Episode 938: The Marshall Plan : Planet Money Sometimes the way to help yourself is to help your enemy. After WWII, the U.S. launched what might be the most successful intervention in history, rebuilding Germany and also the rest of Western Europe. | Subscribe to our weekly newsletter here.
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Episode 938: The Marshall Plan

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Episode 938: The Marshall Plan

Episode 938: The Marshall Plan

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Couple weeks ago, we visited the George C. Marshall Foundation in Lexington, Va.


ROSALSKY: And we are here.


It's next to the campus of the Virginia Military Institute. George Marshall is VMI's most prestigious alum.

ROSALSKY: Ready, Darian?

WOODS: I'm ready.

The foundation was really excited to have us. And, to be honest, we were pretty excited, too.

ROSALSKY: Reserved parking for Mr. Rosalsky and Mr. Woods - the first time anything's ever been reserved with my name on it.

The building looks like an armory - you know, cement, not a lot of frills, like a place where you would wait out a nuclear winter or hide plutonium.

PAUL BARRON: Good morning. Good morning.

ROSALSKY: Good morning. Good to see you.

BARRON: How are you all doing?

WOODS: We were there to meet a guy named Paul Barron.

BARRON: I grew up in Houston, Texas. And then after college, I entered the Marine Corps and served for 24 years. I was an air controller and a helicopter pilot.

WOODS: Has anybody told you you have a resemblance to John McCain?

BARRON: I've heard that.

ROSALSKY: Paul does kind of actually look like John McCain. He's wearing a navy blue jacket with a pin.

WOODS: Tell me about that badge on your jacket.

BARRON: Oh, this is the Marshall Foundation pin.

WOODS: It has five stars on it.

BARRON: Yeah, five-star general - Marshall was a five-star general.

WOODS: Paul's an expert on the military strategist and statesman George Marshall. We came all this way to ask him about something that's come up again and again in the presidential primary debates.

ROSALSKY: Everyone's talking about the Marshall Plan. Julian Castro.


JULIAN CASTRO: One of the things I proposed in my plan is essentially a 21st century Marshall Plan for Central America.

WOODS: Kirsten Gillibrand.


KIRSTEN GILLIBRAND: So what Congress needs to do is pass a Marshall Plan to rebuild Puerto Rico, make sure...

ROSALSKY: Candidates are calling for a Marshall Plan to fight climate change, a Marshall Plan to improve national infrastructure.


PETE BUTTIGIEG: Put forward a Douglass Plan. And the reason we call it a plan and name it after a person is not just in honor of Frederick Douglass but to remind us of the Marshall Plan.

WOODS: That's Pete Buttigieg. He's calling for a Marshall Plan for racial equality. And here's Hillary Clinton a few years back calling for one in Appalachia.


HILLARY CLINTON: We have to have, like, the equivalent of a Marshall Plan.

WOODS: Bush called for one. Obama - you get it.

ROSALSKY: And this isn't new. Actually, there have been calls for more Marshall plans since the original Marshall Plan, which, by the way, began in 1948.

WOODS: That year, someone called for a Marshall Plan for stray dogs and cats.

ROSALSKY: But no one is being really specific about what a Marshall Plan actually means. It's just, like, this magic catch-all, never-mind-the-details, we'll-fix-it term.

WOODS: So all this made us wonder what actually was the Marshall Plan? Why is everyone always talking about it but kind of never really doing it?


ROSALSKY: Hello, and welcome to PLANET MONEY. I'm Greg Rosalsky.

WOODS: And I'm Darian Woods. Today on the show, we're going back to the chaotic days just after World War II.

ROSALSKY: And to a guy who came up with this plan to help Europe rebuild after the war, George C. Marshall. It's a story about what might be the most successful intervention in history, when we sent boatloads of cash - actual boatloads - to help not just one other country, but 16 other countries.

WOODS: Thank you, Uncle Sam. That's so generous.

ROSALSKY: Yeah, that's not the full story.


GEORGE C MARSHALL: The whole world hangs in the balance.

ROSALSKY: There's a world map on the wall at the George C. Marshall Museum. It's covered in red lights. And next to it is this little button.

Let's try it. Push to start map - runtime 30 minutes. Wow. OK, here we go.

WOODS: If you press the button, you get the full history of World War II.

UNIDENTIFIED NARRATOR #1: In 1939, three nations - Germany, Italy and Japan - threatened the peace of the world.

ROSALSKY: It's long. We'll do the shorter version.

WOODS: World War II happened. And afterwards, Europe was in chaos. Fifty million Europeans were homeless. People were starving. It was hard to get around. And in many countries, no one was sure who would be in charge of what.

ROSALSKY: The continent was desperate for basics, like wheat and milk, but also, like, coal and tractors and railroad lines.

WOODS: A lot of Europe looks bad, but especially Germany.

ROSALSKY: No one knows what will happen to Germany. It's not just occupied; it's divided into four occupation zones controlled by Britain, France and the United States in the West and the Soviet Union in the East. That's a big part of the reason it's in freefall.

BARRON: Here is a young child - a young boy. And if you look at his clothes, they're very, very tattered. He has no shoes. He's probably got double socks on.

ROSALSKY: Paul Barron showed us this picture of a kid in Germany after the war.

WOODS: He looks about, maybe, 5 years old.

BARRON: Five years old. But he has a cup. And the question is, what is in the cup?

ROSALSKY: What do the students usually guess?

BARRON: The students usually guess soup, and they're very surprised when we tell them, no, it's tobacco - that this young boy is out looking for cigarette butts so that he can shred that cigarette butt and get the tobacco.

ROSALSKY: Germans were using tobacco as a form of currency - like, really. Paul showed us a list of prices from that time - 30 cigarettes for a chicken, 10 cigarettes for a loaf of bread.

WOODS: The German currency, the reichsmark, was almost worthless. The economy was devastated.

BARRON: That is Bremen, Germany.

WOODS: It's like a gutted doll's house with no dolls. I mean, it looks like the whole place has to be just razed and starting over again.

BARRON: Yeah, and that was just - that's across Germany.

WOODS: And here's where we get back to General George C. Marshall. He's chief of staff of the U.S. Army during the war. And, basically, his job for the last six years has been to destroy Japan and Germany. And he was really good at it. Here's President Truman talking from that giant map at the museum.


HARRY S TRUMAN: He was able to exercise greater influence than any other man on the strategy of victory.

ROSALSKY: And after all that, George Marshall, quite understandably, wanted to move someplace pretty and rest, you know, take up a hobby.

BARRON: He wanted to go home and plant his roses.


BARRON: He was a gardener. Oh, yes.

ROSALSKY: And he does retire, but only for a week.

WOODS: Marshall ends up getting asked by President Truman to become his secretary of state. And he takes the job, which means he has to answer this big question, what shall we do with Germany?

ROSALSKY: Up until this point, America still thought of Germany as the enemy.

WOODS: These were Nazis, after all.

ROSALSKY: Yeah. So President Roosevelt's Secretary of the Treasury Henry Morgenthau - he made it official occupation policy to deindustrialize Germany.

BARRON: The Treasury Department under Morgenthau wanted to turn Germany into pastureland and take all of its industrial power and push it out.

ROSALSKY: And that's what victors typically did - you know, plunder and pillage. It's been that way for thousands of years.

WOODS: But Marshall was part of this new foreign policy team, Truman's team. And they started taking a different view, one that was more motivated by the fear of communism.

ROSALSKY: At this point, the Soviet Union is expanding all over Eastern Europe. Plus, communists in France and Italy are winning elections, and they're fighting to take over Greece and Turkey.

WOODS: All right, so one of the first things Marshall does as secretary of state is travel to Moscow.

ROSALSKY: I see a picture here of Marshall. It's clearly in Russia.

BARRON: He's in Moscow. This is the foreign ministers conference in Moscow.

WOODS: It's 1947. Marshall's there for what turns out to be a six-week-long meeting with foreign ministers of all the major powers. They're all there to figure out what to do about Germany.

ROSALSKY: He's coming out of this building here. Did he actually meet with Stalin?

BARRON: Oh, yes. He had a private meeting. He thought that they could come to an agreement of some type because they had done it during the war.

WOODS: Now, the Soviet Union had lost something like 26 million citizens during the war. So Stalin says he wants Germany to pay billions of dollars' worth of war reparations.

ROSALSKY: Not entirely unreasonable. The Allies made Germany pay after World War I, but that didn't turn out so well - obviously.

WOODS: But the bigger issue on the table isn't reparations. It's what Germany will look like politically and economically once the occupation ends.

ROSALSKY: So Marshall makes a few offers - basically, demilitarize Germany, make sure it's not a threat to the Soviet Union again, but let it recover economically.

WOODS: The Soviets already control East Germany. Marshall wants to prevent them from gaining power in the West. But Stalin rejects Marshall's proposals. And by the end of the six weeks, it's becoming clear this marriage is not going to work.

ROSALSKY: Here's Marshall straight after the Moscow Conference.


MARSHALL: I'm sorry that we have not made more progress at this conference. However...

BARRON: On the flight back, all they talked about was that conference that he had with Stalin and the need to do something.

ROSALSKY: Something big, something the world had never seen before. When Marshall gets back, he tells his team at the State Department, it's time to start formulating a plan.

WOODS: And while they're doing that, he decides to send out a message. And he does it in this kind of weird way. Marshall's being awarded an honorary degree from Harvard, and so he asks the people organizing the ceremony if he can make a few remarks. He doesn't actually tell them what he's going to say.

ROSALSKY: Wait; is this actually the original speech?

BARRON: Yeah, (unintelligible). This is the most important document that we hold. But you can see the day was June 5, 1947, and the time that it was delivered.

ROSALSKY: It starts, I need not tell you gentlemen that the world situation is very serious.


MARSHALL: I need not tell you that the world situation is very serious. That must be apparent to all intelligent people.

WOODS: Marshall wasn't really talking to all those Harvard grads. He was talking to Europe.


MARSHALL: Europe's requirement for the next three or four years of foreign foods and other essential products...

ROSALSKY: Marshall is basically saying, guys, Europe is broke, and it needs help. If it doesn't get aid, things are going to get uglier.


MARSHALL: Or face economic, social and political deterioration of a very grave character.

WOODS: The State Department made sure that European media covered the speech, and they got the message. Britain's Foreign Minister Ernest Bevin, for example - he said that Marshall's speech was, quote, "like a lifeline to a sinking man. It seemed to bring hope where there was none."

ROSALSKY: But a lot of Americans, including members of Congress, can't believe this. It's a battle to get it signed into law. Marshall travels all over the country trying to sell it.


MARSHALL: It was just a struggle, start to finish.

ROSALSKY: I mean, this is a massive foreign aid program. And many people are like, what? Why would we want to give that to Europe? But then there's this Communist coup in Czechoslovakia, and it becomes clear that Stalin is serious about expanding communism outside of the Soviet Union. And Congress comes around.


UNIDENTIFIED REPORTER #2: Using several pens, President Truman signs the bill that puts the Marshall aid plan into operation. Aid...

WOODS: The European Recovery Program, aka the Marshall Plan, is passed by Congress on April 3, 1948. After the break, what happened when America decided to rebuild Germany right under the nose of Joseph Stalin. There will be military tension.

ROSALSKY: And bombers filled with candy.

By the summer of 1948, at any given time, there are something like 150 ships crossing the Atlantic. They're filled with stuff like grain, coal, construction equipment, horse meat - seriously, horse meat. It's all funded by the Marshall Plan.

WOODS: Sixteen countries got aid. And that aid was mostly in grants, not loans. It didn't have to be paid back.

ROSALSKY: The money did a bunch of things. It helped Austria build a dam. It helped the U.K. build cars and pay off some of its debt. It sent mules to Greece. It trained workers. It built factories and roads.

WOODS: Plus, it was good for American business. A lot of the money went into buying American-made stuff. And it made the U.S. look great. Propaganda was built into the Marshall Plan. Countries who received aid were instructed to do things like run radio programs letting people know how important this aid was. They held parades in Marshall's honor. And they even made cartoons promoting just how amazing the American model of capitalism was.


UNIDENTIFIED PERSON #1: Why not make more shoes with less effort by using more machines? That would mean better shoes and cheaper shoes.

UNIDENTIFIED PERSON #2: Why not make more shoes, cheaper shoes?

ROSALSKY: Yeah, so the Marshall Plan also came with all sorts of political strings to undermine communism. But beyond the propaganda and the anti-communist politics and the self-serving exchange of American products, the Marshall Plan was actually helping 16 countries build stronger economies.

WOODS: But historian and economist Benn Steil recently wrote a book called "The Marshall Plan: Dawn Of The Cold War." And he says that the Marshall Plan was really about one country.

BENN STEIL: The whole story really is about Germany. Not just the Marshall Plan, but the Cold War is fought about Germany. Who will control Germany? What sort of Germany will there be?

ROSALSKY: Before the war broke out, Germany was the heart of industrial production in Europe.

STEIL: So one of the aims of the Marshall Plan was to make Germany self-sufficient again so that it could end its dependence on the United States and we could end our occupation. And the only way to do that was to restore Germany to its previous position as the main capital good supplier for Western Europe.

WOODS: So Germany needed to rebuild its economy dollar by dollar, mark by mark. No more cigarettes as currency - that is not going to work.

STEIL: And so in the spring of 1948, the United States decided it was going to pursue currency reform unilaterally in the western part of the country.

ROSALSKY: The United States and its allies introduced a whole new currency, the deutsche mark.

WOODS: New economy, new currency, new start, new you. But there's a problem.

STEIL: Stalin considered this to be an enormous threat to his control of Germany.

ROSALSKY: The new deutsche mark meant Western powers were serious about setting up a separate West Germany. And the Soviets really hated this. They also feared that it would cause a bunch of problems in East Germany - that all those reichsmarks, now completely useless in the West, would flood the East, causing massive inflation. The new currency was, in effect, an attack on communism.

WOODS: The USSR, fed up and threatened by the Marshall Plan, they blockade West Berlin. And mind you, Berlin, Germany's capital city, is in the heart of the Soviet-occupied zone.

ROSALSKY: They blocked the roads, the railroads and the canals. Nothing can go in. Nothing can go out. Two million West Berliners are completely isolated.

WOODS: And this starts one of my favorite moments of post-war history. You've got these 1940s planes trying to get around the blockade. They're basically sending everything that the West Berliners need by air.


UNIDENTIFIED NARRATOR #2: The airlift flows on uninterruptedly, a plane landing or taking off every 45 seconds.

ROSALSKY: They fly in money, tools, bicycles, shoes.

WOODS: Carrots.

ROSALSKY: Carrots. For about a year, America and its allies fly in everything West Berlin needs to survive. At one point, planes are landing every four minutes.

WOODS: Pilots even throw boxes of candy out the windows as they're flying in, with these little parachutes made out of handkerchiefs.

ROSALSKY: Meanwhile, the U.S. is sanctioning the Soviets, too.

STEIL: So fast forward to May 1949. Stalin comes to the conclusion that the blockade has been a strategic failure and a diplomatic failure.

ROSALSKY: He lifts the blockade.

STEIL: And simultaneously with that, the United States and its allies create an independent West German state, the Federal Republic of Germany.

ROSALSKY: Benn Steil says it was the first step in creating what would become the European Union.

STEIL: The European Union as we know it today was really an idea that began with the Marshall Plan in the State Department.

ROSALSKY: The Marshall Plan rebuilt Germany, but the money also convinced France to let a rebuilt Germany exist. It created a Western bloc, united against communism, that would lead directly to the EU.

WOODS: Now, George Marshall - he was this humble guy, and he probably wouldn't claim credit. But do you know who did think what he did was awesome?

BARRON: That's the Nobel Peace Prize.

ROSALSKY: Oh, whoa. I've never seen a Nobel Peace Prize. Well...


ED HERLIHY: General George Marshall mounts the rostrum.

ROSALSKY: It's so much smaller than I thought it'd be.

The Marshall Plan ultimately cost American taxpayers $13.2 billion. And that's about $150 billion today if you adjust for inflation. But our economy is much bigger now. A better yardstick might be using GDP. The Marshall Plan amounted to 5% of GDP. That would be nearly a trillion dollars today.

WOODS: But Benn Steil points out it didn't work just because of the money. The U.S. was rebuilding countries that already had a lot of advantages.

STEIL: So when people talk about Marshall plans in other parts of the world, I think they often mistake the financial aid on its own as being some sort of magic elixir to bring economic growth.

ROSALSKY: He says when politicians talk about the Marshall Plan, they're missing the point.

WOODS: And they're missing the motivation. It wasn't do-gooding for do-gooding's sake. The Marshall Plan was a tool to contain a rival.

STEIL: Yeah. Most Cold War historians would date the beginning of the Cold War to 1945, the immediate aftermath of the war. I argue in my book that it's probably more accurate to date the Cold War to Marshall's speech.

ROSALSKY: The Marshall Plan wasn't just about cleaning up the ruins of a past war. It was about starting a new one.


WOODS: Got a plan to save a continent? Email us - planetmoney@npr.org. We are also on Facebook, Instagram and Twitter - @planetmoney.

ROSALSKY: Today's show was produced by Liza Yeager, with editing from Jessica Weisberg and Bryant Urstadt.

WOODS: Alex Goldmark is our supervising producer. And thanks very much to Cynthia Betubiza for fact-checking.

ROSALSKY: That music in the background - we recorded that at the Virginia Military Institute. They were practicing for a parade.

WOODS: I'm Darian Woods.

ROSALSKY: And I'm Greg Rosalsky. This is NPR. Thanks for listening.


ROSALSKY: Oh, and one more fun fact. And this is maybe the craziest thing about the Marshall Plan. In a way, it's still going. We actually got in touch with the German government, and they still have an account filled with money from the Marshall Plan. They invested it way back in the day, and they still use it to fund small businesses.

WOODS: They sent us a nice note about it.


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