#95 - Marshall Plan II

What this episode covers

* Something that Marshall mentions only briefly in his speech is the effect that would have on the US economy. (around the 7’20" mark) * Europe’s economy might have been destroyed after the war, but America’s wasn’t looking too bulletproof, partly BECAUSE the European economy had been shattered. * In 1947, there were serious concerns about the state of the US economy. * Benn Steil: * There was a report written in 1946, I think, by the SWNCC, the State, War and Navy department staff, which said “The conclusion is inescapable, that, under present programs and policies, the world will not be able to continue to buy United States exports at the 1946-47 rate beyond another 12-18 months.” * They anticipated “substantial decline in the United States export surplus would have a depressing effect on business activity and empolyment in the United States.” * And in 1946, the gross national product of the U.S. was already down 11.6% on the previous year, as the government stopped spending money on the war effort. * Navy Secretary James Forrestal characterised American priorities in Europe as “economic stability, political stability and military stability… in about that order." * Undersecretary of State for Economic Affairs Clayton redefined the problem as one of disposing of America’s “great surplus.” * He explained in May 1947 : “The capitalistic system, whether internally or internationally, can only work by the continual creation of disequilibrium in comparative costs of production.” * "Let us admit right off that our objective has as its background the needs and interests of the people of the United States. We need markets -- big markets -- in which to buy and sell." * Clayton was saying implicitly what Dean Acheson had argued explicitly in 1944: the profitability of America’s corporate system depended upon overseas economic expansion. * Marshall and other advocates of the program also spoke openly of the parallel between their policy and America’s earlier westward expansion across the continent. * America needed to expand. * But wait!? I thought it was the SOVIETS who were trying to take over the world? * Marshall argued that the nation faced an either-or situation. * He claimed that Unless the plan was adopted “the cumulative loss of foreign markets and sources of supply would unquestionably have a depressing influence on our domestic economy and would drive us to increased measures of government control.” * So by defining America’s expansion as the key to prosperity, Marshall defined foreign policy as the key to domestic problems and to the survival of democracy at home. * (The Tragedy of American Diplomacy - William Appleman Williams) * * If the European economy didn’t recover quickly, it would crash the US economy. * It’s all connected. * And if the European economy DID recover, but as part of a Soviet trading bloc, it would STILL crash the US economy. * (Cox, Michael, and Caroline Kennedy-Pipe. "The Tragedy of American Diplomacy? Rethinking the Marshall Plan.”): * * And so they came up with a plan. * A plan to give $13 billion to European countries over 4 years. * So The Plan, Contrary to popular mythology, it was not just a simple program of aid. * It had a TON of conditions. * It wasn’t like the U.S. just dumped pallets of cash on Europe’s doorstep and said “have at it”. * This was very carefully engineered and managed so that it would benefit the American economy. * And Truman politically. * As the influential British economist Sir Alec Cairncross pointed out, US Aid to Europe had been flowing across the Atlantic for the better part of two years even before Marshall's speech. * What made the June 1947 initiative different, he noted, was its attempt to link aid to the reform of European institutions and practices. * Moreove Learn more about your ad choices. Visit megaphone.fm/adchoices

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