History Internal Assessment

Candidate Name: Matthew James Ratty Sumption

Candidate Number: 000817-068

Centre Number: 000817

Centre Name: St George’s British International School Rome

Word Count: 1998 words

Title: To what extent was the Marshall Plan motivated purely by American economic self

interest?

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Section A- Plan of Investigation

The purpose of this investigation is to assess the degree to which the Marshall Plan of

1948 was motivated by the economic self interest of the United States. To address this

question I will investigate the European and American socio-political and economic

situations post war, the subsequent American/ Soviet diplomatic divergence, the nature

of American foreign policy after 1945 and the detailed specifics of the Marshall Plan.

This will be accomplished through the balanced evaluation of evidence from a variety of

academic sources, including information from national archives and contemporary

newspapers. In Section C I will evaluation two relevant sources; Source A is a

memorandum by the American Undersecretary for Economic Affairs Will Clayton which

recommends an economic aid package to Europe. Source B is an American cartoon by

David Marcus, depicting the Marshall Plan as a method of containing communism. All

evidence will then be critically analysed to deduce whether American economic

considerations were the principal motivating factors behind the Marshall Plan.

Word Count: 163 words

Section B- Summary of Evidence

Europe in the aftermath of the Second World War was a continent prostrate, devastated

by the legacy of a six year conflict.1 The United States emerged from the war as ‘the

most powerful nation in the world’.2 Her robust economy had been revitalised by war

effort requirements; Gross Domestic Product doubled between 1941 and 1945 - lifting

1 Robert J. McMahon, The Cold War: a very short introduction, (Oxford: Oxford University Press, ), p.3, http://books.google.it/books?id=FzLapjRIopQC&lpg=PP1&dq=The%20Cold%20War%20a%20very%20short%20introduction&hl=en&pg=PP11#v=onepage&q&f=false, (accessed 18th June)2 Ibid. p.6

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the country out of the Great Depression.3 With European capacity shattered, American

exports flooded European markets; by 1947 Western Europe was importing $3 billion

more from North America and $3.7 billion less from the rest of the world.4

The American-Soviet relationship soured following the wartime conferences, heralding a

political divergence, hardening into mutual distrust and direct confrontation. In Eastern

Europe a process of systematic sovietisation took place, in which Kremlin directed

communists exerted control through methods of terror, coercion, fraud and espionage.5

With over 100 million people in 11 countries under communism,6 by late 1947 only

Czechoslovakia remained immune to Soviet political control, falling to a crackdown in

February 1948.7

The nature of American foreign policy shifted, from seeking accordance with the USSR

to the hard-line stance adopted by the Truman administration. George Kennan’s

influential ‘Long Telegram’ of February 1946, coupled with Winston Churchill’s ‘Iron

Curtain’ speech at Fulton, Missouri, and Clark Clifford’s memorandum of the same year

convinced the administration of the inherent hostile expansionism of Soviet foreign

policy and the need for ‘containment';8 a strong response to every Soviet action9. This

interventionist direction was crystallized by the Truman Doctrine of March 1947. The

United States would provide assistance to any regime threatened by communism, a

reversal of the Monroe Doctrine which promulgated American isolation. Greece and

Turkey jointly received $400 million to prevent communist takeover.10

For Europe, 1947 was a year of total crisis. A meagre harvest in 1946, coal shortages,

and a severe winter, 1946-1947, conspired to cause starvation,11 food riots and general

3 Ibid, p.64Melvyn P. Leffler, A Preponderance of Power: National Security, The Truman Administration and the Cold War, (Stanford: Stanford University Press, 1992), p.159, http://books.google.it/books?id=pIIeG_yn72wC&lpg=PR19&ots=-NdsxTMwKp&dq=The%20Cold%20War&lr&hl=en&pg=PR19#v=onepage&q&f=false, (accessed 19th June). 5Martin McCauley, The Origins of the Cold War 1941-1949 Second Edition, (New York: Longman Group Limited,1995), pg. 836 John W. Mason, The Cold War 1945-1991, (London: Routledge, 1996), p.67 Henry Kissinger, Diplomacy, (New York: Touchstone, 1995), pg. 4428 Kissinger, p4509 McCauley, p.7410Hugh Higgins, The Cold War, (London: Heinemann Educational Books Ltd. , 1974), p.4311Oliver Edwards, The USA and the Cold War, 1945-63 Second Edition, (London: Hodder Education, 2002), p.45

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despair.12 In this desperate situation support for left-wing parties swelled, with

communist parties in France and Italy commanding as much as 20% of the vote.13

Economic recovery was paralysed due to the lack of raw materials, shortage of skilled

labour and severe transport difficulties, with industrial production at only 88% of its

1938 volume and exports at 59%.14 This led to a ‘dollar shortfall’ as nations depleted

their limited dollar reserves on American imports, culminating in acute balance of

payments problems.15 An April 1947 CIA report feared economic collapse and

communist accession to power.16

Into this arena stepped America. The United States had already extended $9 billion in

aid to Europe by 1947,17 however SWNCC18 studies regarding an aid program concluded

that communists would take advantage of European plight and American exports could

only be ensured for 12-18 months, having a ‘depressing effect on business activity and

employment.’19 Secretary of State George Marshall had just returned from the Moscow

Council of Foreign Ministers; convinced that the Soviets wanted to stall European

recovery for political gain and that action was urgently required.20 In early May he asked

George Kennan’s PPS21 to design the framework for an economic aid program.22 On May

23rd Kennan’s report judged that an offer of aid would be an essential stimulus to

12 Tony Judt, Postwar, A History of Europe Since 1945, (London: Pimlico, 2007), p.8613 Edwards, p.4514 Michael J. Hogan, The Marshall Plan: America, Britain and the Reconstruction of Western Europe, (Cambridge: Cambridge University Press, 1987), p.30, http://books.google.it/books?id=EkMD-Ul5j_4C&lpg=PP1&hl=en&pg=PP1#v=onepage&q&f=false, (accessed 18th June).15 Leffler, p.15916 Judt, p.89, 9517 Hogan, p.3018 The State-War-Navy Coordinating Committee 19 Michael Wala, The Council on Foreign Relations and American Foreign Policy in the Early Cold War, (Oxford: Berghahn Books, 1994), p.110, http://books.google.it/books?id=vBiqdx0mkKMC&lpg=PA111&ots=qH25jWwMjZ&dq=William%20Clayton%20memo&pg=PP8#v=onepage&q&f=false, (accessed 19th June, 2010).20 John Gimbel, The Origins Of The Marshall Plan, (Stanford: Stanford University Press, 1976), p.8, http://books.google.it/books?id=nAGsAAAAIAAJ&lpg=PP1&dq=gimbel&hl=en&pg=PP1#v=onepage&q&f=false, (accessed 19th June, 2010). 21 Policy Planning Staff22 5. Michael Wala, ‘The Marshall Plan and the Origins of the Cold War’ in The United States and Germany in the Era of the Cold War, 1945-1968, A Handbook Volume 1, ed. Phillip Gassert, Getlef Junker, (Cambridge: Cambridge University Press, 2004), p.74, http://books.google.it/books?id=y8VfD4IgVZsC&lpg=PP1&dq=The%20United%20States%20and%20Germany%20in%20the%20Era%20of%20the%20Cold%20War&hl=en&pg=PA73#v=onepage&q&f=false, (accessed 19th June, 2010).

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European morale,23 and the May 27th memorandum from Undersecretary for Economic

Affairs William Clayton stressed the desperation in Europe and the negative effect its

collapse would have on the American economy; he recommended an aid package of $6-

7 billion a year for three years.24 Days later in his Harvard Commencement Address on

June 5th, Marshall announced an American aid package available to every European

nation.25 Ministers, including Soviet Union delegates, met in Paris to define the details of

the European Recovery Plan.26 The Soviets, however, labelled the plan as ‘expansionist’,

withdrawing from talks and forbidding any Eastern European country from applying for

Marshall Aid.27 After protracted negotiations the European Cooperation Act was passed

in Congress28 and signed into law in April 194829. It granted over $13 billion in grants and

counterpart funds to 16 cooperating nations over four years,30 with the stated aims of

increasing European production, foreign trade, financial stability and economic

cooperation.31

Word Count: 684 words

23 Ibid. 24 Leffler, p.15925 Higgins, p.4626 John W. Young, The Longman Companion to America, Russia and the Cold War, 1941-1998 Second Edition, (New York: Addison Wesley Longman Limited, 1999), p.17027 Higgins, p.4628 The National Archives, ‘Featured Document: The Marshall Plan’, http://www.archives.gov/exhibits/featured_documents/marshall_plan/ (Accessed 20th June, 2010).29On This Day in History, ‘Aid Bill is Signed by Truman as Reply to Foes of Liberty’, http://www.nytimes.com/learning/general/onthisday/big/0403.html#article (Accessed 20th June, 2010)30 7. Imanuel Wexler, ‘The Marshall Plan in Economic Perspective: Goals and Accomplishments,’ in The Marshall Plan: Fifty Years After, ed. Martin Schain, (New York: Palgrave, 2001) p.148, cont. overleaf Cont. http://books.google.it/books?id=ybAQmmyrLN8C&lpg=PP1&dq=The%20Marshall%20PLan%20Fifty%20years%20after&hl=en&pg=PR5#v=onepage&q&f=false, (accessed 20th June, 2010).3114. Robert E. Wood, ‘From the Marshall Plan to the Third World’ in Origins of the Cold War: An International History Second Edition, ed. Melvyn P. Leffler, David S. Painter, (New York: Routledge, 2005) p.240, http://books.google.it/books?id=DHoQ5GJ2H6YC&lpg=PP1&dq=Origins%20of%20the%20Cold%20War%3A%20An%20International%20History%20Second%20Edition&hl=en&pg=PR8#v=onepage&q&f=false, (accessed 20th June, 2010).

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Section C- Evaluation of Sources

Source A - see Appendix A

On 27th May 1947, Undersecretary of State for Economic Affairs William L. Clayton wrote

a memorandum to Secretary of State George C. Marshall, with the purpose of describing

the crisis in Europe and convincing Marshall of the necessity of American intervention.

The source is valuable to a historian studying the Marshall Plan because it documents

the views of an important official (Presidentially appointed) who has first-hand views on

the situation in Europe in 1947, and presents informed factual detail about the

economic crisis facing much of Europe, highlighting the genuine fear of European

collapse. Significantly the memorandum identifies the principal motivations behind an

American aid program for Europe. Furthermore, the fact that it originated from a

prominent diplomat, and was addressed directly to Marshall, means it may have

influenced the view of government. The limitations of the source are that it is

demonstrates a personal, one-sided perspective of the European situation, and

therefore cannot represent the views of the United States government as a whole. It is a

memorandum, not a government document; therefore the information therein may be

superficial regarding statistics or specific details.

Source B – see Appendix B

This cartoon by Edwin Marcus was published in the New York Times on March 14 th,

1948. The purpose of the cartoon is inform the public and to encourage the immediate

passage of the Marshall Plan in the face of the communist threat to Western Europe.

The cartoon has value because it highlights the existence of the view of the time that

the Marshall Plan was motivated by the need to contain expansionist communism and

protect Western Europe. Given that the New York Times was an influential, widely read

newspaper, the cartoon is valuable because it may have influenced or reflected popular

opinion surrounding the Marshall Plan. The limitation of the cartoon is that it was

commissioned by a newspaper with definite views to convey, therefore it is a subjective

6

representation of events of the time. A simple, understandable message is purported

which may lack factual depth or historical accuracy. It is also unknown whether this view

reflected opinion of the time or had any influence.

Word Count: 346 words

Section D- Analysis

When viewed against the wider background of the Cold War, this investigation is central

because it scrutinises the motivations behind a major American foreign policy decision

which wielded massive influence over Europe’s economic and political future, and

developments in the Cold War. It analyses the principal influences which drove

American policy at a critical stage in the opening act of the superpower rivalry.

Winston Churchill hailed the Marshall Plan as ‘the most unselfish act in history’, 32 yet

despite the altruistic oratory in Marshall’s Harvard address, it is difficult to distinguish

the rhetoric from the genuine motivation. As Galbraith asserts, whilst goodwill was

undoubtedly present amongst U.S. policymakers, philanthropy alone would not have

sanctioned the enormous monetary costs of the endeavour,33 and in reality it may have

acted more as a justification for financial assistance than a motive in itself.34

So what were the genuine motives behind the Marshall Plan? Orthodox historians have

contended they were political, with the Marshall Plan acting as the economic extension

of the Truman Doctrine, aimed at curtailing communist influence in Western Europe.

With American policy defined by the Doctrine, in 1947 Western Europe appeared

threatened both by the encroaching sovietisation behind the ‘Iron Curtain’ and the risk

that the severe socio-economic distress in Europe might cause Europeans to vote their

32 Higgins, p.4733 John Kenneth Galbraith, A Journey Through Economic Times, (New York: Houghton Mifflin Company, 1994), p.149341. Michelle Cini, ‘From the Marshall Plan to the EEC: Direct and Indirect Influences’ in The Marshall Plan: Fifty Years After, ed. Martin Schain, (New York: Palgrave, 2001), p.14, http://books.google.it/books?id=ybAQmmyrLN8C&lpg=PP1&dq=The%20Marshall%20PLan%20Fifty%20years%20after&hl=en&pg=PR5#v=onepage&q&f=false, (accessed 7th July, 2010).

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own communists into office,35 loyal to Moscow, who would then take their countries

into the Soviet orbit.36 American economic support would combat this danger by giving

a psychological boost to Europeans,37 and ending the poverty and despair upon which

communist support depended.38 In traditional balance of power terms, the Plan would

consolidate Western Europe as a buffer to the concentration of Russian power to the

East,39 and according to Gaddis, allow America to seize the ‘geopolitical and moral

initiative in the emerging cold war’ by putting the onus on Stalin to reject the plan and

divide Europe.40 The image of the Marshall Plan as a vehicle for containment, as seen in

Source B, is strengthened by the fact that Congress passed the bill soon after the

communist coup in Czechoslovakia.

However political explanations are not exhaustive, and whilst the bill’s passage may

have been abetted by its perceived anti-communist agenda,41 this was not the

overriding concern of its architects. Marshall maintained that it was ‘not to the

combating of communism as such but the restoration of the economic health of

European society’.42 Alleviating Europe’s economic problems was a sufficient motive in

itself, here the aim of the Marshall Plan being to place Europe on a secure route to

economic recovery43 by freeing trade, eliminating dollar deficits, facilitating imports and

introducing new management methods.44 Furthermore, economic historians such as

Michael Hogan and Alan S. Milward have emphasised the Marshall Plan’s purpose as to

promote economic integration,45 and fashion a ‘genuinely multilateral system.’46 The

stated aims of the plan bolster this argument. 35 The fear that communist influences would capitalise on economic unrest underpinned much of America’s containment strategy towards Western Europe, as shown by the reports of the CIA and SWNCC from 1947. 36 John Lewis Gaddis, The Cold War, (London: Penguin Books, 2005), p.3237 Wala, p.7438 Edwards, p.4639 Higgins, p.4840 Gaddis, p.32 41 On This Day in History, ‘Aid Bill is Signed by Truman as Reply to Foes of Liberty’, http://www.nytimes.com/learning/general/onthisday/big/0403.html#article (Accessed 9th July, 2010)42 Maier, p.18643 Gimbel, p.144 Cini, p.1645 Hogan, p.3746 Alan S. Milward, The Reconstruction of Western Europe 1945-51, (Abingdon: Routledge, 2006), p. 272, http://books.google.it/books?id=-7je5sxUr3AC&lpg=PP1&hl=en&pg=PP1#v=onepage&q&f=false , (accessed 10th July, 2010).

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Finally, it must be acknowledged that economic self interest contributed to the Plan’s

conception. America’s post war economic might47 was partially based on Western

Europe as a vital market for American exports;48 there were fears that a collapse would

have dire consequences on the U.S. economy and provoke another recession.49 The

Marshall Plan would revive a major trading partner and stimulate the U.S economy by

creating a captive market in Europe for American goods.50 In this way the Plan was a

method to ensure the long term economic security of the United States.51 Additionally

Tony Judt notes that anxieties about another 1930’s export slump may have compelled

American intervention.52

This perspective has been extremified by Revisionist historians who claim the Marshall

Plan was the most blatant example of dollar imperialism,53 an aggressive act to expand

and protect the free economic system, guaranteeing American domination of the

continent.54

Word Count: 622 words

Section E- Conclusion

A complex amalgamation of factors inspired the Marshall Plan, but above all it was the

acknowledgement ‘that European economic recovery was essential to the long-term

47 The American production force which supported the war effort and the Lend-Lease program to Europe were greatly responsible for returning the economy to full employment. With the war over, and European markets flat-lining , the American economy seemed at risk from a European collapse. There has been some debate as to whether it really was (Leffler 1992, 160), but the important thing to remember is that at the time it seemed as much. This is the economic argument which precipitated American intervention. 48Cini, p.1649Wala, p.7550Edwards, p.4551Higgins, p.4852Judt, p.9453Spiritus-Temporis, ‘Marshall Plan- Historiography’, http://www.spiritus-temporis.com/marshall-plan/historiography.html (Accessed 10th July, 2010).54McCauley, p.13

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interests of the United States.’55 In 1947, Marshall feared that ‘the patient is sinking

while the doctors deliberate.’56 The will to contain communism, kick-start production,

advance European economic integration, united with the fear of the devastating impact

a collapse could have on the U.S. economy, created a consensus that American

intervention was urgently necessary. The convergence of these differing motives gives

rise to the Marshall Plan’s primary motivation: to secure long term European economic

recovery and political stability. The benefits to U.S. industry, the need to revive

intercontinental trade and secure open markets were undoubtedly significant in

galvanizing support for the Plan, however their importance has been overstated by

Revisionist historians whose ideological argument underestimates the more pressing

concerns of the time. The Marshall Plan was couched in the language of

humanitarianism, but it was a strategic enterprise rooted in American political and

economic concerns. Economic self interest was merely one of those concerns.

Word Count: 179 words

Overall Word Count: 1998 words

Section F- List Of Sources

Books:

55 Hogan, p.1856 Gimbel, p.8

10

Edwards, Oliver. The USA and the Cold War, 1945-63 Second Edition. London: Hodder

Education, 2002.

Lewis Gaddis, John. The Cold War. London: Penguin Books, 2005.

Galbraith, John Kenneth. A Journey Through Economic Times. New York: Houghton

Mifflin Company, 1994.

Higgins, Hugh. The Cold War. London: Heinemann Educational Books Ltd., 1974.

Judt, Tony. Postwar, A History of Europe Since 1945. London: Pimlico, 2007.

Kissinger, Henry. Diplomacy. New York: Touchstone, 1995.

Lightbody, Bradley. The Cold War. London: Routledge, 1999.

Mason, John W. The Cold War 1945-1991. London: Routledge, 1996.

McCauley, Martin. The Origins of the Cold War 1941-1949 Second Edition. New York:

Longman Group Limited,1995.

Phillips, Steve. The Cold War: conflict in Europe and Asia. London: Heinemann, 2001

Young, John W. The Longman Companion to America, Russia and the Cold War, 1941-

1998 Second Edition. New York: Addison Wesley Longman Limited, 1999.

Books published electronically:

Cini, Michelle. ‘From the Marshall Plan to the EEC: Direct and Indirect Influences.’ In The

Marshall Plan: Fifty Years After, edited by Martin Schain, 13-38. New York: Palgrave,

2001. http://books.google.it/books?id=ybAQmmyrLN8C&lpg=PP1&dq=The%20Marshall

%20PLan%20Fifty%20years%20after&hl=en&pg=PR5#v=onepage&q&f=false .

Gimbel, John. The Origins Of The Marshall Plan. Stanford: Stanford University Press,

1976. http://books.google.it/books?

id=nAGsAAAAIAAJ&lpg=PP1&dq=gimbel&hl=en&pg=PP1#v=onepage&q&f=false .

Hogan, Michael J. The Marshall Plan: America, Britain and the Reconstruction of Western

Europe. Cambridge: Cambridge University Press, 1987. http://books.google.it/books?

id=EkMD-Ul5j_4C&lpg=PP1&hl=en&pg=PP1#v=onepage&q&f=false .

Leffler, Melvyn P. A Preponderance of Power: National Security, The Truman

Administration and the Cold War. Stanford: Stanford University Press, 1992.

11

http://books.google.it/books?id=pIIeG_yn72wC&lpg=PR19&ots=-NdsxTMwKp&dq=The%20Cold

%20War&lr&hl=en&pg=PR19#v=onepage&q&f=false .

McMahon, Robert J. The Cold War: a very short introduction. Oxford: Oxford University

Press.http://books.google.it/books?id=FzLapjRIopQC&lpg=PP1&dq=The%20Cold%20War%20a

%20very%20short%20introduction&hl=en&pg=PP11#v=onepage&q&f=false .

Milward, Alan S. The Reconstruction of Western Europe 1945-51. Abingdon: Routledge,

2006. http://books.google.it/books?

id=7je5sxUr3AC&lpg=PP1&hl=en&pg=PP1#v=onepage&q&f=false.

Wala, Michael. The Council on Foreign Relations and American Foreign Policy in the Early

Cold War. Oxford: Berghahn Books, 1994. http://books.google.it/books?

id=vBiqdx0mkKMC&lpg=PA111&ots=qH25jWwMjZ&dq=William%20Clayton

%20memo&pg=PP8#v=onepage&q&f=false .

Wala, Michael. ‘The Marshall Plan and the Origins of the Cold War.’ In The United States

and Germany in the Era of the Cold War, 1945-1968, A Handbook Volume 1, edited by

Phillip Gassert and Getlef Junker, 73-77. Cambridge: Cambridge University Press, 2004.

http://books.google.it/books?id=y8VfD4IgVZsC&lpg=PP1&dq=The%20United%20States%20and

%20Germany%20in%20the%20Era%20of%20the%20Cold

%20War&hl=en&pg=PA73#v=onepage&q&f=false .

Wexler, Imanuel. ‘The Marshall Plan in Economic Perspective: Goals and

Accomplishments.’ In The Marshall Plan: Fifty Years After, edited by Martin Schain, 147-

152. New York: Palgrave, 2001. http://books.google.it/books?

id=ybAQmmyrLN8C&lpg=PP1&dq=The%20Marshall%20PLan%20Fifty%20years

%20after&hl=en&pg=PR5#v=onepage&q&f=false .

Wood, Robert E. ‘From the Marshall Plan to the Third World.’ In Origins of the Cold War:

An International History Second Edition, edited by Melvyn P. Leffler and David S. Painter,

239-250. New York: Routledge, 2005. http://books.google.it/books?

id=DHoQ5GJ2H6YC&lpg=PP1&dq=Origins%20of%20the%20Cold%20War%3A%20An

%20International%20History%20Second%20Edition&hl=en&pg=PR8#v=onepage&q&f=false .

Websites:

12

The National Archives. ‘Featured Document: The Marshall Plan.’

http://www.archives.gov/exhibits/featured_documents/marshall_plan/ (accessed 20th

June, 2010).

On This Day in History. ‘Aid Bill is Signed by Truman as Reply to Foes of Liberty.’

http://www.nytimes.com/learning/general/onthisday/big/0403.html#article (accessed

20th June, 2010).

Spiritus-Temporis. ‘Marshall Plan- Historiography.’

http://www.spiritus-temporis.com/marshall-plan/historiography.html (accessed 10th

July, 2010).

National Endowment for the Humanities. ‘How the Marshall Plan came about.’

http://www.neh.gov/news/humanities/1998-11/marshall.html (accessed 25th June,

2010).

Library Of Congress. ‘While the Shadow Lengthens.’

http://www.loc.gov/exhibits/marshall/images/bearwtext.jpg (accessed 25th June,

2010).

Appendix A 57

May 27, 1947

MEMORANDUM BY THE UNDER SECRETARY FOR ECONOMIC AFFAIRS (W. L. Clayton)

The European Crisis

It is now obvious that we grossly underestimated the destruction to the European economy by the war. We understood the physical destruction, but we failed to take fully into account the effects of economic dislocation on production -- nationalization of industries, drastic land reform, severance of long-standing commercial ties, disappearance of private commercial firms through death or loss of capital, etc., etc

. . .Europe is steadily deteriorating. The political position reflects the economic. One political crisis after another merely denotes the existence of grave economic distress. Millions of people in the cities are slowly starving. More consumer goods and restored confidence in the local currency are absolutely essential if the peasant is again to supply food in normal quantities to the cities. (French grain acreage running 20-25% under prewar, collection of production very unsatisfactory -- much of the grain is fed to cattle. The modern system of division of labor has almost broken down in Europe.)

57Source A: National Endowment for the Humanities, ‘How the Marshall Plan Came About,’

http://www.neh.gov/news/humanities/1998-11/marshall.html (Accessed 25th June, 2010).

13

. . .Only until the end of this year can England and France meet the above deficits out of their fast dwindling reserves of gold and dollars. Italy can’t go that long.

. . .Europe must again become self-sufficient in coal (the U.S. must take over management of Ruhr coal production) and her agricultural production must be restored to normal levels. (Note: No inefficient or forced production through exorbitant tariffs, subsidies, etc. is here contemplated.)

Europe must again be equipped to perform her own shipping services. The United States should sell surplus ships to France, Italy, and other maritime nations to restore their merchant marine to at least prewar levels. (To do it, we will have to lick the shipping lobby, fattening as it is off the U.S. Treasury).

. . .Without further prompt and substantial aid from the United States, economic, social, and political disintegration will overwhelm Europe.

Aside from the awful implications which this would have for the future peace and security of the world, the immediate effects on our domestic economy would be disastrous: markets for our surplus production gone, unemployment, depression, a heavily unbalanced budget on the background of a mountainous war debt.

. . .It will be necessary for the President and Secretary of State to make a strong spiritual appeal to the American people to sacrifice a little themselves, to draw in their own belts just a little in order to save Europe from starvation and chaos (not from the Russians) and, at the same time, to preserve for ourselves and our children the glorious heritage of a free America.

Europe must have from us, as a grant, 6 or 7 billion dollars worth of goods a year for three years. With this help, the operations of the International Bank and Fund should enable European reconstruction to get under way at a rapid pace. Our grant could take the form principally of coal, food, cotton, tobacco, shipping services, and similar things -- all now produced in the United States in surplus, except cotton. The probabilities are that cotton will be surplus in another one or two years. Food shipments should be stepped up despite the enormous total (15 million tons) of bread grains exported from the United States during the present crop year. We are wasting and over-consuming food in the United States to such an extent that a reasonable measure of conservation would make at least another million tons available for export with no harm whatsoever to the health and efficiency of the American people.

This three-year grant to Europe should be based on a European plan which the principal European nations, headed by the UK, France, and Italy, should work out. Such a plan should be based on a European economic federation on the order of the Belgium- Netherlands-Luxembourg Customs Union. Europe cannot recover from this war and again become independent if her economy continues to be divided into many small watertight compartments as it is today.

Obviously, the above is only the broad outline of a problem which will require much study and preparation before any move can be made.

Canada, Argentina, Brazil, Australia, New Zealand, Union of South Africa could all help with their surplus food and raw materials, but we must avoid getting into another UNNRA. The United States must run this show.

--W.L. Clayton

14

Appendix B 58

58 Source B: Library Of Congress, ‘While the Shadow Lengthens,’

http://www.loc.gov/exhibits/marshall/images/bearwtext.jpg (Accessed 25th June, 2010).

15