Marshall Plan Timeline

Speaking at the Paris Peace Conference on October 10, 1946, Soviet Foreign Minister Vyacheslav Molotov stated Soviet fears: 'If American capital was given a free hand in the small states ruined and enfeebled by the war [it] would buy up the local industries.'

Image source: Vyacheslav Molotov

After arriving in Paris in July 1947, Molotov reported that conditions for the American credit were non-negotiable, making Soviet participation impossible. The Soviets blamed the United States for communist losses in elections in Belgium, France, and Italy earlier that spring.

Prime minister Józef Cyrankiewicz rejected the Marshall Plan under Stalin's direction and was rewarded with a lucrative five-year trade agreement, a grant of roughly $450 million (in 1948) in long-term credit and loans, 200,000 tonnes of grain, and heavy machinery and factories.

Image source: Józef Cyrankiewicz

In 1948, Yugoslav leader Josip Broz Tito broke decisively with Stalin on other issues, complicating the Eastern Bloc's unified opposition to Western initiatives like the Marshall Plan.

Image source: Tito–Stalin split

Opposition against the Marshall Plan in the United States Congress was greatly reduced by the shock of the communist coup in Czechoslovakia in February 1948, which heightened fears of Soviet expansionism in Europe.

Image source: 1948 Czechoslovak coup d'état

The founding conference of the Congress for Cultural Freedom was held in Berlin in June 1950, part of the broader Cold War cultural offensive that accompanied economic programs like the Marshall Plan.

Henry Hazlitt criticized the Marshall Plan in his 1947 book Will Dollars Save the World?, arguing that economic recovery comes through savings, capital accumulation, and private enterprise, not through large cash subsidies.

Image source: Henry Hazlitt

Austrian School economist Ludwig von Mises criticized the Marshall Plan in 1951, believing that 'the American subsidies make it possible for [Europe's] governments to conceal partially the disastrous effects of the various socialist measures they have adopted.'

Image source: Ludwig von Mises

Under the London Debts Agreement of 1953, the repayable amount of German debt was reduced by 50% to about 15 billion marks and stretched out over 30 years. The amount of Marshall Plan aid Germany had to repay was reduced to less than US$1 billion; the final German loan repayment was made in 1971.

Image source: London Agreement on German External Debts

Washington demanded convertibility of sterling currency on July 15, 1947, which produced a severe financial crisis for Britain. Convertibility was suspended on August 20, 1947.

Paul Hoffman, head of the Economic Cooperation Administration, told Congress in 1949 that Marshall aid had provided the 'critical margin' on which other investment needed for European recovery depended — a common American interpretation of the program's role.

Image source: Paul G. Hoffman

France, which received billions of dollars through the Marshall Plan, saw its average income per person return to almost pre-war level by 1949. Industrial production in Europe generally reached pre-war levels around this time.

British economists argued their position was validated by 1950 as European industrial production exceeded prewar levels. By 1950, American rearmament and heavy spending on the Korean War and Cold War finally ended the dollar shortage.

By 1952, as funding ended, the economy of every participant state had surpassed pre-war levels; for all Marshall Plan recipients, output in 1951 was at least 35% higher than in 1938. The years 1948 to 1952 saw the fastest period of growth in European history.

On December 17, 1947, the United States agreed to give $40 million to France, Austria, China, and Italy as interim aid ahead of the full Marshall Plan program.

In 1948, the United States allowed European Recovery Program aid to be used to buy goods from Canada, expanding the flexibility of how recipient nations could spend their assistance funds.

Members of the Republican-controlled 80th Congress were initially skeptical, but support grew. Only 17 senators voted against the plan on March 13, 1948. Supporters argued it was 'absolutely necessary' in 'the world battle against communism' even if its economic justification was debated.

On March 17, 1948, President Truman addressed European security and condemned the Soviet Union before a hastily convened Joint Session of Congress, building momentum for passage of the European Recovery Program.

Image source: Harry S. Truman

President Harry Truman signed the Marshall Plan into law on April 3, 1948, granting $5 billion in aid to 16 European nations. The Act established the Economic Cooperation Administration (ECA) to administer the program, replacing an earlier proposal for a Morgenthau Plan.

As a major prerequisite for delivery of Marshall Plan aid, the Currency Reform of 1948 was implemented on June 20. Headed by the military government, it helped Germany restore stability by encouraging production, and the recovery effort began moving from emergency relief.

Image source: Currency Reform of 1948

In January 1949, the American government suspended aid to the Netherlands in response to Dutch efforts to restore colonial rule in Indonesia during the Indonesian National Revolution, implicitly threatening to suspend Marshall aid if the Dutch continued opposing Indonesian independence.

Originally scheduled to end in 1953, the Marshall Plan ended early in 1951 when it was largely replaced by the Mutual Security Act, as Republicans hostile to the plan gained seats in the 1950 Congressional elections and conservative opposition revived. The new plan gave away about $7.5 billion annually until 1961.