Marshall Plan

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The Marshall Plan (officially the European Recovery Program, ERP) was the primary program, 1947–51, of the United States for rebuilding and creating a stronger economic foundation for the countries of Europe. The initiative was named after Secretary of State George Marshall (primarily due to President Harry S. Truman's suspicion that the Republican Party would oppose anything proposed by himself, a Democrat, and his administration [1]) and was largely the creation of State Department officials, especially William L. Clayton and George F. Kennan. Marshall spoke of urgent need to help the European recovery in his address at Harvard University in June 1947.[2]

The reconstruction plan, developed at a meeting of the participating European states, was established on June 5, 1947. It offered the same aid to the Soviet Union and its allies, but they did not accept it.[3][4] The plan was in operation for four years beginning in April 1948. During that period some US $13 billion in economic and technical assistance were given to help the recovery of the European countries that had joined in the Organization for European Economic Co-operation. This $13 billion was in the context of a U.S. GDP of $258 billion in 1948, and was on top of $12 billion in American aid to Europe between the end of the war and the start of the Plan that is counted separately from the Marshall Plan.[5]

The ERP addressed each of the obstacles to postwar recovery. The plan looked to the future, and did not focus on the destruction caused by the war. Much more important were efforts to modernize European industrial and business practices using high-efficiency American models, reduce artificial trade barriers, and instill a sense of hope and self-reliance.[6]

By 1952 as the funding ended, the economy of every participant state had surpassed pre-war levels; for all Marshall plan recipients, output in 1951 was 35% higher than in 1938.[7] Over the next two decades, Western Europe enjoyed unprecedented growth and prosperity, but economists are not sure what proportion was due directly to the ERP, what proportion indirectly, and how much would have happened without it. The Marshall Plan was one of the first elements of European integration, as it erased trade barriers and set up institutions to coordinate the economy on a continental level—that is, it stimulated the total political reconstruction of western Europe.[8]

Belgian economic historian Herman Van der Wee concludes the Marshall Plan was a "great success":

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