress in Europe might cause Europeans to vote their own communists into office, 35 loyal to Moscow, who would then take their countries into the Soviet orbit.36 American economic support would combat this danger by giving a psychological boost to Europeans, 37 and ending the poverty and despair upon which communist support depended. 38 In traditional balance of power terms, the Plan would consolidate Western Europe as

32 33

Higgins, p.47 John Kenneth Galbraith, A Journey Through Economic Times, (New York: Houghton Mifflin Company, 1994), p.149 34 1. Michelle Cini, From the Marshall Plan to the EEC: Direct and Indirect Influences in The Marshall Plan: Fifty Years After, ed. Martin Schain, (New York: Palgrave, 2001), p.14,
id=ybAQmmyrLN8C&lpg=PP1&dq=The%20Marshall%20PLan%20Fifty%20years %20after&hl=en&pg=PR5#v=onepage&q&f=false, (accessed 7th July, 2010).

The fear that communist influences would capitalise on economic unrest underpinned much of Americas containment strategy towards Western Europe, as shown by the reports of the CIA and SWNCC from 1947. 36 John Lewis Gaddis, The Cold War, (London: Penguin Books, 2005), p.32 37 Wala, p.74 38 Edwards, p.46

a buffer to the concentration of Russian power to the East, 39 and according to Gaddis, allow America to seize the geopolitical and moral initiative in the emerging cold war by putting the onus on Stalin to reject the plan and divide Europe. 40 The image of the Marshall Plan as a vehicle for containment, as seen in Source B, is strengthened by the fact that Congress passed the bill soon after the communist coup in Czechoslovakia. However political explanations are not exhaustive, and whilst the bills passage may have been abetted by its perceived anti-communist agenda,41 this was not the overriding concern of its architects. Marshall maintained that it was not to the combating of communism as such but the restoration of the economic health of European society. 42 Alleviating Europes economic problems was a sufficient motive in itself, here the aim of the Marshall Plan being to place Europe on a secure route to economic recovery 43 by freeing trade, eliminating dollar deficits, facilitating imports and introducing new management methods.44 Furthermore, economic historians such as Michael Hogan and Alan S. Milward have emphasised the Marshall Plans purpose as to promote economic integration,45 and fashion a genuinely multilateral system.46 The stated aims of the plan bolster this argument. Finally, it must be acknowledged that economic self interest contributed to the Plans conception. Americas post war economic might47 was partially based on Western Europe as a vital market for
39 40

Higgins, p.48 Gaddis, p.32 41 On This Day in History, Aid Bill is Signed by Truman as Reply to Foes of Liberty, (Accessed 9th July, 2010) 42 Maier, p.186 43 Gimbel, p.1 44 Cini, p.16 45 Hogan, p.37 46 Alan S. Milward, The Reconstruction of Western Europe 1945-51, (Abingdon: Routledge, 2006), p. 272, , (accessed 10th July, 2010). 47 The American production force which supported the war effort and the Lend-Lease program to Europe were greatly responsible for returning the economy to full employment. With the war over, and European markets flat-lining , the American economy seemed at risk from a European collapse. There has been some

American exports;48 there were fears that a collapse would have dire consequences on the U.S. economy and provoke another recession. 49 The Marshall Plan would revive a major trading partner and stimulate the U.S economy by creating a captive market in Europe for American goods.50 In this way the Plan was a method to ensure the long term economic security of the United States. 51 Additionally Tony Judt notes that anxieties about another 1930s export slump may have compelled American intervention.52 This perspective has been extremified by Revisionist historians who claim the Marshall Plan was the most blatant example of dollar imperialism,53 an aggressive act to expand and protect the free economic continent.54 Word Count: 622 words system, guaranteeing American domination of the

Section E- Conclusion
A complex amalgamation of factors inspired the Marshall Plan, but above all it was the acknowledgement that European economic recovery was essential to the long-term interests of the United States.55 In 1947, Marshall feared that the patient is sinking while the
debate as to whether it really was (Leffler 1992, 160), but the important thing to remember is that at the time it seemed as much. This is the economic argument which precipitated American intervention. 48 Cini, p.16 49 Wala, p.75 50 Edwards, p.45 51 Higgins, p.48 52 Judt, p.94 53 Spiritus-Temporis, Marshall Plan- Historiography, (Accessed 10th July, 2010). 54 McCauley, p.13 55 Hogan, p.18


doctors deliberate.56 The will to contain communism, kick-start production, advance European economic integration, united with the fear of the devastating impact a collapse could have on the U.S. economy, created a consensus that American intervention was urgently necessary. The convergence of these differing motives gives rise to the Marshall Plans primary motivation: to secure long term European economic recovery and political stability. The benefits to U.S. industry, the need to revive intercontinental trade and secure open markets were undoubtedly significant in galvanizing support for the Plan, however their importance has been overstated by Revisionist historians whose ideological argument underestimates the more pressing concerns of the time. The Marshall Plan was couched in the language of humanitarianism, but it was a strategic enterprise rooted in American political and economic concerns. Economic self interest was merely one of those concerns. Word Count: 179 words Overall Word Count: 1998 words

Section F- List Of Sources Books:


Gimbel, p.8


Edwards, Oliver. The USA and the Cold War, 1945-63 Second Edition. London: Hodder Education, 2002. Lewis Gaddis, John. The Cold War. London: Penguin Books, 2005. Galbraith, John Kenneth. A Journey Through Economic Times . New York: Houghton Mifflin Company, 1994. Higgins, Hugh. The Cold War. London: Heinemann Educational Books Ltd., 1974. Judt, Tony. Postwar, A History of Europe Since 1945 . London: Pimlico, 2007. Kissinger, Henry. Diplomacy. New York: Touchstone, 1995. Lightbody, Bradley. The Cold War. London: Routledge, 1999. Mason, John W. The Cold War 1945-1991. London: Routledge, 1996. McCauley, Martin. The Origins of the Cold War 1941-1949 Second Edition. New York: Longman Group Limited,1995. Phillips, Steve. The Cold War: conflict in Europe and Asia . London: Heinemann, 2001 Young, John W. The Longman Companion to America, Russia and the Cold War, 1941-1998 Second Edition . New York: Addison Wesley Longman Limited, 1999.

Books published electronically:

Cini, Michelle. From the Marshall Plan to the EEC: Direct and Indirect Influences. In The Marshall Plan: Fifty Years After, edited by Martin Schain, 13-38. New York: Palgrave, 2001.
id=ybAQmmyrLN8C&lpg=PP1&dq=The%20Marshall%20PLan%20Fifty %20years%20after&hl=en&pg=PR5#v=onepage&q&f=false .

Gimbel, John. The Origins Of The Marshall Plan. Stanford: Stanford University Press, 1976.
id=nAGsAAAAIAAJ&lpg=PP1&dq=gimbel&hl=en&pg=PP1#v=onepage&q&f=f alse .


Hogan, Michael J. The Marshall Plan: America, Britain and the Reconstruction of Western Europe. Cambridge: Cambridge University Press, 1987. .

Leffler, Melvyn P. A Preponderance of Power: National Security, The Truman Administration and the Cold War. Stanford: Stanford University Press, 1992. id=pIIeG_yn72wC&lpg=PR19&ots=-NdsxTMwKp&dq=The%20Cold %20War&lr&hl=en&pg=PR19#v=onepage&q&f=false .

McMahon, Robert J. The Cold War: a very short introduction . Oxford: Oxford University Press.
id=FzLapjRIopQC&lpg=PP1&dq=The%20Cold%20War%20a%20very%20short %20introduction&hl=en&pg=PP11#v=onepage&q&f=false .

Milward, Alan S. The Reconstruction of Western Europe 1945-51. Abingdon: Routledge, 2006.

Wala, Michael. The Council on Foreign Relations and American Foreign Policy in the Early Cold War. Oxford: Berghahn Books, 1994. id=vBiqdx0mkKMC&lpg=PA111&ots=qH25jWwMjZ&dq=William%20Clayton %20memo&pg=PP8#v=onepage&q&f=false .

Wala, Michael. The Marshall Plan and the Origins of the Cold War. In The United States and Germany in the Era of the Cold War, 1945-1968, A Handbook Volume 1, edited by Phillip Gassert and Getlef Junker, 7377. Cambridge: Cambridge University Press, 2004. %20States%20and%20Germany%20in%20the%20Era%20of%20the%20Cold %20War&hl=en&pg=PA73#v=onepage&q&f=false .

Wexler, Imanuel. The Marshall Plan in Economic Perspective: Goals and Accomplishments. In The Marshall Plan: Fifty Years After, edited by Martin Schain, 147-152. New York: Palgrave, 2001. 13

%20Marshall%20PLan%20Fifty%20years %20after&hl=en&pg=PR5#v=onepage&q&f=false . Wood, Robert E. From the Marshall Plan to the Third World. In Origins of the Cold War: An International History Second Edition, edited by Melvyn P. Leffler and David S. Painter, 239-250. New York: Routledge, 2005.
%20of%20the%20Cold%20War%3A%20An%20International%20History %20Second%20Edition&hl=en&pg=PR8#v=onepage&q&f=false .

The National Archives. Featured Document: The Marshall Plan. (accessed 20th June, 2010). On This Day in History. Aid Bill is Signed by Truman as Reply to Foes of Liberty. icle (accessed 20th June, 2010). Spiritus-Temporis. Marshall Plan- Historiography. (accessed 10th July, 2010). National Endowment for the Humanities. How the Marshall Plan came about. (accessed 25th June, 2010). Library Of Congress. While the Shadow Lengthens. (accessed 25th June, 2010).

Appendix A57

Source A: National Endowment for the Humanities, How the Marshall Plan Came About, (Accessed 25th June, 2010).


May 27, 1947 MEMORANDUM BY THE UNDER SECRETARY FOR ECONOMIC AFFAIRS (W. L. Clayton) The European Crisis It is now obvious that we grossly underestimated the destruction to the European economy by the war. We understood the physical destruction, but we failed to take fully into account the effects of economic dislocation on production -- nationalization of industries, drastic land reform, severance of long-standing commercial ties, disappearance of private commercial firms through death or loss of capital, etc., etc . . .Europe is steadily deteriorating. The political position reflects the economic. One political crisis after another merely denotes the existence of grave economic distress. Millions of people in the cities are slowly starving. More consumer goods and restored confidence in the local currency are absolutely essential if the peasant is again to supply food in normal quantities to the cities. (French grain acreage running 20-25% under prewar, collection of production very unsatisfactory -- much of the grain is fed to cattle. The modern system of division of labor has almost broken down in Europe.) . . .Only until the end of this year can England and France meet the above deficits out of their fast dwindling reserves of gold and dollars. Italy cant go that long. . . .Europe must again become self-sufficient in coal (the U.S. must take over management of Ruhr coal production) and her agricultural production must be restored to normal levels. (Note: No inefficient or forced production through exorbitant tariffs, subsidies, etc. is here contemplated.) Europe must again be equipped to perform her own shipping services. The United States should sell surplus ships to France, Italy, and other maritime nations to restore their merchant marine to at least prewar levels. (To do it, we will have to lick the shipping lobby, fattening as it is off the U.S. Treasury). . . .Without further prompt and substantial aid from the United States, economic, social, and political disintegration will overwhelm Europe. Aside from the awful implications which this would have for the future peace and security of the world, the immediate effects on our domestic economy would be disastrous: markets for our surplus production gone, unemployment, depression, a heavily unbalanced budget on the background of a mountainous war debt. . . .It will be necessary for the President and Secretary of State to make a strong spiritual appeal to the American people to sacrifice a little themselves, to draw in their own belts just a little in order to save Europe from starvation and chaos (not from the Russians) and, at the same time, to preserve for ourselves and our children the glorious heritage of a free America. Europe must have from us, as a grant, 6 or 7 billion dollars worth of goods a year for three years. With this help, the operations of the International Bank and Fund should enable European reconstruction to get under way at a rapid pace. Our grant could take the form principally of coal, food, cotton, tobacco, shipping services, and similar things -- all now produced in the United States in surplus, except cotton. The probabilities are that cotton will be surplus in another one or two years. Food shipments should be stepped up despite the enormous total (15 million tons) of bread grains exported from the United States during the present crop year. We are wasting and over-consuming food in the United States to such an extent that a reasonable measure of conservation would make at least another million tons available for export with no harm whatsoever to the health and efficiency of the American people. This three-year grant to Europe should be based on a European plan which the principal European nations, headed by the UK, France, and Italy, should work out. Such a plan should be based on a European


economic federation on the order of the Belgium- Netherlands-Luxembourg Customs Union. Europe cannot recover from this war and again become independent if her economy continues to be divided into many small watertight compartments as it is today. Obviously, the above is only the broad outline of a problem which will require much study and preparation before any move can be made. Canada, Argentina, Brazil, Australia, New Zealand, Union of South Africa could all help with their surplus food and raw materials, but we must avoid getting into another UNNRA. The United States must run this show. --W.L. Clayton

Appendix B58


Source B: Library Of Congress, While the Shadow Lengthens, (Accessed 25th June, 2010).