	The Marshall Plan and the Present1

Between 1948 and 1951, the United States undertook what many consider to be one of its more successful foreign policy initiatives and most effective foreign aid programs. The Marshall Plan (the Plan) and the European Recovery Program (ERP) that it generated involved an ambitious effort to stimulate economic growth in a despondent and nearly bankrupt post-World War II Europe, to prevent the spread of communism beyond the "iron curtain," and to encourage development of a healthy and stable world economy. It was designed to accomplish these goals by achieving three objectives:
the expansion of European agricultural and industrial production; the restoration of sound currencies, budgets, and finances in individual European countries; and the stimulation of international trade among European countries and between Europe and the rest of the world. Formulation of the Marshall Plan

The Marshall Plan was proposed in a speech by Secretary of State George Marshall at Harvard University on June 5, 1947, in response to the critical political, social, and economic conditions in which Europe found itself at that time. In addition, Marshall called for this assistance to be a joint effort, "initiated" and agreed by European nations. The formulation of the Marshall Plan, therefore, was, from the beginning, a work of collaboration between the Truman Administration and Congress, and between the U.S. Government and European governments. Economic Cooperation Administration

Due to the complex nature of the recovery program, the magnitude of the task, and the high degree of administrative flexibility desired with regard to matters concerning procurement and personnel, Congress established a new agency—the Economic Cooperation Administration (ECA)—to implement the ERP. To advance this purpose, the OEEC developed analyses of economic conditions and needs, and, through formulation of a Plan of Action, influenced the direction of investment projects and encouraged joint adoption of policy reforms such as those leading to elimination of intra-European trade barriers. The ECA also provided loans. Dollar assistance kept the dollar gap to a minimum. The emphasis in financial and technical assistance on productivity helped to maximize the efficient use of dollar and counterpart funds to increase production and boost trade. Other aspects of its deliberate character were distinctive. While, in some cases, a direct connection can be drawn between American assistance and a positive outcome, for the most part, the Marshall Plan may be viewed best as a stimulus which set off a chain of events leading to the accomplishments noted below. U.S. The Marshall Plan also launched the first participant training programs bringing Europeans to the United States for training and leveraged private sector investment in recipient countries through the use of U.S. government guaranties. From its inception, some Members of Congress voiced fears that the ERP would have a negative effect on U.S. business. It was a multiyear plan designed specifically to bring about the economic recovery of Europe and avoid the repeated need for relief programs that had characterized U.S. assistance to Europe since the War. The roughly $13.3 billion provided by the United States to 16 nations over a period of less than four years equals an estimated $143 billion in 2017 currency. A Marshall Plan for Middle and Eastern Europe? Washington, U.S. Govt. Subcommittee on United States Foreign Aid to Europe. Washington, U.S. Govt.
The European Recovery Program (ERP), more commonly known as the Marshall Plan (the Plan), was a program of U.S. assistance to Europe during the period 1948-1951. The Marshall Plan—launched in a speech delivered by Secretary of State George Marshall on June 5, 1947—is considered by many to have been the most effective ever of U.S. foreign aid programs. An effort to prevent the economic deterioration of postwar Europe, expansion of communism, and stagnation of world trade, the Plan sought to stimulate European production, promote adoption of policies leading to stable economies, and take measures to increase trade among European countries and between Europe and the rest of the world. Since its conclusion, some Members of Congress and others have periodically recommended establishment of new "Marshall Plans"—for Central America, Eastern Europe, sub-Saharan Africa, and elsewhere.
Design. The Marshall Plan was a joint effort between the United States and Europe and among European nations working together. Prior to formulation of a program of assistance, the United States required that European nations agree on a financial proposal, including a plan of action committing Europe to take steps toward solving its economic problems. The Truman Administration and Congress worked together to formulate the European Recovery Program, which eventually provided roughly $13.3 billion ($143 billion in 2017 dollars) of assistance to 16 countries.
Implementation. Two agencies implemented the program, the U.S.-managed Economic Cooperation Administration (ECA) and the European-run Organization for European Economic Cooperation. The latter helped ensure that participants fulfilled their joint obligations to adopt policies encouraging trade and increased production. The ECA provided dollar assistance to Europe to purchase commodities—food, fuel, and machinery—and leveraged funds for specific projects, especially those to develop and rehabilitate infrastructure. It also provided technical assistance to promote productivity, offered guaranties to encourage U.S. private investment, and approved the use of local currency matching funds.
Accomplishments. While, in some cases, a direct connection can be drawn between American assistance and a positive outcome, for the most part, the Marshall Plan may be viewed best as a stimulus that set off a chain of events leading to a range of accomplishments. At the completion of the Marshall Plan period, European agricultural and industrial production were markedly higher, the balance of trade and related "dollar gap" much improved, and significant steps had been taken toward trade liberalization and economic integration. Historians cite the impact of the Marshall Plan on the political development of some European countries and on U.S.-Europe relations. European Recovery Program assistance is said to have contributed to more positive morale in Europe and to political and economic stability, which helped diminish the strength of domestic communist parties. The U.S. political and economic role in Europe was enhanced and U.S. trade with Europe boosted.
Although the Marshall Plan has its critics and occurred during a unique point in history, many observers believe it offers lessons that may be applicable to contemporary foreign aid programs. This report examines aspects of the Plan's formulation and implementation and discusses its historical significance. The Appendix lists numerous related studies and publications.