Marshall Plan - Negotiations

Negotiations

Turning the plan into reality required negotiations among the participating nations, and to get the plan through the United States Congress. Sixteen nations met in Paris to determine what form the American aid would take, and how it would be divided. The negotiations were long and complex, with each nation having its own interests. France's major concern was that Germany not be rebuilt to its previous threatening power. The Benelux countries, despite also suffering under the Nazis, had long been closely linked to the German economy and felt their prosperity depended on its revival. The Scandinavian nations, especially Sweden, insisted that their long-standing trading relationships with the Eastern bloc nations not be disrupted and that their neutrality not be infringed.

The United Kingdom insisted on special status as a longstanding belligerent during the war, concerned that if it were treated equally with the devastated continental powers it would receive virtually no aid. The Americans were pushing the importance of free trade and European unity to form a bulwark against communism. The Truman administration, represented by William L. Clayton, promised the Europeans that they would be free to structure the plan themselves, but the administration also reminded the Europeans that implementation depended on the plan's passage through Congress. A majority of Congress members were committed to free trade and European integration, and were hesitant to spend too much of the money on Germany. However, before the Marshall Plan was in effect, France, Austria, and Italy needed immediate aid. On December 17, 1947, the United States agreed to give $40 million to France, Austria, China, and Italy.

Agreement was eventually reached and the Europeans sent a reconstruction plan to Washington. In the document the Europeans asked for $22 billion in aid. Truman cut this to $17 billion in the bill he put to Congress. The plan encountered sharp opposition in Congress, mostly from the portion of the Republican Party led by Robert A. Taft that advocated a more isolationist policy and was weary of massive government spending. The plan also had opponents on the left, Henry A. Wallace notably among them. Wallace saw the plan as a subsidy for American exporters and sure to polarize the world between East and West.

Wallace, the former vice president and secretary of agriculture, mockingly called this the "Martial Plan," arguing that it was just another step towards war. However, opposition against the Marshall Plan was greatly reduced by the shock of the Communist coup in Czechoslovakia in February 1948. Soon after, a bill granting an initial $5 billion passed Congress with strong bipartisan support. The Congress would eventually allocate $12.4 billion in aid over the four years of the plan.

On 17 March 1948, President Harry S. Truman addressed European security and condemned the Soviet Union before a hastily convened Joint Session of Congress. Attempting to contain spreading Soviet influence in Eastern Europe, Truman asked Congress to restore a peacetime military draft and to swiftly pass the Economic Cooperation Act, the name given to the Marshall Plan. Truman’s speech also offered strong criticism of the Soviet Union. “The situation in the world today in not primarily the result of the natural difficulties which follow a great war,” Truman declared. “It is chiefly due to the fact that one nation has not only refused to cooperate in the establishment of a just and honorable peace but—even worse—has actively sought to prevent it.”

Members of the Republican-dominated 80th Congress (1947–1949) were skeptical. “In effect, he told the Nation that we have lost the peace, that our whole war effort was in vain,” noted Representative Frederick Smith of Ohio. Others thought he had not been forceful enough to contain the USSR. “What said fell short of being tough,” noted Representative Eugene Cox, a Democrat from Georgia. “There is no prospect of ever winning Russian cooperation.” Despite its reservations, the 80th Congress implemented Truman’s requests, further escalating the Cold War with the USSR.

Truman signed the Economic Cooperation Act into law on April 3, 1948; the Act established the Economic Cooperation Administration (ECA) to administer the program. ECA was headed by economic cooperation administrator Paul G. Hoffman. In the same year, the participating countries (Austria, Belgium, Denmark, France, West Germany, the United Kingdom, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Sweden, Switzerland, Turkey, and the United States) signed an accord establishing a master financial-aid-coordinating agency, the Organization for European Economic Cooperation (later called the Organization for Economic Cooperation and Development, OECD), which was headed by Frenchman Robert Marjolin.