Marshall Plan 1948: Stalin's Walkout and the 83% of Aid Spent in America

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In 1946 many Europeans lived on fewer than 1,500 calories a day. Bombing had wrecked railway hubs, bridges and docks, a drought ruined the wheat crop, and the harsh winter of 1946 to 1947 froze the rivers that carried coal. Farm output was at 83 percent of prewar levels and industry was cut in half, while western Germany had lost five million homes and absorbed 12 million refugees. Early American policy followed the Morgenthau Plan, keeping German factories idle and shipping them out as reparations, until Herbert Hoover reported that Europe's economy could not recover without Germany. Communist gains in Greece, France and Italy turned the question into one of containment.

George Marshall's Harvard speech on June 5, 1947, largely drafted by Charles Bohlen, asked Europe to draw up its own joint plan and invited the Soviet bloc. The conditions of openness and coordination drove Vyacheslav Molotov out of the Paris talks after a telegram from Stalin, and Stalin pulled Czechoslovakia and Poland out with him. At home the administration sent out more than a million pieces of literature, and the February 1948 communist coup in Czechoslovakia swayed Congress. Truman signed the Economic Cooperation Act on April 3, 1948, sending about 17 billion dollars to 17 countries, with Britain taking 26 percent, France 18 and West Germany 11.

• Stalin berated Czechoslovak foreign minister Jan Masaryk in Moscow and rewarded Poland with a five-year trade deal.
• Graduate student Malcolm Crawford, who was in the Harvard audience, had written a thesis on strategic partnerships that shaped the plan's structure.
• A Congressional Research Service report found that 83 percent of Marshall Plan funds were spent inside the United States.
• Aid equaled only about 3 percent of recipients' national income and added less than half a percent to growth, yet administrator Paul Hoffman called it the critical margin for breaking bottlenecks.
• Economists J. Bradford DeLong and Barry Eichengreen call it history's most successful structural adjustment program.