This is my second opportunity to commemorate the Marshall Plan. Twenty-five years ago I received an honorary degree and gave the Harvard commencement address from the same spot where George Marshall had delivered his reverberating oration on June 5, 1947. There are those who argue that the plan he unveiled that day made little difference to Europe's recovery. The rebuilding of the continent began before aid started to flow, they say, and would have gone ahead in any event. As with any reasonable theory, this one has some evidence on its side -- but not nearly enough.
The United States had, with little publicity, sent Europe large amounts of aid, mainly in the form of loans, in 1945 and 1946. Postwar American assistance reached a trough in 1947, coinciding with, though not causing, the economic and political crises of that year. These economic troubles and the falloff in aid were particularly dangerous in France and Italy, where, if not for the fortuitous presence of strong interior ministers, the pro-Western governments might have given way to powerful domestic communist parties. Britain was free of that threat, but fuel shortages during that particularly severe winter shut down much of the country's industry, and the unemployment rate temporarily soared.
The next year the economies of Western Europe picked up significantly, even before they received Marshall aid. But the governments knew the funds were coming. Europe may have jump-started its recovery before American assistance began to flow, but the Marshall Plan provided a critical element without which the continent's rehabilitation would have stalled: relative freedom from balance-of-payments restraints. Since the end of the war, Europe had lived from hand to mouth; its limited recovery had been stimulated by the desperate need for short-term supplies. Marshall aid enabled Europe to plan more securely and to embark on an essential program of fixed investment. If the Marshall Plan did not prompt the recovery, it served as the crucial underpinnings.
Aside from the direct economic effects and the free transatlantic transfer
Loading, please wait...