The Marshall Plan was an American program, which gave monetary support to help rebuild European economies after the World War II. The plan fostered the political, economical and military position of the United States. It also enforced the separation of Europe into two political blocks.

Situation

• Post World War II, a new power-balance was still to be found. Former allies were establishing themselves to secure power and influence in Europe.
• Large parts of the continent needed to be rebuilt and redeveloped. European economies were very poor and suffering harsh conditions.
• The question of how to approach post-war Germany still needed to be solved.

Objectives

• Strengthen the military, economical and political position of the United States.
• Prevent the spread of Soviet Communism.
• Rebuild a war-devastated region, remove trade barriers, modernize industry and make Europe prosperous again.
• Invest in western allie’s economies and gain new markets in the European sector.
• Massive export of US goods.

Assets

• The United States had 13 billion dollar budget to achieve their goal.
• A highly productive US industry and logistic powers on war-level.
• Europe was grateful for America’s participation during World War II and willingly accepted their offer to help rebuild Europe’s economies.
• Fear of Communism.

Strategy

• Strengthen old and new allies with strong interdependency.
• Combine the rebuilding of economies with new economic networks.
• Build up a military system with the necessary infrastructure against the soviet influence.
• Combine nationbuilding with political networks of the future.
• Initiate the ‘American Way of Life’ in Europe through various forms of various advertising on bilboards, television and radio programs. School exchange programs were also set up to depict this way of life.

Action

• June 5th 1947, George C. Marshall introduced the European Recovery Plan (ERP).
• In 1948, the first staples and credits were sent to support the devestated regions in Europe.
• In 1951, the ERP finished 6 months early after they succeeded to boost the European economies.
• Payments were kept by the Organisation for Economic Co-operation and Development in a special counterpart fund which was used by the government for further investment projects.
• 60% of these funds had to be invested in industry and played a central role in the reindustrialization of Germany. In 1949–50, 40% of the investment of the German coal industry was made by these funds.
• The Marshall plan consisted of aid both in the form of grants and loans. Out of the total 1.2 billion USD, all monies were loan-aid.

Effect

• Industrial production increased by 35%.
• Agricultural production substantially surpassed pre-war levels.
• Western Europe embarked upon an unprecedented two decades of growth. Standards of living increased dramatically.
• Both parties in the Marshall Plan experienced economical growth.
• The term ‘equivalent of the Marshall Plan’ is now often used to describe a proposed large-scale rescue program.
• As a result of the strong bond created between the US and Europe, Communism failed to grow.