Why was the Marshall Plan introduced?

Funding landscape - funding programs

He is considered to be the forefather of all modern funding programs: US Secretary of State Marshall's plan to rebuild Europe after the Second World War. But what can today's economy learn from this?

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The Marshall Plan has existed and has had an impact on the European funding landscape for over 50 years.

With the Marshall Plan, the USA invented a completely new form of influencing international economic areas. In doing so, they shaped a system that to this day functions no differently than it did in the late 1940s. Anyone who wants to understand the funding landscape can therefore not ignore the Marshall Plan. How did it come about?

Friends are better than enemies

After the end of the Second World War, large parts of Europe lay in ruins. In Germany, the infrastructure, countless residential areas and, last but not least, the state administration as a whole collapsed. Now the victorious powers were faced with the question: What to do with the defeated aggressor?

While France pushed for a policy of reparation such as that applied in the Treaty of Versailles after World War I, the US recognized this as a grave danger. It was not least the tough demands of this surrender treaty and the national pride it injured that led to Germany becoming increasingly radicalized from the Weimar period until the National Socialists came to power.

The then US President Harry S. Truman therefore brought a proven and resourceful expert to his side as Foreign Minister: the 5-star General George C. Marshall. Instead of demolishing Germany, the two statesmen now pursued a policy of reconstruction and helpfulness.

Friends are also more useful than enemies

This did not happen unselfishly: The total of over 12 billion US dollars (today's equivalent of around 130 billion) that the Congress of the United States of America approved for the European Recovery Program (ERP) in 1948 helped the entire economic area of ​​Europe, especially England, Germany, France and Italy, but primarily America itself.

The American economy remained intact throughout the war because of the country's superior military power and geographically relatively isolated position. Production went well. It went too well: its own market was more than saturated, but the sales markets, especially in Europe, were almost destroyed. If the US manufacturing and export economy wanted to survive, it was precisely these European markets that had to be restored.

The myth of the Marshall Plan?

Today we know that the extensive US economic stimulus program was primarily an indirect aid that gave the recipient states primarily time and capital, but did not pump any subsidies into Europe.

But how could 80% of the ERP money flow into subsidies? These grants stayed in their own country. American farmers in particular benefited from the aid. Their products, initially and mainly agricultural products and machines, were then exported to Europe as aid to goods. In Germany, dealers bought such products for the newly introduced Deutsche Mark. This money then went to KfW, the credit institution for reconstruction, which was also only launched at the end of 1948.

KfW managed this money in funds from which it could then grant construction and investment loans. The German funding culture was born. According to today's economic historians, however, the ERP funds integrated here did not have the economic effects that public relations in the USA suggested at the time. In fact, some experts assume that the German economy recovered hardly more than 1 to 2 years faster thanks to the ERP funds.

Because: German industry was far less damaged than the media reports suggested. In essence, the defeated nation did the reconstruction with its own strengths and resources, but only because these were left to it by the victorious powers. So it came about that just 5 years after the end of the Second World War, the German economy had recovered so well that it was in better shape than before. This was not least due to the fact that the German machine industry was also able to recover quickly. Due to the pan-European effect of the ERP aid, the sales markets for German products quickly stabilized again and Germany regained the status of European supplier.

A Europe divided in two

In terms of overall economic development in Europe, the Marshall Plan must therefore by no means be underestimated. It is true that the aid from the USA initially meant the de facto division of Europe into a liberal-capitalist West with the ideals of the American Dream and a communist East that was dominated by the Soviets. In this sense, it is clear that when Germany has been mentioned up to this point, it means first the three western zones of occupation, then the Federal Republic of Germany, founded in 1949. No state under the influence of the East could, would or was not allowed to use ERP help by order of Josef Stalin.

And yet: Today Europe would not exist as a united, dynamic economic area without the measures of the Marshall Plan. Opinions can be divided about the motives of the Americans and their ethical judgment. The fact is, however, that West Germany in particular received a vitamin injection from the funds and public relations work of the USA, which was worth far more than all the billions. The generosity and friendship of the victorious power experienced in the eyes of the population awakened courage, hope and new energies.

America sells

The marketing measures that ensured the good reputation of the Marshall Plan, which continues far beyond its actual influence and into our time, were enormous.

Trains passed through Europe, proclaiming the friendship of the Americans. Posters advertised a Europe united in friendship, rising stronger than ever from the ruins of the war. Buildings and companies that had benefited from the indirect funding of the ERP wore plaques with the slogan “To strengthen the free world” in Stars and Stripes and the message “This is where the Marshall Plan helped”. Communism was portrayed as a backward opponent, intent on isolation, just as, conversely, the East portrayed capitalism as the enemy of a better human race.

Given these statements, the West Germans were no longer the defeated who bore the yoke of their occupiers since 1948. They felt the strong, friendly outstretched hand of the victor, pulling them up from the ruins. Ultimately, therefore, it does not matter whether this hand was really the decisive factor for the coming economic miracle. The fact that exactly this boom broke out in the FRG had above all to do with the mood that the Americans had created in the country. Basically, it didn't bother anyone when the Adenauer government began to repay its actual debts to the United States in cents and dollars in the 1950s. More important than the money was the Germans' restored faith in themselves.

In connection with the ERP, the USA helped the FRG significantly back into the community of peoples. They mediated between the former archenemy France and Germany. They gave the former war opponents the feeling of being a partner on an equal footing. And they opened up and thus secured the economically strong, Western European markets up to our time.

The Marshall Plan: Friendship or Calculation?

The answer has to be: both and. There is no reason to doubt that American aid was in large part born of democratic, liberal values. Truman and Marshall associated these values ​​with what was useful for their state.

Basically, this reciprocal relationship between the will to do good and the interest in a strong economy has not changed until now.

Funding programs from the public sector still follow the same principle in Germany today: Of course, they want to encourage the individual on the one hand to pursue their entrepreneurial goals. Just as naturally, they should help the economy as a whole to grow and at the same time stabilize it.

Anyone who accuses the Americans at the end of the 1940s of having realized their own interests in Europe is misjudging the nature of a capitalist economy in general. Every value here corresponds to an equivalent value, every trade represents a contract from which all sides expect a significant advantage, one hand washes the other.

The USA thought economically with the Marshall Plan. But it is precisely this figure of thought that has given Europe the development it has taken in the decades to come. A policy that was not economic, but rather national or shaped by pride and superiority, as planned in the Morgenthau Plan, would never have made it possible for Germany to recover economically and thus also culturally.

Those who understand the principle are in control of the situation

Every entrepreneur today can learn a lot from the history of the Marshall Plan when it comes to funding. It must be clear to him that no funding, regardless of whether it is grants, subsidies or loans, is a disinterested gift from the public purse. The state has an interest in a certain development of its economy. Recognizing these interests can be an important prerequisite for successfully generating funding.

Funding programs “think” very similarly to Truman and Marshall in their time. They ask equally about the potential for success for the funded company and about the benefits of the funding for the economy as a whole. If, for example, the middle class is promoted specifically and on particularly favorable terms, this is not an act of mercy, but an expression of the fact that an important component of our economic system is recognized in its structures, which is essential for the health of competition and innovation in the long term.