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American Visions and British Interests: Hogan's Marshall Plan The Marshall Plan: America, Britain, and the

Reconstruction of Western Europe, 1947-1952 by Michael J. Hogan Review by: Charles S. Maier Reviews in American History, Vol. 18, No. 1 (Mar., 1990), pp. 102-111 Published by: The Johns Hopkins University Press Stable URL: . Accessed: 26/02/2012 14:40
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Charles S. Maier

of Michael J. Hogan. TheMarshallPlan:America,Britain,and theReconstruction Western Europe,1947-1952. New York:Cambridge University Press, 1987. xiv + 482 pp. Notes, bibliography, and index. $34.50 (cloth); $15.95 (paper). The historiography of the Marshall Plan, along with the historiography of the Cold War in which it used to be embedded, has progressed during the last few years to a new level of sophistication. Michael Hogan's dense and important work (along with other recent studies, preeminently Alan Milward's 1945-51, 1984) sets the history of the EurEurope of TheReconstruction Western opean Recovery Program in a new interpretive framework. It leaves behind the preoccupation with the Soviet-American antagonism; if it seems helpful to resort to concepts such as postrevisionist, the book might best be described as transrevisionist. It has crossed to new concerns. The Marshall Plan, formally titled the European Recovery Program (ERP), emerges in Hogan less as a chapter of American foreign policy than as an emanation of a domestic vision of political economy. This vision takes on institutional form within a set of policy dialogues-between the executive and the Congress, the European Cooperation Agency and the U.S. Treasury, and, just as critically, between Washington and London. Within this framework Hogan's Marshall Plan emerges as a historic compromise between a vigorous American corporatism and a waning British imperialism. It represents the United States alternative for postwar international economic stabilization. Hogan has taken us a long way from just a story of foreign aid. And while he evidently admires the Recovery Program, his approach also leaves behind the warm glow with which so many narratives and personal testimonies have suffused the initiative. The Marshall Plan, after all, has attained virtual policy canonization. Its example still summons American leaders (rightly so, I will confess to believing) to aspire to-if not to fund-generous, internationally coordinated, and far-sighted assistance programs. Secretary of State George Marshall still enjoys the nearest attribution to immaculate conception of any modern American statesman. He remains our Cincinnatus of the Cold War,

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a Washington who never had the disadvantage of a presidential term. Indeed the United States was fortunate to have him. The issue for the historian, however, is not whether the Marshall Plan was far-sighted policy, but how its operation can be rescued from celebratory myth. Even wise policies deserve hard analysis, and Hogan provides a close examination. He happily does not labor for the umpteenth time the pseudo-dramatic narrative of how Marshall came to present his Harvard Commencement address and Bevin and Bidault responded. He remains interested throughout in substantive issues, not in the anecdotal atmospherics that too often afflict histories of the contemporary era. Hogan also shifts the emphasis from issues prompted by the revisionist critique of the late 1960s. The Marshall Plan in the revisionist perspective was designed to make Western Europe a safe arena for international capitalism. The crudest accounts, which claimed that the United States required the aid program to avoid recession at home, did not really convince. But the argument that the ERP was the key component of a global strategy of capitalist stabilization had a more forceful logic:' it was, after all, just a less euphemistic version of what many American policy makers often claimed. In retrospect this issue seems awkwardly framed. The question was not whether Washington aspired to buttress an international capitalism, but on what political and economic terms it sought this aim and how it squared with others. Hogan's agenda in fact involves unraveling the tangle among American objectives: the ideological and practicalconnection among democracy, welfare capitalism, the representation of interests, and economic growth. In any case revisionism has not remained a dominant mode; or perhaps we are all revisionists now. Certainly the historiography of the Marshall Plan has changed again. The research now being published pursues different issues: no longer how the Recovery Program might have answered the supposed needs of American capitalism, but how did it fit in with the long-term development of American foreign policy, indeed public policy overall? What did the Recovery Program actually accomplish economically? How much of an impact did it exert on the European societies? Europeans as well as Americans have been contributing to this new scholarly examination, some by focusing on the Recovery Program itself, others by examining related economic and social issues. 2 To cite just the countries where this reviewer follows research, noteworthy French studies of postwar recovery and economic policy have recently appeared;3a spirited current controversy in West Germany has debated the importance of the Plan to postwar recovery;4Italian-based scholars have made acute contributions.5 There are related investigations of labor and political party responses to the plan.6 Other theses have appeared or are underway for the Netherlands and the Scandinavian countries. To-



gether they have woven the Recovery Program into a dense fabricof national histories. Moreover, the same examination is now being extended to the military assistance programs that followed on the ERP and also played an important institutional role. Why this intensive reexamination now? In good part the recent accessibility of archives has stimulated research. The massive documentation of the American foreign assistance agencies (the European Cooperation Administration for the Marshall Plan, the successor Mutual Security Administration, Foreign Economic Agency, and even Agency for International Development) was just starting to open up over a decade ago when Hogan was pursuing the files. Holdings have continued to be made available for researchers at the Suitland, Maryland depository of the National Archives. The researcher can follow the development of foreign-aid policy at the highest levels of the ECA as well as the impact on each country in many parallel files, whether those retained by the Washington Headquarters, those accumulated by the Paris Office of the Special Representative, or those in the respective country missions. As just part of his massive research effort, Hogan based much of his work on the originally released ECA documents (then filed as Record Group 286, but since reorganized as Record Group 469), which allowed him to cover the key documents concerning policy formation. Thousands of cubic feet have been opened since, much of it very detailed, and especially valuable on the recipient nations. These files can be complemented by the Post or Embassy records, State Department's decimal files, and the Treasury holdings that Hogan has also exploited. Hogan's work was obviously shaped by the vast British documentation at the British Public Record Office. Continental archives have also made progress in accessioning the records of the 1950s. Scholars now can draw on smaller holdings at the French Ministries of Foreign Affairs and Finance, the overlapping West German agencies, whose records are retained in Bonn and Koblenz, and records in other national archives. For any single historian the prospect is endless. In fact, the effort has become collective. The European University Institute along with scholars elsewhere have been systematically sending out their graduate students to sift the dispersed records. The Marshall Plan is now the stuff of which serious history can be written. Hogan has written very serious history. He has fully documented the origins of the Marshall Plan and the years in which Washington sought to use its foreign assistance to shape the European economic and political order. He has a keen sense of how European issues hang together-the stakes of German reconstruction, the French role on the continent, the importance of Belgian financial conservatism, and the British effort to maintain freedom of action. Far more than a study of just the Marshall Plan, the book provides a

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cross-section of postwar liberal politics. This review can only touch on some of the important questions that Hogan has tackled and the stakes of the scholarly debates. He follows the Plan from its American origins in the early chapters, then examines how it was advanced in negotiations with the Europeans. The first two chapters tackle the question of what the Marshall Plan represented in the tradition of American policy making. Hogan traces the European Recovery Program to a long-term strategy of stabilization through growth, based on corporatist or neocapitalist interest-group collaboration at home and on the effort to secure Anglo-American cooperation abroad. Thomas McCormick has elevated the "corporatist"paradigm for American foreign policy into a general model of United States foreign relations. To my mind, the paradigm can only cover a restricted twentieth-century approach and should not be overgeneralized.7 Nonetheless, insofar as a corporatist approach to policy making did prevail in the United States, it did so during the Second World War and the postwar era, when under Democratic Party administrations the episode of labor-management collaboration for the sake of high wartime output might appear the basis for organizing a long-term international political economy. ForHogan-whose earlier work concerned the forging of Anglo-American cooperation in the 1920S8-the parallel between the two postwar periods is unmistakable. The effort at domestic and European stabilization carried out under the aegis of Hoover's "associationalism" but shattered by the world economic crisis was resumed in the second postwar era. The second version, however, was constructed on the broader political base of "the New Deal synthesis" (pp. 22, 427). It embraced the spokesmen for organized labor and incorporated the techniques of Keynesian demand management. It was more viable. Three major theses thus structure this complex narrative:first the domestic neocapitalist origins of the Recovery Program;second, the joint Anglo-American basis of the stabilization effort; third, the consistency of the American planners' pursuit of West European integration. "Both recovery periods ... witnessed the formation of an Anglo-American partnership that subordinated French hopes for economic and political predominance to the reintegration of Germany" (p. 20). In substantive terms integration meant the construction of supranational institutions, such as the OEEC, the effort to unify the European economies, to overcome the old Franco-German antagonism and thus mobilize German economic strength, and finally to persuade the British to link their economy with that of continental Europe. British reluctance to commit the fortunes of the United Kingdom to this agenda meant that within the overarching partnership there was a serious divergence. Most of Hogan's highly detailed narrative is devoted precisely to U.S. efforts to press the Europeans toward integration. Along with Milward's more



thematically organized coverage, his book provides the best available treatment of the European-American interaction-at least the nonmilitary aspects-during the late 1940s and early 1950s. ForHogan, integration involved overcoming two major obstacles: Britain'sreluctance to give up the protected position of the sterling area and merge its economy more fully with the Continent; and French reluctance to accept the German recovery that Washington believed would provide the economic motor for European growth. By remaining aloof from the continent, the Britishalso made the French even more averse to accepting West German revival. Ultimately, Hogan proposes, the American model of domestic neocapitalism (the heir of technocorporatist collaboration), could depoliticize the continental quarrels enough to facilitate Franco-Germancollaboration, even if Britainremained partiallyodd man out. And compromise with the U.K. over the payments' issues allowed substantial realization of Wasington's goals: "Europe made the American way"-but simultaneously "America made the European way" (pp. 427, 445). More than any other issue, the long negotiations to reestablish a multilateral system of payments brought out the divergences that lay between Washington and London. London, with a precarious reserve position, wished to shield sterling so it could remain an international currency. This meant setting limits on continental creditors who might present their pounds for dollars or gold, and preventing the Indians and Egyptians from cashing in the credit balances they had accumulated during the war. Washington pressed to remove such restrictions, which they felt artificially maintained old imperial privileges, would limit the demand for American goods, and prevent integration of the West European economies. Hogan devotes major sections of his narrative to the compromises on these issues so arduously worked out during the payments agreements of 1948-49 and the European Payments Union of 1950. In fact Washington spokesmen, as Hogan recognizes, never advanced a single policy. By and large, ECA officials spoke for activist and "Keynesian" approaches to national investment even when these undercut orthodox deflationary efforts at the currency stabilization that U.S. Treasury officials urged. Although they chafed at British resistance, they were willing to protect the continental countries from the rigors of multilateralism by American side payments. ECA compromises meant that Washington had to settle for less of the American design than it originally wanted. On the other hand, such compromises remained the prerequisite for the progress that was achieved. It is no deprecation of Hogan's achievement-his breadth and detail of coverage, his mastery of the complicated issues debated between Washington and its allies-to register some dissent and criticism. For a work on an economic assistance program, the economic side of the story remains underde-

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veloped. Hogan is concerned to defend the significance of the Marshall Plan against Alan Milward's recent and provocative reevaluations as well as against my 1981 observation that in quantitative terms alone, the Recovery Program contributed only a very small portion of European capital formation.9 The latter dispute need not be labored; there is probably less disagreement than Hogan would suggest. My point was that the ERP worked primarily by alleviating strategic bottlenecks and foreign-exchange constraints, not by vast infusions of capital. Hogan disagrees with Milward's far more comprehensive argument that the MarshallPlan was hardly necessary (which is not to say Milward does not think it was a good thing). Milward has maintained that the crisis of 1947 arose as a consequence of the rapid investment that Europeans had undertaken since the war. He has undertaken a series of counter-factual calculations to demonstrate that even without U.S. aid, these programs could have continued without real cuts in European consumption standards. Franceand the Netherlands alone might have required temporary cutbacks given their commitment to both eating well and investing.10 In general Milward's large work contends that each successive postwar American policy initiative fell short of announced goals and must be deemed unsuccessful. In his scenario, the Bretton Woods system of exchangeable currencies never worked as Americans envisaged. Marshall aid was the price Washington had to pay to help rescue multilateralism. In turn the ERP was unable to advance Europe toward the American goals of integration. Instead, decisive progress awaited the Franco-German Schuman Plan that allegedly ran against U.S. aspirations for more inclusive linkages. Hogan argues, correctly I believe, that the results of American policies should be assessed more favorably. Milward's concept of success seems too stringent to be useful. After all, each alleged postwar American "failure" brought Western Europe closer to the prosperous liberal democratic order we championed. The liberaldemocratic and prosperous Europe that Americans sought to nurture did emerge "on our watch," as it were. Still, it is unfortunate that in a work of such ambition, Hogan cannot provide more of a strictly economic evaluation. He relies on assertion and secondary testimony in effect to assert the crucial economic importance of the Marshall Plan. A second difficulty arises from the very emphasis on British-Americaninteractions that make this study so rewarding. By adopting an Anglo-American perspective Hogan has vastly enriched the usual account of the American diplomatic historian. On the other hand, the ERPwas also designed to stem communist appeals in Italy and France and to redress West German demoralization. Marshall aid was construed as an economic instrument to restore the possibilities for centrist politics on the continent. Its most notable political success perhaps was to strengthen beleaguered social democratic unions and



parties, but this development receives much less emphasis than, say, the long negotiations over convertibility. Third, one can quarrel with Hogan's heavy emphasis on the concept of integration. ECA program officers in Italy who were trying to get the governments in Rome to invest in the Mezzogiorno, or not to build, say, another purely pork-barrelmodel dairy farm, the frustrated mission directors in Athens who faced dismaying clientelism, did not habitually think in terms of European integration. They worried about corruption, local factionalism, lack of technical know-how, and often grinding poverty. Integration was a term that popped up in the ECA vocabulary after 1949 as Paul Hoffman and ECA officials sought dramatic objectives for the second biennium of the four year program. Its real purport puzzled the British and many Americans. It ended up by being defined largely in terms of currency convertibility, or else was quickly exploited by spokesmen for German reconstruction to argue that rebuilding the Ruhr, say, would be to the benefit of other Europeans. This is not to deny that Washington policy makers had a persisting vision of a large interconnected European market, which they sometimes naively compared to the interregional flows in the United States. Indeed until the Cold War really firmed up, Truman had entertained images of East-West exchanges of agricultural and industrial goods. Hogan is certainly justified in pointing to the continuing invocation of the ideal; nonetheless, I would question the degree to which an explicit commitment to "integration" really oriented policy before 1949. Finally, I would ask whether Hogan's concept of American politics does not unduly overstress synthesis and undervalue the continuing strength of some fundamental divisions in American politics. Hogan summarizes:
The Marshall Plan. . . was the brainchild of . . . the so-called New Deal coalition, which was strong enough to prevail against opponents on the Left and the Right . . . [including] at its core a bloc of capital-intensive firms and their allies among labor, farm, financial and professional groups. Its leadership combined the technocorporative formulations of the 1920s with the ideological adaptations of the 1930s in a policy synthesis that envisioned a neo-capitalist reorganization of the American and world systems. It was this synthesis, what I have called the New Deal synthesis, that inspired the Marshall Plan to remake Western Europe in the image of "God's own country." (p. 427)

I am on record with a similar analysis;" however, it is instructive to recall the conflictuality of American politics in the 1940s. Hogan himself repeatedly stresses the continuing tension in American policy between the New Deal planning tradition-which found a last home in ECA with its Keynesian activists-and the more orthodox preferences and Midwestern sobriety of

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Treasury Secretary John Snyder and many spokesmen for business and industry (although not the effervescent Paul Hoffman). Treasury officials remained convinced that less supranational institutions or Keynesian intervention than the correct alignment of exchange rates (devaluation of the British pound) and thus market forces would prompt recovery. Indeed what seems to have happened by the end of the 1940s is that in terms of rhetoric the economic interventionists briefly gained the upper hand. But not in terms of actual policy results. Hoffmann and his adviser Bissell talked about integration, urged a strong supranational OEEC, pressed the Europeans to use the new armory of macroeconomic planning and national accounts. (Tojudge by ECA'sprogrammaticefforts, from 1949 one might refer to a "second" Marshall Plan as one used to talk about a second New Deal, although the objectives moved toward planning, not away from it.) In terms of actual policy, however, the interventionists tended to lose ground. German recovery in Europe would also strengthen forces hostile to Keynesianism. So, too, at home the progress toward a welfare state was arrested. To a degree the advent of the Korean Warand the urgency of the rearmament agenda (in the works with plans for the hydrogen bomb and NSC 68 even before Korea), provided objectives that bridged the differences. As in 1940-41, the commitment to mobilization helped overcome deep conflicts between the New Deal and its opposition, but rifts as well between the planning and market-oriented traditions inside the Democratic camp. As much as it represented a resolution of earlier divisions over political economy, the Marshall Plan, I believe, provided some of the same occasion for conflict that the Depression had earlier. Even a coherent American foreign policy allowed for a replay of domestic debates. The evidence for such divisions clearly emerges in Hogan's book, but he prefers to stress what unites the contenders even as he extensively documents their disputes. I would suggest that it is less "synthesis" that is operative than stalemate, or at best a compromise finally reached under the impact of national military mobilization in 1949-51. Much of the history of the FairDeal recapitulates the transformation of the New Deal as World War II approached. Disputes that were shelved in 1940were to be shelved again before Korea. The story of American politics in the twentieth century is less one of synthesis than of continuing struggles, never decisively won by liberals, but never completely reversed by would-be conservatives. Hogan's major work allows us to place postwar foreign policy within this continuing rhythm of national contention. As Hogan so substantially demonstrates, the Marshall Plan broke down the barriersbetween domestic and foreign policy agendas. This episode of national activism long merited the magisterial treatment it has finally received.



CharlesS. Maier, Department History, HarvardUniversity,is the authorof The of Unmasterable Task: History, Holocaust, and German National Identity (1988).
1. Most cogently argued by Joyce and Gabriel Kolko, The Limits of Power: The Worldand United States ForeignPolicy (1972). 2. Cf. William Diebold, Jr. "The Marshall Plan in Retrospect: A Review of Recent Scholarship," Journalof InternationalAffairs 41 (Summer 1988): 421-35. 3. Annie Lacroix-Riz,Le choix de Marianne: les relationsfranco-americaines 1944-1948 (Paris: Messidor/Editions Sociales, 1985) has some interesting material but is unabashedly old-line leftist in its criticism of U.S. policy. For recent research see Gerard Bossuat, "Le poids de l'aide americaine sur la politique economique et financiere de la France en 1948," Relations Internationales37 (Spring 1984): 17-36; Bossuat, "L'aide americaine a la France apres la seconde guerre mondiale," Vingtieme Siele (January-March 1986); also Bossuat's doctoral thesis, "La modernisation de la France sous L'Influence: Premieres etapes de l'appel a l'tranger," 1988); and Michel Marguairaz's 1989 dissertation on French financial policy from 1930 to 1950. 4. This debate continues a parallel controversy over the importance of the German currency reform. Werner Abelshauser has downplayed the significance of both the 1948 currency conversion and the Marshall Plan for West German economic growth; Knut Borchardt and Christof Buchheim have insisted on the importance of both. See Abelshauser, Wirtschaft in Westdeutschland 1945-1948 (Stuttgart: Deutsche Verlags-anstalt, 1975); Bucheim and Borchardt, "Die Wirkung der Marshallplan-Hilfe in der deutschen Wirtschaft," Vierteljahrshefte 35 fur Zietgeschichte (July 1987): 317-47. A translation of this essay, a new (but still revisionist) evaluation by Abelshauser, will be included in Charles S. Maier, ed., assisted by Gunter Bischof, The Marshall Plan and Germany (Berg Press, 1990). See also Gerd Hardach, "The Marshall Plan in Germany, 1948-1952," Journalof EuropeanEconomic History 16 (Winter 1987): 433-85. 5. Pier-Paolo D'Attorre, "ERP Aid and the Politics of Productivity in Italy during the 1950s," European University Institute Working Papers No. 159, 1985; also D'Attorre "Aspetti dell'attuazione del Piano Marshall in Italia," in Elena Aga-Rossi, ed., Il Piano Marshall e l'Europa(Rome: Trecani, 1983), pp. 163-80. 6. Anthony Carew, Labourunder the Marshall Plan: The Politics of Productivity and the Marketing of ManagementScience(Manchester: Manchester University Press, 1987); also Federico Romero, "United States Policy for Postwar European Reconstruction: The Role of American Trade Unions," European University Institute Working Papers No. 311 (1987). For discussions of left-wing and labor politics that stress the ideological ramifications, see Othmar Haberl and Lutz Niethammer, eds., Die europdischen Linkeund der Marshall-Plan (Frankfurt: Main, 1986); Peter Weiler, British Labourand the Cold War(1988). 7. Thomas J. McCormick, "Drift or Mastery? A Corporatist Synthesis for American Diplomatic History," Reviews in AmericanHistory 10 (December 1982): 318-30. For a more limited application of the idea see McCormick's recent work, America's Half-Century: United States ForeignPolicy in the Cold War(1989). 8. Michael J. Hogan, InformalEntente:ThePrivate Structureof Cooperation Anglo-American in EconomicDiplomacy, 1918-1928 (1977). 9. Charles S. Maier, "The Two Postwar Eras and the Conditions for Stability in TwentiethCentury Western Europe," AmericanHistoricalReview 86 (April 1981), now in Maier, In Search of Stability:Explorationsin HistoricalPolitical Economy(1987), pp. 153-83, esp. p. 172. I would modify the argument I then made in one respect: although the capital provided to most ECA recipients (Italy and Germany excepted in 1949) remained a small portion of their own investment effort, the total U.S. effort was a sizable transfer of about two percent of current GNP in the late 1940s and early 1950s. 10. Alan S. Milward, Reconstructionof WesternEurope,pp. 90-113; also Milward, "Was the Marshall Plan Necessary?" Diplomatic History (1989): 231-53. But as Milward admits, "the

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debate about the economic effectiveness of Marshall Aid at the moment focuses on questions which are too narrow and in certain respects sterile and unanswerable" (p. 92). See also the shrewd essay by Harold Van Buren Cleveland, "If there had been no Marshall Plan . . ." in Stanley Hoffmann and Charles Maier, eds., The Marshall Plan: A Retrospective (1984), pp. 59-64. Hogan lumps me with Milward for underestimating the economic effect of the Marshall Plan. Milward lumps me with Hogan for overstressing the themes of corporatist consensus. For an even sharper jab at Milward and Maier as revisionists, see Charles P. Kindleberger, Marshall Plan Days (1987). 11. Cf. Maier, "The Politics of Productivity," in In Searchof Stability, pp. 121-52.