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 | www.MoAF.org
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,