Truman signs the Economic Cooperation Act (the Marshall Plan) into law.

Best Decision

1

Marshall Plan

Scroll to begin

Introduction

On April 3, 1948, President Harry Truman signed into law the Economic Cooperation Act of 1948, better known as the Marshall Plan. Named after its main proponent, Secretary of State George C. Marshall, the law authorized one of the largest foreign aid programs in history. From 1948 to 1951, the United States provided sixteen countries in Western Europe $13.2 billion in assistance—equivalent to roughly $180 billion today—to buy food and goods and to invest in their infrastructure and industry. The Marshall Plan revitalized postwar Europe, blunted Soviet influence in Western Europe, encouraged intra-European cooperation, and cemented the United States’ leadership of the transatlantic alliance. SHAFR Historians ranked the Marshall Plan as the best U.S. foreign-policy decision.

Europe on the Edge of Collapse

World War II devastated Europe. Recovery proved difficult. The winter of 1946–47 was one of the harshest in memory, and the 1947 spring harvest was the worst since the nineteenth century. Moved by Europe’s difficulties, Truman increasingly worried that the victory the United States had won at great cost on the battlefield would soon be lost. In March 1946, former British Prime Minister Winston Churchill warned of an “Iron Curtain” descending on Eastern Europe. A year later, a civil war in Greece, which pitted communist-led rebels against the established government, led Truman to pledge to send assistance to Greece and Turkey.

The struggle to rebuild raised fears that Communist parties might take power in Western Europe at the ballot box, increasing Soviet influence over the continent. Communists were already part of coalition governments in France and Italy. Determined to prevent that outcome and also worried that communists might try to seize power by force with Soviet help, Truman sought to develop a broader plan. He hoped to position Western Europe as a bulwark against Soviet expansion and ensure that it remained politically and economically aligned with the United States.

Bremen, Germany, shipyards after Allied bombing

Bremen shipyards in Germany, destroyed by Allied bombing, 1945. Courtesy of the Library of Congress.

Crafting a Plan

Truman tapped Secretary of State George C. Marshall to devise the administration’s response. He had vast experience with difficult problems. As chief of staff of the U.S. Army during World War II, he had organized the largest expansion and modernization of the U.S. military in history and oversaw the overall war effort. In April 1947, he directed his staff to develop a plan to spur European economic recovery. His advice to George Kennan, who led the effort as the head of the State Department’s new Policy Planning Staff, was simple: “Avoid trivia.”

The sense of urgency was high. Under secretary of State for Economic Affairs William L. Clayton returned from a trip to Europe in May warning that “without further prompt and substantial aid from the United States, economic, social and political disintegration will overwhelm Europe.” Americans would feel the impact as the United States lost valuable export markets, which might send the U.S. economy into recession. The State Department had to move quickly.

Courtesy of the National Archives photo no. 73-2876, Harry S. Truman Discussing Marshall Plan with George C. Marshall, Paul Hoffman, and Averell Harriman, 1948

President Harry S. Truman discussing the Marshall Plan with George C. Marshall, Paul Hoffman, and Averell Harriman, 1948. Courtesy of the National Archives and Records Administration.

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.

William L. Clayton, Under Secretary of State for Economic Affairs

Who Should Benefit?

The core idea of the plan that Marshall and his advisors developed was as simple as it was bold: the United States would help rebuild Europe if the Europeans agreed to develop a plan for reconstruction. But that raised an immediate question: Which European countries would be eligible for U.S. aid? Marshall knew that Congress would reject his plan if it meant sending aid to the Soviet Union and Communist governments in Eastern Europe. But he also knew that the United States needed to avoid creating the impression that it was trying to divide Europe.

Marshall decided to make the offer to all of Europe. He had not gone soft on communism. Instead, he calculated that Joseph Stalin would reject the aid offer because it would require the Soviet Union and its satellite countries to open up their economies to Western inspection. Marshall was right.

Marshall Plan versus Marshal Stalin Plan

A political cartoon comparing the Marshall Plan to Joseph Stalin's Council for Economic Mutual Assistance, 1949. Courtesy of the Library of Congress.

A Bold Vision

Marshall and his team had their plan ready by late May. The question then turned to how to unveil it to the United States and the world. They decided to accept a long-standing invitation from Harvard University to award Marshall an honorary degree.

On June 5, 1947, a crowd of fifteen thousand—including fellow honorees T.S. Eliot, J. Robert Oppenheimer, and General Omar Bradley—filled Harvard Yard to capacity. Marshall took less than eleven minutes to deliver his remarks. Much of the speech recounted the challenges Europe faced recovering from World War II. After noting that it was “the business of the Europeans” to lead in devising a recovery plan, he made his pitch: “The role of this country should consist of friendly aid in the drafting of a European program and of later support of such a program so far as it may be practical for us to do so. The program should be a joint one, agreed to by a number, if not all European nations.”

Most of Marshall’s audience did not immediately grasp the significance of what one senator would later call the “electric effect” of “a few sentences in a quiet sequence.” In the months to come, they would.

Secretary of State George C. Marshall Delivers an Address at Harvard University, June 5, 1947

Persuading Congress

Truman submitted a fleshed-out version of Marshall’s plan to Congress in December 1947. The political winds seemed unfriendly. Truman’s personal popularity was sagging. Republicans controlled both houses of Congress, and their relations with the Democratic president were strained. Moreover, 1948 was a presidential election year.

Conservative and isolationist lawmakers bristled at the idea of sending taxpayer dollars overseas, arguing that Europe’s problems were Europe’s to solve. Others warned that no matter how noble the purpose, foreign aid would divert funds from domestic programs, increase government spending, interfere with the operation of free markets, and create dependency rather than foster self-sufficiency. And some members of Congress asked why the United States should aid former adversaries Germany and Italy.

A Critical Ally

Truman and Marshall had one critical congressional ally, Senator Arthur Vandenberg of Michigan. He chaired the Senate Foreign Relations Committee and was a potential Republican presidential candidate. Before Pearl Harbor, he had opposed becoming entangled in European affairs. But the war convinced him that the United States could no longer afford to turn its back on events overseas. Vandenberg worked closely with the administration on the draft legislation.

At Vandenberg’s behest, the Truman administration provided Congress with detailed reports on the dire conditions in Europe. The administration also sent officials across the country to explain why the Marshall Plan was needed and enlisted business leaders and local officials to press the case that U.S. aid was not charity but a hardheaded and effective way to repel communist influence and expand markets for American-made goods. Continued news of Soviet intimidation of Europe also helped make the case. The Senate passed the Marshall Plan by a margin of 69 to 17. The House passed it by a margin of 329 to 74. On April 3, 1948, Truman signed it into law.

Senator Arthur Vandenberg

Senator Arthur Vandenberg testifying before the Senate Committee on Appropriations, June 9, 1948. Courtesy of the United States Senate Historical Office.

Europe Rebuilt

The United States allocated $13.2 billion (equivalent to roughly $180 billion in 2025 dollars) in grants and loans to sixteen European countries, including France, Italy, the Netherlands, the United Kingdom, and West Germany, over the next four years. As Marshall envisioned, European countries generated their own recovery plans and cooperated to allocate resources. Much of the aid went to rebuild railroads, highways, bridges, and factories destroyed during the war. Other aid provided food, oil, coal, and industrial machinery. But the Marshall Plan also funded activities ranging from medicine for tuberculosis, equipment for Portugal’s cod-fishing fleet, and sending Europeans to the United States to study advanced industrial and farming techniques.

The Marshall Plan’s impact was dramatic. By 1952, every recipient country had seen its gross domestic product (GDP) surpass pre-war levels, food shortages ended, and the quality of life improved. That turnaround cannot be attributed solely to the Marshall Plan. While the amount of U.S. aid was large in absolute terms, it was small relative to the overall size of European economies. But it inspired confidence in the future and spurred other public and private investment. The Marshall Plan also encouraged European economic integration, enabling each country to grow faster than it would have in isolation. In particular, the plan helped establish the European Coal and Steel Community in 1951, which evolved into what we know today as the European Union. The creation of NATO, which was established one year and one day after Congress passed the Marshall Plan, also helped spur economic recovery by providing Europe with a vital security reassurance.

Western Europe’s economic growth in turn shored up its fragile democracies. Falling unemployment, rising wages, and improved living standards diminished the appeal of the radical proposals that Communist parties offered and left less room for the Soviet Union to meddle. Center-left and center-right parties flourished. Europe’s political crisis passed.

after

The Coutances Bridge in Normandy, France, rebuilt with Marshall Plan aid. Courtesy of the National Archives and Records Administration.

Legacy of the Marshall Plan

The Marshall Plan jump-started Western Europe’s economic recovery, helped democratic governments weather difficult economic times, and blunted Soviet influence. As Marshall recognized from the start, U.S. aid solved major humanitarian problems and benefited the United States. Europeans were able to buy far more of what U.S. farmers and manufacturers produced, to the benefit of people on both sides of the Atlantic. The Marshall Plan also became a foundational anchor to the transatlantic relationship that has been a core pillar of U.S. foreign policy for more than eighty years.

What Historians Say

  • Ian Van Dyke

    Ian Van Dyke

    The Marshall Plan not only helped ensure stability of Western allies in Europe in the short term, it helped sow the seeds for long-term stability and prosperity in Europe that have remained to this day. By shouldering responsibility for rebuilding Europe after World War II, the U.S. demonstrated that it would not repeat the mistakes of a punitive postwar settlement that occurred after World War I.
    Visiting Assistant Professor, Grand Valley State University
  • Max Paul Friedman

    Max Paul Friedman

    The Marshall Plan harnessed American economic power to strategically rebuild a key global area of shared interest, winning a generation of friendship and two generations or more of allies in Europe while contributing substantially to the growth of important markets for U.S. exports. It became the textbook case of how foreign aid is not charity but can serve the national interest.
    Professor of History and Professor of International Relations, American University
  • Alexandra Penler

    Alexandra Penler

    The Marshall Plan and NATO both brought significant goodwill to the United States, which is something that has to be taken into consideration. In so much of U.S. history, it has defended democracy and provided aid for health, food, and reconstruction which increases its soft power. This tends to earn goodwill, which the U.S., like any great power, has needed.
    Oman Desk Officer, U.S. Department of State
  • Lauren Turek

    Lauren Turek

    The Marshall Plan engendered good will toward the United States and allowed it to assist the involved nations in recovery; the Marshall Plan helped the United States shore up its trading partners and build a community of democratic capitalist states.
    Associate Professor of History, Trinity University

National Security Archive, GWU

Learn More

Primary documents, books, articles, and more on the Marshall Plan.

Primary Documents

Books

Articles

Documentaries and Short Videos

Lectures and Podcasts

Timeline and Websites