TOWARDS THE MARSHALL PLAN
Marshall's speech, given in Harvard on 5th June 1947, analyses the European problem in terms that rather resemble the 'scissors crisis' in the Soviet Union at the end of the 1920s. It was seen in terms of a conflict of interest between town and country:
'The farmer has always produced the foodstuffs to exchange with the city dweller for the other necessities of life. This division of labor is the basis of modern civilization. At the present time it is threatened with breakdown. The town and city industries are not producing adequate goods to exchange with the food producing farmer. Raw materials and fuel are in short supply. Machinery is lacking or worn out. The farmer or the peasant cannot find the goods for sale which he desires to purchase. So the sale of his farm produce for money which he cannot use seems to him an unprofitable transaction. He, therefore, has withdrawn many fields from crop cultivation and is using them for grazing. He feeds more grain to stock and finds for himself and his family an ample supply of food, however short he may be on clothing and the other ordinary gadgets of civilization. Meanwhile people in the cities are short of food and fuel. So the governments are forced to use their foreign money and credits to procure these necessities abroad. This process exhausts funds which are urgently needed for reconstruction. Thus a very serious situation is rapidly developing which bodes no good for the world. The modern system of the division of labor upon which the exchange of products is based is in danger of breaking down.'
It may be that I haven't read enough but in what I have seen this does not seem to be how the problem was seen in Britain and France which were the main countries that had to respond if substance was to be given to Marshall's offer. Both countries were engaged in very ambitious programmes which could only be realised with US help but which the Americans themselves regarded with suspicion. In Britain a Socialist government had the ambition to establish a welfare state, was engaged in a programme of nationalising major industries, and was committed to achieving 'full employment' at a time when it was by no means clear that full employment was compatible with the multilateral free trade that was the main aim of the Americans. It is the more interesting and impressive that the man who was the personification of these British ambitions, Ernest Bevin, was now, as Foreign Secretary, the man the Americans had to deal with.
The case of France is a little more ambiguous. The Monnet Plan had originally been worked out in the context of the American loan of December 1945 and the Americans had formally agreed to it. It laid out 'six key sectors of the economy upon which the rest of the economy depended' - coal (50 Million tonnes in 1946, to be increased to 65 in 1950), electricity (23.5 billions of kwh to be increased to 37), steel (4.2 million tonnes to 11), cement (3 million tonnes to 13.5), agricultural machinery (zero to 500), railways (130 million tonnes transported to 240). (14) The aim wasn't just to secure more coal and coke for French needs, important as that was. It was also to deprive Germany of the coal and coke that would enable it to revive its own steel industry. To quote De Gaulle's economic adviser and Director of the Economic Section of the Quai d'Orsay, Hervé Alphand, in a paper submitted in January 1947, 'the surest guarantee for the maintenance of peace will always consist in the limitation of the German steel potential.' (Lynch pp.240-41).
(14) Frances M. B. Lynch: 'Resolving the Paradox of the Monnet Plan: National and International Planning in French Reconstruction', The Economic History Review, Vol. 37, No. 2 (May, 1984), p.238.
Marshall didn't name any particular European country but by that time it was clear that in American eyes the recovery of Europe presupposed the recovery of Germany. There was what might be interpreted as a hint to France when he said 'Any government which manoeuvres to block the recovery of other countries cannot expect help from us.'
The best known British economic historian dealing with this period - Alan Milward (15) - argues that the Americans were greatly exaggerating the catastrophic state of Europe. Marshall's analysis was based on a memorandum submitted in May 1947 by William L.Clayton, US Assistant Secretary of State for Economic Affairs, 'a millionaire director of a firm of Texas cotton brokers' and 'a militant free trader who became an author of political tracts in his seventies' (meaning in the 1950s - PB). According to Milward (pp.2-3): 'As Marshall was taking his words from Clayton, most European countries were still in a period of rising output and expanding foreign trade. It could not be shown that any population outside Germany was in danger of starvation and even there the diet was slightly improved over the previous year.' Milward goes into more detail on the very real problems that did exist but remains faithful to this as a broad generalisation.
(15) To quote Perry Anderson: 'There is some irony in the fact that the country which has contributed least to European integration should have produced the historian who has illuminated it most.' Review of two books by Milward and François Duchêne's biography of Monnet in London Review of Books, 4th October, 1996.
He argues that Marshall and Clayton needed to present a picture of Europe on the point of collapse in order to overcome the instinctive isolationism of Congress, now dominated by Republicans, and persuade them that the situation posed a threat to the United States. They also had a more parochial interest: 'The Marshall Plan was predominately designed for political objectives. Conceived and pushed through by the Department of State itself, it represented a return to a position of pre-eminence in the making of national policy by that department.' (p.5). In other words it was aimed at wresting back the control over European policy that had been usurped by the Treasury under Morgenthau and White.