The Marshall Plan

The Marshall Plan (from its enactment, officially the European Recovery Program (ERP)) was the primary plan of the United States for rebuilding the allied countries of Europe and repelling communism after World War II. The initiative was named for United States Secretary of State George Marshall and was largely the creation of State Department officials, especially William L. Clayton and George F. Kennan.

The reconstruction plan was developed at a meeting of the participating European states in July 12 1947. The Marshall Plan offered the same aid to the Soviet Union and its allies, if they would make political reforms and accept certain outside controls.

In fact, America worried that the Soviet Union would take advantage of the plan and therefore made the terms deliberately hard for the USSR to accept. The plan was in operation for four fiscal years beginning in July 1947. During that period some $13 billion of economic and technical assistance—equivalent to around $130 billion in 2006—was given to help the recovery of the European countries that had joined in the Organization for Economic Co-operation and Development.

By the time the plan had come to completion, the economy of every participant state, with the exception of Germany, had grown well past pre-war levels. Over the next two decades, Western Europe as a whole would enjoy unprecedented growth and prosperity.

The Marshall Plan has also long been seen as one of the first elements of European integration, as it erased tariff trade barriers and set up institutions to coordinate the economy on a continental level. An intended consequence was the systematic adoption of American managerial techniques.

In recent years historians have questioned both the underlying motivation and the overall effectiveness of the Marshall Plan. Some historians now believe that the benefits of the Marshall Plan actually were the result of new laissez faire policies that allowed for markets to stabilize through economic growth.

Furthermore, some criticize the plan for establishing a precedent of solving the problem of failing economies abroad by offering aid from US taxpayers.