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II.
For greater comprehension of the Marshall Plan, it is useful to record
some unpublicized work that went on in the Department of State
during the war years. Secretary Hull and Sumner Welles had foresight-
edly created study committees to work on postwar policy, the assump-
tion being that the forces of the United Nations would eventually
triumph. These found counterparts in international study committees
set up in London, where most of the western European Allied govern-
ments then had headquarters. The economic difficulties now facing
Europe were accurately forecast—no great gift of prophecy was needed
for that. Also accurately, it was forecast that the United States would
emerge from the war with her productiveness substantially intact.
Recreation of Europe and, if possible, Asia, was considered essential to
the building of any peace. Equally it was clear that Europe must herself
play the major part in that reconstruction, and that American aid must
stimulate European self-help.
Europe, west of Russia, is a subcontinent in which more than
300 million people divided into twenty separate nations support
themselves by a highly integrated economy. This is based on a high
level of mutual trade and exchange, supplemented by the import
from, and export to, other areas of a large volume of raw materi-
als and manufactures. The constituent nations never achieved effec-
tive unity among themselves through political arrangements, though
integration had three times been imposed on them—once by Napo-
leon; once, less completely, by Metternich; and once by Hitler. Yet
economic integration, at least, is a necessity if these hundreds of
millions of people are to be fed, clothed, and housed. Before World
III.
The stormy and unsatisfactory diplomatic history of 1945 and 1946
need hardly be reviewed. President Roosevelt endeavored to meet the
situation at Yalta by making great and solid concessions to the Soviet
point of view, which, he believed, would assure Russian security, allay
Soviet fears, and thus induce the Kremlin to agree on a cooperative
course. The hopes arising from those concessions were not realized,
and the Potsdam Conference could only recognize the fruits of that fail-
ure. The cooperation in all occupied territories agreed upon at Yalta
was not implemented. The campaign aimed at eliminating Allied coop-
eration within any area occupied by Russian forces assumed increasing
violence. Dreary meetings of the Big Four Foreign Ministers continued
to a rising obbligato of countercharges, obstruction, and even insult.
Secretary Byrnes did achieve a treaty of peace with Italy, albeit an
unsatisfactory one, and accepted it on the theory that any agreement
was better than none. It seems reasonably clear now that the Soviet
government attained its objective—namely, to clear our Allied occu-
pation troops from Italy in preparation for her political battle in that
country. There was, it appeared, to be no peace.
And the ineluctable forces of European economics ground on.
A shattered west European plant lacked even the measure of coordi-
nation it had achieved before World War II. Rising, and justifiable,
claims of the people for food, shelter, supplies, could not be met.
Budgets could not be balanced. The foreign exchange which Euro-
pean governments had salvaged out of the wreckage of the war was
going out in payment for American supplies. The United Nations Re-
lief and Rehabilitation Administration (UNRRA) and the spending of
the American armies of occupation temporarily cushioned the imme-
diate needs for elementary consumer goods such as food and cloth-
ing, but the funds appropriated for UNRRA were exhausted without
V.
As a corollary to the European work, a committee constituted under
the leadership of Secretary Harriman was taking an inventory of the
resources of the United States. This was designed primarily to answer
the question whether the United States, without impairing its own
economy, could meet the needs of the Marshall Plan. The report, which
was detailed, skillful and enlightening, is perhaps secondary to the
international discussion; it is enough to say that according to its conclu-
sions the United States could quite safely and wisely extend support
of the magnitude contemplated by the sixteen-nation schedule. A
supplementary and unpublished report by the President’s Council of
Economic Advisers, headed by Dr. Edwin C. Nourse, reviewed the prob-
able effect of the Plan on American economic conditions. Again the
conclusion was that the Plan could be undertaken without undue strain
on the economy of this country. One or two salient points may be of
interest.
The sixteen-nation report called for American financial aid to
Europe totaling about 13.9 billion dollars in 1948, but it was estimat-
ed that return imports would pay for a considerable part of that sum.
The deficit represents the net strain on the finances of the United
States and on current United States production. But the Nourse Com-
mittee pointed out that in the year 1947 the excess of our exports
to Europe over our imports from Europe was running at a rate that
would make it greater than the deficit estimated in the sixteen-nation
plan. Further, the Nourse Committee noted, our exports to Europe
had already begun to drop sharply, for the obvious reason that Eu-
rope no longer has dollars with which to pay, and that consequently
American-paid exports through UNRRA, and other governmental aid,
or shipments paid for by European-held exchanges, were being cut
off. The conclusion was that an implementation of the sixteen-nation
plan would not place any greater strain on American production and
VI.
The Marshall operations will present a topflight problem in administra-
tive organization. No official solution has yet been propounded. Some
observations can, however, be made. The administrators of the Marshall
Plan will have to set up a procurement organization and program. It
would be plainly absurd to have sixteen nations bidding separately
against each other for requirements. We have precedents and experi-
ence in this kind of operation. Allied procurement boards during the
war performed this function for munitions and current supplies under
conditions of far greater stress than those now contemplated.
Distribution of materials on the ground will call for a govern-
mental organization that must tread new paths. We had a vaguely
parallel problem under the Lend-Lease Administration which pre-