The Marshall Plan: why the US gave free money to Europe, and the URSS didn’t want it

The Marshall Plan was an American initiative that passed in 1948 for foreign aid to Western Europe.

The purpose of the Marshall Plan was to aid in the economic recovery of nations after World War II and to reduce the influence of Communist parties within them.

The United States transferred over $12 billion (equivalent to over $128 billion as of 2020)in economic recovery programs to Western European economies after the end of World War II. Its role in the rapid recovery has been debated, as it only helped the GDP growth of less than half a percent.

The largest recipient of Marshall Plan money was the United Kingdom (receiving about 26% of the total), followed by France (18%) and West Germany (11%).

The Soviet Union refused Plan benefits, and also blocked benefits to Eastern Bloc countries, such as Hungary and Poland.

The USSR developed its own economic plan, known as the Molotov Plan that was symbolic of the Soviet Union’s refusal to accept aid from the Marshall Plan. The plan was in some ways contradictory because while the Soviets were giving aid to Eastern Bloc countries, at the same time they were demanding that countries who were members of the Axis powers pay reparations to the Soviet Union.

In 1951 the Marshall Plan was largely replaced by the Mutual Security Act, with annual authorizations of about $7.5 billion, out of a GDP of $340bn in 1951, for military, economic, and technical foreign aid to American allies. The aid was aimed primarily at shoring up Western Europe, as the Cold War developed.

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