Marshall Plan and monetary reform

February 8, 2021 by Bonn Brandt

What is the Marshall Plan?

Marshall Plan is the colloquial term for the ERP (European Recovery Program). Countries of Europe that were not part of the Sovie-bloc received food, fertiliser, fuel, raw materials, machinery and medicines. Between 1948 and 1952, a total of about $12.4 billion was provided. $1.5 billion was allocated to West Germany.

President Harry Truman and Defense Secretary George C. Marshall in 1951
President Harry Truman and Defense Secretary George C. Marshall in 1951

The Marshall Plan was designed by U.S. Secretary of State George C. Marshall to help the European economy get back up and running, but also to prevent the expansion of communism. One condition was that the European countries agreed on a common competitive economic order. In 1953, Marshall received the Nobel Peace Prize in recognition of his plan for the economic restoration of Western Europe after World War II.

Marshall Plan Plaque
Marshall Plan Plaque

At the Marshall Plan Conference in Paris in July 1947, 16 European countries agree. The Eastern European countries, also invited, did not participate under pressure from the USSR. The Marshall Plan was launched in 1948.

How did Germany benefit from the Marshall Plan?

The intentions of the Americans concerning the Marshall Plan can be assessed differently from various points of view. From a German perspective, the monetary aspect was a positive one, but much more significant was the American negotiating role on behalf of the Germans amongst their justifiably sceptical European neighbours. The return to the international community was of greater importance than the financial incentive.

After World War II, Germany was divided into 4 occupation zones, large parts of the country lay in ruins. The economic hardship in Germany became apparent. The severe winter almost turned into a catastrophe. Food, energy supplies and transport collapsed, and only the intervention of the USA and Great Britain prevented anything worse.

People in a destroyed German City

More than a billion tons of rock and rubble - this is the amount of debris left behind by the bombing campaign against Germany in World War II.

A precondition for the economic recovery of Germany was a new currency. After the failure of the Allied Control Council, also known as the Four-Power Government, the Western powers prepared a currency reform for their zones.

With the introduction of the Deutschmark on June 21, 1948, wages, salaries and rents were revalued at a ratio of 1:1. The new currency eliminated price controls. This marked an important step toward a market economy.

Production of the VW Beetle

Symbol of the "economic miracle" and advertising icon with the slogan "It rolls, and rolls, and ...": Starting at Christmas 1945, the first Beetles rolled off the production line at the VW plant in Wolfsburg.

Soon after the founding of the Federal Republic on May 23, 1949, the economic situation in the West began to recover abruptly. The so-called "Wirtschaftswunder" of the Federal Republic. With the help of the U.S., a market economy establishes itself in West Germany, that also strengthens confidence in the new parliamentary democracy.

"I personally believe the West-German recovery was wholeheartedly due to economic policies rather than the Marshal Plan".

Was the Marshall Plan successful?

The U.S., in turn, benefited from the mega-project Marshall Plan in several ways: Rebuilding Europe as an important sales market also helped its own economy, which had been weakened by the war. At the same time, the close economic ties successfully shielded Western Europe from the Soviet Union.

Poster Marshall Plan

Cultural measures and events accompanying the Marshall Plan were based on the common premise that the "American way of life" should be promoted.

The speed of economic recovery did not match the amount of financial aid the countries received under the Marshall Plan. Germany's economic recovery was significantly more dynamic, although England and France had received considerably more aid.

When the BRD was permitted to rebuild its industries, revitalised West-Germany set a tremendous pace in terms of economic recovery.

By the 1950s, unemployment was so low that Germany began allowing foreign guest workers to settle in the country.

Today, Germany is a model of democracy and a loyal and strong ally of the U.S.A. Germany has become a guarantor of peace, freedom and cooperation in the EU and the rest of the world. The German people owe this positive development in great part to America. The Marshall Plan has played an essential role in this process.

In November 1992, the Marshall Center was founded by former Secretary of Defense Dick Cheney. Since December 2, 1994, the Marshall European Center for Security Studies in Garmisch-Partenkirchen, Germany officially operates as a German-American partnership between EUCOM and the German Ministry of Defense.

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