1120 Ch. 27 • Rebuilding Divided Europe

Table 27.1. Indices of Industrial Production, 1946-1950
(1938= 100)

1946 1947 1948 1949 1950

Belgium^91106120129139

Britain 106 1 14 128 137 148

France^7995111122125

Italy^759399105119

Netherlands 74 94 113 126 137

W. Germany^2934517590

Source: William I. Hitchcock, The Struggle for Europe: The Turbulent History of a Divided

Continent, 1945-2002 (New York: Doubleday, 2003), p. 135.

Because great economic turmoil had contributed to social and political

instability between the world wars, the United States undertook a program

of massive economic aid to Western Europe. Through the Marshall Plan,

named after the American secretary of state, George Marshall, who devised

it, the United States contributed $13 billion between 1948 and 1951 toward

the rebuilding of the Western Allies’ economies. The Marshall Plan was

intended to help Western Europe resist communism—as the United States

pressured the governments of France and Italy not to name Communists to

key ministries—and to make Europe a powerful trading partner for American

industry.

The Marshall Plan contributed to the revival of Western Europe. How­

ever, the European economic recovery was already well under way by the

time the Marshall Plan began in 1948. Britain and France had already

matched their industrial production of the pre-war period, and Italy, the

Netherlands, and Belgium followed within a year. Moreover, the monies

provided by the Marshall Plan amounted to only 6.5 percent of France’s

gross national product, 2.5 percent of that of Britain, and 5.3 percent of

that of Italy. The Marshall Plan did assist Western European states to pur­

chase raw materials, fuel, and machinery for industry. In Britain, about a

third of the aid went to the purchase of food. Funds from the Marshall

Plan also allowed Western European governments some margin to pay for

the beginnings of social programs emerging with the construction of wel­

fare states (see p. 1126). The United States offered loans and credits to a

number of European countries, with an eye toward encouraging anti­

communism, while having excluded the Soviet Union from the provisions

of the Lend-Lease Act.

The difficult years in the immediate post-war period gave way to a period

of considerable economic growth from 1950 to 1973. European economies

benefited from the globalization of trade, the availability of a labor supply,

and the use of oil instead of coal as the principal source of fuel for indus­

trial growth. This rapid rise in the demand for oil dramatically increased