1What American ideas lay behind the Marshall Plan ? What premises did it embody ? No simple answer is possible. At the most basic level the Marshall Plan embodied a belief that économie assistance could help prevent Communist political advance in Europe. But the Marshall Plan, or European Recovery Program, did not remain just a political prophylatic. It took on a life of its own as a major effort at économie improvement. It incorporated many concepts and its emphases varied over the course of the Plan.

2 This paper will explore the « presuppositions » of the Plan, but presuppositions is a misleading terni, for the political and intellectual bases evolved – evolved not only as the European emergency eased, but as the American political framework also changed. The Marshall Plan was not a simple imposition of an American agenda on a destitute Europe. It was the resuit of a complex interaction between a United States that was rapidly leaving behind its era of New Deal expérimentation and a Europe that was forsaking its somewhat simplistic aspirations of 1945 and embarking on rapid économie transformation. America and Western Europe, in effect, changed together through the Marshall Plan. Premises altered through practice.

3From its conceptualization in 1947 to its transformation into a program of military assistance by 1951, the European Recovery Program integrated a wide range of policy aspirations : political and économie. It began in response to a perceived crisis – political and économie at the same time. It was carried on after the immédiate crisis in an effort to produce enduring structural changes. It ended with the appearance of a new crisis : military more than économic.

4The ERP, moreover, involved a complex administrative arrangement. It was run by a Washington agency that had to seek annual funding from Congress. The Washington agency articulated its policy objectives primarily to extract funds from Senators and Représentatives, some of whom were sophisticated, others ill-disposed or ill-informed. But the Washington agency also included young economists with an active agenda of their own. Outside Washington a virtually co-equal Paris Office of the Spécial Représentative served to negotiate with the OECD and coordinate national recovery efforts. Finally, within each country, a country team affailiated with the Embassy designed local policy1. For ail this complexity, EGA did not remain the only agency with a voice over foreign-assistance policy. State and Treasury also asserted their objectives, as did the Department of the Army insofar as occupied Germany was concerned.

5The State Department rarely came into direct conflict with the Marshall Plan authorities. But State Department officiais were particulary concerned with the recovery of France. The French rôle was pivotai both because of the inhérent importance of the country and because its approval was crucial for the reconstruction of western Germany. « The goal of European recovery program is fundamentally political, » Acting Secretary of State Robert Lovett wrote Harriman, « and France is the keystone of continental Western Europe2 ». By and large the French emphasis caused no great difficulty, especially because Harriman had personal friends within the State Department and tended to act as a sort of régional ambassador. On the other hand the willingness of the Paris Embassy, seconded by Harriman, to make compromises with the French authorities over fiscal reform, could antagonize EGA headquarters3.

6 Treasury officiais were more demanding than Department of State spokesmen. They insisted on a major rôle when issues of international payments were under discussion. The Treasury remained far more preoccupied than most EGA officiais about moving rapidly toward currency convertibility i.e. toward establishing the dollars rôle as an international reserve currency. Hence their major concern were the continuing British efforts to shield the pound sterling, either by limits on convertibility, delaying intra-European payments schemes, or immobilizing the so-called sterling balances of colonial dependencies. While EGA officiais generally were réceptive to British pleas for delays or shielding the pound from the full rigors of convertibility, the Treasury had more « orthodox » concepts, and the différences peaked during the negotiations of the European Payments Union in 19504.

7In the field, moreover, the administrators of American assistance tailored plans to individual countries. Their objectives varied according to each location they dealt with ; general concepts were modified according to local needs. American aid to Great Britain was designed to meet a different crisis from the assistance extended to France or Italy, and ail varied from the objectives governing West German aid. Hence between the demands of American public opinion, the theoretical preconceptions of the staff economists, and the perceived objectives of individual country teams, a wide range of aspirations came together in « the » Marshall Plan.

8Most accounts hâve tended to look at one level of policy articulation or another. In the paper that follows, I will try to compare the policies and the premises of policy as they emerged at these different levels of the Program, and at different times during the program.

I. Overall concepts

9Rather schematically one can pick out a few major interlocking thèmes that dominate United States policy : The first was the critical interplay of économie recovery and démocratie political stability. The second involved a particular analysis of économie distress and, conversely, of requirements for success. These hinged on restoring productivity and a class collaboration in advancing productivity. Third, a new geography of économie exchange was envisaged, in which an integrated West European trade would replace earlier East-West exchange and German industrial potential would serve as sparkplug for the new Western économie arena.

A. The Interplay of Politics and Economics

10The Marshall Plan began with the growing belief in the winter and spring of 1947 that économie misery and political instability were interlocked in a very potent and menacing way. The most immédiate danger emerged with the économie agony of the winter of 1947. Alan Milward has argued that the problem was a crisis of growth ; the resource pinch encountered during a powerful wave of recovery5. But it was perceived differently by an excited public opinion. Three day work weeks, brown outs, coal and food shortages seemed more than mere kinks in a recovery curve, even if later the long term figures might allow such a reading. The leaders of 1947 were coping with the anguish of the moment and not to be solaced by the long term6.

11The supposed threat of Communism was clearly emerging as the most urgent political aspect of the European problem. It went hand in hand with the economie difficulties, although American policy makers in the spring of 1947 sought to stress the autonomy of the économie issue (in part, they worried that they might hâve over-emphasized the Communist threat the previous Mardi in seeking aid for Greece and Turkey). The resuit was an ambivalent public stance. To appeal to Congressional leaders, communism was a useful spectre. Communism, which had prevailed in Eastern Europe by force of the Soviet presence, could be depicted as an infectious disease. At the least, it was understood, communist parties in the West would block economie recovery if they remained in cabinet posts. They would oppose austerity measures, demand wage increases, veto the price rises of coal and basic supplies. But their removal in early 1947 exposed governments to massive strikes and protests unless they could overcome urgent shortages of food and fuel. The Italians might not overcome their inflation and industrial recovery so long as the Party remained in power. The Communists, who in 1945, had seemed the paragons of production now seemed determined to sabotage recovery7. The spring of 1947 provided some dramatic warnings. When George Marshall stopped in Paris on the way to the Moscow Foreign Ministers’ Conférence, the French government pressed home that its stability depended upon solving the coal crisis8. Alcide De Gasperi was seeking économie aid to withstand popular discontent and communist opposition once he excluded them from his ministry9. By late 1947, the Communist reaction no longer was seen as an outgrowth of national conflicts, but part of an international revolutionary mobilization. Zhdanov’s summons of Party leaders to Sklarska Poreba, the institution of the Cominform, and finally the Prague coup apparently justified the argument that without successful counter-action, Moscow would foment systematic subversion. Certainly it helped convince members of Congress.

12Within the Executive branch, however, at least through the formative first half of 1947, policy positions could be developed without constant reference to the Communist danger. Too much harping on the threat might lead to a one-sided military or défensive reaction. More generally, U.S. policy architects were prepared to argue, démocratie reconstruction threatened to founder because of widespread misery. George Kennan’s newly found Policy Planning Staff in the State Department argued in the spring of 1947, « it does not see Communist activities as the root of the difficulties of Western Europe. » The root problem was the war, and the « profound exhaustion of physical plant and spiritual vigor10 ».

13So too Marshall argued that the crisis of 1946-47 had revealed that even the visible destruction left by the war « was probably less serions than the dissolution of the entire fabric of European economy... the rhabilitation of the economic structure of Europe quite evidently will require a much longer time and greater effort than had been foreseen11 ». Thoughtful Americans envisaged an autonomous économie dimension of the problem, which had to be tackled on its own terms.

b. The Diagnosis of Economic Distress

14The Marshall Plan embodied a model of economic diffîculty and a model of economic growth. On the one hand, it was based on the récognition, according to Secretary Marshall’s speech, that the dificulties afflicting Europe were far deeper than had originally been realized. It presupposed that the war had bequeathed a long-term disruption of normal trade patterns. This was true : the collapse of trade and payments – not only among the European countries, but between Europe and her former dependencies, i.e. some of the « third world »– was profound. It was the British who had to face this fact first. While by 1946 they reachieved the physical volume of exports that they had enjoyed before the war, they could not reap the same dollar earnings12.

15Ironically enough, however, it was the American economy that created some of the problems that the U.S. had to solve. The dollar was probably valued too high, not only in terms of other currencies, but in terms of basic postwar commodities. Yet the Europeans had agreed that the dollar was a reserve currency ; they would acccept the value that the Americans themselves decided. The market price of dollars was set by the seller, not the buyer. When the British looked at the pound-dollar relationship, they felt that the dollar was out of alignment, not the pound13. Of course, U.S. Treasury officiais felt the reverse.

16Indeed Americans soon developed a diagnosis of European difficulties that ascribed the dollar gap to causes more profound than even the war and its rupture of trade patterns. In the short term the war had left bottlenecks. Kennan originally suggested that the U.S. « might select some particular bottleneck or bottlenecks in the economic pattern of western Europe and institute immédiate action which would bring to bear the full weight of this Government on the breaking of these bottlenecks14. » American officiais continued to think in clearing impediments – whether purely economic or political as well. But they developed a longer-term, more « structural » analysis as well. Europeans, it was noted, had started to lag in productivity growth from the turn of the century. Flagging productivity vis a vis the United States created the balance of payments problem15. « The basic and long-term European problem, which would hâve arisen even without World War II, is the problem of the rate of increase of productivity. The European annual growth of productivity has been progressively falling behind the U.S. rate... since the last century16. » Marshall Plan crédits played a spécial role and exerted particular leverage. As a staff advocate argued by 1949 :

While their value is small relative to total domestic production of goods and services, they are critical in the sense that any substantial réduction in imports below programmed levels would mean an immédiate and serious réduction of urban food consumption and a deline in industrial production larger by several times than the initial réduction in imports... Before this cycle had worked itself out, the final loss to Europe’s gross product would be a multiple of the required aid figure.
The resuit would undoubtedly be a sudden overturn of the financial stability which has been so dearly won and a renew of inflation with ail that implies for renewed political struggle, lowered morale and weakening of coopération among the Western European countries and with the U.S.17.

C. The Politics of Productivity

17I hâve developed this idea elsewhere and several other authors, British and Italian above ail, hâve taken it up, so that I will merely recapitulate the concepts very briefly18. The productivity that seemed the key parameter of économie performance was also deemed a major déterminant of political outcomes. Americans traditionally turned to économie growth as a way of overcoming bruising conflicts over politics and économies. Taylorism had been premised on the idea that increasing efficiency would buy the loyalty of the working class ; Henry Ford had likewise coupled a high-wage and high-output model of industry. The « arsenal of democracy » in the Second World War had demonstrated that coopération for industrial production could pull the country out of the dépréssion. Party conflict, the antagonism of capital and labor, could be overcome when both sides concentrated on efficient production or productivity increases. As per-worker output increased, the growth generated could be used to enrich labor as well as management. As an EGA labor official exulted in early 1949 :

A vision seems to capture the imagination of ail the countries of Western Europe, looking to a new high productivity record that will raise the standard of living. This fact has repercussions in politics and ideologies. Production has always been the forte of capitalism. The emphasis of Socialist countries has been in distribution. If Socialist countries of Europe now turn to production as a solution, it is a distinguished tribute to capitalism and the American way of life19.

18Americans would teach Europeans how to increase their productivity. Cooperative trade unionists could be brought to the U.S. to learn American cooperative methods ; businessmen would be brought to study factory organization ; the EGA authorities would send « productivity missions » to the European countries20. In practice, these efforts became efforts at ensuring labor union collaboration with managerial control of the workplace in return for higher real wages21. The political thrust was to separate the compilant unions (FO, for example) and the Social Democrats from the Communists. The Acting Secretary of State Robert Lovett best articulated the calculation in October 1947 :

19« Politically speaking the break must corne to the left of or at the very least in the middle of the French Socialist Party. Translated into labor terms, the healthy elements of organized labor must be kept in the non-Communist camp. Otherwise the tiny production margin of the fragile French economy would vanish and the ensuing civil disturbances would take on the aspects of civil war22. » Or as Secretary Marshall himself instructed the Rome embassy in May 1949 : Basic Department policy is to do everything possible to strengthen non-Communist labor éléments. It is essential to ERP that non-Communists regain and hold control European labor organization23. »

20During the Eisenhower administration such attitudes hardened into a far tighter alliance with the center-right in Europe, the Italian Christian Democrats or the employées. The politics of productivity would entail a major shift in the postwar labor relations. If initially Communist unions were weakened at the expense of the Socialists, by the 1950’s, the labor movement as a whole possessed a diminished capacity for adversarial relations. The ERP, after ail, involved ending the fifteen-year inflationary trend of the Western (and Japanese) economies, which had been unleashed with the armament expenditures on the eve of World War II. The conditions of American aid included the commitment to work toward liberalized international trade and casier currency convertibility. Hence U.S. assistance required the progressive (if slow) yoking of currencies. Much as the Mitterrand government chose the European Monetary System over domestic reflation in 1983, ail Western economies that were oriented toward the United States had to choose currency stabilization between 1947 and 1949. The Einaudi Plan, the introduction of the Deutsche Mark, the stabilization program of René Mayer, and the British devaluation of 1949, all comprised part of a systemic reorientation.

21Such an effort to switch from an inflationary conjoncture (which, of course, was set back by the Korean War and rearmament) necessarily implied an impact on wage methods and labor relations. For it involved a major restoration of productivity wages, bonuses (primes), and piece work. Real wages had risen with inflation during 1944-45 ; they then fell and began to rise again 1949. By then the wager on productivity was yielding a surplus that could be shared with working-class consumers. Nonetheless, salaires à la tâche meant a recovery of managerial hierarchies in the workplace24. Although by 1950, the ramifications of « productivity » became increasingly conservative and constraining on organized labor, the original thrust of the Marshall Plan was still envisaged in Washington as reinforcing the center-left : « The trend in Europe is clearly toward the Left » the State Department analyst of European affairs wrote three weeks after Marshall’s address at Harvard. « I feel that we should try to keep it a non-Communist Left and should support Social-Democratic governments25. »

D. The new régional architecture of Europe

22As a major theme, « integration » in the broadest sense emerged, as suggested below, in 1949. But the Plan presupposed new international linkages from the outset. John Gimbel has stressed that the Marshall Plan allowed the State Department officiais, who tended to stress French political needs, and the Army officiais in charge of administering a poor zone in Germany, to find a joint solution for their respective foreign « clients26 ». Impatient Congressional conservatives, bolstered by ex-president Hoover’s notable report of early 1947 on European economie difficulties, could not understand why restrictions were still placed on West German production (although, of course, actual German output still lagged below the allowable ceilings). After the Moscow Conférence and Marshall’s famous visit and conclusions – the patient is dying while the doctors argue – it became accepted wisdom that German productive capacity must be restored. The SWNCC report of mid April urged Germany form an active part of a régional recovery strategy27. The Joint Chiefs of Staff likewise argued that « the complété resurgence of German industry... is essential for the économie recovery of France-whose security is inséparable from the combined security of the United States, Canada, and Great Britain28. These recommendations found their way into Kennan’s report to Acheson in late May, cited above.

23Kennan’s inclusion of Western Germany, in fact, implied the exclusion of the Soviet Union and its sphere of influence in Eastern Europe. Kennan was identified with a strategy of abandoning lingering ideas of trying to overcome the East-West division. His earlier telegrams had advocated the moral and économie strengthening of the Western countries including the western zones of Germany29. Resistance to Soviet demands for all-German control might mean partition, but by April 10, 1947, Kennan told students at the Air War College that it was better not to « shrink from that partition » rather than allow the Soviets a chance to dominate the whole country30. Indeed the same issue was currently driving apart the Council of Foreign Ministers in Moscow.

24In contrast to the advocates of partition, some of the younger State Department officers, notably Walt Rostow and Charles Kindleberger, had entertained hopes of a more general East-West seulement (based in part on action through the Economie Commission for Europe). But in the spring of 1947, sensing the excitement of the initiatives in the air, they yielded to the second-best alternative of focusing on the West31. Essentially by the spring of 1947, the earlier advocates of East-West économie coopération were largely converted : better to throw their energies into Western économie recovery than no recovery at all. As Paul Porter, a Socialist newspaper éditer before the war, then member and thereafter head of the US Mission for Economie Affairs in London, wrote revealingly to Norman Thomas on June 30, 1947 : « It will be a pity if the Soviets force the création of a western bloc, although this alternative is obviously préférable to continuation of the muddled despair of the past two years32. >>

25German division, West European recovery including the reconstruction of West German productive capacity, and eventually an Atlantic System of trade and payments were to comprise the économie geography of the Recovery Program.

26Did, however, the American emphasis on German recovery imply a decision to hold back French production ? This seems to be the thesis of Annie Lacroix-Riz, who argues :

L’évidente mauvaise volonté des États-Unis à livrer les quantités attendues, au moment même où leur pression porte un coup décisif aux réparations allemandes – sous forme d’expéditions de charbon notamment atteint très sévèrement les projets de reconstruction... à la fin de 1947, les responsables français ne peuvent plus guère nourrir d’illusions sur les objectifs de production du Plan, compte tenu des intentions de Washington. Dans le programme ouest-européen des Etats-Unis, la reconstruction accélérée de l’Allemagne a notamment pour contrepartie le relèvement sérieusement différé d’une France qui continue à engendrer la méfiance33.

27I believe this judgment to be misconceived. The coal shortage of 1947 was a European-wide emergency, German as well as French. The delays in American aid were not the cause of the European crisis. American policy makers decided that they must orchestrate a major public relations effort to commit the Congress (now controlled by Republicans) and the country to a massive long-term investment program. The ERP was not to be oriented toward relief, as the UNRRA crédits had been, but was to address underlying flaws of production and exchange. Summoning the OECD, establishing the major citizens’ committees to « sell » the Marshall Plan, proceded at a stately pace. The rapid détérioration of European conditions in the summer and fall of 1947 (recall the sterling crisis of July), which outran the pace of Congressional action on the Aid program, was hardly an American calculation. (Indeed American conservatives argued an equally shortshighted position, namely that the European difficulties were virtually voluntary : « They [the French] are apparently are expecting us to do more for them than they are doing for themselves... They are just looking to America to make up these losses that they having because of the strikes.... What excuses are they giving you for these strikes and not mining coal ? They are the ones that need coal. The question that arises in my mind is : Are we to take these steps to help them when they will not even help themselves ?34 ») The fact was that Europeans were in the midst of a complex économie crisis which severely set back the beginning momentum of recovery. Every aid provision until that point – the loan to Britain of 1946, the Blum-Byrnes Accord – proved insufficient to compensate for the sudden sharp set-backs to European output and the need to find American substitutes for coal and foodstuffs. Indeed interim aid was really an umplanned, emergency diversion from the long-term reconstruction that was envisaged.

II. The evolution of ideas

28American historiography used to distinguish between a first and a second New Deal – an overdrawn distinction, to be sure, but one that still underlines the changing approaches of policy during the 1930’s. The so-called First New Deal had the NRA as its centerpiece ; its policies, designed from 1933 to 1935, stressed government-industry coordination, planning, and active State interventionism. The so-called Second New Deal of Roosevelt’s second administration, 1937 on, forsook planning for restoration of competition and counter-cyclical fiscal policy. It combined antitrust and déficit spending, and its theoreticians tended to blame oligopoly or « monopoly » as the obstacle to full employment35.

29So, too, one might make a case for a First Marshall Plan and a Second Marshall Plan. The distinction, once again, would too absolute ; nonetheless, it helps spotlight some changing emphases of American policy. The First Marshall Plan comprised the projects developed in late 1947, the program for Intérim Aid, then the bilateral treaties and appropriations of 1948. It focused on the European emergency, meeting the urgent import requirements, and getting long-term viable reconstruction underway.

30The Second Marshall Plan can be dated from 1949, as Paul Hoffmann and the EGA looked ahead to securing their next budgetary appropriations, now that the emergency was over. It was hoped, by the Marshall Plan authorities, that the four-year program might become « something other than a statistical exercise and, in fact, to turn it into a plan of concrète action36 ». Developments in the second half of the year stimulated more interventionist efforts. In September the British devalued the pound by 30 percent after a sériés of talks in Washington that antagonized the French. Dévaluation apparently rectified one of the fundamental imbalances of the European economy, but at the same time it convinced American diplomats on the Continent that Britain was acting in order to be able to withstand European cooperative efforts at institution building37. Other problems also raised forebodings : First, Congress might believe the need for continuing foreign aid at the originally envisaged levels had passed. Second, the recession of 1949 threatened to set back the progress of économie growth in Europe and in the United States. These possible difficulties evoked two responses. Persuading Congress required new imaginative goals that might mark the next phase of the Program.

31Stressing steps toward « integration » was one dramatic step. A paper written and revised by the policy activists, Bissell, Geiger and « Van » Cleveland, along with Lincoln Gordon of the OSR staff envisaged « intégration, » or Western European Union. The time was ripe ; dévaluation eliminated the threat of a high-price high cost area ; the ECA still had funding to help ease the transition ; the new Soviet atomic threat meant that additional European defense costs were to be expected. « Finally, persons most familiar with attitudes in Congress are afraid that a continuation of ERP at the minimum necessary level of aid cannot be expected unless Western European countries hâve clearly embarked on the course of economie unification. » The disappointing upshot of trade liberalization negotiations also showed the need for « more powerful, supra-national institutions endowed with some degree of authority over certain areas of national économie policy38 ». Hoffman brought the message to the Europeans in his October 31, 1949, speech to the OEEC, which called for « an intégration of the Western European economy ». He did not pursue the concept of a supranational monetary authority, although Europeans and Americans soon found themselves in the arduous negotiations that led to the EPU by July 195039. What the Americans really meant by « integration » became a topic for spéculation among the British and others. What it really amounted to in practice was a step toward free exchange of currencies. Americans were happy with the French proposais for a coal-steel authority, and certainly saw it as consistent with their aspirations for « intégration. » Nonetheless, they did not présent it on their own40.

32By late 1949 and 1950 the rhetoric of the Marshall Plan – perhaps because of Bissell’s leverage at helping define policy – stressed more interventionist and growth-oriented goals. As early as July 1948, Bissell said that Washington hoped to get more general country plans for économie improvement rather than just commodity financing programs41. Discussing French counterpart negotiations in November 1949, for example, the reporter argued « What is needed, and what has not so far been seriously demonstrated, is a positive approach to the basic problem of the French economy – the problem of breaking out of the circle of inflation, low productivity and high Government expenditures, and releasing the dynamic productive forces of the economie System. » Reliance on national income projections alone could not yield this objective. Nevertheless,

At various times in the past twenty years, political figures in the United States hâve used the national income and product concepts to suggest income levels which could be achieved and hâve then advocated a program for arriving at these levels... it is almost impossible to recall instances in which importnt persons in power or seeking power hâve urged, as a fighting aim for French society, that the national product could easily be $50 billion instead of $25 billion42.

33It would be wrong to suggest too decisive a rupture between a first and second Marshall Plan. In part what one finds by 1949-50 is the greater voice of young-Turk Keynesian economists who formed an activist core and liked to write ambitious position papers. As the political emergency of 1947-48 was surmounted, the technical économie aspects of the aid programs became more important. Likewise more économie choices seemed at hand. But the influence of the would-be policy activists was limited. American Treasury officiais, as noted already, were far more restrained and conservative. They occupied the influential positions in the IMF and the National Advisory Council on international monetary issues. The most informed économie adviser connected with the Paris Embassy – and thus with a weighty voice in the French ERP mission – was William « Tommy » Tomlinson, who had clear priorities of sound finance and tax reform. British Treasury officiais had only contempt for Richard Bissell. And ultimately whatever dirigiste recommendations ECA economists proposed would be overtaken by the Korean War and the efforts at rapid rearmament. These emergencies in fact tended to affirm their interventionist methods (especially the reliance on macroeconomic aggregates) but now for military production. The Mutual Security Administration and the Medium Term Defense Plan would incorporate their approach – but in a new political context43.

III. « Country teams » and country problems

34To complété this survey of the concepts behind the European Recovery Program – evolving and often contested as they were – it is necessary to go from the Washington or Paris policy centers to the administrators in the fïeld. They confronted particular national conditions ; and while the economists in Athens or Rome or London and Paris were young and energetic, they had to corne to terms with the intractable bureaucratie intricacies of the countries they advised. It was in their day-to-day battles against clientelism, poverty, and patronage that much of the ERP had to be worked out in practice. At the same time the ECA had to corne to terms with the other agencies that had a stake in policy making.

35American officiais could exert two major influences on national recovery programs. They had to approve the imports requested from the United States, and they had a voice in the application of so-called counterpart funds in national currencies that governments collected when they allocated the imports to domestic users, whether private firms or national agencies. By and large official ideology maintained, however, that détermination of the projects was the Europeans’ own affair, to be worked out in a dialogue between the national governments and the OEEC in Paris.

36American influence could be voiced most directly when the various national governments pressed for spécial uses, which local ECA officiais had to approve, or if the U.S. added funds devoted to special purposes. The latter situation characterized the negotiation for the intra-European payments agreements that led up to the European Payments Union. The United States allocated part of its Marshall Plan contributions for 1949 and 1950 for funds that would let the European countries move slowsly toward greater convertibility of currencies without concern for loss of dollar reserves. This was a form of pump priming devoted to the goal of convertibility. By and large the EPU involved a major three-cornered negotiation between Great Britain, which feared loss of reserves in a new payments union ; Belgium, which feared having to extend extensive crédits to the other Europeans ; and the United States. But among American authorities, conservative Treasury spokesmen tended to align more with the financially conservative Belgians, while the relatively expansive ECA tended to accept the British positions44.

37In the case of France, the State Department claimed a preeminent interest. Nonetheless, ECA and the State Department agreed that American objectives must include the strengthening of centrist politics. This meant reinforcing the Queuille government of 1948 by suitable concessions and pushing the French toward tax reform. The French Fiscal System had to be made more efficient and équitable. To keep the Communists at bay in France, so Ambassador Caffery had argued in 1947, required stabilization of wages, prices, and sound fiscal policy45. Reluctantly in the fall of 1948, ECA allowed the French to use counterpoint funds to balance the budget and avoid inflationary advances from the Bank of France. Inflation in France, so State Department officiais argued in October 1948, was « the major current problem of European recovery46 ». But taxes had to be restructured as well as increased. By December 1948, David Bruce wrote Queuille (in a letter presumably designed to help the President of the Council vis-a-vis the National Assembly) that Congress was unlikely to approve another year of substantial aid unless the budget was balanced – and the fiscal System was reformed. « I assume that the reform will bring about drastic shifts in the incidence of taxation to permit a more equitable sharing of the burden of French recovery and thereby contribute to social and political stability47. »

38Marshall aid did not really allow such a major intervention inside French fiscal politics. In fact once the French under Petsche and then René Mayer had undertaken a serious fiscal effort, the United States was delighted with its progress. Both Petsche and Mayer enjoyed good relations with Secretary of the Treasury John Snyder. Indeed by 1949 Americans felt that France was the serious European partner on matters of intégration, while the British were always seeking spécial arrangements48.

39By 1950 the French had become the chief American interlocutors on the continent. Americans were now concerned about the military challenge of Communism ; the People’s Republic had triumphed ; the Soviets had exploded a nuclear bomb ahead of schedule ; the Korean War threatened actual armed conflict. The French effort in Indochina now seemed less of a colonial war, more of an ideological struggle. Moreover, only the French – as Jules Moch indicated when he proposed somewhat fantastic rearmament schemes in fall 1950 – could quickly raise an army in Europe. (The British agreed.) For a brief period from 1950 to 1953, a privileged French-American dialogue took place. Thereafter the Germans would become an equal partner.

40In France, the ECA sought to intervene in the very structure of government finance. But the country team hardly needed to impose a blueprint of industrial development. It could largely accept Jean Monnet’s investment priorities. In Italy, the Marshall Plan authorities feared that American aid was being absorbed for conservative fiscal purposes that prevented full employment. The country team had greater say and remained distressed that Italian finance and planning seemed so passive. Their impatient activism lay behind publication of the celebrated 1950 ECA Country Study, which chastised the Italian authorities for their slow reliance on job creation.

41In retrospect, the American emphasis seems misplaced. Italian unemployment was structural – a refiection of the excess labor in the South and the relative slowness of industrial opportunities in the North. There was no easy fix for unemployment ; and following the ECA priorities would either hâve rekindled inflation, or led to unprofitable job création. The Americans grew impatient with clientelism, patronage, the use of the parastatal agencies IRI and ENI for party-affiliated goals. But they did not hâve a viable counter-strategy49.

42Precisely because Italian économie policy mattered less to the American Treasury and its policies were safely in Christian Démocratie hands by 1950, the EGA country team had the greatest say. According to Harold Van B. Cleveland’s 1987 auto-critique to Vera Zamagni, the Country Study was « simply an inappropriate application of 1930’s American Keynesian economies to the then Italian situation, characterized, as you say, by supply constraints and inelasticities50 ».

43Ardently proferred in the late 1940’s, resignedly forsworn in the late 1980’s, American Keynesianism found its purest applications not at home, but in the Italian laboratory. By the late 1940’s, the encroaching conservatism of American opinion no longer nurtured New Deal political economy at home, whereas Italy might still provide a testing ground51.

44One can summarize the mix of objectives, local conditions, and results with the following table.

45Obviously American authorities fell short of their goals. Intégration was limited ; sterling retained some of its privilèges ; the French tax System remained a muddle ; Italian public spending was often badly targetted. Yet Washington’s overall objectives, I believe, were advanced. Balance of payments viability took an extra half dozen years ; the Korean War boom and the use of offshore procurement (as a replacement for Marshall Aid) were required on top of the Marshall Plan. But Americans could and did welcome the new économie vigor that was emerging by the mid 1950’s.

IV. Postscript : implicit premises/idées profondes

46Even this brief exposition should make clear that the Marshall Plan incorporated a complex agenda. Nonetheless, one can underline what might be termed its fundamental assumptions – what a Renouvin might have called, if not its forces profondes, at least its idées profondes.

47The first was the belief that economic growth would undermine the impact of Marxism. Économie growth required the coopération of labor and capital ; a joint effort at productivity. Without the commitment to productivity, to enhancing the return per worker, real incomes would stagnate and employees and employers would struggle over a diminished social product. With a common commitment to productivity, increasing output would allow cooperation. A conflict over shares of income would be transformed into an alliance for production. This was a vénérable idea in the United States, associated with Taylor and Ford, and apparently triumphantly justified by the performance during the Second World War. There was a French analogue : Saint-Simonianism, and it was no accident that French entrepreneurs had responded early to Taylorism and similar doctrines. Ultimately French and American varieties suggested that political conflict itself might be overcome. Society might become a self-administering compact for production without fundamental conflict – a view of technocratic social relations that dominated in American sociology until the late 1960’s.

48Of course such a notion did not reckon with the possibility that class conflict might be inhérent in the hierarchical authority relations of industrial society and not simply to be overcome through économie growth. Nonetheless, the idea still found European advocates : Force Ouvrière in France, the British Trade Union Congress, the Socialist and Christian unions in Italy. The politics of productivity could not did not eliminate a Marxist view of the labor market, but it did help isolate the Communists.

49The second implicit idea was that big was beautiful. Mass production and integrated markets promised prosperity. The economie enterprise that most typified the postwar reconstruction schemes was the integrated steel mill : Hoogovens, USINOR, Cornigliano, Thyssen – ail wanted one. The Marshall Plan in effect diffused a particular stage of industrial technology. It built naturally on a vision of production that dominated from the 1930’s to the 1960’s and then began to fade.

50The Marshall Plan also assumed that Western Europe offered the social base for a successful recovery effort. Although Americans envisaged a related development program (Point IV) for outside Europe, the Marshall Plan presupposed that the basis of human capital already existed. It aspired to teach new habits of cooperation and some new techniques – but did not hâve to drag countries through the entire trajectory of development.

51Perhaps the most basic idée profonde was the uncontested belief that public policy could yield successful economie results. This confidence tended to fade in the 1970’s, as economists argued that public policy perversely brought about undesired outcomes. Such pessmism, however, was foreign to the Marshall Plan. The economists and entrepreneurs behind the Recovery Program had served their apprenticeship on the joint économie planning boards with Britain during the war. (Monnet had shared in this experience in Washington.) They had learned how to allocate scarce resources, run an economy by committee, and hâve confidence in their collective capacity. This spiritual bouyancy remains one of the most striking characteristics of the Marshall Plan.

52This confidence also presupposed that intelligent public expenditures might accomplish worthy goals. The United States GNP was rising from below $200 billion to about $250 billion during the years of the Plan. Flence the aid rendered amounted to about 2 percent of national output. Obviously it was initially easy to provide such an amount ; after far higher wartime costs, the postwar commitment did not seem excessive. Extrapolating from a $5 billion GNP today, an equivalent commitment would amount to $80 to $100 billion – probably about four to five times the current level of U.S. foreign assistance programs.

53Could one attempt such an endeavor today ? Obviously the United States is not prepared for a unilatéral commitment. Within the framework of the the European Community and North America, the sums are feasible. Clearly Eastern Europe is the area that most fulfïlls the conditions that the U.S. envisaged for Western Europe. It offers a cohérent région with the possibility of a broad trade area ; it has skilled labor and technicians, i.e. an infrastructure of social capital. One can envisage its diffîculties in terms of bottlenecks and constraints to be overcome, markets to be widened. Anti-communism is no longer a motivation ; post-communism may be. But while the Marshall Plan might not hâve been passed without the fear of Communism, it attained a momentum based on économie optimism and not mere ideological fear. One would hope that such a momentum, such a wager on progress, were still possible today.