Martialing the Economy:
New York and the Marshall Plan
“Let us therefore brace ourselves to our duties, and so bear ourselves that if the British Empire and Commonwealth last for a thousand years, men will say, ‘this is their finest hour’”- Winston Churchill
September of 1939 marked the beginning of the bloodiest and most devastating war in the world’s history, and the initiation of drastic and fundamental changes in the world’s economy. World War II. For Europe in particular, the monetary cost of World War II, the loss of human life, and the mass industrialization and repurposing of existing industries to suit the war economy were incredibly defining.
It is estimated that the total amount of money spent by Britain alone over the course of the war was in excess of what would be $120 billion today. Besides this, of the 80 million people who died as a direct result of the war, the majority were European. With Nazi Germany being the catalyst of war, seven million deaths were comprised of Germans, both military and civilian. After the war, the United States imposed harsh restrictions on German manufacturing and production, with the intent of preventing the country from being able to wage any form of war in the foreseeable future. In essence, the plan was to completely de-industrialize the country. The first industrial plan, signed in 1946, led to German industry being reduced to about 50% of what it had been post-war. This, coupled with the vast destruction caused by Allied air raids and invasion, led to a diminished, starving, and weak Germany. Meanwhile, the British economy had also taken a vicious beating, with almost 70% of its industry destroyed by hostile bombings. Despite the Germans failing to actually conquer Britain, due to its efficient air force and the lack of a German navy after the incredibly costly invasion of Norway, the British loss of life and damage to its economy was heavy. 450,000 war related casualties, the majority of its factories made into rubble, and the overall cost of $120 billion dollars led to Britain being on its knees. Countries such as Italy and Japan were also left devastated, with the burden of post-war economic and industrial sanctions imposed by the United Nations. However, the mass global industrialization and the accelerated production of new inventions and ideas, which helped fuel the war, had not affected the world only negatively. After World War II ended in 1945, the United States, unlike the majority of countries that had been involved in the war, was left with a booming economy, placed in a position which could permanently affect its political relations on a global scale. The diminutive amount of destruction caused by enemy air raids, and the amount of growth that American industry had experienced over the war’s lifespan, were vital. They allowed the United States to become the leading financial center in the world, poised to not only help rebuild all the damage that the war had caused, but also to help ensure that the atrocities seen and committed during the war would not happen again. (World War II Records).
The United States, placed in a position of global power and influence, made a decision to positively influence Europe’s situation. General George Marshall, secretary of defense under President Truman, began development of an ambitious global recovery program, which would help define European and American relations all the way up to the present day. The Marshall Plan, defined as “an act to promote world peace and the general welfare, national interest, and foreign policy of the United States through economic, financial, and other measures necessary to the maintenance of conditions abroad in which free institutions may survive and consistent with the maintenance of the strength and stability of the United States” (“Marshall Plan” ), was the final result. The end goal of recreating global economic and industrial stability, as well as the possibility of forming new trade relations with European countries, was a tempting offer, and the suggested bill met little resistance. The increasing amount of Soviet activities in Czechoslovakia and Italy further helped the passage of the bill, with Congress beginning to worry about the spread of communism. The program entailed the distribution of financial and physical aid to 16 European countries, including Germany and Poland. The majority of aid was sent to the major industrial powers, such as England and Germany, since it was believed that their rebuilding was the most important for the future of Europe. In current dollar value, approximately $120 billion were distributed in currency and goods, with the goal of not only rebuilding the receiving countries, but also to renovating industry, and removing trade barriers. The goodwill towards the United States caused by the Marshall Plan would also place America in a position to cement itself down as the financial center of the world. In the words of former U.S. representative Joe Baca, “Pearl Harbor caused our nation to wholeheartedly commit to winning World War II, changing the course of our nation’s history and the world’s future.” This increase in U.S. influence, as a matter of fact, was one of the controversies surrounding the actuation of the Marshall Plan. Despite the intentions being to restore European economy and industry, the sudden influx of American goods sent as help could lead to the United States gaining economic control over Europe. This, in part, was one of the reasons why the Soviet Union refused any help from the United States. Undoubtedly, this denial of United States assistance has contributed to the bad relations between the United States, and countries such as Russia and Kazakhstan. (Jones)
New York, as the financial capital of the United States, was vital in the actuation of the Marshall Plan, and the amassing of the vast amount of goods and commodities necessary for it to be successful. In 1941, when the United States joined World War II after the Pearl Harbor attack, New York rapidly became the center of naval operations. This drastic increase in activity led to a huge amount of goods, soldiers, and fleets coming through New York City, giving it new life. It is estimated that 63 million tons of supplies, as well as 3.3 million soldiers embarked through New York City over the course of the war. Up until World War II, New York had been struggling with the Great Depression, being hit particularly hard due to the huge amount of bank closures during that time. In particular, the banking panics that occurred between 1931 and 1933 were devastating, with about 25% of all banks being forced to close. This momentous decrease in banks led to the implementation of the Glass-Steagall act in 1933. This led to the creation of the FDIC, or the Federal Deposit Insurance Corporation. The goal of this was to give the banking system greater stability, in order to prevent the mass closure that had happened previously. Leaving the Great Depression, New York found itself in the midst of World War II, with the United States on the brink of entering. Throughout the war, it served as the busiest naval center in the United States, deploying ships to fronts across the world. The city, already based around financial activity, was to a sense revitalized by the second world war, making it even more outstanding on a global scale. (Exhibitions)
After the end of the war and the subsequent initiation of the Marshall Plan, the effects of the plan on the world were extremely evident. In the 1950’s, the average GDP growth per year for Europe and Japan was around 5%, marking a steady increase in the countries’ productivity, and signifying rising economies. Despite the extensive destruction in much of the rest of the world, no fighting had actually happened in the United States. This gave America a sense of stability that the rest of the world lacked. Immediately following the war, during the 1940’s and 50’s, the dollar was the only major convertible currency in the world, leading to it becoming the central global reserve currency. Meanwhile, the Soviet Union and all other communist countries’ excluded all foreign companies, creating a sense of separation from the rest of the world. Russia in particular, having been very involved in the second world war, had not taken the type of damage that European countries had, meaning that it was not in need of American help. Japan, being brought down to an almost complete standstill after its surrender, grew incredibly quickly. By 1970, it had become one of the world’s largest capitalist economies, surpassed only by the United States. Similarly, following the formation of the European Economic Community, most countries in Europe had free trade, which, in turn, attracted a large amount of American companies. All of this development was initiated by the deployment of the Marshall Plan, and the determination of participating countries to rebuild their economies, and produce a new stability in the world, for the sake of preventing a third global conflict. (Grossman )
From the crumbled, burned, and starving remains of post-World War II, Europe arose as what would become one of the most prosperous international economies in history. With the help of the United States, through the ambitious concept that would be daubed the Marshall Plan, the world worked together to recover from the most destructive and costly war in the history of humanity. With $120 billion dollars worth of goods and currency being distributed, the plan gave Europe the assistance that it needed to recover from the vast amount of damages, and let to an international initiative to create trade alliances and treaties to ensure peace in the future. This desire eventually led to the creation of organizations such as the European Union and NATO. Similarly, the Soviet Union’s unwillingness to receive American help and take part in any of these peace-oriented movements is undoubtedly one of the reasons that there is a certain level of animosity between Russia and the Western world, in particular the United States. However, when it comes to the rest of the world, the Marshall Plan led to general improvement in global industry and finance, and has helped secure global peace all the way up until the present day. In this way, the lack of damage caused to the United States and the vast economic growth that it had experienced during the years of the war contributed to global peace, and has placed the United States at the center of global economy. This, in turn, placed New York right in the middle of the world’s finance. To this day, it largely represents the western money system, with Wall Street as its face. This is only to be expected. The United States acts as one of if not the most influential economies in the world, and New York, in turn, is the one representing that economy.
It is estimated that the total amount of money spent by Britain alone over the course of the war was in excess of what would be $120 billion today. Besides this, of the 80 million people who died as a direct result of the war, the majority were European. With Nazi Germany being the catalyst of war, seven million deaths were comprised of Germans, both military and civilian. After the war, the United States imposed harsh restrictions on German manufacturing and production, with the intent of preventing the country from being able to wage any form of war in the foreseeable future. In essence, the plan was to completely de-industrialize the country. The first industrial plan, signed in 1946, led to German industry being reduced to about 50% of what it had been post-war. This, coupled with the vast destruction caused by Allied air raids and invasion, led to a diminished, starving, and weak Germany. Meanwhile, the British economy had also taken a vicious beating, with almost 70% of its industry destroyed by hostile bombings. Despite the Germans failing to actually conquer Britain, due to its efficient air force and the lack of a German navy after the incredibly costly invasion of Norway, the British loss of life and damage to its economy was heavy. 450,000 war related casualties, the majority of its factories made into rubble, and the overall cost of $120 billion dollars led to Britain being on its knees. Countries such as Italy and Japan were also left devastated, with the burden of post-war economic and industrial sanctions imposed by the United Nations. However, the mass global industrialization and the accelerated production of new inventions and ideas, which helped fuel the war, had not affected the world only negatively. After World War II ended in 1945, the United States, unlike the majority of countries that had been involved in the war, was left with a booming economy, placed in a position which could permanently affect its political relations on a global scale. The diminutive amount of destruction caused by enemy air raids, and the amount of growth that American industry had experienced over the war’s lifespan, were vital. They allowed the United States to become the leading financial center in the world, poised to not only help rebuild all the damage that the war had caused, but also to help ensure that the atrocities seen and committed during the war would not happen again. (World War II Records).
The United States, placed in a position of global power and influence, made a decision to positively influence Europe’s situation. General George Marshall, secretary of defense under President Truman, began development of an ambitious global recovery program, which would help define European and American relations all the way up to the present day. The Marshall Plan, defined as “an act to promote world peace and the general welfare, national interest, and foreign policy of the United States through economic, financial, and other measures necessary to the maintenance of conditions abroad in which free institutions may survive and consistent with the maintenance of the strength and stability of the United States” (“Marshall Plan” ), was the final result. The end goal of recreating global economic and industrial stability, as well as the possibility of forming new trade relations with European countries, was a tempting offer, and the suggested bill met little resistance. The increasing amount of Soviet activities in Czechoslovakia and Italy further helped the passage of the bill, with Congress beginning to worry about the spread of communism. The program entailed the distribution of financial and physical aid to 16 European countries, including Germany and Poland. The majority of aid was sent to the major industrial powers, such as England and Germany, since it was believed that their rebuilding was the most important for the future of Europe. In current dollar value, approximately $120 billion were distributed in currency and goods, with the goal of not only rebuilding the receiving countries, but also to renovating industry, and removing trade barriers. The goodwill towards the United States caused by the Marshall Plan would also place America in a position to cement itself down as the financial center of the world. In the words of former U.S. representative Joe Baca, “Pearl Harbor caused our nation to wholeheartedly commit to winning World War II, changing the course of our nation’s history and the world’s future.” This increase in U.S. influence, as a matter of fact, was one of the controversies surrounding the actuation of the Marshall Plan. Despite the intentions being to restore European economy and industry, the sudden influx of American goods sent as help could lead to the United States gaining economic control over Europe. This, in part, was one of the reasons why the Soviet Union refused any help from the United States. Undoubtedly, this denial of United States assistance has contributed to the bad relations between the United States, and countries such as Russia and Kazakhstan. (Jones)
New York, as the financial capital of the United States, was vital in the actuation of the Marshall Plan, and the amassing of the vast amount of goods and commodities necessary for it to be successful. In 1941, when the United States joined World War II after the Pearl Harbor attack, New York rapidly became the center of naval operations. This drastic increase in activity led to a huge amount of goods, soldiers, and fleets coming through New York City, giving it new life. It is estimated that 63 million tons of supplies, as well as 3.3 million soldiers embarked through New York City over the course of the war. Up until World War II, New York had been struggling with the Great Depression, being hit particularly hard due to the huge amount of bank closures during that time. In particular, the banking panics that occurred between 1931 and 1933 were devastating, with about 25% of all banks being forced to close. This momentous decrease in banks led to the implementation of the Glass-Steagall act in 1933. This led to the creation of the FDIC, or the Federal Deposit Insurance Corporation. The goal of this was to give the banking system greater stability, in order to prevent the mass closure that had happened previously. Leaving the Great Depression, New York found itself in the midst of World War II, with the United States on the brink of entering. Throughout the war, it served as the busiest naval center in the United States, deploying ships to fronts across the world. The city, already based around financial activity, was to a sense revitalized by the second world war, making it even more outstanding on a global scale. (Exhibitions)
After the end of the war and the subsequent initiation of the Marshall Plan, the effects of the plan on the world were extremely evident. In the 1950’s, the average GDP growth per year for Europe and Japan was around 5%, marking a steady increase in the countries’ productivity, and signifying rising economies. Despite the extensive destruction in much of the rest of the world, no fighting had actually happened in the United States. This gave America a sense of stability that the rest of the world lacked. Immediately following the war, during the 1940’s and 50’s, the dollar was the only major convertible currency in the world, leading to it becoming the central global reserve currency. Meanwhile, the Soviet Union and all other communist countries’ excluded all foreign companies, creating a sense of separation from the rest of the world. Russia in particular, having been very involved in the second world war, had not taken the type of damage that European countries had, meaning that it was not in need of American help. Japan, being brought down to an almost complete standstill after its surrender, grew incredibly quickly. By 1970, it had become one of the world’s largest capitalist economies, surpassed only by the United States. Similarly, following the formation of the European Economic Community, most countries in Europe had free trade, which, in turn, attracted a large amount of American companies. All of this development was initiated by the deployment of the Marshall Plan, and the determination of participating countries to rebuild their economies, and produce a new stability in the world, for the sake of preventing a third global conflict. (Grossman )
From the crumbled, burned, and starving remains of post-World War II, Europe arose as what would become one of the most prosperous international economies in history. With the help of the United States, through the ambitious concept that would be daubed the Marshall Plan, the world worked together to recover from the most destructive and costly war in the history of humanity. With $120 billion dollars worth of goods and currency being distributed, the plan gave Europe the assistance that it needed to recover from the vast amount of damages, and let to an international initiative to create trade alliances and treaties to ensure peace in the future. This desire eventually led to the creation of organizations such as the European Union and NATO. Similarly, the Soviet Union’s unwillingness to receive American help and take part in any of these peace-oriented movements is undoubtedly one of the reasons that there is a certain level of animosity between Russia and the Western world, in particular the United States. However, when it comes to the rest of the world, the Marshall Plan led to general improvement in global industry and finance, and has helped secure global peace all the way up until the present day. In this way, the lack of damage caused to the United States and the vast economic growth that it had experienced during the years of the war contributed to global peace, and has placed the United States at the center of global economy. This, in turn, placed New York right in the middle of the world’s finance. To this day, it largely represents the western money system, with Wall Street as its face. This is only to be expected. The United States acts as one of if not the most influential economies in the world, and New York, in turn, is the one representing that economy.
Works Cited
Boyte-White, Claire. "How Did World War II Impact European GDP?" Investopedia.
Investopedia, 28 Nov. 2014. Web. 8 Mar. 2017.
"Economic Effects of the War." Economic Effects of World War II. John D. Clare, n.d. Web. 1
Mar. 2017.
"Exhibitions." New-York Historical Society | WWII & NYC. New-York Historical Society, 5
Oct. 2012. Web. 21 Mar. 2017.
Grossman, Richard S. "US Banking History, Civil War to World War II." EHnet. Economic
History Association, n.d. Web. 21 Mar. 2017.
Jones, Geoffrey. "Restoring a Global Economy, 1950–1980." HBS Working Knowledge.
Harvard Business School, 22 Aug. 2005. Web. 21 Mar. 2017.
"Marshall Plan." Wikipedia. Wikimedia Foundation, 22 Mar. 2017. Web. 22 Mar. 2017.
The Learning Network. "April 3, 1948 | Truman Signs Marshall Plan, Providing Aid to
Europe." The New York Times. New York Times, 3 Apr. 2012. Web. 23 Feb. 2017.
"World War II Records." National Archives and Records Administration. National Archives and Records Administration, n.d. Web. 12 Apr. 2017.
Boyte-White, Claire. "How Did World War II Impact European GDP?" Investopedia.
Investopedia, 28 Nov. 2014. Web. 8 Mar. 2017.
"Economic Effects of the War." Economic Effects of World War II. John D. Clare, n.d. Web. 1
Mar. 2017.
"Exhibitions." New-York Historical Society | WWII & NYC. New-York Historical Society, 5
Oct. 2012. Web. 21 Mar. 2017.
Grossman, Richard S. "US Banking History, Civil War to World War II." EHnet. Economic
History Association, n.d. Web. 21 Mar. 2017.
Jones, Geoffrey. "Restoring a Global Economy, 1950–1980." HBS Working Knowledge.
Harvard Business School, 22 Aug. 2005. Web. 21 Mar. 2017.
"Marshall Plan." Wikipedia. Wikimedia Foundation, 22 Mar. 2017. Web. 22 Mar. 2017.
The Learning Network. "April 3, 1948 | Truman Signs Marshall Plan, Providing Aid to
Europe." The New York Times. New York Times, 3 Apr. 2012. Web. 23 Feb. 2017.
"World War II Records." National Archives and Records Administration. National Archives and Records Administration, n.d. Web. 12 Apr. 2017.