Cold War Essay
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In the European theater of operations for WWII, the Allied victory and the Axis loss resulted in unprecedented destruction of the economy of the region. The Americans felt that the United States had a purpose to work for the revival of the European economy along the lines of political and social factors that could allow free countries to emerge (qtd. in May par. 2). The sweep of such a purpose on into a solid commitment was not perceived or hoped for at the outset.
In the United States the Executive branch (including the State Department) and the US Congress were often at odds about what to do about the European economic situation.
But there was agreement that the aftermath of WWII must not come to have a result in any fashion like the economic conditions that prevailed after WWI (Marshall Plan Par. 7). It was initially felt that the United States’ involvement in European recovery would not be costly or time consuming. It was thought that Europe and especially the United Kingdom and France with their colonies, could pull themselves back up in short order (Marshall Plan par.
4). The cold winters after the war did not help the situation.
The worst winter in a century was experienced in Europe in 1946-47 (Kunz par. 5). There was high unemployment, food shortages, and strikes. In particular, the food shortages sparked humanitarian and relief efforts among various organizations. The new United Nations sponsored much of this effort and it was almost all funded by the United States (Marshall Plan par. 11). Not enough of this was organized well enough or in great enough amounts to do more than to briefly alleviate the problem. American troops in Europe also lent a hand in repair and refugee work.
For the long term, the food shortages could be seen to keep on occurring since the traditional source for supplies for Western European had come from Eastern Europe (Judd “East-West Trade” par. 2). After these winters of food shortage, it was becoming apparent that a divided Europe was becoming the norm. The awareness of such a division was not generally acknowledged prior to these harsh winters. President Truman entered the United States into some bilateral agreements intending to militarily aid Greece and Turkey.
These countries could be seen as being in East Europe. They were facing subversive efforts by communists to take over those countries. For Western Europe, some thought the Morgenthau Plan could be used (Marshall Plan par. 13). This plan supposed massive war reparations could be extracted from Germany to restore the countries other than Germany. There was also the Monnet Plan (Marshall Plan par. 13) which proposed more punishment of Germany since France would control the Ruhr and Saar coal regions for French purposes.
On a purely monetary front the Bretton Woods agreements of 1944 established the International Monetary Fund and the International Bank for Reconstruction and Development for loans to European nations (Kunz par. 7). The funds made available for these loans were proving to not be of the necessary magnitude. It had been assumed that the international economic system was sound and that an initial infusion of monetary aid would do the trick. But even more was needed. The American agricultural production was unimpaired, the level of manufacturing output was unprecedented, and the American gold reserves were safe.
An outlet was needed to sustain and use the economic prowess of the American transition from wartime to domestic and foreign consumption. The economic plan for a reconstruction of Western Europe, if needed, could borrow from the New Deal experience as the American response to the Great Depression had been accomplished. Early in 1947, evidence of a recession brewing in the United States turned some economist’s attention to a need to assure European purchases of American goods.
The Americans did not want to see continued European wartime controls and plans which had placed the idea of a continuance of control and regulation by European governments as conclusive. Many in Europe were looking to the Soviet Union’s central planning controlled by the state. The Soviets were reporting very high growth rates with the prospect of prosperity just around the corner (DeLong and Eichengreen 11). The Americans had not successfully concluded a war in Europe to end fascist tyranny and oppression only to then see a different brand of tyranny and oppression in its place.
This threat was perceived to be the communists, Soviet or otherwise. The Soviet influence was directly felt on Eastern Europe. The American administration felt that, for Western Europe, an economic union would be needed. These nations would have to be on the same page if they were not to go communists or be controlled by communists. Accordingly, on June 5, 1947, Secretary of State Marshall spoke of the need to promote free institutions in Europe through their restoration with American aid (Marshall Plan, par. 15).