George Marshall and the Marshall Plan: Europe's Recovery

Introduction: George Marshall and the Vision for Peace

Within the history of the world, few Americans will be as widely remembered for working toward world peace as George Marshall. Marshall, who was named Chief of Staff of the United States Army during World War II, was charged with recruiting and training several million men and women to serve in the armed forces. He also had the task of planning military operations that would impact the world on a global scale.

While Marshall handled these duties with intelligence and professionalism, the most important contribution he made to the world was when he authored the Marshall Plan. "The idea of extending billions of American dollars for European economic recovery was not his alone. He was only one of many Western leaders who realized the tragic consequences of doing nothing for those war-shattered countries in which basic living conditions were deplorable and still deteriorating two years after the end of the fighting. But Marshall, more than anyone else, led the way." His insight and compassion for the nations ravaged by war provided a path for America to reach out and embrace those nations, thereby demonstrating the true meaning of a democratic system and what it allows that system to do for others.

The Marshall Plan: Origins and Structure

It was June 5, 1947, when the world first heard about the Marshall Plan. Marshall arrived at Harvard University to explain its blueprint to the audience assembled there. The war had devastated much of Europe, including Greece, and the entire region had endured one of the harshest winters in recorded history immediately following the conflict.

"The nations of Europe had nothing to sell for hard currency, and the democratic socialist governments in most countries were unwilling to adopt the draconian proposals for recovery advocated by old-line classical economists. Something had to be done, both for humanitarian reasons and also to stop the potential spread of communism westward."

The Marshall Plan, in short, was a program that would provide many billions of dollars to war-torn nations, provided that those nations could produce a single viable rebuilding plan when they applied for a share of the funds. This requirement meant that European nations would have to work as a unified body, detailing how the funds would be used — thereby unifying the nations involved.

The money being offered to Europe would equal approximately $130 billion in today's dollars. The plan was also offered to the Soviet Union; however, Stalin accused the United States of using it as a ploy and refused to participate. "The Marshall Plan benefited the American economy as well. The money would be used to buy goods from the United States, and they had to be shipped across the Atlantic on American merchant vessels. But it worked. By 1953 the United States had pumped in $13 billion, and Europe was standing on its feet again. Moreover, the Plan included West Germany, which was thus reintegrated into the European community."

In his address at Harvard, Marshall outlined the basics of why he structured the plan as he did and what he hoped it would accomplish. He opened with a general overview of the way the war had left Europe unable to rebuild without substantial assistance. "The remedy lies in breaking the vicious circle and restoring the confidence of the European people in the economic future of their own countries and of Europe as a whole. The manufacturer and the farmer throughout wide areas must be able and willing to exchange their products for currencies the continuing value of which is not open to question."

Marshall also stressed that there would be grave economic consequences for America as well if Europe failed to recover. "The role of this country should consist of friendly aid in the drafting of a European program so far as it may be practical for us to do so. The program should be a joint one, agreed to by a number, if not all, European nations."

The Marshall Plan's Impact on Greece

Before the war, the economic situation in Greece had been a positive one. Following the conflict, the nation began a slow recovery process. "In 1949, the Greek Ministry of Welfare listed 1,617,132 persons as indigent; destitute, despondent, and directionless, they looked to Athens for assistance. Another 80,000 to 100,000 had fled their homeland voluntarily or been resettled forcibly in various parts of the communist world. The German occupation and the Civil War had left the countryside devastated, the economic infrastructure largely in rubble, and the government broke. The most pressing need, then, was the material reconstruction of the country, which required continuation of large-scale United States aid. In the early days of the Cold War, the West gave priority to reinvigorating Greece because of its strategic location."

The Marshall Plan provided an American Mission of Aid to Greece, commonly referred to as AMAG, created for the purpose of overseeing the nation's economic recovery. The United States began sending millions of dollars to Greece to support these postwar efforts. "As part of the agreement between Greece and the United States, members of the AMAG were given wide-ranging supervisory powers that quickly led to the formation of parallel administrations — one Greek and one American. Greece had become, for all intents and purposes, a client state of the United States."

In the early stages, most of the funds provided by America went toward Greek military expenses, including building a military structure whose primary function was to stop the expansion of communism in the region. Once Greece believed its military was sufficiently strong, American dollars were redirected toward stabilizing and rebuilding the national currency.

"The national currency, the drachma, required stabilization because bouts of hyperinflation during the war years had rendered it valueless. Faith had to be restored in the monetary system. Exports had to be revived. And the core of Greek agriculture and industry required rebuilding. Greece — especially Athens — came to resemble a giant work site, with building construction everywhere; new roads were built and old ones refurbished; and hydroelectric stations were built to power new industry. In 1953 the drachma was devalued in order to make Greek products more competitive. Other measures were taken to attract foreign capital to Greece. These policies ushered in a new phase of growth in the early 1950s. However, massive dependence on foreign aid came at the price of foreign dependence in international relations."

The initial efforts of postwar reconstruction under the Marshall Plan actually provided very little benefit to the nation of Greece. Part of that may be attributed to the fact that Greece endured a major Civil War between 1946 and 1949, which shifted the world's attention for postwar reconstruction toward other nations.

Conclusion

The Marshall Plan was designed by George Marshall to help the devastated nations of Europe rebuild following World War II. Unfortunately, Greece not only endured the World War but immediately entered into a national Civil War, and because of that, the Marshall Plan was not a very effective tool for the nation in its early stages.

Once the Civil War ended, however, America funneled millions of dollars into the national rebuilding program, and Greece went on to achieve the most successful growth in gross national product of any European nation for several years. The Greek people were initially hesitant to accept Marshall Plan aid, distrustful of the motives behind it. Once the aid began arriving and its positive impact became apparent, however, the national attitude shifted to one of gratitude, and Greece continued its participation in the program.