The U.S. transferred $13.3 billion to rebuild sixteen Western European economies in four years.
On June 5, 1947, Secretary of State George C. Marshall delivered a commencement address at Harvard University that he deliberately kept quiet. He wanted no reporters, issued a low-key press release, and hoped the first reactions would come from Europe rather than the American press.1 In the speech, Marshall described an economic crisis in which the "entire fabric of European economy" had been dislocated by a decade of war.
The winter of 1946-1947 had been catastrophic. Europeans were starving, fuel was scarce, and the economies of the continent's industrial nations were collapsing.2 Marshall declared that "the patient is sinking while the doctors deliberate."
On April 3, 1948, President Truman signed the Economic Cooperation Act, creating the European Recovery Program.3 Over the next four years, Congress appropriated $13.3 billion, equivalent to roughly $140 billion in current dollars, for sixteen Western European countries.4 The aid was administered by the U.S.-managed Economic Cooperation Administration and the European-run Organisation for European Economic Cooperation.
Marshall's invitation did not explicitly exclude the Soviet Union. Britain and France initially included the Soviets in a three-power discussion, but Moscow refused to participate, unwilling to reveal national economic data or accept conditions it viewed as infringing on sovereignty.2
The content of aid shifted as European needs changed. In early 1948, roughly 50 percent went to food-related goods. By 1949, food assistance had dropped to 27 percent while raw materials and machinery rose to 50 percent.4 The program represented approximately 3 percent of American GDP at the time.
The Soviets responded by creating COMECON to deliver aid to Eastern Bloc countries. Economic recovery in the East was significantly slower than in the West, creating a wealth gap that persisted for decades.5 In 1953, George Marshall became the only general to receive the Nobel Peace Prize. Frances Perkins later described the Triangle fire as the moment the New Deal was born. Marshall's plan represented a parallel turning point, the moment the United States committed to rebuilding foreign economies as a matter of its own security.6