A Vision So Noble

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The Clayton Theorem (continued)

            More typical than Harriman is the Wall Street financier who warns that European recovery will oblige the US to impose rent, price, and wage controls; postpone tax cuts; and delay public works projects. As one senator concludes: ‘We are going to have to defer, if we carry on this program, some of the pent-up demands which our people have’.[28] 

Indeed, inflation was a major worry in the opening months of 1948. The US economy was experiencing shortages of many of the same products that Europeans needed most, including wheat, fertilizer, coal, steel, and farm machinery. In the fall of 1947, Truman himself launched a food conservation campaign because ‘the United States had to increase its grain exports dramatically in order to avert starvation in parts of Europe’, and he appealed to Americans to reduce their consumption of grain, so as to prevent inflation at home due to shipments overseas.[29] Overall, consumer prices in 1947 increased 14.65%—a rate last seen in 1920 and never since.[30]

            Inflation's most strident prophet is Yale professor George Murock, who warns the senators that the ERP will cause ‘an upsurge of catastrophic proportions in the cost of living’ leading to ‘an uncontrollable inflation such as the country has never seen’—and that, in turn, will lead to the dread ‘economic crash and depression’, though by a theorem 180 divergent from Clayton’s.[31] 

Conclusions

            How much truth is there to the conventional wisdom about the ERP as a tool to save the American economy? Obviously there’s a germ. Time, for example, reports in January 1948 that the Marshall Plan ‘meant that the export boom was not going to collapse; foreign nations were going to get the cash to keep the boom going.[32] But what’s remarkable is how seldom such sentiments are voiced. The prevalent view at the time, outside the Belgrade offices of the Comintern, is closer to the judgment of British Foreign Secretary Ernest Bevin, who likens the ERP to ‘a lifeline to sinking men. It seemed to bring hope where there was none. The generosity of it was beyond belief’.[33]

            As Allen Dulles recalls of his own observations in Europe: ‘It was not only dollars and food and supplies which were running out—hope and faith in a future were dwindling too. Something had started which was in the nature of a run on the European bank of resources, and slender resources they were in that year 1947’.[34] Whether in the recollections of the participants, the testimony before Congress, or the media coverage of the day, the concern in the United States seems to be for the people of Europe—from whom, of course, most Americans sprang, most of them only a few generations earlier. Even the biographer of Will Clayton—the man most often cited as proof that the motives were cynical—chose to title his book, in an echo of Winston Churchill, as Our Finest Hour.[35]

            I am inclined to agree with John Gimbel: ‘Historians in search of the cold war have, in fact, discovered a Marshall Plan that never existed’.[36] The analysis, he argues, has stemmed from the historians’ knowledge of the outcome, arguing backwards ‘to explain and describe what must have been the reasons’ for its origins. ‘In short, the origins of the Marshall Plan have been explained by extrapolation, rather than by interpretation of documents, sources, and contemporary evidence’. His conclusion is that the ERP developed in an ad hoc fashion and not according to some reasoned plan.[37]

            And now I return to the Senate Foreign Relations Committee, which among its witnesses hears ‘a distinguished American academic economist’, Calvin Hoover.[38] The United States, Hoover assures the senators, ‘could easily consume much more in the form of goods and services than we are currently able to produce. There can be no question, therefore, but that the goods we furnish Europe must come out of our own potential standard of living and not out of some mythical surplus. This answers both the argument about ERP providing a market for our surplus goods and the ERP as a means of preventing a depression in the United States. These are both spurious arguments, [which] have been used with some effect by the Russians as propaganda against us.’[39]

            And to even greater effect, I conclude, in shaping the way academic historians now present the genesis of the Marshall Plan.




[28] US Senate 1948, pp. 557, 293

[29] Sanford 1987, pp.4-5

[30] Inflationdata 2006

[31] US Senate 1948, p. 1369

[32] Time 1948

[33] Carr 1997

[34] Dulles 1993, p.2

[35] Fossedal 1993

[36] Gimbel 1976, p. 4 (he later weighs the depression arguments at length, pp. 270-272)

[37] Gimbel 1976, p. 273-4, 277

[38] Wallace 1967

[39] US Senate 1948, pp. 843-4

 

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