The Marshall Plan: Investing in America Abroad

Charles W. King

The success of The Marshall Plan rebuilding Europe after World War Two and correcting the mistakes of the Treaty of Versailles is one of the most well known facts about World War Two amongst the American. Named for George C. Marshall, the US Army Chief of Staff during the war and Secretary of State and Defense after the war, the Marshall Plan provided more than $13 billion (in 1940s dollars) to Western Europe to help rebuilding. This largess is contrasted with the punitive measures imposed on Germany after World War One.

The Treaty of Versailles required not only German admission of guilt for World War One but the acceptance of responsibility for not only their own war debt, but millions in reparations to the victorious Entente powers. The predominant historical narrative is that the burdens of the Treaty of Versailles led to the collapse of the Weimar Republic’s economy, the rise of Adolph Hitler, and World War Two, and that the Marshall Plan averted a repeat of this cycle. Contemporary historians and economists are skeptical of whether the Treaty of Versailles actually contributed to the hyperinflation that plagued Germany in the interwar period. This raises the question; if the Treaty of Versailles is not responsible for World War Two, then what was the purpose of the Marshall Plan?

First and foremost the Marshall Plan, along with the Cooperative for American Remittances to Europe (CARE), saved countless lives in Western Europe in the years after World War Two. Additionally, like many of the other post-war efforts by the United States and its Allies, the Marshall Plan was designed to create a post-war order that was good for the United States. As it transitioned from a war-time economy to a consumer one the United States would need markets for its goods. A struggling Europe or a Europe that had turned to communism would not be able or willing to purchase American consumer goods. Like many of the American aid programs that would follow in the twentieth century the Marshall Plan had requirements. States receiving aid had to lower interstate barriers to trade and other regulations. The Marshall Plan also facilitated economic growth through labor union participation, increased productivity, modern American business practices and above all capitalism.

Recognizing the purpose economic and political objectives of the Marshall Plan illuminates the fact that while bold and on a scale not seen before, it was not unprecedented. Economic growth through productivity and access to markets goes back to colonial resistance to British mercantilism and monopolies. Westward expansion and the acquisition of overseas territory at the end of the nineteenth century represent the second phase of this effort. The Marshall Plan was the third. It ushered in decades of active American foreign policy where aid was a political tool used to gain market access for the United States and to prevent foreign states from falling to communism by allowing them to participate in the economic growth experienced by the US and its trading partners. The Marshall Plan for all of its expense and obvious moral character was essential to preventing the collapse of the American economy and a return to the Great Depression after World War Two. George Marshall and President Truman recognized that for the United States to continue to prosper it needed to invest in the wider world.