The Marshall Plan

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• American foreign policy in this policy vacillated (wavered) between realism and idealism.

• Aftermath of the war (WW2) brought unimaginable poverty to Europe

• Throughout 1946 the fear of famine and homelessness was widespread

• Secretary of State George Catlett Marshall addressed the crowd at Harvard University on 5th June 1947

• The European Recovery Program, or 'Marshall Plan', created by Marshall, injected about US$15 billion worth of grants to assist European governments with reconstruction, which included purchases of fuel, raw materials and food

• Plan was at odds with the style of recovery hoped for by most European leaders, many governments maintained tariff barriers

• The American dream of free trade was at odds with the protection of their economies. They (the European governments) were suspicious of open, free-trade capitalism and blamed it for causing the Great Depression that had brought so much suffering before the war

• In the face of starvation and with communism threatening, leaders were left little choice but to accept the Marshall Plan

• Marshall Plan also touched on one of the fundamental disagreements between the American and the Soviets; the future of Germany.

• America want Germany to rise again as a powerful, industrial trading partner in Europe, but the Soviets wanted to keep Germany weak, as it had tried to invade Russia twice within a century. This point would flare up in a year with the Berlin Blockade

• Had the effect of reinforcing the division between the East and the West

• Although the money was largely targeted at Western European economic recovery, the Americans also offered aid to the Eastern bloc countries and to the Soviets

• Offer was famously dismissed by Soviet Foreign Minister Molotov as 'dollar imperialism'

• In response, the Soviets created Comecon (the Council for Mutual Economic Assistance) to foster trade cooperation among eastern European countries

• Along with the Truman Doctrine, the Marshall Plan was central to the US's plan to contain communism during the early years of the Cold War