Financial History Issue 127 (Fall 2018) | Page 36

BOOK REVIEW  BY JAMES P. PROUT The Marshall Plan: Dawn of the Cold War By Benn Steil Simon & Schuster, 2018 (A Council on Foreign Relations Book) 608pp with photos, cast of characters, appendices, notes and index There is a picture of my father and his brother in uniform, meeting in Frankfurt sometime in 1945 or 1946. They are two American GIs, smiling and looking pretty well fed. The background of the photo tells a darker story. The building behind them is only half standing, and there is a pile of stones and twisted wood just next to them. The war in Europe left millions dead or homeless, cities flattened, roads and bridges destroyed. Beyond the obvious physical wreckage, even more fundamen- tal damage had been done. Institutions central to pre-war Euro- pean societies—free markets, business organizations, individual ownership, capitalism—lay in ruins. In fact, many Europeans believed that these concepts had been among the root causes of the war. Were these worth re-establishing? And, if so, how could countries that were hungry, cold and financially weak do so when the most likely source of help (the United States) was shrinking its budgets, packing up and going home. For some Europeans, the Soviet model—seemingly more worker-friendly and less fraught with competition—looked attractive. This is the background on which Benn Steil begins the story of the Economic Cooperation Act of 1948, better known as the Marshall Plan. In his book, The Mar- shall Plan: Dawn of the Cold War, Steil details how (paced by some extraordinary leadership), the war-weary, isolationist- tending United States got wise, found the money and spent it smartly to help West- ern Europeans get their mojo back. One result: 70+ years of progress and relative peace on a continent that had had centu- ries of war. Steil, of the Council on Foreign Rela- tions, has made a specialty of post-WWII financial and trade history. In 2013, I enthusiastically reviewed his book on the Bretton Woods conference, and I commend him again for a painstakingly researched and well-written book. Those interested in how successful international economic policies are constructed and applied by thoughtful adults should stop and read this book. Steil starts off on the ground in a grim post-war Europe. Josef Stalin thought he had the whip hand in terms of influence. With FDR dead and Churchill tossed out of office, he was the last of the “Big Three.” Soviet-leaning governments were in power in Eastern Europe, Soviet forces occupied half of Germany and Communist parties in Italy and France were set to gain political power among workers disillusioned with capitalism. Britain, which had traditionally checked Russia, could no longer afford to do so. This created uncertainty, which Sta- lin was happy to exploit to test how much he could extend Russian interests. In the United States, leaders didn’t really understand how the Russians oper- ated or what long term effect the power vacuum could have on US interests. George Kennan, a senior State Depart- ment official and Soviet expert, stepped in and re-calibrated American thinking on Soviet intentions. Russia, Kennan wrote, 34    FINANCIAL HISTORY  |  Fall 2018  | would push its agenda as far as allowed, testing the West at shifting points around the globe. Europe was front and center of this effort, and the United States must conduct a policy of “containment” by shoring up European institutions, most importantly their economies. This concept was expanded on by George Marshall in a speech at Harvard in 1947, which forever linked the General to the plan for Euro- pean reconstruction. Those interested in how successful international economic policies are constructed and applied by thoughtful adults should stop and read this book. Steil’s focus then shifts to the political ground game through which US lead- ers convinced the American people and Congress that America—having paid for the war—should now fund the peace. He gives excellent insights on person- alities from Marshall to Will Clayton to Dean Acheson, and a host of others as they cajoled and compromised their way to getting the funding legislation passed. One stand-out is Senator Arthur Vanden- berg, a Michigan Republican and Senate Foreign Relations Committee chairman. Vandenberg’s high ideals and bi-partisan canniness helped to turn back the isola- tionist instincts in Congress. That would be unheard of today. Luckily, Marshall Plan proponents had help from an unlikely source: Russia. The USSR consistently misapprehended and misjudged US intentions and willingness to confront. Stalin did not want a re- surgent Europe. He spurned the offer to include Russia as a recipient of aid, and he forbade vassal states like Czechoslovakia and Poland from participating. Germany,