When sharing saved the world
A reminder of America's finest hour - financing the Marshall Plan, which rebuilt Europe after World War II, and a call for her to once again meet the urgent needs of those starving to death in the developing world.
Fifty years ago, in April 1948, the Steam Ship John H. Quick set sail from Texas with a cargo full of wheat. Thus began what has been called by Benjamin Creme "the greatest achievement of America to date"1 and by Sir Winston Churchill "the most unsordid act of history".
The Second World War was bracketed by two of the worst economic crises of modern times. The first, the Great Depression, helped to create the war; the other was the result of it. When the fighting came to an end in 1945, Europe was a desolate, smoking ruin. In addition to the enormous loss of life and dislocation of people, hundreds of thousands of homes had been destroyed and hunger and pestilence stalked the once proud cities of the European Continent. A considerable proportion of factories, mines, bridges, roads, rail lines, utility networks and farmland had also been damaged or destroyed.
Worse than the visible destruction was what one man called "the dislocation of the entire fabric of the European economy". That man was United States Secretary of State, George C.Marshall, the person largely responsible for formulating what became known as the Marshall Plan. In a famous speech delivered at Harvard University on 5 June 1947, he outlined both the problem and its solution. Marshall explained that the war effort had meant that "long-standing commercial ties, private institutions, banks, insurance companies, and shipping companies disappeared through loss of capital, absorption through nationalization, or by simple destruction. In many countries, confidence in the local currency has been severely shaken. The breakdown of the business structure of Europe during the war was complete."
To make matters worse, food production was collapsing because the urban population was not producing enough goods to sell to farmers. The division of labour that forms the basis of modern civilization was breaking down, forcing governments to spend their precious foreign currency reserves on importing food and other basic commodities from abroad.
A balance of payments crisis was looming, and very soon the European nations would run out of the currency needed to pay for the imports on which their livelihood depended. As the principal supplier of those imports, the United States was also facing grave economic consequences should the European market collapse. Getting the European economy back on its feet was therefore not only a humanitarian concern but also in America's self-interest.
As Marshall was delivering his message the crisis was reaching its climax. The year had begun with Western Europe experiencing the worst winter in its living memory. Shipping had been immobilized by rough seas and frozen canals, and roads had been blocked by heavy snow. Shortages of fuel and power had not only resulted in people dying from the cold but also in literally hundreds of thousands of workers being laid off. The snow had buried livestock and in Britain the Air Force had to be called in to drop food to snow-bound villages. A British Member of Parliament declared the situation to be "an economic Dunkirk".
Meanwhile international political tensions were mounting with the beginning of the Cold War standoff between the West and the Soviet bloc. Time magazine dubbed 1947 'the year of decision': America could either tackle the world situation head-on or, as it had done after the First World War, retreat into isolation and leave it all to fester and collapse.
No man understood the situation better than George Marshall, and he offered a simple way out of the quagmire: let the European nations formulate an integrated plan to restore confidence in their economy and let the American Government underwrite the financing of it. Only in this way could Europe's vicious economic circle be broken. Fortunately for the world, both the politicians and the people endorsed this bold and simple proposal and very soon the European Recovery Plan (ERP), as it was officially called, became a reality.
A fleet of ships, lead by the John H.Quick, was dispatched to Europe with supplies of food and cattle feed. After just a few months this 'dole' phase, as Marshall termed it, was superseded by the objective of priming Europe's 'economic pump'. The ships switched to carrying seed, fertilizer, fuel, chemicals, raw materials, and the latest in industrial machinery.
The most important commodity that they brought, however, was hope. According to George Kennan, a State Department official at the time: "The psychological success at the outset was so amazing that we felt that the psychological effect was four-fifths accomplished before the first supplies arrived." A new wave of energy and optimism swept across Europe as mountains of rubble were cleared away, buildings were either repaired or replaced, new houses built, roads repaved and power lines rehung. Production bottlenecks and shortages of essential inputs no longer hampered the wheels of industry and output levels began rising sharply before the year was over.
An economic miracle unfolded as Western Europe not only got itself up and running but adopted the very latest in machinery and production techniques, courtesy of the Americans. Raymond Jolivet remembers the excitement when his family's farm was the lucky recipient of their district's first tractor. "Lots of people stopped to see what was going on. They wanted to see what kind of work the tractor could do and to take a close look at it, because at the time we didn't see many in the countryside. The tractor meant that production increased fivefold during busy periods like harvest time."
In another snapshot, Jean Dubertret remembers the arrival of a giant steel press to his town of Douai, on the French-Belgian border. "It was enormous. When it was on its way from Le Havre, teachers brought pupils of all ages to watch this monster go by. I'll never forget when it rolled into the factory. Most of the workmen stopped what they were doing to come and see this new toy. It was so different from what we'd known before that everyone was amazed." Jean worked on the steel press making car bodies for Citroen 2CVs.
As well as sending the latest brand-new equipment, 372 American experts visited Europe to give management seminars on engineering, marketing, and research techniques. Nearly 150 European productivity teams also visited the United States to observe the latest industrial methods first-hand.
The press was soon full of their success stories. At a soap works in Holland, Americans showed the Dutch how to reduce processing time from five days to two hours, using the latest equipment. In Denmark a nylon factory switched to more modern methods and was able to produce what had been a whole month's production in a single day.
In 1948, The Marshall Plan countries had set themselves a target of increasing industrial production to 30 per cent above pre-war levels by 1952, with a 15 per cent increase as the agricultural target. While they fell slightly short of the agricultural target, the industrial goal was surpassed a year ahead of schedule. Overall the Gross National Product of Western Europe increased by 32.5 per cent during the four years that the ERP operated. They were also some of the most prosperous years that the American economy had ever seen.
Total aid given by the United States to the ERP came to $13,300 million (worth nearly $90,000 million in today's terms). While this was a mere fraction of the total economies of the participating countries, the grants were the 'sparks that fired the engine', providing the stability, confidence and essential inputs necessary for the economic fabric to repair itself.
In addition to the action taken by their Government, ordinary Americans opened their hearts to the suffering of their fellow human beings and an astonishing $500 million worth of relief parcels was collected by private charities. In today's money, this was a donation of more than $20 for every man, woman and child then living in the United States. Benjamin Creme has said that this outpouring of love by the American public shares some similarities with the heartfelt response of the British people to the recent death of Princess Diana. In each case it was the 2nd-ray soul (expressing the Love aspect of Divinity) of the US and Great Britain respectively which manifested so powerfully.2
However the most important parallel with today's world is the crisis of decision again faced by one section of humanity with regard to the plight of their fellow human beings. Nearly 80 per cent of the world's population live in the developing countries of the Third World, yet their share of the world's economic output only amounts to a little over 20 per cent. This fundamental imbalance results in millions of people starving to death, dying from curable diseases or living lives of unimaginable squalor and drudgery, while the rest of humanity enjoys a life of relative plenty. It is this situation that underlies the tensions and turmoil that so beset the world today.
Between 1948 and 1951, America was giving between one and two per cent of its GNP each year to finance the Marshall Plan. This is a sharp contrast with today's official development assistance which stands at just 0.1 per cent of GNP. According to Benjamin Creme's Master: "The major task for the United States at the present time is to discover its soul, and with it its need to serve rather than dominate the world ... The way forward for the United States is to put its manifold resources, talents and energies at the disposal of the world community and so lead the nations into the creation of a new and more viable world. The world awaits such a consummation of purpose."3
Half a century ago George Marshall told his fellow citizens that "the whole world of the future hangs on a proper judgement. It hangs, I think, to a large extent on the realization of the American people ... What are the sufferings? What is needed? What can best be done? What must be done?" The same words could be spoken today.