‘The patient must be allowed time to recover, or even the best of programs will not avail.’ With that image, George Marshall set out in his June 5, 1947 Harvard speech what the Marshall Plan would actually do. The aid — about $13.3 billion to sixteen Western European countries between 1948 and 1951 — provided the foreign exchange that let governments import food, fuel, and raw materials without starving their populations or letting currencies collapse. It financed the capital goods — machine tools, electric generators, trucks, fertilizers — that let industry modernize faster than wartime destruction would otherwise have allowed, and it required participating governments to coordinate economic policies, producing the institutional foundation for the European integration that followed.
Stabilization, 1948–1949
The first year of the program was, in essence, a humanitarian operation. Coal from the Ruhr, grain from the United States and Canada, and petroleum products kept Western Europe’s cities lit and its bakeries in business. Industrial production in the OEEC area, which had been stuck at roughly 90 percent of the 1938 level, climbed through 1948 and crossed 100 percent in early 1949. The currencies of France, Italy, and the smaller European countries stabilized; the black markets that had dominated postwar urban life shrank rapidly.
The most acute political danger — communist electoral victories in France and Italy — receded. The French Communist Party, which had polled 28.6 percent of the vote in the November 1946 elections, fell to 25.9 percent in 1951 and 18.9 percent in 1958. The Italian Communist Party fell from 31 percent in 1948 to 22.7 percent in 1953. Economic recovery was not the only reason — anti-communist ideology, Cold War loyalty, and Catholic social teaching all played roles — but the link between rising living standards and falling communist support was unmistakable.
Modernization, 1949–1952
The second and third years of the plan shifted the emphasis to investment. The counterpart funds — the local-currency proceeds of the sale of American goods, deposited in special accounts — financed roughly $5 billion in additional investment projects: port facilities, electric power stations, steel mills, agricultural extension services, and housing. The technical-assistance program, run through the OEEC, sent roughly 2,500 European managers and engineers to the United States on “productivity missions” and brought American experts to Europe to advise on specific problems.
American influence on the modernization program was real but limited. The ECA’s role was to approve or disapprove the European governments’ investment plans, not to design them. Europeans retained control of the policy choices. The result was modernization that reflected local priorities, with American techniques and capital goods adapted to European conditions.
Integration, 1948–1957
The Marshall Plan required the participating governments to coordinate their economic policies through the Committee of European Economic Cooperation, which became the Organisation for European Economic Co-operation in April 1948 and the OECD in 1961. The OEEC was the first institution in which European governments had systematically pooled their economic decision-making.
The OEEC’s successor institutions were decisive. The European Coal and Steel Community, established by the Treaty of Paris in April 1951 and operational in 1952, put the coal and steel production of France, West Germany, Italy, Belgium, Luxembourg, and the Netherlands under a common authority. The Treaties of Rome, signed March 25, 1957, created the European Economic Community and the European Atomic Energy Community. None of these institutions would have been possible without the habits of cooperation that the Marshall Plan made normal. For the strategic framework that gave the plan its purpose, see the Truman Doctrine.