To advance economic recovery in Europe following World War II, the Marshall Plan, or the European Recovery Program, was established. A draft of this plan took form in a commencement speech given at Harvard University on June 5, 1947, by U.S. Secretary of State George C. Marshall, who spoke of the importance of restoring “economic health” in order to assure “political stability” in the region. He also urged European countries to determine their economic “requirements” before the United States could proceed in supporting recovery to the area.

The truth of the matter is that Europe’s requirements . . .
are so much greater than her present ability to pay that she
must have substantial additional help or face economic,
social, and political deterioration. . . . It would be neither
fitting nor efficacious for this Government to undertake to
draw up unilaterally a program designed to place Europe
on its feet economically. The initiative must come from

World War II and its aftermath left the countries of Europe in ruins. Throughout the continent, homes, factories, INFRASTRUCTURE, and farmlands were destroyed, reduced to rubble after years of bombardment. With national economies having been diverted to the war effort, the European nations’ financial systems were also devastated, and famine endangered stability. In Eastern Europe, the Soviet Union posed another postwar threat. After the war, Germany was governed by the victorious powers of the United States, the Soviet Union, Great Britain, and France, each with its own zone of occupation. As these various sectors became increasingly expensive to maintain, the United States, Great Britain, and France merged their zones. This divided Germany in two, the Allied zone in the West and a Soviet zone in the East, a division that would last until reunification in 1990. Old, unresolved conflicts between the United States and the Soviet Union resurfaced. This discord and the growing influence of communism as well as the cold war posed further challenges for restoration efforts. It was crucial that economical, societal, and political stability be restored. Following Secretary Marshall’s commencement speech, and because the plan called for Europe to show the first initiative, Great Britain’s foreign secretary, Ernest Bevin, visited the French foreign minister, Georges Bidault, in Paris. The Soviet foreign minister, Vyacheslav Molotov, also attended the meeting but returned home after five days without reaching an agreement. The Kremlin blocked Poland, Yugoslavia, Romania, and Czechoslovakia from attendance, further deepening their division with the Allies. Bevin and Bidault invited representatives from 16 nations to meet in Paris to form a committee for European Economic Cooperation. By September 1947, with the assistance of the United States, the committee had developed a budget and drafted a planning strategy. Participating countries would work to raise agricultural and industrial production to prewar levels, reduce TRADE BARRIERS, and stabilize their domestic finances. President Harry S. Truman convened a committee of businessmen, statesmen, and military leaders to study the Marshall Plan’s merits. Upon receipt of their report, he submitted a plan to the 80th Congress, which met in January 1948. Various political events shortly thereafter threatened positive development of the plan, including a communist coup in Czechoslovakia that further hastened the debate. On April 3, 1948, President Truman signed the Foreign Assistance Act, authorizing the European Recovery Program; it became known as the Marshall Plan in honor of Secretary of State George C. Marshall, who had first suggested it. Paul G. Hoffman was named the economic cooperation administrator to supervise the allocations. The plan called for approximately $13 billion in the form of grants and LOANS that were to be paid out over a four-year period. In addition to the financial aid, assistance was to be offered in the form of foodstuffs, building materials, machinery, and advice and expertise. Participating countries included Austria, Belgium, Denmark, France, West Germany, Great Britain, Greece, Iceland, Italy, Luxembourg, the Netherlands, Norway, Sweden, Switzerland, Turkey, Portugal, Trieste, and Iceland. The first shipment of foreign aid was wheat, vitally needed to feed Europe’s desperate refugees. Future shipments included such items as tractors for farms, coal for generators, turbines for dams, iron for locomotives, and electrical equipment for PUBLIC UTILITIES—all necessary RESOURCES to increase the productivity that would make Western Europe once again self-supporting and help bring political stability to the region. The Marshall Plan continued through 1951 and dispensed over $12 billion in assistance. Transferred to the Mutual Security Agency in 1951, and later to other agencies, the plan’s aid was extended to less-developed countries. Historians regard the program as a great success and credit the plan as a turning point toward the restoration of the democratic nations of Europe. The plan greatly contributed to the expansion of U.S. multinational corporations (MNCs). During the Great Depression protectionist trade policies increased U.S. economic isolation. The Marshall Plan was a major reversal from those policies. The plan resulted in significant purchases of U.S. capital goods by European companies. In addition, U.S. service businesses, accounting, finance, insurance, and architecture expanded internationally with their manufacturing customers. George C. Marshall was awarded the Nobel Peace Prize in 1953 for his part in instituting the Marshall Plan. When he accepted the award, he modestly proclaimed it was not an individual triumph and that he was merely a representative of the American people whose support and money had made the program a success.