Marshall Plan

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1.) In 1945, Western Europe appeared to have destroyed itself, physically, economically, and psychologically. Carefully distinguish and give appropriate weight to the reasons why it was able, in less than twenty years, to rise like a phoenix from the ashes.

First and foremost, a great deal of Europe's success would not have happened without its initial aid from the United States. After helping destroy so much of the continent, the U.S. pumped billions and billions of dollars back into the European economy through The Marshall Plan. It was named after Secretary of State George C. Marshall, who said "The world of suffering people looks to us for leadership. Their thoughts, however, are not concentrated alone on this problem. They have more immediate and terribly pressing concerns where the mouthful of food will come from, where they will find shelter tonight, and where they will find warmth. Along with the great problem of maintaining the peace we must solve the problem of the pittance of food, of clothing and coal and homes. Neither of these problems can be solved alone. (DeLong)"

In the first two post-World War II years the U.S. contributed through this plan, about four billion dollars a year to relief and reconstruction. The Marshall Plan continued these flows at comparable rates and was a multi-year commitment. From 1948 to 1951, the U.S. contributed $13.2 billion to European recovery. $3.2 billion went to the United Kingdom, $2.7 billion to France, $1.5 billion to Italy, and $1.4 billion to the Western-occupied zones of Germany (DeLong). An astounding $15.5 billion had been provided to Europe before the Marshall plan was enacted (Wegs, 66). The availability of Marshall Plan aid gave European countries a pool of resources that could be used to cushion the wealth losses sustained in restructuring. Countries that received large amounts of money from the Marshall Plan invested more. Countries could buy the amounts of coal, cotton and petroleum needed (all of these were in short supply) when needed because of Marshall Plan aid. Great Britain used the Marshall Plan aid to retire public debt (DeLong).

The Marshall Plan did have strings attached however. Countries had to agree to balance government budgets, restore internal financial stability, and stabilize exchange rates at realistic levels. Marshall plan aid was available only if Europe was committed to the "mixed economy" with the market playing a large part in the mix (DeLong).

On their own, some countries were able to rebuild or repair slightly damaged factories and warehouses. Contrary to popular belief, factories and capital goods were not totally or almost totally destroyed in Western Europe. Only one-fifth of factories on the west side of the continent were in ruins (Wegs 65). And even if factories and machines and capital goods were destroyed, it wasn't a huge loss. This permitted companies, along with money from United States assistance, to buy newer, more technologically advanced equipment. Without U.S. help, they would not have had the financial capacities to get this new industrial equipment, which proved to be faster, more efficient, and safer (Kindleberger, 113).

All of the building and rebuilding that needed to be done because of the bombing destruction helped sustain long term economic growth. Building trades prospered and grew dramatically as entire cities like Stuttgart had to start from scratch (Wegs, 66). This meant that many jobs would become available, and there were many people available to work. There were several reasons for the mass quantities of laborers eager to get to work. Soldiers had returned home from the war with no job to come home to because of either destruction or replacement workers. Refugees fleeing from the eastern portion of Europe occupied many countries in the west, especially West Germany, bringing about more bodies for work. Even workers from southern Europe came to work. Europe's...
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