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93-530: The GD, originally known as the Forecast, began in 1950 under the direction of six institutes, which were then members of the Association of German Economic Research Institutes (ARGE). It began in the years of post-World War 2 reconstruction as a means of facilitating Germany's reintegration into the global economy. The participating institutes until 2007 included: From 2007 to 2010, with the dissolution of

186-773: A Democrat from Georgia, "there is no prospect of ever winning Russian cooperation." Despite its reservations, the 80th Congress implemented Truman's requests, further escalating the Cold War with the USSR. Truman signed the Economic Cooperation Act into law on April 3, 1948; the Act established the Economic Cooperation Administration (ECA) to administer the program. ECA was headed by economic cooperation administrator Paul G. Hoffman . In

279-640: A concern was the Czechoslovak eagerness to accept the aid, as well as indications of a similar Polish attitude. Soviet Foreign Minister Vyacheslav Molotov left Paris, rejecting the plan. After that, statements were made suggesting a future confrontation with the West, calling the United States both a "fascizing" power and the "center of worldwide reaction and anti-Soviet activity", with all U.S.-aligned countries branded as enemies. The Soviets blamed

372-513: A follow-up conversation with Stalin, he explained that an armed struggle would be impossible and that the struggle against the Marshall Plan was to be waged under the slogan of national independence. Congress, under the control of conservative Republicans, agreed to the program for multiple reasons. The 20-member conservative isolationist Senate wing of the party, based in the rural Midwest and led by Senator Kenneth S. Wherry (R-Nebraska),

465-587: A just and honorable peace but—even worse—has actively sought to prevent it. Members of the Republican-controlled 80th Congress (1947–1949) were skeptical. "In effect, he told the Nation that we have lost the peace, that our whole war effort was in vain.", noted Representative Frederick Smith of Ohio. Others thought he had not been forceful enough to contain the USSR. "What [Truman] said fell short of being tough", noted Representative Eugene Cox ,

558-614: A larger meeting was convened in Paris. Every country in Europe was invited, with the exceptions of Spain (a World War II neutral that had sympathized with the Axis powers ) and the small states of Andorra , San Marino , Monaco , and Liechtenstein . The Soviet Union was invited with the understanding that it would likely refuse. The states of the future Eastern Bloc were also approached, and Czechoslovakia and Poland agreed to attend. In one of

651-666: A new currency. Taxes were also reduced and Germany prepared to remove economic barriers. During the first three years of occupation of Germany, the Allied occupational authorities vigorously pursued a military disarmament program in Germany , partly by removal of equipment but mainly through an import embargo on raw materials, part of the Morgenthau Plan approved by President Franklin D. Roosevelt . Historian Nicholas Balabkins concluded that "as long as German industrial capacity

744-458: A percent. Graham T. Allison states that "the Marshall Plan has become a favorite analogy for policy-makers. Yet few know much about it." Some new studies highlight not only the role of economic cooperation but approach the Marshall Plan as a case concerning strategic thinking to face some typical challenges in policy, as problem definition, risk analysis, decision support to policy formulation, and program implementation. In 1947, two years after

837-455: A proposal than a plan, it was a challenge to European leaders to cooperate and coordinate. It asked Europeans to create their own plan for rebuilding Europe, indicating the United States would then fund this plan. The administration felt that the plan would likely be unpopular among many Americans, and the speech was mainly directed at a European audience. In an attempt to keep the speech out of American papers, journalists were not contacted, and on

930-636: A quick European response to (and acceptance of) the offer, which led to the creation of the Committee of European Economic Co-operation . The two agreed that it would be necessary to invite the Soviets as the other major allied power. Marshall's speech had explicitly included an invitation to the Soviets, feeling that excluding them would have been a sign of distrust. State Department officials, however, knew that Stalin would almost certainly not participate and that any plan that would send large amounts of aid to

1023-570: A reduced black market . In 1948, the Deutsche Mark replaced the occupation currency as the currency of the Western occupation zones, leading to their eventual economic recovery. By 1950, the UK and France were finally induced to follow the U.S. lead, and stop the dismantling of German heavy industry . The country's economic recovery under the newly formed democratic government was, once it

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1116-476: A small factor in their economy. Much of the Marshall Plan aid would be used by the Europeans to buy manufactured goods and raw materials from the United States and Canada. Most of Europe's economies were recovering slowly, as unemployment and food shortages led to strikes and unrest in several nations. Agricultural production was 83% of 1938 levels, industrial production was 88%, and exports 59%. Exceptions were

1209-574: A strategic partner, and in exchange, the Federal government would purchase stock in the US businesses to reimburse them. In this way, Europe would receive the aid it needed, American businesses would receive capital investment, and the federal government would make a profit when the stock was sold. British Foreign Secretary Ernest Bevin heard Marshall's radio broadcast speech and immediately contacted French Foreign Minister Georges Bidault to begin preparing

1302-401: Is logical that the United States should do whatever it is able to do to assist in the return of normal economic health to the world, without which there can be no political stability and no assured peace. Our policy is not directed against any country, but against hunger, poverty, desperation and chaos. Any government that is willing to assist in recovery will find full co-operation on the part of

1395-603: The Comecon . In a 1947 speech to the United Nations, Soviet deputy foreign minister Andrei Vyshinsky said that the Marshall Plan violated the principles of the United Nations. He accused the United States of attempting to impose its will on other independent states while at the same time using economic resources distributed as a relief to needy nations as an instrument of political pressure. Although all other communist European countries had deferred to Stalin and rejected

1488-651: The Democrats controlled the White House with Harry S. Truman as president. Some businessmen feared the Marshall Plan, unsure whether reconstructing European economies and encouraging foreign competition was in the US' best interests. The plan was largely the creation of State Department officials, especially William L. Clayton and George F. Kennan , with help from the Brookings Institution , as requested by Senator Arthur Vandenberg , chairman of

1581-468: The Molotov Plan . However, the plan was said to have not worked as well due to the USSR particularly having been hit hard by the effects of World War II . The phrase "equivalent of the Marshall Plan" is often used to describe a proposed large-scale economic rescue program. The reconstruction plan, developed at a meeting of the participating European states, was drafted on June 5, 1947. It offered

1674-582: The Morgenthau Plan . Millions of German prisoners of war were for several years used as forced labor , by both the Western Allies and the Soviet Union . Beginning immediately after the German surrender and continuing for the next two years, the United States pursued a vigorous program to harvest all technological and scientific know-how, as well as all patents in Germany. John Gimbel comes to

1767-592: The Soviet Union refused Plan benefits and also blocked benefits to Eastern Bloc countries, such as Romania and Poland . The United States provided similar aid programs in Asia, but they were not part of the Marshall Plan. Its role in rapid recovery has been debated. The Marshall Plan's accounting reflects that aid accounted for about 3% of the combined national income of the recipient countries between 1948 and 1951, which means an increase in GDP growth of less than half

1860-634: The United States Senate Committee on Foreign Relations . Marshall spoke of an urgent need to help the European recovery in his address at Harvard University in June 1947. The purpose of the Marshall Plan was to aid in the economic recovery of nations after World War II and secure US geopolitical influence over Western Europe. To combat the effects of the Marshall Plan, the USSR developed its own economic recovery program, known as

1953-401: The "critical margin" on which other investment needed for European recovery depended. 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. Belgian economic historian Herman Van der Wee concludes

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2046-643: The American and British proposals. During negotiations with the French and the British, Molotov received a ciphered telegram from Vyshinsky, Soviet Minister of Foreign Affairs. The official position of the Soviet Union, on Stalin's orders, had changed dramatically, and now Moscow's representatives in Paris were forcefully rejecting the Marshall Plan. Due to this change, Molotov rejected the counteroffer to scrap

2139-599: The American economy as well. Major newspapers were highly supportive, including such conservative outlets as Time magazine . Vandenberg made sure of bipartisan support on the Senate Foreign Relations Committee. The Solid Democratic South was highly supportive, the upper Midwest was dubious, but heavily outnumbered. The plan was opposed by conservatives in the rural Midwest, who opposed any major government spending program and were highly suspicious of Europeans. The plan also had some opponents on

2232-613: The British-American "Bizonia" and to include the Soviet zone within the newly constructed Germany. Marshall was particularly discouraged after personally meeting with Stalin to explain that the United States could not possibly abandon its position on Germany, while Stalin expressed little interest in a solution to German economic problems. After the adjournment of the Moscow conference following six weeks of failed discussions with

2325-545: The Czechoslovakian and Polish delegations were prevented from attending the Paris meeting. The other Eastern Bloc states immediately rejected the offer. Finland also declined, to avoid antagonizing the Soviets (see also Finlandization ). The Soviet Union's "alternative" to the Marshall plan which was purported to involve Soviet subsidies and trade with western Europe, became known as the Molotov Plan , and later,

2418-627: The Eastern Bloc, Truman asked Congress to restore a peacetime military draft and to swiftly pass the Economic Cooperation Act , the name given to the Marshall Plan. Of the Soviet Union Truman said, "The situation in the world today is not primarily the result of the natural difficulties which follow a great war. It is chiefly due to the fact that one nation has not only refused to cooperate in the establishment of

2511-430: The European economy and presented a rationale for US aid: The modern system of the division of labor upon which the exchange of products is based is in danger of breaking down. ... Aside from the demoralizing effect on the world at large and the possibilities of disturbances arising as a result of the desperation of the people concerned, the consequences to the economy of the United States should be apparent to all. It

2604-654: The Financing of Post-War Business and Industry in the United Kingdom and Republic of France." Crawford's thesis was read by future Supreme Court Justice Abe Fortas and presented to President Truman as the solution for Marshall's proposal. It was Crawford's thesis which provided the key to selling the Marshall Plan to Congress by laying out the idea of "strategic partnerships." Instead of the Federal government granting money directly to Europe, American businesses would provide technology, expertise, and materials to Europe as

2697-499: The German economy." The new plan JCS 1779 stated that "an orderly and prosperous Europe requires the economic contributions of a stable and productive Germany." The restrictions placed on German heavy industry production were partly ameliorated; permitted steel production levels were raised from 25% of pre-war capacity to a new limit placed at 50% of pre-war capacity. With a communist, although non-Soviet, insurgency threatening Greece, and Britain financially unable to continue its aid,

2790-560: The HWWA in 2006, the DIW also ceased publication of the report. The Federal Government had reservations about the efficiency of the institute due to the departure of experienced DIW employees. The GD was then published by: From 2010 to 2013, three new institutes were added to the project: KOF Swiss Economic Institute at ETH Zurich and the Center for European Economic Research. In 2013, the latter left

2883-572: The Kremlin from whom he received instructions, also castigated communist parties in France and Italy for collaboration with those countries' domestic agendas. Zhdanov warned that if they continued to fail to maintain international contact with Moscow to consult on all matters, "extremely harmful consequences for the development of the brother parties' work" would result. Party rules prevented Italian and French communist leaders from pointing out that it

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2976-509: The Marshall Plan was a "great success": It gave a new impetus to reconstruction in Western Europe and made a decisive contribution to the renewal of the transport system, the modernization of industrial and agricultural equipment, the resumption of normal production, the raising of productivity, and the facilitating of intra-European trade. By the end of World War II, much of Europe was devastated. Sustained aerial bombardment during

3069-445: The Marshall Plan, although in the less generous form of loans, was in 1949 extended to also include the newly formed West Germany. In the years 1949–1952, West Germany received loans which totaled $ 1.45 billion, equivalent to around $ 19 billion in 2024. The country subsequently began a slow but continuous improvement of its standard of living , with the export of local products, a reduction in unemployment, increased food production, and

3162-500: The Nazis, had long been closely linked to the German economy and felt their prosperity depended on its revival. The Scandinavian nations, especially Sweden , insisted that their long-standing trading relationships with the Eastern Bloc nations not be disrupted and that their neutrality not be infringed. The United Kingdom insisted on special status as a longstanding belligerent during the war, concerned that if it were treated equally with

3255-526: The President announced his Truman Doctrine on March 12, 1947, "to support free peoples who are resisting attempted subjugation by armed minorities or by outside pressures", with an aid request for consideration and decision, concerning Greece and Turkey. Herbert Hoover noted that "The whole economy of Europe is interlinked with the German economy through the exchange of raw materials and manufactured goods. The productivity of Europe cannot be restored without

3348-487: The Soviet Union called a meeting of nine European communist parties at the resort town of Szklarska Poręba in southwest Poland. A Communist Party of the Soviet Union (CPSU) report was read at the outset to set the heavily anti-Western tone, stating now that "international politics is dominated by the ruling clique of the American imperialists" which have embarked upon the "enslavement of the weakened capitalist countries of Europe". Communist parties were to struggle against

3441-607: The Soviet ambassador in Washington suspected that the Marshall Plan could lead to the creation of an anti-Soviet bloc, Stalin was open to the offer. He directed that—in negotiations to be held in Paris regarding the aid—countries in the Eastern Bloc should not reject economic conditions being placed upon them. Stalin only changed his outlook when he learned that (a) credit would only be extended under conditions of economic cooperation, and (b) aid would also be extended to Germany in total, an eventuality which Stalin thought would hamper

3534-414: The Soviets in their occupied zone. Molotov refrained from supplying accounts of Soviet assets. The Soviets took a punitive approach, pressing for a delay rather than an acceleration in economic rehabilitation, demanding unconditional fulfillment of all prior reparation claims, and pressing for progress toward nationwide socioeconomic transformation. After six weeks of negotiations, Molotov rejected all of

3627-408: The Soviets regarding a potential German reconstruction, the United States concluded that a solution could not wait any longer. To clarify the American position, a major address by Secretary of State George Marshall was planned. Marshall gave the address at Harvard University on June 5, 1947. He offered American aid to promote European recovery and reconstruction. The speech described the dysfunction of

3720-495: The Soviets was unlikely to get Congressional approval. Speaking at the Paris Peace Conference on October 10, 1946, Molotov had already stated Soviet fears: "If American capital was given a free hand in the small states ruined and enfeebled by the war [it] would buy up the local industries, appropriate the more attractive Romanian, Yugoslav ... enterprises and would become the master in these small states." While

3813-465: The Soviets' ability to exercise influence in western Germany. Initially, Stalin maneuvered to kill the plan, or at least hamper it using destructive participation in the Paris talks regarding conditions. He quickly realized, however, that this would be impossible after Molotov reported—following his arrival in Paris in July 1947—that conditions for the credit were non-negotiable. Looming as just as large

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3906-564: The US presence in Europe by any means necessary, including sabotage. The report further claimed that "reactionary imperialist elements throughout the world, particularly in the United States, in Britain and France, had put particular hope on Germany and Japan, primarily on Hitlerite Germany—first as a force most capable of striking a blow at the Soviet Union". Referring to the Eastern Bloc, the report stated that "the Red Army's liberating role

3999-510: The United Kingdom, the Netherlands and France, where by the end of 1947 production had already been restored to pre-war levels before the Marshall Plan. Italy and Belgium would follow by the end of 1948. In Germany in 1945–46 housing and food conditions were bad, as the disruption of transport, markets, and finances slowed a return to normality. In the West, the bombing had destroyed 5,000,000 houses and apartments, and 12,000,000 refugees from

4092-510: The United States for communist losses in elections in Belgium, France, and Italy months earlier, in the spring of 1947. It claimed that "marshallization" must be resisted and prevented by any means and that French and Italian communist parties were to make maximum efforts to sabotage the implementation of the plan. In addition, Western embassies in Moscow were isolated, with their personnel being denied contact with Soviet officials. On July 12,

4185-496: The United States. Its purpose should be the revival of a working economy in the world so as to permit the emergence of political and social conditions in which free institutions can exist. Marshall was convinced that economic stability would provide political stability in Europe. He offered aid, but the European countries had to organize the program themselves. The speech, written at Marshall's request and guidance by Charles Bohlen contained virtually no details and no numbers. More

4278-496: The United States. These efforts had important effects, but they lacked any central organization and planning, and failed to meet many of Europe's more fundamental needs. Already in 1943, the United Nations Relief and Rehabilitation Administration (UNRRA) was founded to provide relief to areas liberated from Germany. UNRRA provided billions of dollars of rehabilitation aid and helped about 8 million refugees. It ceased

4371-487: The aid, the Yugoslavs, led by Josip Broz (Tito), initially went along and rejected the Marshall Plan. However, in 1948 Tito broke decisively with Stalin on other issues. Yugoslavia requested American aid. American leaders were internally divided, but finally agreed and began sending money on a small scale in 1949 and on a much larger scale in 1950–53. The American aid was not part of the Marshall Plan. In late September,

4464-587: The closing chapters of the war and agricultural production was only 35 percent of what it was before the war. At the Potsdam Conference , the victorious Allies ceded roughly 25 percent of Germany's pre-Anschluss territory to Poland and the Soviet Union . The German population in this area was expelled , together with the Germans of the Sudetenland and the German populations scattered throughout

4557-512: The conclusion in his book, Science Technology and Reparations: Exploitation and Plunder in Post-war Germany , that the "intellectual reparations" taken by the U.S. and the UK amounted to close to $ 10 billion, equivalent to around $ 150 billion in 2024, concurrent to Operation Paperclip . As soon as 1945, the Allied forces worked heavily on removing Nazi influence from Germany in a process dubbed as " denazification ". By mid-1947,

4650-460: The destruction of transportation left them economically isolated. None of these problems could be easily remedied, as most nations engaged in the war had exhausted their treasuries in the process. The only major powers whose infrastructure had not been significantly harmed in World War II were the United States and Canada. They were much more prosperous than before the war, but exports were

4743-409: The devastated continental powers, it would receive virtually no aid. The Americans were pushing the importance of free trade and European unity to form a bulwark against communism. The Truman administration, represented by William L. Clayton , promised the Europeans that they would be free to structure the plan themselves, but the administration also reminded the Europeans that implementation depended on

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4836-472: The dollar value of the goods in local currency ("counterparts") into so-called ERP Special Accounts that were set up at the country's central bank. This way of operation held three advantages: the provision of U.S. goods to Europe without European dollar payments helped to narrow the dollar gap that strangled European reconstruction; the accumulated funds could be used for investments in long-term reconstruction (as happened in France and Germany) or for paying off

4929-475: The east had crowded in. Food production was two-thirds of the pre-war level in 1946–48, while normal grain and meat shipments no longer arrived from the East. The drop in food production can be attributed to a drought that killed a major portion of the wheat crop while a severe winter destroyed most of the wheat crop the following year. This caused most Europeans to rely on a 1,500-calorie-per-day diet. Furthermore,

5022-499: The end of World War II . Replacing an earlier proposal for a Morgenthau Plan , it operated for four years beginning on April 3, 1948, though in 1951, the Marshall Plan was largely replaced by the Mutual Security Act . The goals of the United States were to rebuild war-torn regions, remove trade barriers , modernize industry , improve European prosperity and prevent the spread of communism . The Marshall Plan proposed

5115-493: The end of the war and the start of the plan that is counted separately from the Marshall Plan. The Marshall Plan was replaced by the Mutual Security Plan at the end of 1951; that new plan gave away about $ 7.5 billion annually until 1961 when it was replaced by another program. 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

5208-500: The end of the war, industrialist Lewis H. Brown wrote, at the request of General Lucius D. Clay , A Report on Germany , which served as a detailed recommendation for the reconstruction of post-war Germany and served as a basis for the Marshall Plan. The initiative was named after United States Secretary of State George C. Marshall . The plan had bipartisan support in Washington, where the Republicans controlled Congress and

5301-441: The form of the Soviet Union's offer of a lucrative trade agreement lasting for five years, a grant amounting to the approximate equivalent of $ 450 million (in 1948; the sum would have been $ 4.4 billion in 2014 ) in the form of long-term credit and loans and the provision of 200,000 tonnes of grain, heavy and manufacturing machinery and factories and heavy industries to Poland. The Marshall Plan participants were not surprised when

5394-406: The four years of the plan. Congress reflected public opinion, which resonated with the ideological argument that communism flourishes in poverty. Across America, multiple interest groups, including business, labor, farming, philanthropy, ethnic groups, and religious groups, saw the Marshall Plan as an inexpensive solution to a massive problem, noting it would also help American exports and stimulate

5487-464: The four years that the plan was in effect, the United States donated $ 17 billion (equivalent to $ 240.95 billion in 2023) in economic and technical assistance to help the recovery of the European countries that joined the Organisation for European Economic Co-operation . The $ 17 billion was in the context of a US GDP of $ 258 billion in 1948, and on top of $ 17 billion in American aid to Europe between

5580-517: The gigantic sums of money would be handled efficiently. Turning the plan into reality required negotiations among the participating nations. Sixteen nations met in Paris to determine what form the American aid would take, and how it would be divided. The negotiations were long and complex, with each nation having its own interests. France's major concern was that Germany not be rebuilt to its previous level of might. The Benelux countries (Belgium, Netherlands, and Luxembourg), despite also suffering under

5673-529: The group. After a series of dissolutions and departures, the five current institutes that write the report are: The GD is Germany's leading economic report that generates economic forecasts and produces policy recommendations. It is nominally produced by the Project Group Community Diagnosis (Institute der Projektgruppe Gemeinschaftsdiagnose), an independent group of economists from each represented economic institute. The results of

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5766-567: The harsh winter of 1946–47 . From July 1945 through June 1946, the United States shipped 16.5 million tons of food, primarily wheat, to Europe and Japan. It amounted to one-sixth of the American food supply and provided 35 trillion calories, enough to provide 400 calories a day for one year to 300 million people. Especially damaged was transportation infrastructure, as railways, bridges, and docks had been specifically targeted by airstrikes, while much merchant shipping had been sunk. Although most small towns and villages had not suffered as much damage,

5859-545: The introduction of a currency reform to halt the rampant inflation. This type of action to help the German economy had been prohibited by the directive. In 1947, the Marshall Plan , initially known as the "European Recovery Program" was initiated. In the years 1947–1952, some $ 13 billion of economic and technical assistance – equivalent to around $ 140 billion in 2017 – were allocated to Western Europe. Despite protests from many beneficiaries,

5952-574: The large shipments of food stolen from occupied nations during the war no longer reached Germany. Industrial production fell more than half and reached pre-war levels at the end of 1949. While Germany struggled to recover from the destruction of the War, the recovery effort began in June 1948, moving on from emergency relief. The currency reform in 1948 was headed by the military government and helped Germany to restore stability by encouraging production. The reform revalued old currency and deposits and introduced

6045-576: The left, led by Henry A. Wallace , the former vice president. He said the plan was hostile to the Soviet Union, a subsidy for American exporters, and sure to polarize the world between East and West. However, opposition against the Marshall Plan was greatly reduced by the shock of the communist coup in Czechoslovakia in February 1948. The appointment of the prominent businessman Paul G. Hoffman as director reassured conservative businessmen that

6138-416: The most evident signs and reflections of tight Soviet control and domination over the region, Jan Masaryk , the foreign minister of Czechoslovakia, was summoned to Moscow and berated by Stalin for considering Czechoslovakia's possible involvement with and joining of the Marshall Plan. The prime minister of Poland, Józef Cyrankiewicz , was rewarded by Stalin for his country's rejection of the plan which came in

6231-580: 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. A common American interpretation of the program's role in European recovery was expressed by Paul Hoffman, head of the Economic Cooperation Administration, in 1949 when he told Congress Marshall aid had provided

6324-425: The one hand, and the anti-imperialist and democratic camp on the other". Although the Eastern Bloc countries, except Czechoslovakia, had immediately rejected Marshall Plan aid, Eastern Bloc communist parties were blamed for permitting even minor influence by non-communists in their respective countries during the run-up to the Marshall Plan. The meeting's chair, Andrei Zhdanov, who was in permanent radio contact with

6417-475: The operation of displaced persons camps in Europe in 1947; many of its functions were transferred to several UN agencies. After Marshall's appointment in January 1947, administration officials met with Soviet Foreign Minister Vyacheslav Molotov and others to press for an economically self-sufficient Germany, including a detailed accounting of the industrial plants, goods and infrastructure already removed by

6510-399: The plan's passage through Congress. A majority of Congress members were committed to free trade and European integration and were hesitant to spend too much of the money on Germany. However, before the Marshall Plan was in effect, France, Austria, and Italy needed immediate aid. On December 17, 1947, the United States agreed to give $ 40 million to France, Austria, China, and Italy. Agreement

6603-419: The plan, and thus be pulled out of the emerging Soviet bloc, but that did not happen. In January 1947, Truman appointed retired General George Marshall as Secretary of State. In July 1947 Marshall scrapped Joint Chiefs of Staff Directive 1067 , which was based on the Morgenthau Plan which had decreed "take no steps looking toward the economic rehabilitation of Germany [or] designed to maintain or strengthen

6696-477: The publication are subsequently discussed by representatives of the Federal Ministry for Economic Affairs and Energy and Energy and the Federal Ministry of Finance and serve as the basis for their economic forecasts. Key areas of discussion in recent reports include free trade agreements, demographic changes in Germany, and tax reform. Reconstruction of Germany The reconstruction of Germany

6789-479: The reduction of interstate barriers and the economic integration of the European Continent while also encouraging an increase in productivity as well as the adoption of modern business procedures. The Marshall Plan aid was divided among the participant states roughly on a per capita basis. A larger amount was given to the major industrial powers, as the prevailing opinion was that their resuscitation

6882-434: The rest of Eastern Europe. Between 1.5 and 2 million are said to have died in the process, depending on source. As a result, the population density grew in the "new" Germany that remained after the dismemberment. As agreed at Potsdam, an attempt was made to convert Germany into a pastoral and agricultural nation, allowing only light industry. Many factories were dismantled as reparations or were simply destroyed as proposed in

6975-464: The restoration of Germany as a contributor to that productivity." Hoover's report led to a realization in Washington that a new policy was needed; "almost any action would be an improvement on current policy." In Washington, the Joint Chiefs declared that the "complete revival of German industry, particularly coal mining" was now of "primary importance" to American security. The United States

7068-467: The same aid to the Soviet Union and its allies , but they refused to accept it, under Soviet pressure (as was the case for Finland's rejection) as doing so would allow a degree of US control over the communist economies. Secretary Marshall became convinced Stalin had no interest in helping restore economic health in Western Europe. President Harry Truman signed the Marshall Plan on April 3, 1948, granting $ 5 billion in aid to 16 European nations. During

7161-474: The same day, Truman called a press conference to take away headlines. In contrast, Dean Acheson , an Under Secretary of State, was dispatched to contact the European media, especially the British media, and the speech was read in its entirety on the BBC . In the audience at Harvard was International Law and Diplomacy graduate student Malcolm Crawford, who had just written his Master's thesis entitled "A Blueprint for

7254-646: The same year, the participating countries (Austria, Belgium , Denmark, France, West Germany, the United Kingdom, Greece, Iceland , Ireland, Italy, Luxembourg , the Netherlands , Norway, Sweden, Switzerland , Turkey, and the United States) signed an accord establishing a master financial-aid-coordinating agency, the Organisation for European Economic Co-operation (later called the Organisation for Economic Co-operation and Development or OECD ), which

7347-522: The success of denazification and the start of the Cold War led to a re-consideration of policy, as the Germans were seen as possible allies in the contest, and it was becoming clear that the economic recovery of Europe was dependent on the reactivation of German industry. With the repudiation of the U.S. occupation directive JCS 1067 in July 1947, the Western Allies were able to start planning for

7440-488: The view of the State Department under President Harry S Truman , the United States needed to adopt a definite position on the world scene or fear losing credibility. The emerging doctrine of containment (as opposed to rollback ) argued that the United States needed to substantially aid non-communist countries to stop the spread of Soviet influence. There was also some hope that the Eastern Bloc nations would join

7533-487: The war had badly damaged most major cities, and industrial facilities were especially hard-hit. Millions of refugees were in temporary camps. The region's trade flows had been thoroughly disrupted; millions were in refugee camps living on aid from the United States, which was provided by the United Nations Relief and Rehabilitation Administration and other agencies. Food shortages were severe, especially in

7626-419: The war. Much more important were efforts to modernize European industrial and business practices using high-efficiency American models, reducing artificial trade barriers, and instilling a sense of hope and self-reliance. 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 at least 35% higher than in 1938. Over

7719-613: Was Stalin who had directed them not to take opposition stances in 1944. The French communist party, like others, was then to redirect its mission to "destroy capitalist economy" and that the Soviet Communist Information Bureau ( Cominform ) would take control of the French Communist Party's activities to oppose the Marshall Plan. When they asked Zhdanov if they should prepare for armed revolt when they returned home, he did not answer. In

7812-437: Was a long process of rebuilding Germany after the destruction endured during World War II . Germany suffered heavy losses during the war, both in lives and industrial power. Approximately 6.9 to 7.5 million Germans died, representing roughly 8.5 percent of the German population and a fraction of total World War II casualties estimated at 70 to 85 million people. The country's cities were severely damaged from heavy bombing in

7905-441: Was already spending a great deal to help Europe recover. Over $ 14 billion was spent or loaned during the postwar period through the end of 1947 and is not counted as part of the Marshall Plan. Much of this aid was designed to restore infrastructure and help refugees. Britain, for example, received an emergency loan of $ 3.75 billion. The United Nations also launched a series of humanitarian and relief efforts almost wholly funded by

7998-430: Was complemented by an upsurge of the freedom-loving peoples' liberation struggle against the fascist predators and their hirelings." It argued that "the bosses of Wall Street" were "tak[ing] the place of Germany, Japan, and Italy". The Marshall Plan was described as "the American plan for the enslavement of Europe". It described the world now breaking down "into basically two camps—the imperialist and antidemocratic camp on

8091-590: Was essential for the general European revival. Somewhat more aid per capita was also directed toward the Allied nations , with less for those that had been part of the Axis or remained neutral . The largest recipient of Marshall Plan money was the United Kingdom (receiving about 26% of the total). The next highest contributions went to France (18%) and West Germany (11%). Some eighteen European countries received Plan benefits. Although offered participation,

8184-498: Was eventually reached, and the Europeans sent a reconstruction plan to Washington, which was formulated and agreed upon by the Committee of European Economic Co-operation in 1947. In the document, the Europeans asked for $ 22 billion in aid. Truman cut this to $ 17 billion in the bill he put to Congress. On March 17, 1948, Truman addressed European security and condemned the Soviet Union before a hastily convened Joint Session of Congress . Attempting to contain spreading Soviet influence in

8277-482: Was headed by Frenchman Robert Marjolin . According to Armin Grünbacher: The U.S. government did not give money directly to the participating countries so that they could buy whatever they thought they needed. Instead the U.S. delivered the goods and provided services, mainly transatlantic shipping, to the participating governments, which then sold the commodities to businesses and individuals who had to pay

8370-436: Was kept idle the economic recovery of Europe was delayed." By July 1947, Washington realized that economic recovery in Europe could not go forward without the reconstruction of the German industrial base, deciding that an "orderly, prosperous Europe requires the economic contributions of a stable and productive Germany." In addition, the strength of Moscow-controlled communist parties in France and Italy worried Washington. In

8463-538: Was no certainty that the plan would succeed, but said it would halt economic chaos, sustain Western civilization, and stop further Soviet expansion. Senator Robert A. Taft (R-Ohio) hedged on the issue. He said it was without economic justification; however, it was "absolutely necessary" in "the world battle against communism." In the end, only 17 senators voted against it on March 13, 1948 A bill granting an initial $ 5 billion passed Congress with strong bipartisan support. Congress eventually allocated $ 12.4 billion in aid over

8556-445: Was outmaneuvered by the emerging internationalist wing, led by Senator Arthur H. Vandenberg (R-Michigan). The opposition argued that it made no sense to oppose communism by supporting the socialist governments in Western Europe; and that American goods would reach Russia and increase its war potential. They called it "a wasteful 'operation rat-hole'" Vandenberg, assisted by Senator Henry Cabot Lodge Jr. (R-Massachusetts) admitted there

8649-664: Was permitted, swift and effective. During the mid-1950s, the unemployment rate in Germany was so low that it led to an influx of Turkish immigrants into the country's labor force . Germany's economy continued to improve until the 1973 oil crisis . Marshall Plan The Marshall Plan (officially the European Recovery Program , ERP ) was an American initiative enacted in 1948 to provide foreign aid to Western Europe . The United States transferred $ 13.3 billion (equivalent to $ 173.8 billion in 2024) in economic recovery programs to Western European economies after

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