there can be no political stability and no assured peace. Our policy is not directed against any country or doctrine but against hunger, poverty, desperation and chaos. Its purpose should be the revival of a working economy in the world so as to permit the emergence of political and social conditions in which free institutions can exist. . . . Any government that is willing to assist in the task of recovery will find full cooperation. . . on the part of the United States Government. Any government which maneuvers to block the recovery of other countries cannot expect help from us. Furthermore, governments, political parties or groups which seek to perpetuate human misery in order to profit therefrom politically or otherwise will encounter the opposition of the United States. It is already evident that, before the United States Government can proceed much further in its effort to alleviate the situation and help start the European world on its way to recovery, there must be some agreement among the countries of Europe as to the requirements of the situation and the part those countries themselves will take in order to give proper effect to whatever action might be undertaken by this Government. . . . The initiative . . . must come from Europe. The role of this country should consist of friendly aid in the drafting of a European program and of later support of such a program so far as it may be practical for us to do so. The program should be a joint one, agreed to by a number, if not all, European nations.

Britain and France took the lead in moving toward an acceptance of this opportunity for an overall program for economic rehabilitation.

Russia attempts to delay European action

When a meeting was called in Paris by Ernest Bevin and Georges Bidault, the foreign ministers of the two western powers, Molotov, who was invited, sought to obstruct the progress of European study of Secretary Marshall's offer. The British and French went forward with their plan. They invited twenty-two European nations to meet in Paris. Spain, then under a form of blacklist by the UN, was not invited, but all the European countries under the influence of the Soviet Union were asked to send representatives.(57) Early acceptances were received from all the western European nations and from Poland and Czechoslovakia. Albania, Bulgaria, Finland, Hungary, Roumania, Yugoslavia, and the U.S.S.R. refused outright. Shortly Poland and Czechoslovakia withdrew their acceptances obviously upon instructions from Moscow. In fact, the Soviet Union proposed to its bloc a Molotov plan for economic unity to draw the eight captive states closer into the communist

grasp. Later the Soviet government announced the formation of the Communist Information Bureau (the Cominform) on October 5, 1947 as a counter move to the Marshall Plan and its economic unification of western Europe.

16 Nations meet in Paris to estimate their aid requirements

The sixteen nations comprising the anti-communist bloc met July 12, 1947 in Paris and concluded their deliberations on September 19th. The total estimate of the support needed by the sixteen nations for the next four years was calculated at $19,310,000,000. When the United States received this estimate it was studied by various agencies of the government. On December 19, 1947, President Truman requested from Congress seventeen billion dollars in Marshall Plan aid for Europe for a four and a quarter year period; $6,800,000,000 of this was to be appropriated for the first fifteen months.

The plan for European recovery

PRESIDENT TRUMAN'S MESSAGE TO CONGRESS ON AID TO EUROPEAN ECONOMY, WASHINGTON, DECEMBER 17, 1947: A principal concern of the people of the United States is the creation of conditions of enduring peace throughout the world. We must now make a grave and significant decision relating to our further efforts to create the conditions of peace. We must decide whether or not we will complete the job of helping the free nations of Europe to recover from the devastation of the war. . . . Considered in terms of our Own economy, European recovery is essential. The last two decades have taught us the bitter lesson that no economy . . . can remain healthy and prosperous in a world of poverty and want. . . . Our deepest concern with European recovery .. is that it is essential to the maintenance of the civilization in which the American way of life is rooted. . . . The next few years can determine whether the free countries of Europe will be able to preserve their heritage of freedom. If Europe fails to recover, the peoples of these countries might be driven to the philosophy of despair. . . . Such a turn of events. . . . might well compel us to modify our own economic system and to forego, for the sake of our own security, the enjoyment of many of our freedoms and privileges. It is for these reasons that the United States has so vital an interest in strengthening the belief of the people of Europe that freedom from fear and want will be achieved under free and democratic governments. . . . an integrated program for United States aid to European recovery has been prepared.... the program is designed to make genuine recovery possible within a definite period of time, and not merely to continue relief indefinitely.

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the program is designed to insure that the funds and goods which we furnish will be used most effectively for European recovery. . . . the program is designed to minimize the financial cost to the United States, but at the same time to avoid imposing on the European countries crushing financial burdens which they could not carry in the long run. . . . the program is designed with due regard for conserving the physical resources of the United States and minimizing the impact on our economy of furnishing aid to Europe. . . . the program is designed to be consistent with other international relationships and responsibilities of the United States. . . . In providing aid to Europe we must share more than goods and funds. We must give our moral support to those nations in their struggle to rekindle the fires of hope and strengthen the will of their peoples to overcome their adversities.

...

The debate which followed in Congress was one of the most heated and involved of the postwar era. Opponents of the aid program attacked

The "Great Debate" on European aid

the President's proposal as a colossal give-away, called it "Operation Rathole," and argued that the plan would put an intolerable burden on the American people without any compensating assurance that the spread of communism would be halted. These opponents included such dissimilar figures as former VicePresident Henry A. Wallace, who saw in the plan a goad which might cause the Soviets to make war on Western Europe, and Senator Robert A. Taft, who termed the program a threat to American economy and a defiance of the American people's desire to remain aloof from European problems. Supporters of the Marshall Plan had the strong aid of Senator Vandenberg and other internationally-minded Republicans, Fall of as well as leading members of the Czechoslovakia President's party. Their arguments emphasizes were appreciably bolstered by the need for action of the communists in Czechohaste slovakia who succeeded in capturing the government of that practicing democracy in a coup d'etat in February 1948. The fate of Czechoslovakia was an alarming demonstration of what might happen to France, Italy, and other western European nations, if aid from America was not forthcoming.

In the Foreign Assistance Act of 1948 as it finally passed the Congress and was approved by President Truman on April 3, 1948, the long-term

appropriation request was dropped. Instead, the act provided for an appropriation of $6,098,000,000 for the first year, with assurances that similar funds would be voted in each of the following three years. As a result of pressures by proNationalist China forces in and out of Congress, $463,000,000 was included for aid to Chiang Kai-shek's administration on Formosa. A proposal to include Spain in the list of European recipients of aid was passed by the House of Representatives, but so unfavorably was this inclusion regarded by many of the Western European nations that it was dropped before final enactment of the bill.

Creation of ECA and ERP

The act set up the Economic Cooperation Administration (ECA) with the European portion of the plan called the European Recovery Program (ERP). Paul G. Hoffman, prominent American industrialist and president of the Studebaker Corporation, was selected as administrator of the ERP. The European participants had already established the Organization for European Economic Cooperation (OEEC) to carry out the multilateral pledges for increasing international trade between the member nations. The machinery for the operation of this huge economic aid program was quickly put in motion and in the spring of 1948 began to show results.

European aid helps defeat the Italian communists

The most dramatic showing of the first few months of the ERP was in the case of the Italian elections of April 18-19, 1948. The Italian Communist Party, under the vigorous leadership of Palmiro Togliatti, through 1947 had challenged the power of Premier Alcide de Gasperi's Christian Democratic Party. There seemed to be a very good chance that the communists would win the elections scheduled for 1948. This would entrench the communists in an important west European nation and might influence the political life of France where another large and dynamic communist party was threatening the continuance of a coalition government sympathetic to the Marshall Plan objectives. The Marshall Plan, an ably conceived and executed propaganda drive by American administrators of the ERP, and a letter barrage directed by Americans of Italian

ancestry to their friends and relatives in Italy, all did much to convince the Italian voters that they had more to gain by staying on the side of democracy and economic aid from America than by voting for the communist slate of candidates. There is good evidence that part of the credit for the defeat of the communists belongs to the influence exerted by the Marshall Plan. The Christian Democrats won 130 of 237 elective seats in the Senate and 307 seats in the 574 member Chamber of Deputies. The Communists, or Popular Front, gained 31% of the vote for the Senate and 30.7% of the ballots for the Chamber. Not again in the postwar period have the Italian communists approached one-third of the popular vote and the influence of the Red leadership has markedly declined in Italy since the advent of ERP.11

Communist strength declines in Italy

The subsequent course of American economic aid to Europe was not without its disappointments. Many critics of the Marshall Plan and the ERP did little to disguise their pleasure when trade rivalries, differences between nations and between labor and capital elements within nations, and communist-inspired campaigns sabotage the program through strikes and work stoppages caused the plan to fall somewhat short of its hoped for achievements. By late 1949 Mr. Hoffman indicated that further American aid would be dependent upon an integration of the western European economic structure. The creation of the European Payments Union in September 1950 and the adoption of the Schuman Plan in March 1951 which established a single market for coal, iron, and steel were two definite steps taken by the Europeans to meet American objections.

Korean war upsets hopes for early European economic stability

By the summer of 1950 such progress had been made that it was indicated that, except in special instances, economic recovery for western Europe was in sight. With the outbreak of the Korean war and the consequent rearmament program originated by the anti-communist powers,

11 In the elections of June 7, 1953 the Communists polled 6,122,000 votes out of a total of more than 27,000,000. This increased their seats in the Chamber of Deputies by 11, while the Christian Democrats lost 44 seats. However the center coalition maintained a margin of 303 seats (51.3%) to 287 for the opposition parties. In the Senate the center coalition won 52% of the seats.

all calculations were upset. In President Truman's message to Congress of May 24, 1951 he proposed that such economic aid as was to be extended to Europe would have to support military production directly or provide materials for the export industries of those countries through which they could pay for the imports needed to bolster defense production.

The Mutual Security Act of 1951, which will be discussed at a later point, authorized an extension of American postwar aid to Europe. However, the assistance was priMSA marily military and only incidentalabsorbs ly economic. The ECA, within ECA, 1951 which ERP was operating, was absorbed by the Mutual Security Administration (MSA). Under this legislation a clause permitted the transfer of as much as 10% of the total amount set aside for western Europe from military aid to economic aid. In early 1952 France, Greece, Turkey, the United Kingdom, and Yugoslavia (which had dropped its allegiance to the Soviet dominated communist bloc in 1948) received increases amounting to $478,000,000 in the economic assistance scheduled under the MSA.

In the eight years which have elapsed since the enunciation of the Truman Doctrine and the Marshall Plan more than $33,700,000,000 have

More than 33 billions in aid expenditures since 1947

been expended by the United States for economic aid to foreign nations. The bulk of this sum has gone to assist European nations; a much lesser proportion has been sent to the Far East and Middle East, with smaller amounts going elsewhere in the global fight against communism. Although some critics of the American aid program, both within the United States and abroad have denounced the aid program as "imperialistic" and "domineering," the overall results have been generally well received. No doubt exists that in some facets of its operation American economic aid to western Europe has been costly, and even wasteful-it is unfortunately true that human beings, politics, billions of dollars, and administrative red-tape do not always combine to achieve the ideal of efficiency and economy. Even the nation

which has developed modern business methods to the acme of proficiency cannot guarantee that its governmental operations will always measure up to the goal of "a dollar of value for every dollar spent." And much of the administration of American aid to Europe was in the hands of able and respected American business executives who surely, if anyone, might have been expected to exert every effort to get real value from the program.

American aid a good investment

It is idle to believe that American dollars can buy people's minds, and no attempt to do so was part of the European Recovery Program. But it is clear that American aid had a great deal to do with the victories of the non-communists in the Italian elections of 1948 and in the French voting of 1948 and 1951 when similar setbacks were dealt the communists. And American aid enabled western Europe to climb a good way out of the depths to which it had been driven by the war. Economically as well as politically-western Europe has resisted communism since 1946 largely with the help of American financial and economic programs. Therefore, it appears to have been a good investment for and by the American taxpayers.

4. The German Problem: 1945-1949

Change in attitudes

toward

Germany

Of all the vexing European problems facing the United States in the postwar period the question of Germany has probably been the most troublesome. Whether the concern has been with economic recovery, resistance to communism, rearmament, political unification, or boundary settlements, the existence of a divided Germany has often been at the bottom of the dilemma. And the span of events which has seen the transition of Germany from a defeated enemy to a prized ally, sought after by both the West and the East, forms one of the most amazing chapters of the postwar story.

a postwar phenomenon

During the war the allies were united in their determination to reduce Germany to submission and to assure the impossibility of that nation ever again rising to a position of overwhelming power in Europe. The "unconditional surrender" policy was carried to fruition by the successes of the

allied armies so that there was no doubt of Germany's defeat in the field and of the crushing of the Nazi leadership. The reduction of Germany to a pastoral state without industrial might as contemplated by the Morgenthau Plan was never actually carried out, but wartime damage to Germany's industrial plant and postwar removals of industrial installations, principally by the Soviet occupation forces, left the formerly potent German industrial machine in a sorry state. The trials of war criminals put most of the surviving political and military leaders of the Nazi regime into jail,12 leaving the direction of the defeated nation in the hands of coalitions of democrats, socialists, communists, and other anti-fascists, many of whom had spent the past few years in exile or in concentration camps. Moreover, such government as existed in occupied Germany was under the control of the authorities heading the military forces in residency in each of the four zones staked out for occupation by the Yalta and Potsdam agreements.

In the first months of victory friction among the four occupying powers was of minor consequence. Adjustments were generally made on the

Early

cooperation among the occupying allies

spot without difficulty and the world was encouraged to think that matters relating to Germany would move smoothly. In fact in the summer of 1946 it was the French and not the Russians who created most of the situations disturbing the progress of occupation. Soon, however, it became apparent that the Soviets intended to make their zone in eastern Germany a garrison state, complete with a puppet government, a Russiancontrolled communist Party, and a Soviets begin Soviet-trained peoples' army. In addition, the presence of large units of the Red Army in the Russian Zone meant that Soviet forces were in a position to attack western Europe should the U.S.S.R. decide upon all-out military aggression against its former allies.

to create frictions

The three major western powers-France, the United Kingdom, and the United States-early

12 A number of the leading war criminals were executed. Others were sentenced to long prison terms. By 1950, however, quite a few of these were released for reasons of health, or granted pardons.

realized that some relaxation of the economic strictures on Germany would have to be instituted. Secretary Byrnes made an important statement on this subject in a speech at Stuttgart in 1946.

SECRETARY BYRNES' ADDRESS ON AMERICAN POLICY TOWARD GERMANY, STUTTGART, SEPTEMBER 6, 1946: . . . In agreeing at Potsdam that Germany should be disarmed and demilitarized and in proposing that the four major powers should by treaty jointly undertake to see that Germany is kept disarmed and demilitarized for a generation, the United States was not unmindful of the respon

Secretary Byrnes voices American desire for relaxation of

economic curbs on Germany

sibility resting upon it and its major Allies to maintain and enforce peace under the law. It is not in the interest of the German people or in the interest of world peace that Germany should become a pawn or a partner in a military struggle for power between the East and the West. there should be changes in the levels of industry agreed upon. . . if Germany is not to be administered as an economic unit as the Potsdam Agreement contemplates and requires. Reparations from current production would be wholly incompatible with the levels . . . under the Potsdam Agreement. The United States is firmly of the belief that Germany should be administered as an economic unit and that zonal barriers should be completely obliterated so far as the economic life and activity in Germany are concerned. . . . We favor the economic unification of Germany. . . . it was never the intention of the American Government to deny to the German people the right to manage their own internal affairs as soon as they were able to do so in a democratic way. . . . The Potsdam Agreement expressly bound the occupying powers to start building a political democracy from the ground up. . . . [it] did not provide that there should never be a central German government; it merely provided that for the time being there should be no central German government. . . . It is the view of the American Government that [a provisional government for all Germany] should not be hand-picked by other governments... we do not want Germany to become the satellite of any power or powers or to live under a dictatorship, foreign or domestic.

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December 17, 1947, and again on June 30, 1949. When the Allied High Commission for Germany was created in June 1949 by the action of the foreign ministers of the United States, Great Britain, and France, the bi-zonal arrangement was extended to permit the entry of France into the plan for economic unity of western Germany. This tri-zonal plan went into operation on September 21, 1949.

The establishment of the Allied High Commission in 1949 was preceded by a series of events which demonstrated the difficulties of administering a territory as important as Germany in an atmosphere of international tension and suspicion. The meeting of the Big Four foreign ministers in Moscow from March 10 to April 24, 1947 accomplished very little in respect to a settlement of the German problem. Secretary Marshall, supported by British Foreign Secretary Bevin, refused to resume reparations deliveries unless Germany was treated as an economic unit. The Soviets insisted on a ten billion dollar indemnity to be raised by an increase in the level of German industry, the augmentation of German exports, and a four

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SECRETARY MARSHALL'S STATEMENT ON GERMAN RECONSTRUCTION, MOSCOW, MARCH 14, 1947: . . . We believe that the reconstruction of Germany on a democratic basis. . . requires that .. the occupying authorities should assure .. [certain inalienable] rights to every individual and effectively prevent any government or group . . . from taking such rights from ... any individuals. . . . We believe that the present control of Germany by the Allies gives us an unique opportunity to demonstrate to the world the sincerity of the democratic goals which were proclaimed in the Atlantic Charter and the Charter of the United Nations. . . . there has not been a uniformly effective guaranty of civil rights in all parts of Germany. . . . there has been no uniformly effective guaranty of the rights of political parties in all parts of Germany [nor] of free trade unions in all parts of Germany. . . [nor] of the freedom of the press and radio. [nor] of freedom of movement for persons and goods throughout Germany. . . . We will