Happy Anniversary to The Marshall Plan

rimrocker · Jun 5, 2013

On this day in 1947, Secretary of State George C. Marshall delivered a speech at Harvard that laid out the concept of the Marshall Plan. Here are some excerpts:

In considering the requirements for the rehabilitation of Europe the physical loss of life, the visible destruction of cities, factories, mines and railroads was correctly estimated, but it has become obvious during recent months that this visible destruction was probably less serious than the dislocation of the entire fabric of European economy. For the past ten years conditions have been highly abnormal. The feverish preparation for war and the more feverish maintenance of the war effort engulfed all aspects of national economies. Machinery has fallen into disrepair or is entirely obsolete. Under the arbitrary and destructive Nazi rule, virtually every possible enterprise was geared into the German war machine. Long-standing commercial ties, private institutions, banks, insurance companies and shipping companies disappeared, through loss of capital, absorption through nationalization or by simple destruction. In many countries, confidence in the local currency has been severely shaken. The breakdown of the business structure of Europe during the war was complete. Recovery has been seriously r****ded by the fact that two years after the close of hostilities a peace settlement with Germany and Austria has not been agreed upon. But even given a more prompt solution of these difficult problems, the rehabilitation of the economic structure of Europe quite evidently will require a much longer time and greater effort than had been foreseen.
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The truth of the matter is that Europe’s requirements for the next three or four years of foreign food and other essential products--principally from America--are so much greater than her present ability to pay that she must have substantial additional help, or face economic, social and political deterioration of a very grave character.

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.
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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 is logical that the United States should do whatever it is able to do to assist in the return of normal economic health in the world, without which there can be no political stability and no assured peace. Our policy is directed not against any country or doctrine but against hunger, poverty, desperation and chaos. 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. Such assistance, I am convinced, must not be on a peace-meal basis as various crises develop. Any assistance that this Government may render in the future should provide a cure rather than a mere palliative. Any government that is willing to assist in the task of recovery will find full cooperation, I am sure, on the part of the United States Government. Any government which maneuvers to block the recovery of other countries cannot expect help from us. Furthermore, governments, political parties or groups which seek to perpetuate human misery in order to profit therefrom politically or otherwise will encounter the opposition of the United States.
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An essential part of any successful action on the part of the United States is an understanding on the part of the people of America of the character of the problem and the remedies to be applied. Political passion and prejudice should have no part. With foresight, and a willingness on the part of our people to face up to the vast responsibility which history has clearly placed upon our country, the difficulties I have outlined can and will be overcome.
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But to my mind, it is of vast importance that our people reach some general understanding of what the complications really are, rather than react from a passion or a prejudice or an emotion of the moment. As I said more formally a moment ago, we are remote from the scene of these troubles. It is virtually impossible at this distance merely by reading, or listening, or even seeing photographs or motion pictures, to grasp at all the real significance of the situation. And yet the whole world of the future hangs on a proper judgment. It hangs, I think, to a large extent on the realization of the American people, of just what are the various dominant factors. What are the reactions of the people? What are the justifications of those reactions? What are the sufferings? What is needed? What can best be done? What must be done?
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Winston Churchill was much more resigned. Describing Europe after the war, he said: “It is a rubble heap, a charnel house, a breeding ground of pestilence and hate.”

Into that stepped Marshall. And even though Kennan and others contributed to the idea, it is called The Marshall Plan for a reason: Marshall described it, set it in context for both average Americans and politicians, and implemented it without "political passion and prejudice." Truman said of the Marshall Plan: “In all the history of the world we are the first great nation to feed and support the conquered.”

The genius of the plan was that it both addressed the humanitarian needs while encouraging the democratic governments that would check the spread of the Soviet Union. It is not a given that the history of Europe and the Soviet Union would have played out like it did.

George C. Marshall is, I think, the most underrated great American in our history. We are not the country we are without him and the world is not the world it is without him.

MoonDogg · Jun 5, 2013

Haymitch · Jun 5, 2013

As economist Tyler Cowen has noted, the countries that received the most Marshall Plan money (allies Britain, Sweden, and Greece) grew the slowest between 1947 and 1955, while those that received the least money (axis powers Germany, Austria, and Italy) grew the most. In terms of post-war prosperity, then, it eventually paid to be a political enemy of the U.S. instead of a "beneficiary" of international charity.

But this truth is only news if you think that the Marshall Plan was genuinely intended to help foreign countries. But as with all government programs, it pays returns to look beneath the surface. So what exactly was the point of the Marshall Plan, named for General George Marshall? It's been well-described in the works of historians William Appleman Williams, Gabriel Kolko, Stephen Ambrose, and Alan Milward.

Marshall himself played the role of a patsy, delivering prepackaged speeches written by the players behind the plan. His original pitch, given at Harvard, was for money to end "hunger, poverty, desperation, and chaos." But the real upshot of the Marshall Plan was a political maneuver to loot American taxpayers to keep influential American corporations on the government dole. The Plan's legacy was the egregious and perpetual use of foreign aid for domestic political and economic purposes.

http://mises.org/freemarket_detail.aspx?control=120
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Also see Henry Hazlitt's book on the subject.

Link: http://mises.org/books/dollarssave.pdf

da_juice · Jun 5, 2013

Haymitch said: ↑

Also see Henry Hazlitt's book on the subject.
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i read somewhere that the reason the Axis powers fared better was because their countries were completely destroyed, and were able to rebuild more efficiently and modernly.

Cohete Rojo · Jun 5, 2013

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geeimsobored · Jun 5, 2013

Haymitch said: ↑

Also see Henry Hazlitt's book on the subject.
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That is such a silly argument.

You can't view these countries in a vaccuum. Countries like the UK and France had huge colonial possesions that went from being an economic boost for the host countries to being an anchor that dragged them down. The war wrecked the ability of countries like the UK and France to finance colonial administrations and diverted money that was needed for infrastructure at home.

On top of that, both countries actually gained colonial possesions after the war which were also weakened from the war. The onus then went on those countries to rebuild those new colonies as well.

On top of all of this, Bretton Woods pretty much killed the entire reason to own colonies. Before Bretton Woods you had economic incentives in the form of mercantilism to maintain colonies. Countries like the UK limited currency conversion to the Pound and restricted foreign currencies in colonies that effectively walled off places like India and Africa from competition. America flat out couldn't sell goods in much of the world.

Bretton Woods dismantled much of this currency protectionism and opened much of the world up to competition. Suddenly, a colony like India wasn't off limits and Britain was too bankrupt to finance maintenance of the country. And now, British industries were subject to actual competition (although some outright protectionist policies still limited foreign competition).

And at the same time, Germany and Austria didn't have deadweight colonies that were also crippled during the war. So its no surprise they had an easier time recovering.

basso · Jun 5, 2013

rimrocker said: ↑

On this day in 1947, Secretary of State George C. Marshall delivered a speech at Harvard that laid out the concept of the Marshall Plan.
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what're your thoughts about nation building today? assuming you think there are instances when it's necessary/desirable, what conditions, on the home front and in the defeated country, are required for it to succeed?

IOW, when should we stay and help rebuild, and when should we just leave?

and lastly, do we need to know the answers to those two questions before entering into a conflict? is it even possible to know in advance?

Haymitch · Jun 5, 2013

geeimsobored said: ↑

That is such a silly argument.

You can't view these countries in a vaccuum. Countries like the UK and France had huge colonial possesions that went from being an economic boost for the host countries to being an anchor that dragged them down. The war wrecked the ability of countries like the UK and France to finance colonial administrations and diverted money that was needed for infrastructure at home.

On top of that, both countries actually gained colonial possesions after the war which were also weakened from the war. The onus then went on those countries to rebuild those new colonies as well.

On top of all of this, Bretton Woods pretty much killed the entire reason to own colonies. Before Bretton Woods you had economic incentives in the form of mercantilism to maintain colonies. Countries like the UK limited currency conversion to the Pound and restricted foreign currencies in colonies that effectively walled off places like India and Africa from competition. America flat out couldn't sell goods in much of the world.

Bretton Woods dismantled much of this currency protectionism and opened much of the world up to competition. Suddenly, a colony like India wasn't off limits and Britain was too bankrupt to finance maintenance of the country. And now, British industries were subject to actual competition (although some outright protectionist policies still limited foreign competition).

And at the same time, Germany and Austria didn't have deadweight colonies that were also crippled during the war. So its no surprise they had an easier time recovering.
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Yeah I probably quoted the wrong part of the article, especially since I'm not familiar with the work he is referring to (Cowen's), so I can't really defend it. The main point is the intention of the Marshall Plan and Marshall himself.

rimrocker · Jun 6, 2013

basso said: ↑

what're your thoughts about nation building today? assuming you think there are instances when it's necessary/desirable, what conditions, on the home front and in the defeated country, are required for it to succeed?

IOW, when should we stay and help rebuild, and when should we just leave?

and lastly, do we need to know the answers to those two questions before entering into a conflict? is it even possible to know in advance?
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First, your questions are premature and assume an occupation or invasion. The first questions one should ask given where you are coming from include "Is the invasion necessary for the national interest of the United States?" And, "What does victory look like?" You have to answer those kinds of questions before you start thinking about what to do afterwards or even if there should be an afterwards.

Second, I'll remind you Great Britain was not defeated in WWII yet the Marshall Plan directed aid to that country and several other non-Axis countries. Why? Because it was in the best interest of the United States to help establish stable societies, governments, and economies after the war (which also happened to be in the national interest).

rimrocker · Jun 6, 2013

By the way, today is the anniversary of D-Day. Who planned it? George C. Marshall. Who really wanted to lead the invasion but did not campaign for the assignment and told FDR to make the decision based on what was best for the country? George C. Marshall. After selecting Eisenhower, FDR told Marshall: "I didn't feel I could sleep at ease if you were out of Washington."

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