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The Marshall Plan revised and completed American policy designs for the
reconstruction of Western Europe, which were first discussed at the Bretton Woods
Conference in 1944. The plan directed American aid toward vital sectors of recovering
European economies and allowed Washington to exert pressure on aid recipients to fall in
line with its foreign policy objectives. Of the sixteen aid recipients, the United Kingdom
and West Germany were the most important to the American strategy in Western Europe.
Though weakened, Britain maintained the largest trading bloc in the world (sterling area),
a global military presence, and the biggest economy in Western Europe. West Germany
represented the most substantial supply of underutilized capital materials and labor on the
continent. Its proximity to the Soviet Union made it the primary battleground of the Cold
politicized aid policy to consolidate its position in Western Europe. American aid
countered Soviet economic warfare by helping to rebuild the West German economy and
fortify Britains position as a strategic ally, all while allaying French concerns over the
restoration of a hostile Germany.1 The decision to grant coordinated aid was welcomed
in Western Europe, but each of the major sovereign states had their own plans for
distribution, trade liberalization, and European integration. Marshall aid in each country
was received differently. In the UK, officials pushed the limits of their Special
Relationship with the US to press for an individual aid package.2 West Germany
1
For the purposes of this paper the zones of Germany occupied by the Americans, British, and the French
and which later became the Federal Republic of Germany in May 1949 will be referred to as West
Germany.
2
For more on the Special Relationship see; Roger Louis and Hedley Bull,, The Special Relationship:
Anglo-American Relations since 1945 (Oxford: 1986); C.J. Bartlett, The Special Relationship: A Political
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embraced the Marshall Plan without objection, allowing for aid distribution to help build
the functionality of the West German-American relationship. The decisive action of the
Marshall Plan is even more striking when considered alongside the possible alternatives:
the Morgenthau Plan and the Monnet Plan. These options would have destabilized the
European economy, created an imbalance of power within Europe and undermined its
fragile recovery. The choice and effective implementation of the Marshall Plan locked
the same time, it helped Britain manage the decline of its empire and sustain its
international prestige.
At the close of the Bretton Woods Conference in the late hours of 22 July 1944,
Henry Morgenthau declared, we have come to recognize that the wisest and most
united effort for the attainment of common goals.3 Economic collaboration became the
primary strategy for the defense of national sovereignty and helped spread the philosophy
Bretton Woods, aimed to lubricate trade through the free convertibility of currencies.
From the conference came the International Monetary Fund (IMF) and the International
Bank for Reconstruction and Development (World Bank), which were conduits to supply
aid for the implementation of financial objectives. Before currency convertibility could
happen the United Kingdom and the rest of the European allies needed to restore the
national economies and infrastructures while managing the dismembered German state.
History of Anglo-American Relations since 1945 (London: 1992). John Dumbrell, A Special Relationship:
Anglo-American Relations from the Cold War to Iraq (London: 2006).
3
Henry Morgenthau Jr., Proceedings and Documents of the United Nations Monetary and Financial
Conference vol. II (GPO: 1948), 1226.
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In the first two years following the German surrender in World War II there was
could hardly reach a consensus. Plans for economic restoration varied from reparations
extracted from an agrarian German state to the restoration of imperial trading preferences
and experiments with national currency values. Few of these plans matched the
objectives of Bretton Woods and none recommended the restoration of the German
of State George Marshall called for coordinated aid policy in Europe in a speech given at
Harvards commencement on 5 June 1947, did Europeans and Americans alike embark
on a strategy of mutually beneficial aid coordination that would reconstruct the political
economy of Europe and transform it into a viable common market and bulwark against
Soviet economic and military aggression. The development of a coordinated aid strategy
drew in politicians, policy makers, and scholars who attempted to reconcile aid to Europe
immediately attracted the attention of scholars. Today, little continuity exists throughout
the lineage of Marshall Plan scholarship. Each generation of scholars has attempted to
dispel the conclusions of their predecessors. The first line of thought, pushed by the likes
of Ellis and Price contends that Marshall aid was critical to overcoming the logjam of raw
purchase capital goods from the US. Additionally, the American technological assistance
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was paramount in boosting Western European economic growth.4 The second generation
of Marshall Plan scholars was right to challenge the legitimacy of their forerunners
conclusions. Though not completely wrong, much of the early literature on the Marshall
Plan was initiated by government bureaucrats for the purposes of justifying aid for the
European recovery.
Looking back on Marshall aid from the late 1970s and early 1980s, the second
group of Marshall Plan scholars, headlined by Abelshauser and Milward, asserted that
Western Europe was already operating in a boom economy and that contemporary
politicians and policy makers believed Europe was still struggling because little had been
done to fix the cosmetic damage left largely untouched after the war. When distribution
of Marshall aid began in 1948, essential communication and transportation links were
already repaired and industrial production was increasing. These scholars believe that
Western Europes economic fortunes would not be much different with or without
Marshall aid. In this round of Marshall Plan literature, technical assistance and foreign
exchange constraints are largely ignored, but the contributions to these areas by the
The most recent school of revisionists led by Casella and Eichengreen claim
Marshall aid did not stimulate investment, avert supply bottlenecks or rebuild
infrastructure. Instead, they believe the Marshall Plan compelled European states to
4
Barry Eichengreen, Europes Postwar Recovery (Cambridge: 1995), 16; Howard S. Ellis, The Economics
of Freedom: The Progress and Future of Aid to Europe (New York: 1950); H.B. Price, The Marshall Plan
and its Meaning (Cornell: 1955).
5
Eichengreen, Europes Postwar Recovery, 18; W. Abelshauser, Weideraufbrau vor dem Marshall-Plan.
Westeuropas Wachstumschancen und die Wirtschaftsordnungspolitik in der zweiten Haelfe der vierziger
Jahre, Vierteljahrshefte fr Zeitgeschichte (1981): 545-578.
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negotiate with labor unions and generate new social contracts that increased personal
developments were the preconditions for the subsequent years of high profit margins and
rapid growth.6 The reconstruction of the European consumer economy benefited national
economies in Europe and guaranteed the US a sufficiently wealthy market for its exports.
avoids the trap of a bipolar Cold War explanation, noting, In American thinking,
integration was the way to reconcile Germanys recovery with Frances security and
bring both together in a unit of sufficient scale to contain the Soviets.7 The Franco-
German connection restrained Germany and pulled its resources into the allied camp,
Each successive revision adds another layer to the complex set of analyses that
interprets the successes and failures of the Marshall Plan and its impact on the current
state of European affairs. Still none of the three generations of scholarship offers a
completely accurate picture of the Marshall Plan. These contradictory histories must be
taken in synthesis and supplemented with additional perspectives to fully understand the
ramifications of Marshall aid. For a nuanced assessment, the Marshall Plan must be
deconstructed from its integrative policies and distribution practices down to national
case studies. This study uses each generation of scholarship to help construct a
comparison of the Marshall Plan in the UK and West Germany. This comparison
6
Eichengreen, Europes Postwar Recovery, 19-20.
7
Michael Hogan, The Marshall Plan: American, Britain, and the reconstruction of Western Europe, 1947-
1952 (Cambridge: 1987), 20-22.
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uncovers the internal and external obstacles to the implementation of the plan and the its
In the weeks immediately following Marshalls call for a plan of coordinated aid
to Europe, Britain fell into a monetary crisis that threatened its international position,
damaged its prestige, and left the government fighting for an aid package developed
specifically for Britains unique position as a slowly declining great power and Americas
chief ally. By July 1947, the dollar drain from British reserves rose from $100 million to
$300 million placing sterling on the brink of massive devaluation and challenging the
British abilities to maintain the sterling area. A special aid package to Britain would
position was further complicated by their decision to rapidly convert from a wartime
the government for the Labour Party and the premiership for Clement Atlee.
external aid, to balance our overseas payments before our reserves are exhausted, we
shall be obliged to make such drastic cuts in our dollar and gold purchases as will bring
the unmanageable dollar drain from the UK economy as a negotiating device. The
British threatened the consequences of competition for a common pool of dollars for
Europeans would be for them to abandon the whole concept of multilateral trading and
seek to eke out a painful existence on the best terms of bilateral trade we can secure.
8
Economic Survey for 1948, CAB/129/24.
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They further warned, unless sufficient steps can be taken to fill the gap in the worlds
dollar supply we shall be confronted with the choice as hard fact which has to be faced.9
Washington remained steadfastly opposed to special aid for Britain, hoping that common
aid would compel Britain to take up a position of leadership in Europe and combat
economy. Effective coordinated aid to the three largest nations in Western Europe would
then create the preconditions for a common market. Robert Tiffin, the Director of the
IMFs Exchange Control Division, believed this would create a large and stable area of
freer trade, gradually drawing non-member countries into its orbit.10 The British feared
that the US remained too narrowly focused on a continental approach. The UK only
conducted 25% of trade with European partners and a massive dollar shortage remained
in the sterling area the primary financial foundation for a healthy British economy.11
The near concurrent announcement of the Marshall Plan and the sterling crisis in 1947
highlighted the opposite directions the two leading nations in the Anglo-Saxon world
were headed.
position as world banker and arbiter between the economies of the Western and Eastern
hemispheres demonstrated that the United States was willing to push Pax Britannica
aside and claim its mandate as Pax Americana. Washington did not want to undermine
British strength at the expense of their overall strategic objectives. The US still
considered Britain their most valuable strategic ally in the world Washington had to
9
C.C.S. Newton, The Sterling Crisis of 1947 and the British Response to the Marshall Plan, The
Economic History Review 37 (1984): 396.
10
Ibid., 396.
11
Ibid., 397.
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make concessions within the Marshall Plan, such as a $600 million in operating capital to
the European Payments Union, to coax Britain into full cooperation and fall in line with
its policy objectives. Despite complaints leveled by the British concerning aid, if the
offer came it would be immediately snatched up and directed toward strengthening the
British economy. Even with domestic humanitarian concerns the cabinet agreed, If aid
is given to us [UK], we must use it, to the limit of our freedom to do so, for recovery and
not relief: to make it more certain that when the time comes for us to rely on our
Both states believed fortification of Britain was necessary for the overall
economic and defensive policies of the West. Whitehall hoped the similar geopolitical
position of Britain and the US would afford it special consideration and separate
treatment from Europe. Britain was an unoccupied victorious power without a significant
communist party. They were a sovereign state with significant assets in both manpower
and territory overseas, and they maintained the largest trading bloc in the world backed
by a reserve currency.
Britain had the energy capabilities to help fuel the European recovery with
adequate domestic supplies of coal and secure access to oil in the Middle East and
elsewhere in the world through their two super-majors (AIOC, Royal Dutch Shell). Even
with these advantages the UK was still the largest debtor nation. It was in the process of
scaling back its empire and remained financially dependent on not just the US, but also
countries within its commonwealth (i.e. Canada). These issues forced Britain to accept
American aid and fall in line with American foreign policy. In the early stages of
12
CAB/129/24, Economic Survey for 1948.
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implementation the British struggled to come to terms with the Marshall Plan. American
aid was one more sign of British decline, a status many struggled with, especially Lord
Beaverbrook, who noted, The British people are not prepared to sell their financial
independence for cigarettes, prunes, and dried eggs of the Marshall Plan. Stand on your
own two feet!13 The British wanted more than European influence, Whitehall aimed to
sustain its international prestige. This attitude proved to be the biggest obstacle for the
British in maximizing the political, economic, and integrative advantages of Marshall aid.
From 1945-1947 Germany paid the price for being the primary European
antagonist of the preceding seventy years. Allied aid efforts were mostly focused on
relief rather than recovery. In the case of France, the country that had suffered the most
at the hands of the German pariah, direct efforts were undertaken to stall the
reconstruction of the German territories - France adopted a simple tactic: the French
Government prevented the work of the Allied Control Commission that had been setup to
restore transport, electricity, and other utilities to the whole of Germany.14 Though their
remains active debate in academic circles as to whether or not Marshall aid was the
critical element in transforming the West German economy there is no doubt that the plan
came in place of others that may have forever set Germany behind. Henry Morgenthau
Jr., the overseer of the Bretton Woods Conference and Secretary of the Treasury under
Roosevelt and briefly under Truman, organized a scheme for the industrial disarmament
of Germany. Reducing the German state into three separate regions: a North German
13
Henry Pelling, Britain and the Marshall Plan (New York: 1988).
14
A.W. Lovett, The United States and the Schuman Plan: A study in French Diplomacy, The Historical
Journal 39 (1996): 427.
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Fortifying Europe: The Marshall Plan in
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allied states. The plan aggressively attacked German industry, calling for the dismantling
of German plants and in some cases re-erecting them in allied states. It would have
forced the separation of industrial areas from Germany and placed limits on production.
Any remaining industries on German soil were subject to allied confiscation. This
among its supporters, had a similar counterpart in Europe. The French backed Monnet
Plan was the radical predecessor of the Schuman Plan. Jean Monnet, an influential
French economist, called for the internationalization of the Ruhr in addition to the French
annexation of the coal rich Saarland. This plan guaranteed the French steel industry
access to coal, which accounted for 70% of steel production costs.16 During a period
without plastic, steel production not only supplied military industries with capital
materials, but also dominated manufactured consumer goods. Though Monnet did not
directly call for the pastoralization of Germany, removing its coal deposits and claiming
the heartland of German heavy industry would have undercut any chance of a future
German coal. Marshall Planners recommended, Government should give serious and
sympathetic attention to the feelings of the French Government with respects to questions
of military and economic security.17 The report later stated, special arrangements
15
Frederick Gareau, Morgenthaus Plan for Industrial Disarmament in Germany, The Western Political
Quarterly 14 (1961): 517-518.
16
Lovett, The United States and the Schuman Plan, 428-430 .
17
Certain Aspects of the European Recovery Problem from the United States Standpoint, 23 July 1947, 45.
10
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should be given to the need for enlisting a greater spirit of cooperation and responsibility
of the Germans themselves.18 Marshall Planners considered the French, but they
Recovery.19 Though the French were resolute on limiting Germanys war making
capacity, food and financial factors forced Paris to accept American aid and
The general grain shortage in Western Europe hit France especially hard. The
need for grain to feed the population tested the shallow dollar and gold reserves of the
will have exhausted these resources to a point where she will have to suspend imports of
food and coal for lack of dollars.20 After exhaustion of dollar resources France would
fall short by $250-300 million over the following 6 months.21 Without the dollars to
import coal, steel production and the Monnet Plan would be unrealizable and a starving
population could jeopardize the life of the 4th Republic. The dollar aid from the Marshall
Plan saved the objectives of the Monnet Plan, which were refitted into the more palatable
and integrationist Schuman Plan in 1950.22 With food and dollar shortages preventing
France from pursuing unilateral plans for recovery at the expense of Germany, Paris soon
championed the integrationist movement. Opting instead to work with the US and the
events, Marshall aid overcame French objections to the restoration of West Germany
18
Ibid., 47.
19
Ibid., 45.
20
The Immediate need for Emergency Aid to Europe, 29 September 1947, 2.
21
Ibid., 4.
22
Lovett, The United States and the Schuman Plan, 428.
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removing obstructions to the road to recovery that went through the German industrial
heartland.
needed to slash their tariffs and other trade barriers to facilitate intra-European trade.
Initially the 23 member countries that signed the General Agreement on Tariffs and
Trade (GATT) in 1947 did so as a stopgap measure until a more comprehensive approach
materialized under the guidance of the International Trade Organization (ITO). When
ITO negotiations stalled GATT became the de facto anti-tariff reform agreement, its
members accounted for nearly 80% of world trade and went about setting duty rates on
an impressive 45,000 items.23 The US made the most aggressive cuts to its tariffs,
reducing tariff rates by 35%.24 American cuts were meant to induce Europe to do the
same and liberalize intra-European trade with the US included in the framework. The
drawback to GATT is that it complicated the states ability to manage its own
employment rates against import/export ratios. Loosing this recourse could force a
country, such as the UK, to resort to inflation in attempts to reach full employment of its
population. GATT was not an unqualified success, but it did establish the distribution of
transparent trade data and practices while lowering tariff for countries most favored
nation status.25 The post-war growth miracle could not have occurred in the
absence of the Marshall Plan, the GATT, and the Breton Woods System.26 Coming as a
trade liberalization and European integration for the European Recovery Program.
23
Douglas A. Irwin, The GATT in Historical Perspective, The American Economic Review 85 (1995):
325.
24
Ibid., 325.
25
Wytze Gorter, GATT After Six Years: An Appraisal, International Organization 8 (1954): 15.
26
Eichengreen, Europes Postwar Recovery, 5
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Atlantic materialized to direct aid dollars and lock recipient states into binding
cooperation. The American organization charged with distributing aid was the Economic
counterpart, the Committee for European Economic Cooperation (CEEC), emerged from
the Paris Conference on 12 July 1947, where delegates from 16 European states authored
a proposal for economic cooperation within Europe. Britains Foreign Secretary, Ernest
Bevin, and Frances Foreign Minister, George Bidault rapidly assembled conference
participants illustrating Europes desperation for outside assistance. On the urgent need
for aid the CEEC delegates reported to the US, Many of the participating countries have
already reached the point at which they are forced by lack of foreign exchange to restrict
their imports of the fuel and raw materials which are indispensable for their industrial and
agricultural production.27 The initial report from the CEEC indicates that there was a
bottleneck issue in the European recovery, noting, From the devastation of war
Europe has recovered well. But that recovery is now halted and the crisis is deepening
and its repercussions are spreading.28 The Marshall Plan changed the use of dollars
from earlier programs like Government Aid for Relief in Occupied Areas (GARIOA).
The sum of aid, a mere 2 percent of recipient states GDP and mostly lent in the
first year, could not realize the objectives of the Marshall Plan with out careful direction.
The hidden value of the plan rested in the genius of its planners and the timely investment
27
CAB/129/21, Committee of European Economic Cooperation General Report, 17 September 1947, 5.
28
Ibid., 5.
13
Fortifying Europe: The Marshall Plan in
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trade.
The European Payments Union (EPU) allowed countries to continue trading even
with multiple outstanding trade deficits. The EPU functioned as a central clearing house
for European trade payments. Credits were distributed and could be applied to cut down
national deficits, essentially allowing for each state to consolidate its deficit payments.
The trade union had a dramatic impact on intra-European trade and reduced European
payments considerations.29
London remained hostile to the idea; believing their safest route to economic
and European affairs with leadership in the English-speaking world. Bevin continued to
press the Americans on the need for a separate continental integration aid package and
one for Britain. British officials agreed on the need for economic cooperation on the
continent, but looked for their own special position alongside Europe. Bevin feared
lumping Britain into the European package would relegate Britain to just another
European country.30 Apart from the sterling zone argument used against Britains place
in European integration, Bevin claimed the relatively high level of shared economic
interests that Britain and the commonwealth shared with the US placed Britain in a
precarious position. Leaving it with little protection from the next United States
recession. The United States might then change its policy and leave Britain helpless.
29
Thomas Oatley, Multilateralizing Trade and Payments in Postwar Europe, International Organization
55 (2001): 949.
30
Milward, The Reconstruction of Western Europe, 62.
14
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Bevins policy was that the United Kingdom should have a special interim position for
some years rather than have to seek dollars from a common pool as its European
neighbors.31 After having allayed French fears of future German hostility through the
coordinated aid approach, Washington could not afford to loose face by supplying the
British with a special aid package. The French long had been suspicious of the Anglo-
American relationship and special aid would have heightened these suspicions, making
the already stubborn French a more intractable negotiating partner. Americans at home
may have also perceived an individual aid package to Britain as a negative sign that the
integration schemes. In the end, dollars were provided to Britain in the form of operating
capital for the EPU. The $600 million in working capital to the EPU was primarily a
means of enticing Britain to join the community.32 With British access to extra dollars,
the EPU succeeded where the suspension of free currency convertibility in September
1947 did not. Before the suspension of convertibility many countries, especially
Belgium, accumulated massive sterling balances and then used convertibility to pass their
problem in the short term, but damaged their European trade. Forcing the UK to rely
increasingly on trade with the commonwealth and the rest of the world, which faced its
31
Ibid., 62.
32
Ibid., 53.
33
Newton, The Sterling Crisis of 1947, 399-400.
15
Fortifying Europe: The Marshall Plan in
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own dollar shortage. Membership in the EPU restored British trade with Europe while
simultaneously protecting it from bilateral trade agreements that would drain its dollar
reserves. The EPU was the first step to increasing intra-European trade on a multilateral
basis. It allowed the British to release its exports onto the European market and helped
protect the vulnerable European states near Soviet satellites or with large communist
Britains position in the Western camp was guaranteed, but West Germanys
pressing neighbors and its rapid, yet fragile economic restoration left the state vulnerable
to a monetary crisis that could have destabilized its economic recovery and placed the
material, and capital goods to Europe collapsed after World War II. In the early years of
recovery, West Germany relied on the US and the UK to supply food and raw materials.
When the Korean War broke out in 1950 the price of importing these commodities
skyrocketed. The extension of EPU credits covered the West German deficit and allowed
her to continue importing long beyond her capacity under bilateral agreements. The
multilateral trading mechanism worked. When demand for capital equipment and
industrial products returned in 1952, West Germany was adequately supplied with raw
materials to allow for production to move its balance-of-payments position back into
surplus.34 The EPU mechanism worked as planned West Germany being the first
member state to call on credits confirmed her orientation toward the West. The
34
John Killick, The United States and European Reconstruction, 1945-1960 (Edinburgh: 1997), 141.
16
Fortifying Europe: The Marshall Plan in
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safe guard against external economic disasters and consequent political upheaval.35
Other sectors of the economy followed the EPUs example of integrations. The
influx of Marshall aid boosted British and West German coal production. In the spirit of
cooperation, the increase in West German coal production pacified the French. Secure
French access to West German coal was both economically binding and good for the
common market. A contemporary scholar noted, French ores and German coal are the
Marshall aid topped off investment to bring coal production back online, while forcing
recipient countries to follow the American lead in foreign policy, fortifying the dual
relationship. In 1947, Britain and West Germany were critical fuel states in Western
Europe; supplying the energy to recovery and creating a common market economy that
could resist and exert pressure on Eastern Europe and the USSR. The British owned
Anglo Iranian Oil Company, later BP, prospered from concessions in Iran. At the time
the Marshall Plan was announced Iran was the fourth largest oil producer in the world.37
The partly owned British company, Royal Dutch Shell, also had substantial holdings in
sterling oil instead of dollar oil, alleviating further strain on sovereign balance-of-
35
Ibid., 141.
36
Louise Sommer, The Franco-German Steel and Coal Pact: The Monnet-Schuman Plan, World Affairs
113 (1950): 81.
37
DeGloyer & MacNaughton, Twentieth Century Petroleum Statistics, 2005 (Dallas: 2005).
17
Fortifying Europe: The Marshall Plan in
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payments deficits. Dollars were still needed to offset transportation costs and royalty
payments, but of all the oil used for the European recovery, only 24 percent came either
from the US or was paid for with Marshall aid dollars compared to 71 percent for coal.38
Though prewar Europe relied on coal for 90 percent of its energy needs, postwar
Europes thirst for oil grew as the revolution in the transportation industry hit the
continent.39 The U.S. recognized the potential for transforming Europe into an oil based
society and the Economic Cooperation Agency (ECA) allocated upward of $430 million
for the purchase of vehicles, including cars, planes, tractors, and auto manufacturing
plants. The ECA granted additional funds for the repair and improvement of
1950, the passenger car accounted for 11 percent of industrial production in Britain,
France, Italy, and West Germany.41 When the British stumbled in negotiations over
secure access to Middle East oil, the Americans stepped in to maintain a steady supply
from the Middle East into the fuel tanks of Europe, keeping the recovery alive and well.42
The automobile bump in industrial output demanded more coal for steel production.
Making the formation of the European Coal and Steel Community an even more
In 1947 Europe had just struggled through the most severe winter in decades,
government offices went unheated, industrial operating costs skyrocketed, and labor
38
Killick, The United States and European Reconstruction, 1945-1960, 91.
39
D. S. Painter, The Marshall Plan and Oil, Cold War History 9 (2009): 164.
40
Ibid., 168.
41
Alan S. Milward, The Reconstruction of Western Europe, 1945-1951 (Berkeley: 1984), 491.
42
D.S. Painter, Oil and the American Century (Johns Hopkins: 1986).
18
Fortifying Europe: The Marshall Plan in
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productivity dropped as people stayed in bed.43 The coal shortage was at the center of the
problem; in 1947 UK coal output was a full 32 million tons short of its prewar production
levels. Conditions were worse in West Germany, coal production fell 77 million tons
from prewar totals.44 European steel production fell by equally impressive margins. The
the coal-steel industry in Europe. In their initial appeal to Marshall planners, the CEEC
prominently featured the need to increase coal and steel production under the guidance of
the European Coal Community, the forerunner to the European Coal and Steel
Community (ECSC). However, the plan failed to outline how increased production of
coal could benefit other sectors of the West German economy. The plan aimed to keep
West German steel production below British and French production and well below
The announcement of the Schuman Plan on 9 May 1950 by the former French
American political goals for interdependent institutions. The plan was rooted in the idea
that the pooling of coal and steel production will immediately assure the establishment
of a common basis for economic development, which is the first step for a European
developed political and economic institutions geared toward the formation of a common
43
Helmut Schmidt, Miles to Go: From American Plan to European Union, Foreign Affairs 76 (1997):
214.
44
CAB/129/21, Committee of European Economic Cooperation General Report, 17 September 1947, 19-
21.
45
Ibid., 21.
46
Gerhard Bebr, The European Coal and Steel Community: A Political and Legal Innovation, The Yale
Law Journal 63 (1953): 2.
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Fortifying Europe: The Marshall Plan in
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would integrate the West German lynchpin into Western Europe, reducing the
plan would counterbalance the strength of the Soviet satellite system. The danger that
West Germany, with its vital industry, would be lured into the Soviet web by promises of
political unification to German nationalists, and by offers of vast hungry markets within
the Soviet orbit to German industry.47 The Schuman Plan and the ECSC represented the
Britains decision to remain outside of the ECSC cemented the division between
the inner six and the UK.48 The Special Relationship between the US and the UK
problematized the cohesive action in the Western world. From the European Coal and
Steel Community the inner six formed the core of the European Economic Community
(EEC) and promoted and increasingly unified continental Europe. The Marshall Plan
initiated the development of an integrated Europe. Washington held the conviction that a
Western Europe rooted in a common market, with the United Kingdom in the lead role
would allow the Americans to utilize the Special Relationship with to influence
47
Ibid., 2.
48
The inner six is comprised of the Benelux countries, France, Italy, and West Germany. These were the
founding members of the European Economic Community.
49
Alan Dulles and Michael Wala, The Marshall Plan (Oxford: 1993), 125.
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Fortifying Europe: The Marshall Plan in
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The British decision to remain outside of the ECSC and jeopardize its future ability to
cooperate with Western Europe elevated the status of West Germany in the minds of US
government officials. With the UK refusing to take the lead in the European integration
the fulfillment of their policy objectives in Western Europe. France repeatedly scoffed at
Germany the only viable alternative for an intimate political relationship. One of the
most important legacies of the Marshall Plan is that Britains absence from leadership left
the door open for Konrad Adenauer and West Germany to pursue a close working
partnership with the US, which was searching for allies to counter the Soviet threat.
By 1948, the ideological dimension of the Marshall Plan in West Germany was in
full effect. Washington planned for Marshall aid to transform the German public into
ideological counterparts of Americans within the Europe. As the first line of defense in
the Cold War, a prosperous consumer based standard of living would shield West
Germans from communist ideology and serve as living Western propaganda for the
democratic capitalist system. From the American point of view the future of democracy
in West Germany is the central test of the major premise of US foreign policy.51
Monetary reform was the first step to transforming West Germany from a relief aid
society to a consumer society. The deutschemark replaced the near worthless reichsmark
in June 1948 and the ration cards Germans used for food allowances fell by the wayside.
The former Prime Minister Helmut Schmidt reflected, Now money became all-
50
Matthew Jones, Anglo-American relations after Suez, the rise and decline of the working group
experiment, and the French challenge to NATO, 1957-1959, Diplomacy and Statecraft 14 (2003): 49-79.
51
Carl C. Hodge and Nolan J. Cathal , Shepherd of Democracy?: American and Germany in the Twentieth
Century (London: 1992), xii.
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important. The rations cards slowly disappeared over the next two years, and shops
began to fill with goods we had only dreamed about: bread, butter, fruit, even coffee and
cigarettes. This monetary revolution would have never transpired had it not been for the
Marshall Plan.52 If Western Germany was the lynchpin in the American European
saw the United States as the military, political, and economic anchor of the security and
of the age, and we Germans turned in hope and faith to the United States.53 West
Germans were provided with new currency to play the part, and the US State Department
West Germans who were eager to leave the material suffering of the immediate postwar
years behind. In October 1950 the West German Industrial Exhibition coincided with
elections in East Germany, providing the perfect opportunity for the State Department to
Gimmek, soon became the most popular exhibit and was the perfect example for West
Germans to pursue the course of consumer materialism. Capitalizing on the large crowds
drawn to the exhibition German Finance Minister Ludwig Erhard encouraged West
whether production would be employed for the ends of human and social welfare.55
The ideological impact of Marshall Plan impact slammed against the Soviet dominated
52
Helmut Schmidt, Miles to Go, 215.
53
Ibid., 216.
54
Greg Castillo, Domesticating the Cold War: Household Consumption as Propaganda in Marshall Plan
Germany, Journal of Contemporary History 40 (2005): 268.
55
Ibid., 268.
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political economy of East Germany. West Germans, impressed with American standards
of living, and were encouraged to push forward with US strategies to achieve an idyllic
France was the obstacle standing between West Germany and a close working
relationship with the US. Early in its recovery the newly formed West German state
policy. Adenauer began his political career as Mayor of Cologne, but was dismissed
during the Nazi ascendency. Following World War II he quickly rose through the ranks
of the CDU and was elected the first Chancellor of the Federal Republic of Germany on
15 August 1949. Adenuaers diplomatic outlook mirrored the course of his political
career, moving from regional to national and eventually international politics. Adenauer
relaxed attitude toward tensions between Atlanticism and Gaullism.56 The US cherished
Adenauers objectivity. The bipolar world of the Cold War was enough to convince any
sound minded Western European leader that the US security guarantee deserved the
highest political premium. Coupled with the apparent success of Marshall aid in
stimulating the West German economy, Adenauer needed only to follow a direct political
56
Hodge, Shepard of Democracy, 96.
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course. It is fair to say that he welcomed the Cold War to the extent that it simplified
the choices available to West Germans in both foreign and domestic policy, while
simultaneously drawing the two realms together.57 In West Germany, the Marshall Plan
won the favor of the public and persuaded government officials that the American plan
for recovery would restore the nation. The offers made by the US Government were
common market that rapidly converted West Germany into the strongest economic ally of
The Special Relationship between the US and the UK was much more
complicated than German-American relations. For one, contact between the two states
spilled into every arena of diplomacy. Marshall aid to Britain was perhaps the most
Washington withheld nuclear technology. They challenged the British to maintain their
costly military positions around the world. All while allowing American oil companies
to pursue aggressive strategies against traditional British concessions in the Middle East.
The British wished to follow Harold Macmillans famous Greeks to Romans path for
hegemonic mentorship. Whitehall made its best efforts to persuade the US to follow past
The US was in the position today where Britain was at the end of the Napoleonic
Wars. When those wars ended Britain held about 30 percent of the worlds
wealth. The US today holds about 50 percent. Britain, for eighteen years after
Waterloo practically gave away her exports but this resulted in stability and a
hundred years of peace.58
57
Ibid., 99.
58
Newton, The Sterling Crisis of 1947, 398.
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Fortifying Europe: The Marshall Plan in
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For the most part, Washington ignored British economic advice. The British remained
stubborn and pushed the limits of the Special Relationship. The UK recognized that
Washington wished Britain to integrate with Europe for more than functional purposes.59
In spite of its relatively poor economic outlook relative to Western Europe the US looked
first to Britain to lead integration. In Britain there was no need to sell the public on the
ideals of a democratic consumer based society. The UK shared an innate kinship with the
US. Britain had significant experience in world leadership, and they were least
dwarfed that of Britain. The imperial ambitions of the Germans were swept away with
the defeat of Hitler. Defeated Germany was the prize in the American-Soviet rivalry, but
for purely functional reasons. Functionalism of the West German relationship did not
lessen the value of the alliance, but it did contain German-American diplomacy to select
addition to strategic interests. These factors allowed Britain to assume a more important
position in the Atlantic world. The relationship with the US allowed Britain to extend its
influence far beyond that of countries of equal economic status through its power-by-
59
John Dumbrell, A Special Relationship: Anglo-American Relations in the Cold War to Iraq (London:
2006).
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Fortifying Europe: The Marshall Plan in
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proxy relationship with the US.60 By the late 1950s West Germany enjoyed a more
robust economy than that of the UK, but it could hardly be argued that the FRG held
more geopolitical influence than the UK. The functionality of the German-American
relationship encouraged West Germany to prosper within the European framework, but
The three preceding generations of scholarship on the Marshall Plan have lacked
theoretical continuity. Since the initial treatment of the Marshall Plan in the early 1950s,
scholars have constantly revisited and attempted to disprove the conclusions of their
and supplemented with new perspectives, ample grounds for comparison of the West
German and UK Marshall Plan experience emerges. At the time of the Marshall Plan
positions, but the bipolar world of the Cold War and the leverage of Marshall aid pushed
acted quickly to produce a convincing appeal for American aid, based on coordinated
consolidate its strategic position in Western Europe and prevent further Soviet expansion.
The Marshall Plan distributed aid to sixteen states, of these Britain and West Germany
were the most vital pillars of the American strategy. Acting decisively to ensure the full
recovery of West Germany and Britain, the Truman administration leveraged aid to
60
Kevin Ruane and James Ellison, Managing the Americans: Anthony Eden, Harold Macmillan and the
Pursuit of Power-by-Proxy, in the 1950sContemporary British History 18 (2004): 147-167.
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overcome French objections to restoration of the West German economy. At the same
time Washington asserted itself as the undisputed leader of the West. The US forced
Britain into a common aid package with the rest of Europe, intentionally neglecting its
The common market and interdependent institutions that emerged from the
Marshall Plan demonstrated the successful American strategy for dual containment of
Germany and the USSR. This was done by inextricably linking German economic and
relationship, but the strength of the relationship was purely rooted in functionalist
principles. Contrary to the diplomatic course pursued by West Germany, Britain pushed
the limits of its Special Relationship with the US. At every turn Whitehall fought the
policy decisions of Marshall Planners. The British were able to pursue a more forceful
diplomatic course than West Germany because the Anglo-American relationship went
and the UK successfully countered Soviet economic warfare and infused American
27
Fortifying Europe: The Marshall Plan in
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Fortifying Europe: The Marshall Plan in
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