The Marshall Plan and the Shaping of American Strategy

Bruce D. Jones

• Publisher: Brookings Institution Press
• Year: 2017
• ISBN:
  9780815729549
• Topic: Politik & Internationale Beziehungen
• Subtopic: Demokratie

How the United States helped restore a Europe battered by World War II and created the foundation for the postwar international order

Seventy years ago, in the wake of World War II, the United States did something almost unprecedented in world history: It launched and paid for an economic aid plan to restore a continent reeling from war. The European Recovery Plan—better known as the Marshall Plan, after chief advocate Secretary of State George C. Marshall—was in part an act of charity but primarily an act of self-interest, intended to prevent postwar Western Europe from succumbing to communism. By speeding the recovery of Europe and establishing the basis for NATO and diplomatic alliances that endure to this day, it became one of the most successful U.S. government programs ever.

The Brookings Institution played an important role in the adoption of the Marshall Plan. At the request of Arthur Vandenberg, chairman of the Senate Foreign Relations Committee, Brookings scholars analyzed the plan, including the specifics of how it could be implemented. Their report gave Vandenberg the information he needed to shepherd the plan through a Republican-dominated Congress in a presidential election year.

In his foreword to this book, Brookings president Strobe Talbott reviews the global context in which the Truman administration pushed the Marshall Plan through Congress, as well as Brookings' role in that process. The book includes Marshall's landmark speech at Harvard University in June 1947 laying out the rationale for the European aid program, the full text of the report from Brookings analyzing the plan, and the lecture Marshall gave upon receiving the Nobel Peace Prize in 1953. The book concludes with an essay by Bruce Jones and Will Moreland that demonstrates how the Marshall Plan helped shape the entire postwar era and how today's leaders can learn from the plan's challenges and successes.

TWO

BROOKINGS REPORT FOR THE SENATE FOREIGN RELATIONS COMMITTEE

January 22, 1948

Marshall’s Harvard speech may have set a lodestar for American foreign policy, but the hard tasks remained of galvanizing public support and crafting an effective means of implementation. Both started with the U.S. Senate. As outlined in Strobe Talbott’s foreword to this volume, Senator Arthur Vandenberg quickly drew Brookings into this venture. On December 31, 1947, he requested of Institution President Harold Moulton a report outlining how best to implement Marshall’s vision. Presented to the Foreign Relations Committee only twenty-three days later, the Administration of United States Aid for a European Recovery Program was a success on both fronts. The document not only laid out the skeleton of the Economic Cooperation Agency that would coordinate and direct the vast resources needed for European recovery, but also was immediately released to the press to allay public skepticism around the project. Though not the first Brookings report of its kind, the 1948 document reflects a high standard of quality and impact that Brookings scholars strive for to this day.

COMMITTEE ON FOREIGN RELATIONS

ARTHUR H. VANDENBERG, Michigan, Chairman

ARTHUR CAPPER, Kansas

WALLACE H. WHITE, Jr. Maine

ALEXANDER WILEY, Wisconsin

H. ALEXANDER SMITH, New Jersey

BOURKE B. HICKENLOOPER, Iowa

HENRY CABOT LODGE, JR., Massachusetts

TOM CONNALLY, Texas

WALTER F. GEORGE, Georgia

ROBERT F. WAGNER, New York

ELBERT D. THOMAS, Utah

ALBEN W. BARKLEY, Kentucky

CARL A. HATCH, New Mexico

FRANCIS O. WILCOX, Chief of Staff

C.C. O’DAY, Clerk

INTRODUCTORY NOTE

Even before the Committee on Foreign Relations began its study of the European recovery program it was apparent that the major problems involved in the administration of such a program deserved very careful consideration. Accordingly, on December 30, 1947, the chairman of the committee requested the Brookings Institution to prepare a brief analysis of the main administrative proposals that have been put forward, taking into account the experience of our Government with respect to similar programs during recent years. It was believed that as a result of such a study certain basic principles might emerge which would be of assistance to the committee in its attempt to find the type of administrative organization that would help insure an effective ERP.

The report of the Brookings Institution is printed herewith for the use of the Senate and Committee on Foreign Relations. The conclusions of the Brookings Institution will be found on pages [64] to [76].

REPORT ON ADMINISTRATION OF UNITED STATES AID FOR A EUROPEAN RECOVERY PROGRAM

INTRODUCTION

This report on the administration of United States aid for a European recovery program has been prepared at the request of the chairman of the Committee on Foreign Relations of the United States Senate. In his request, the chairman asked the Brookings Institution to undertake a rapid review and analysis of the principal proposals that have been made for the administration of the program, taking into account the experience with the administration of similar programs during the past few years. Upon the basis of this study, an independent appraisal was requested of the requirements for an administrative organization that would insure maximum business efficiency in proper coordination with other aspects of our foreign policy and the conduct of foreign relations.

In this undertaking, a review has been made of the three major proposal emanating from within the Government, namely the report by the President’s Committee on Foreign Aid (known as the Harriman committee); the reports of the House Select Committee on Foreign Aid (known as the Herter committee) and the bill, H.R. 4579 (the Herter bill), that embodies the recommendations of the committee; and the special message from the President to the Congress on December 19, 1947, together with the draft bill (subsequently introduced as H.R. 4840) and the supporting report submitted by the Department of State. Extensive consultations were held with many persons who participated in the preparation of the foregoing proposals and consideration was given to the bases upon which their conclusions were drawn.

Account has also been taken of the proposals for administration of the program that have been put forward by private organizations, such as the Chamber of Commerce of the United States, the National Association of Manufacturers, the National Foreign Trade Council, the Congress of Industrial Organizations, and the National Planning Association—to name only a few—and of proposals and suggestions of a more informal nature made by private individuals both inside and outside the Government. Finally, recent American programs for overseas relief, economic development, and aid were reviewed by members of our staff who have had extensive experience in this general field.

The results of this study and the conclusions reached are presented in the three parts of this report. Part 1 outlines briefly the nature of the administrative problems involved in the proposed European Recovery Program. The outstanding issues that the Congress faces in determining the character of the administrative arrangements for the program are set forth in part 2, together with a summary of the main arguments that have been advanced with respect to each issue. Part 3 states the conclusions reached.

PART 1
THE NATURE OF THE PROBLEM

The administration of United States aid for a European recovery program, in its manifold policy and operating aspects, must be considered in relation to the basic objectives of the program. The central purpose is to help the participating countries, individually and as a group, to help themselves in achieving economic stability and in strengthening free institutions. The attainment of this purpose requires the operation of a gigantic foreign economic program, which, in some of its phases, partakes of the character of business enterprise. But the administration of the program is not merely a business matter. In the nature of the case, the program involves relations among sovereign nations and is, therefore, inextricably bound up with a wide range of United States foreign policies at the highest level of government.

Once Congress approves the program, bilateral agreements must be negotiated by the United States Government with each participating European country, under which the latter will be required to accept certain obligations, varying according to circumstances, as a condition of receiving aid. Simultaneously, some arrangements will have to be worked out with the overall continuing organization that it is expected will be created in Europe by multilateral agreement among the participating countries. From time to time there will be need for subsequent negotiations involving possible modifications of these basic agreements. The program thus calls for the initial establishment and possible later revision of a new set of relationships among a large number of governments. It also calls for special liaison with a number of existing and contemplated international organizations, both European and general, in addition to the special organization set up by the participating countries.

The day-to-day administrative operations of the program will take place within the framework provided by this complex of agreements. The supplying of the goods and services under these agreements cannot be handled simply by turning an experienced purchasing agent loose with the requisite funds. A program must first be planned—in relation to the specific needs of each of the participating countries and with due regard to available supplies in the United States, as well as to the possibility of obtaining some portion of the materials from other countries. There is thus required wide knowledge of economic conditions in Europe, the capacity of the domestic economy, possibilities international trade, and negotiations with foreign governments as well as skill in routine business operations.

Since one of the objectives of the program is to promote rather than retard the resumption of commercial operations between countries, much of the procurement is expected to be carried on through normal business channels. Such purchases will, however, have to be guided by the administration to insure conformity with the program. Export controls, priorities, and powers of allocation will doubtless be required in some cases to lessen the adverse effect on the domestic economy. Provision will have to be made for the efficient use of transport facilities within in the United States and in overseas shipments. The employment of overseas transportation raises such questions of policy as the distribution of cargoes between United States and foreign-flag vessels, those concerning the sale or charter of United States Government-owned ships, the interests of the United States merchant marine and national defense, and problems of coordination in procurement and operation of shipping. Important decisions will also need to be made on a wide range of financial problems, relating both the expenditure of Government funds and to the stimulation of private financing.

Many of these activities will have a direct bearing on the capacity, health, and strength of the American economy and, from this standpoint, they are obviously not exclusively the concern of the administration of the European recovery program. In some cases the direct assistance of many departments of the Government will be necessary. The decisions to be made affect the policies not only of the Department of State, but also in some instances the Departments of the Treasury, Commerce, and Agriculture, the Military Establishment, the Maritime Commission, and other agencies of the Government.

At the European end, the administrative problems are of the most diverse character. The administration will be concerned, in every participating country, with such problems as the following: The adequacy of recovery programs; methods of allocating, distributing, and using American supplies; trends in export and import trade, including trade with nonparticipant European countries; currency reform and exchange stabilization; fiscal policies; the use and control of local currencies deposited in earmarked or special accounts; and facilitating the sale of special materials to the United States of stock piling and other purposes. In connection with joint undertakings that transcend the efforts of particular countries, the administration will need to collaborate closely with the organization established for that purpose by the participating countries.

To prevent the possibility of dissipating or misusing the aid given, it is vitally important that the administration set up certain tests by which to gauge the general progress of the program as a whole and the degree of compliance on the part of the European countries individually and collectively. Such tests must be worked out with responsible officials of the European governments. Because of constantly changing conditions the administration will need to have discretion within the framework of the commitments made in the government agreements. It is obvious that such decisions have an important bearing on many aspects of American foreign policy, especially if occasions arise for the termination of aid.

Western Germany will present many special problems, whether American economic operations there are integrated with the program worked out for the 16 European countries or merely coordinated with it. The situation in Germany differs, however, from that in the other because there is no sovereign German government with which to deal, and direct operations are therefore involved. These operations are complicated by the fact that they need to be coordinated with the operations of the other two occupying powers, Great Britain and France.

Two things are evident from this brief outline of the nature of the program: First, the administrative task is one of extraordinary magnitude and complexity, requiring an unusual combination of experience, skill, and judgment; and second, it is neither a purely business job nor a purely governmental operation, but a mixture of both. The problem before the Congress is thus to create administrative machinery that will insure an effective carrying out of the business aspects of the program in proper coordination with the requirements of our domestic economy and at the same time promote to the fullest possible extent the attainment of the Nation’s foreign policy objectives.

PART 2
OUTSTANDING ISSUES

The major issues that the Congress faces in determining the character of the administrative arrangements for the European recovery program arise both from differences in evaluations of tasks to be performed and from varying interpretations of the results of the administrative experience of the Government, especially during and since the war, in administering similar programs

Despite these differences, current proposals for administering the program seem to be in agreement on the following points:

1. A new agency.—Primary responsibility for administering the program should be lodged in a new temporary administrative agency. Success of the program is so important to the national well-being of the United States that the organizational arrangement for the agency should be designed to attract men of outstanding ability to the Government for service in it.
2. The need for flexibility.—The unpredictable situations that may have to be faced and the speed that is necessary in carrying out the program if it is to be effective require that a large degree of financial and administrative flexibility should be inherent in any organization that is established.
3. Organization abroad.—The operations required in Europe are of such primary importance that an overseas organization will be essential.

Beyond these areas of agreement, however, lie many issues that must be resolved in prescribing the administrative arrangements for the program. Some of these must be determined by the Congress. Others may be left for later administrative determination, provi...