* America’s approach to providing financial aid wasn’t popular with some of their allies either.
* Ernest Bevin, the British Foreign Secretary, resented American dollar diplomacy, in particular the linking of desperately needed financial assistance to London’s submission on political matters central to British sovereignty.
* The American loan agreement, signed in December 1945 after nearly four months of difficult and often humiliating negotiations in Washington, required Britain to accept American air and naval bases on British and Commonwealth territory.
* Bevin’s decision to support the manufacture of British nuclear weapons was driven not by a German or Soviet threat, but by his belief that the country “could not afford to acquiesce in an American monopoly of the new development.”
* So, in other words – he wanted the UK to have nuclear powers to defend themselves against America.
* Britain, as Bevin saw his country, was “the last bastion of social democracy,” standing against both “the red tooth and claw of American capitalism and the Communist dictatorship of Soviet Russia.”
* This is coming from a country that, until recently, had imperial control over 25% of the world.
* Mmmmm smell that social democracy.
* Another recent ally was also suspicious.
* The Kremlin was receiving a constant flow of intelligence from highly placed British sources—among whom Guy Burgess at the Foreign Office in London and Donald Maclean at the British embassy in Washington.
* Maclean, who had access to all of the embassy’s classified cable traffic, was reporting that “the goal of the Marshall Plan was to ensure American economic domination of Europe.”
* The spies also warned Stalin that the Brits and Americans were getting ready to announce that they were going to renege on the Yalta agreement regarding reparations.
* They were going to cut off German reparations to the USSR, which at the time was the Soviet’s only source of foreign income.
* Instead, they were going to re-build Germany.
* Well the parts under their control, anyway.
* And the Marshall Plan aid was to be implemented outside the United Nations framework, because they wanted some of it to go to Germany – and Germany was not a member of the U.N.
* And the Soviets needed the German money and goods to finance their efforts to control Eastern Europe.
* And – in the early stages, the ERP funds were going to be offered to Eastern European countries and even the U.S.S.R.
* The United States offered immense grants of cash and material aid to all of the European nations, not just those in the West, on the sole condition that the recipient nations agree upon a common economic plan to use these resources.
* Of course, this economic plan had to be based upon market capitalism, a stipulation not mentioned formally in the proposal but obvious nevertheless.
* Eastern European nations that accepted the American offer, as many were initially keen to do, would therefore have become incorporated into the American economic system, gravitating naturally into the U.S. orbit as their material fate became dependent upon American, not Russian, alliance.
* In addition, the terms of the Marshall Plan, when released, as we’ve discussed, gave the Americans a very high degree of say in how the money was spent.
* And it forced the recipients to buy products from American companies.
* And to give up their own funds for the Americans to spend however they saw fit.
* SPECIAL PROVISIONS: The Administrator is authorized to use funds made available to promote an increase in production in participating countries of materials required by the U. S. where there are actual or potential shortages in the U. S.
* This involved strategic goods needed for military purposes, and it prevented recipients from selling these things to Moscow or Eastern European countries, so they could use Marshall Plan funds to buy raw materials, eg uranium and plutonium, that they needed. (the_marshall_plan_-_the_extension_of_empire.pdf)
* More on that later.
* But This of course was intolerable to the Soviets – as the Americans, of course, knew it would be.
* As we discussed with Benn Steil when he was on the show, it was planned from the beginning the the Soviets would have to turn down the American money, and insist that the countries in Eastern Europe that were in their sphere of influence would also turn it down.
* As Bevin said to his private secretary, after Molotov stormed out of their last Foreign Ministers meeting in 1947: “This is the beginning of the Western bloc.”
* The Marshall Plan, Molotov said, was “nothing but a vicious American scheme for using dollars to buy its way” into European affairs.
* If the Soviets had just said “yes sure wonderful” and jumped both feet into the Marshall Plan, they probably could have killed it from the inside.
* Which is what Ambassador Novikov had recommended.
* But instead, Stalin refused to be part of it on principle.
* Which turned out to have dramatic consequences for the world.
* So the Marshall Plan, like the Truman Doctrine, has to be viewed, at least in part, as a political tactic for Truman.
* But in order for it to be useful in the upcoming election, he needed to sell it.
* To build support with the public, the “Committee for the Marshall Plan” was established.
* also known as Citizens’ Committee for the Marshall Plan to Aid European Recovery
* The committee contained eminent people like:
* Allen Dulles, president of the Council on Foreign Relations, later to become the director of the CIA
* Alger Hiss, president of the Carnegie Endowment for International Peace and Soviet spy
* Philip D. Reed, chairman of General Electric
* Dean Acheson, United States Under Secretary of State, who would later be Sec of State
* Robert Patterson, Secretary of War
* Hugh Moore president and founder of the Dixie Cup Company
* Winthrop W. Aldrich president and chairman of the board of Chase National Bank
* Union leader James B. Carey
* Another union leader David Dubinsky
* To sway public opinion, the committee advertised, issued various documents (press releases, editorials, policy papers), sponsored radio broadcasts, hired speakers bureaus. Targets included women’s clubs, church councils, and public affairs groups.
* Dean Acheson went on his own speaking tour around the country.
* His Message focused on American idealism, self-interest, and ideology – particularly, humanitarian and economic concerns.
* Allen W. Dulles: “The Marshall Plan … is not a philanthropic enterprise … It is based on our views of the requirements of American security … This is the only peaceful avenue now open to us which may answer the communist challenge to our way of life and our national security.”
* Government propaganda to convince the people to let them give THEIR money to American corporations in the name of European aid.
* A congressional committee headed by Representative Forrest A. Harness concluded its long study of the problem with this estimate in 1947: “Government propaganda distorts facts with such authority that the person becomes prejudiced or biased in the direction which the Government propagandists wish to lead national thinking.”
* Exactly ten years later, General Douglas MacArthur offered an even more biting commentary on the same pattern of distortion. “Our government has kept us in a perpetual state of fear—kept us in a continuous stampede of patriotic fervor—with the cry of a grave national emergency. . . . Yet, in retrospect, these disasters seem never to have happened, seem never to have been quite real.”
* (The Tragedy of American Diplomacy – William Appleman Williams)
* When the plan passed, as it easily did (with even Taft’s vote), the ink was hardly dry on the legislation when the ships full of goods hit the high seas.
* At any given moment over the next few months, 150 boats were carrying wheat, flour, cotton, tires, borax, drilling equipment, tractors, tobacco, aircraft parts, and anything else big domestic manufacturers could get their hands on.
* As with most goods shipped under the Marshall Plan, American producers had the advantage: 50 percent had to be sent on American vessels.
* Taking a leaf from the Roosevelt playbook, Truman bypassed the usual bureaucracy and established a new bureau—the Economic Cooperative Administration—to distribute the aid.
* It too was staffed by the heads of major industrial-corporate interests who stood to benefit at public expense.
* Paul Hoffman – the same guy who founded the CED – headed the group and passed out billions to well-heeled corporate powers.
* As historian Anthony Carew summarizes, the Marshall Plan “was in all major respects a business organization run by businessmen.”
* Most of all, the aid was used for purchases at distorted prices by American tax dollars in the hands of European governments.
* Like we see with Pentagon contract even today – when you’re taking taxpayer money, which they have no say over, and give it to corporations, particularly when there is an emergency, there’s no time or incentive to check how competitive the prices are that you’re being offered.
* The result was the largest peacetime transfer of wealth from the taxpayers to corporations until that point in U.S. history.
* The Marshall Plan aid was mostly used for the purchase of goods from the United States.
* The European nations had all but exhausted their foreign exchange reserves during the war, and the Marshall Plan aid represented almost their sole means of importing goods from abroad.
* Chomsky https://chomsky.info/200311__/:
* Of the $13 billion of Marshall Plan aid, about $2 billion went right to the U.S. oil companies.
* That was part of the effort to shift Europe from a coal-based to an oil-based economy, and parts of it would be more dependent on the United States.
* It had plenty of coal.
* It didn’t have oil.
* So there’s two billion of the 13.
* You look at the rest of it, very little of that money left the United States.
* It goes from one pocket to another.
* 90% of the funds were actually just a credit that had to be spent on American goods.
* And the recipient countries needed to match that amount in their own currency, known as counterpart funds.
* The remaining 10% was a loan that had to be paid back with interest.
* So the U.S. took $13 billion of taxpayers money and gave $11.7 billion of it to American companies.
* The counterpart thing is confusing.
* Here’s one explanation I read of how it worked.
* Each government that received grant funds had to put an equivalent amount into an account in their own currency.
* The governments reimburse themselves for the money they deposit in the counterpart funds by“selling” the ECA dollar credits to those of their citizens who require dollars with which to import goods from dollar countries.
* The importer, either a government agency or a private business firm, applies for use of ECA dollars to make a particular purchase that will contribute to the recovery of the country.
* If the importer’s application is approved (by the US), he buys the dollar credits with the currency of his country, e.G. Francs, lire Or pounds.
* Suppose a German construction company wished to purchase an American crane for reconstruction efforts in 1949. In a counterpart fund arrangement, company would buy the crane from the West German government in Deutschmarks, which would then be deposited into the central bank. The Economic Cooperation Administration (ECA), the body mediating counterpart funds, would pay the American crane exporter in dollars authorized under the European Recovery Program (ERP). Meanwhile, the Deutschmarks would be used to finance a ECA-approved recovery project.
* There are several benefits to this transaction. First, instead of a direct transfer of an asset or converting currency for import, this system incentivizes participation in the economy using the local currency. For the construction company, the entire transaction occurred in West Germany and was arranged by the fledgling government. Furthermore, because the payment was in local currency, there is not a negative effect on West German balance of payments, which was a major concern of the ERP. Lastly, instead of resorting to inflationary policies as had often been done in post-war recoveries, the central bank had an inflow of currency to loan out for projects.
* As I said before, the U.S. also had to approve how the counterpart funds were spent, via the ECA.
* EG Britain wanted to spend counterpart funds on rebuilding social welfare projects but the U.S. rejected that idea.
* They would only approve projects that would drive the economy – meaning the country would be able to buy more American products in the future.
* Those bags of wheat that fed Germans and others had to come from the U.S.’ mid-Western grain belt, and many were paid for in so-called counterpart local funds which the United States could technically spend as it wished in Europe. (https://www.rferl.org/a/1084818.html)
* And 5% of the counterpart funds were earmarked for the U.S. to spend as it liked.
* Which, according to the actual explanation on the George Marshall Foundation site, was to “stockpile critical materials needed for America’s defense”.
* In fact, a quarter of this money ended up as a $200 million slush fund for the CIA which it used for covert activities in France and Italy.
* Another way the funds were used was for a European propaganda tour.
* The ERP Train.
* A seven-carriage train that went around Europe extolling the virtues of the Marshall Plan.
* (Cold-War Economics: The Use of Marshall Plan Counterpart Funds in Germany, 1948-1960
* Armin Grünbacher)
* How is this not imperialism, when Country A gets to dictate to Country B how and where it spends its own money?
* This is taking imperialism to a new level.
* You don’t need to invade.
* You don’t need to threaten.
* You just BUY control.
* Or as Zbigniew (zuh-big-nef) Bresinski, Carter’s National Security Adviser, put it, “co-optation”.
* “It likewise relies heavily on the indirect exercise of influence on dependent foreign elites.”
* And it’s “reinforced by the massive but intangible impact of the American domination of global communications, popular entertainment, and mass culture and by the potentially very tangible clout of America’s technological edge and global military reach.”
* (Brzezinski, Zbigniew – The Grand Chessboard; American Primacy and its Geostrategic Imperatives (1998).pdf)
* This is Keynesianism at its best.
* Even though Keynes died just before it got under way.
* He died in April 1946, a few weeks after participating in the negotiations for the Anglo-American loan in Savannah, Georgia, where he was trying to secure favourable terms for the United Kingdom from the United States, a process he described as “absolute hell”.
* And yes – it helped get Europe back on its feet.
* And probably stopped socialist parties from gaining political power.
* And reduced the chances for the U.S.S.R. to build economic and political ties with Western Europe.
* Yet many U.S. and European historians have recently concluded that the Marshall Plan’s impact in Western Europe was more important politically and psychologically than it was economically.
* U.S. historian Charles Maier concluded that Marshall aid served as what he called the “lubricant in an engine — not the fuel — which allowed a machine to run that would have otherwise buckle and bind.”
* In fact, the more recent historians say, the Marshall Plan provided Europeans as much psychological reassurance as it did recovery.
* The Marshall Plan had one other great effect on West Europe’s evolution over the past four decades: It encouraged the economic integration that led, first, to the creation of the European Coal and Steel Community among six nations -Belgium, France, Germany, Italy, Luxembourg and the Netherlands -in 1950.
* Eight years later, the same six took a qualitative jump into the more integrated European Economic Community.
* Which then became the European Union.
* Which Britain is now leaving.
* The Marshall Plan stimulated European unification because its architects celebrated the benefits of economic integration and did what they could to bring it about.
* They believed that an integrated economic order, particularly one headed by central institutions, would help to channel constructively Germany’s revitalized strength -and so far, they have been proved right.
* These assumptions grew fundamentally out of U.S. domestic experience, where a large integrated economy has made vast economic growth possible.
* They were not all accepted by the West Europeans, but they had a great influence over them.
* Witness the recent words of former German Chancellor Helmut Schmidt: “The United States ought not to forget that the emerging European Union is one of its greatest achievements: it would never have happened without the Marshall Plan.”
* But did the Marshall Plan work to stave of America’s economic woes?
* It created jobs, especially in the export industries.
* Just as millions of Americans were being discharged from the armed forces and were looking for jobs.
* For the first time in its history, the United States did not suffer from a severe recession due to a lack of spending immediately following the cessation of a major war and a reduction in military spending by the federal government. The United States and most of the rest of the world experienced an economic “free lunch” as both the potential debtor nations and the creditor nation experienced tremendous real economic gains resulting from the Marshall Plan and other foreign aid giveaways. Despite the growth in output from foreign factories, however, the United States maintained a surplus merchandise trade balance of exports over imports until the first oil price shock in 1973. (source)
* And the U.S. economy boomed in the 50s and 60s, in part because of the spending of public treasury money on boosting the economy.
* And partly because the Marshall Plan created a massive market in Europe for American products.
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