Outline the circumstances leading to adoption of Marshall Plan.

Answer:

The European Recovery Programme, announced by Secretary of State George Marshall in June 1947, arose from the economic devastation of post-war Europe and the American conviction that poverty would open the way to communism.

The circumstances

• Europe lay in ruins, with industry, transport and housing destroyed by the war.
• The exceptionally severe winter of 1946-47 brought food and fuel crises.
• A dollar shortage prevented Europe from buying the goods it needed to recover.
• Communist parties were gaining strength in France and Italy amid the hardship.
• Britain's announcement that it could no longer support Greece and Turkey prompted the Truman Doctrine in March 1947.

The plan and its purposes

• Marshall's Harvard speech of June 1947 offered aid to a Europe that would plan jointly.
• About thirteen billion dollars was disbursed between 1948 and 1952.
• The OEEC was created to coordinate distribution among the recipients.
• The Soviet Union rejected participation and forbade it to eastern Europe.
• American industry also gained assured markets for its exports.

Consequences

• Western European industrial output rose well above pre-war levels by 1952.
• It encouraged European economic cooperation, a step towards the Common Market.
• The Soviet Union countered with Comecon in 1949, deepening the division of Europe.

The Marshall Plan therefore arose from the convergence of humanitarian need, economic self-interest and containment. As historians observe, it succeeded brilliantly in reviving western Europe and in binding it to the United States, while the Soviet refusal to join hardened the division of the continent into two blocs.