Christopher Coker

Peace Offering

The Marshall Plan: Dawn of the Cold War


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In his Commencement Address at Amherst in 1993, John Updike told the students that they were graduating at a time when history was more like a short-story collection than a novel. The Cold War that he and his generation had taken for granted had given history both drama and shape; now, with the fall of the Berlin Wall, history had been left largely shapeless. Benn Steil’s immensely erudite book relates the story of the Marshall Plan, the initiative that kick-started the Cold War, though to be sure it had been brewing for some time. It calls to mind not so much a novel or a collection of short stories as a riveting play in three acts.

In the first act we are confronted with the desperate plight of postwar Europe, ‘the new dark continent’ as the New York Times called it. Much of it was lawless. Fifty million people were still homeless. In Germany death haunted the streets. In Hungary inflation reached a peak of 160,000 per cent over the course of a single day. In the second act we witness the long and often acrimonious debate in the USA about the wisdom of departing from George Washington’s long-heeded advice to avoid entering into ‘entangling’ commitments. In the third act we see the actual impact of American aid. At the end of the book, Steil presents the reader with a cast of characters, both familiar and unfamiliar, which runs to twenty-five pages. There are the usual suspects, such as Dean Acheson and George Kennan. But there’s also Scott Lucas, a Democratic Congressman who mocked the Republican opponents of Marshall Aid for effectively aligning themselves with the Soviet Union. There are villains, too, such as the former Treasury official Harry Dexter White, the man who, at the Bretton Woods Conference of 1944, harried an ailing Keynes to an early grave. (Ironically, years later it was discovered that he had been considered a valuable agent of influence by Soviet intelligence.) But it is George Marshall himself who is showcased most extensively in this book. He emerges as a highly honourable if slightly stiff man whose personal integrity was never doubted, even by his critics. People on meeting him for the first time were impressed that he read from his notes and never spoke off the cuff for fear of being misunderstood. Different times!

The decision to help Europe was also born of the rather late realisation by the Americans that they had been played by the Russians. Stalin tried to string them along for as long as he could; the best friendships, he told his foreign minister, Molotov, were those founded on misunderstanding. Molotov was always suggesting that discussions be postponed whenever they met an obstacle. As social psychologists tell us, frequent postponements are often signs of hostile diplomatic intent, while a constant focus on ‘future possibilities’ more often than not suggests imminent betrayal. By 1947 Truman had come to conclude that the Soviets simply couldn’t be trusted and decided to press ahead with aiding Europe in the face of violent Soviet objections.

The decision to aid Europe in peacetime was a new departure for the USA, though the country was no stranger to the use of economic diplomacy. Steil traces its interest in the latter back to secretary of state John Hay’s enunciation at the turn of the century of ‘Open Door’ principles for global trade with China. But what Marshall was proposing was something very different: economic aid to Europe was designed to give the USA a ‘psychological advantage over the Soviet Union in the countries it targeted for economic assistance’ (including some that Stalin considered to be in the Soviet sphere); it was intended to revive a sense of purpose and self-reliance. There was no possibility that the Russians would permit any country in eastern Europe to actually accept aid from America, since this would have meant that the communist parties already established in countries such as Czechoslovakia would have been deprived of the economic levers of power, and thus political credibility.

Even so, the Marshall Plan was a hard sell. We forget that it had to be sold to some of its beneficiaries too. The British were the most sceptical. They were pleased, as Ernest Bevin, the foreign secretary, observed, to be present at the ‘birth of the Western bloc’, but they were suspicious that it might lead to the country’s integration into a European economic union (not much change there). Marshall himself made no secret of the fact that his plan (a term, by the way, he assiduously avoided) would give a boost to European unity, as indeed it did. The real battle, however, was waged in the USA, both inside and outside Congress. Opposition in parts of the Republican Party was particularly widespread. ‘No tax relief, no European relief,’ insisted Ohio representative Clarence Brown (not much change there either). Heavyweights like Senator Arthur Vandenberg were eventually able to swing sentiment around, though bipartisan support didn’t last long; it had totally broken down by the time Truman left office.

Did the Marshall Plan save Europe? There are some dissenting voices. Six months before Marshall announced his aid package, industrial production in Europe had picked up as repairs to the continent’s electricity and transport networks gained momentum. By the end of 1946, industrial output in all European countries except Germany had already returned to 1938 levels. This has led a number of ‘contrarians’ (as Steil likes to call them), notably the British economic historian Alan Milward, to argue that, far from saving Europe, Marshall Aid was largely unnecessary: the postwar European world would have looked much the same without it. It’s also worth pointing out, as Odd Arne Westad does in his recent history of the Cold War, that as a proportion of GDP, Soviet economic assistance to communist China was more than twice the size of Marshall Aid and, perhaps more to the point, lasted ten years longer. But Steil prefers to concentrate on the bigger picture. It gave western European countries the confidence to reform and rearm and to see off the threat of communist parties, which had done particularly well in France. The Marshall Plan and the creation of the NATO alliance two years later are best understood as parts of a wider European security policy that was itself embedded in an emerging grand strategy to contain Soviet power. And it worked: Washington’s early Cold War alliances are still intact; Moscow’s aren’t.

Since the end of the Cold War, politicians have been demanding Marshall Plan-style programmes fit for our own times. They have been proposed for Ukraine and Greece; at the height of the Arab Spring, Hillary Clinton wanted one for the Middle East. Al Gore has demanded one for the environment. There have even been calls for a Marshall Plan for the USA (as President Obama told West Point cadets back in 2009, the nation he wanted to ‘rebuild’ was his own). It’s unlikely that any of these would be successful: the original Marshall Plan was directed at a continent that, though devastated by war, had been an economic powerhouse for two hundred years. It was culturally resilient and, above all, rich. Economic assistance, perhaps, works best when you throw good money after good.

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