by Benn Steil
APRIL 3 MARKED THE ONE-YEAR anniversary of the Marshall aid legislation. Attlee sent the president a warm message commemorating the event. The $5 billion in assistance ($50 billion in today’s money) Congress had thus far authorized had, he said, “given us hope and help when we most needed it. During the last year the whole economic scene in Western Europe has been transformed to a degree which must astonish all of us when we recall the uncertainties and perils of the immediately preceding years.” A further $5.43 billion would be authorized by Congress eleven days later.
From England, Time offered the stirring story of a Birmingham car plant that had been on the verge of shutting down, with a loss of ten thousand jobs, before Marshall aid began flowing. The firm had been unable to buy carbon black, an essential element for a third of each tire’s carcass and tread, owing to the country’s paltry dollar reserves, until counterpart funds began financing the imports. “We’ve never had to worry since,” said one of the workers. “Marshall aid saved us from catastrophe.”49
Meanwhile, backing for the ERP from the most influential American business interests had also grown. The Chamber of Commerce embraced “judicious tariff cuts,” arguing that foreign competition would boost domestic productivity. The National Association of Manufacturers urged the country to “recognize its own economic strength and overcome its ‘inferiority complex.’ ” The tariff issue having “shrunk to almost relative insignificance,” it called for Washington to “provide the maximum of encouragement to the flow of goods and services as between nations on an honest competitive basis.”50
Tensions with Moscow, however, had grown over the twelve months. Soviet actions in Berlin, Harriman told Congress, had been a by-product of the Marshall Plan; the Russians had “perceived [its] immensely constructive potentialities earlier and more fully” than anyone else.51 Indeed, Stalin was investing ever greater manpower and funds to counter it. Hoffman estimated that Communist anti–Marshall Plan information officials in Europe outnumbered his own pro-Marshall staff by 50 to 1. “Run[ning] the ECA without a strong information arm,” he concluded, was “as futile as trying to conduct a major business without sales, advertising, and customer-relations departments.”
Over the course of 1949, Harriman boosted funds for publications, posters, exhibits, fairs, film documentaries, radio programs, and television shows.52 Spending on media publicity would grow from $500,000 in 1948 to about $20 million annually by 1952 ($182 million in today’s money).53 The director of the State Department’s International Broadcasting Division, Charles Taylor, returned from a European fact-finding trip in January 1949 to file a long confidential report on the need for differentiated programming in the “slave areas” and the “free areas.” He concluded that “the ground is very suitable in Bulgaria for our propaganda” and that “Czechoslovakia’s hatred of Germany and Poland can be exploited as well by the Voice [of America] as it can by Moscow.” France, however, “nationalistic” and “hard-headed,” was averse to what its officials called “the ‘brutal propaganda’ of the United States.” In Italy, he reasoned, “slightly stronger doses of propaganda” were possible.54
Secretly, though, the administration was doing far more. Kennan sat on the advisory committee of a new Office of Policy Coordination. Despite its deliberately dull name, the OPC’s mission was anything but: it was the new CIA covert operations arm. Early in the new year, the OPC’s new head, Frank Wisner, approached Hoffman’s deputy, Bissell. Wisner, whom Marshall had successfully nominated as its head, knew that the ECA had been receiving 5 percent of counterpart funds to cover administrative costs. He had come to request some of these funds for efforts on behalf of the Plan. Given that Harriman had approved, according to Wisner, Bissell agreed.
Though the OPC’s budget was less than $5 million at the time, it now began receiving tens of millions via the ECA. Funding would climb seventeen-fold before the Marshall Plan wound down in 1952. Staff would grow twenty-fold, controlling forty-seven overseas stations. Wisner used his new bounty to fund psychological warfare campaigns through European media, nongovernmental organizations, and cultural and educational institutions; bribes to labor officials and politicians; and even insurrection efforts in eastern Europe.55
In early 1949, Kennan was anxious to show that the Marshall Plan could work without visible muscular interventions, such as military pacts and the division of Germany. Still bitter that Lippmann had portrayed him as the misguided apostle of aggressive and limitless containment, he sought to become the invisible hand behind efforts to head off open militarization. “Operating in a personal capacity,” so that the State Department’s hand could “be denied by the Secretary,” as he explained his work to Lovett, Kennan became an eager and active source of inspiration and guidance for the OPC. Under his stewardship, the Policy Planning Staff would become the effective overseer of all U.S. covert activities.
Secret governments, however, tend to take on a life of their own, resisting the sort of shepherding Kennan tried to provide. The OPC’s early Marshall-funded efforts would eventually mushroom to become one of the defining dark features of the Cold War.
Kennan would in consequence come to look back with regret on “all part that I or the [PPS] staff took in any of this.”56 He would, however, primarily blame the Pentagon and its chief, Forrestal, for the OPC’s uncontrolled growth. In any event, the effort would, with the coming of the Korean War, become a complement to, and not a substitute for, militarization of the conflict with Moscow.
Well before that, however, the defense establishment’s top architect of the Cold War would become a casualty of it.57 Convinced that the Soviets were driven by a boundless ideological fervor, Forrestal sought every possible means—conventional and covert—to expand America’s capacity to fight back. Yet unable to convince the president that foreign aid should not preclude more military spending,58 and unable to control his own bickering Army, Navy, and Air Force chiefs, Forrestal became consumed by long hours, stress, and outright paranoia. Russians, Zionists, White House aides: all were, he was convinced, stalking and undermining him.
On March 1, Truman demanded his resignation. He replaced him with Louis Johnson, his loyal chief campaign fundraiser.59 One of Truman’s finer qualities was an ability to identify and cultivate subordinates of capacity and judgment, but he failed to display it in this case. Johnson was his worst appointment. Forrestal’s temperamental opposite, he shouted, boasted, and, in the words of one high official, made “two enemies for every dollar he saved.” General Bradley would later say that Truman “replaced one mental case with another.”60
Forrestal sank into “involutional melancholia,” as his April 2 admission record at Bethesda Naval Hospital would show. Less than two months later, shortly before 2 a.m. on May 22, a thud was heard below his sixteenth-floor window. On an asphalt and cinder block ledge three floors above the ground, his body would be found facedown—a robe sash tied around the neck.
ARTHUR VANDENBERG WAS THE BRIDGE between a democratic White house and a Republican Congress that made the Marshall Plan possible. When he rejected the chance to take Marshall’s job after Truman’s victory in November, he knew this role was still indispensable. A critical task remained, one that required Senate approval.
Notwithstanding his unwavering support for the Marshall Plan, Vandenberg thought it doubtful that economic stability could take hold in Europe without American military backing. “I am inclined to think,” he wrote in a constituent letter in January 1949, “that ‘physical security’ is a prerequisite to the kind of long-range economic planning which Western Europe requires.” In this view, he was at odds with Kennan. To Vandenberg it had been the American Neutrality Laws of the 1930s, which he had at the time supported, that encouraged Hitler to set off on the path to World War II. The United States now needed a different peacetime posture. “If an appropriate North Atlantic Pact is written,” he wrote to another constituent, “I think it will exactly reverse this psychology so far as Mr. Stalin is concerned if,
as and when he contemplates World War Three.”61
With this conviction, Vandenberg had set out, following passage of the Marshall legislation, to lay the groundwork for yet more difficult legislation. On June 11, 1948, by a vote of 64 to 4, the Senate approved Resolution 239, clearing the way for the country to enter into peacetime collective security arrangements outside the Western Hemisphere. The Vandenberg Resolution, as it was known, was careful to situate this call within the U.N. Article 51 protections for “collective self-defense” arrangements, but outside the veto Moscow held on the Security Council. This further embrace of regionalism was yet another blow to FDR’s postwar vision, in which universalism would underpin economic and physical security.
The resolution gave the State Department political cover to begin another difficult and painstaking process of reconciling Europe’s needs with Congress’ tolerance for obligations and costs. Mutual-defense planning among officials from the U.S., Canada, the U.K., France, Belgium (also representing Luxembourg), and the Netherlands began quietly in July 1948 under the aegis of the “Washington Security Talks.” Their Top Secret joint memorandum of September 9 stated that whereas the Marshall Plan had dealt a “political setback” to Soviet plans for exploiting the “weakening of the Western European countries” and the “vacuum in Germany,” a security pact was important to securing the “confidence . . . essential to full economic recovery.”
It recommended a “collective defence arrangement” for the “North Atlantic,” which the State Department defined to comprise the signatory countries plus Norway, Denmark, Iceland, Portugal, and perhaps Ireland—“stepping stone countries” important to the defense of western Europe in the event of Soviet attack. The case of Italy would remain controversial, owing to “the military limitations imposed by the Peace Treaty” with the Soviets, geographical difficulties in defending it, and its record of switching sides in two world wars.62
By December 1948, the State Department had concluded that “a North Atlantic Security Pact [was] an essential supplement to the Marshall Plan.” And “because of the impact of a rearmament program on the European economy,” it reasoned, there would have to be “close coordination between the Europeans of the economic aspects of rearmament and ERP.” American officials, it said, would also need to collaborate with “the Western Union military staff” to “ensure that the end product is realistic, having in mind European and U.S. resources.”63 The boundaries between Marshall aid and military aid were being erased.
In his January 1949 inaugural address, Truman pledged to buttress the Marshall Plan with “a collective defense arrangement” tying the United States and Canada with western Europe.64 Vandenberg, however, was unwilling to go as far as Acheson to meet European pleas for guarantees of U.S. military support. Just as he had done with the Marshall legislation, the senator worked to fashion the legislative commitments into a form Congress could digest. In particular, he subjected the North Atlantic Treaty’s critical Article 5 collective defense provision65 to reworking to allow the Europeans to claim an American commitment to defend them in the event of attack and the United States to claim free rein to determine the nature of its response.
In the early months of 1949, the structure of a new North Atlantic Treaty Organization was hammered out with European officials in extreme secrecy, or so they thought. As was so often the case, Maclean’s espionage in Washington compromised it. In any case, it officially came to an end on April 4, the day following the ERP’s one-year anniversary, when the foreign ministers of ten West European nations and Canada joined Acheson in Washington to sign the historic NATO founding agreement. Vandenberg hailed it as “the greatest war deterrent ever devised.”66
Beginning on April 27, the Senate Foreign Relations Committee subjected the Treaty to sixteen days of hearings. Though the committee was now under the control of Texas Democrat Tom Connally, Vandenberg once again played a central role in steering Administration witnesses through difficult questioning aimed at assuring senators that the country could not be forced into war or an open-ended aid commitment.
The State Department was convinced aid would be necessary for many years: “It seems clear that the United States must supply much of the military equipment which the countries working for recovery cannot produce themselves,” concluded one analysis in February. It decided it would therefore need to seek a substantial $1.13 billion for its allies in 1950 ($11.25 billion in today’s money), and undetermined sums thereafter. With the Senate chamber overflowing its seating capacity of five hundred, including 125 press members, Vandenberg masterfully shepherded Acheson through testimony. “[I]n contemplating future budgets,” the senator asked him, was it not true that “the greater the success of the program in increasing pacific and reliable security, the less will be the need—and the need may entirely disappear?”
“That is entirely correct, senator,” Acheson dutifully answered.67
Lovett, now a former under secretary, argued that “it seemed hardly logical” to undertake the ERP while leaving it unprotected. “All the consequences [it] was designed to avert might [then] be upon us.”68 His successor, James Webb, said the time had come to “get ready for a change-over from dollar diplomacy to one in which greater reliance is placed on security arrangements.”69 As Time’s Frank McNaughton summarized the administration’s argument, “Europe can’t fully recover until the sickle is removed from its throat.”70
By a vote of 82 to 13, the Senate consented to the treaty on July 21, 1949. The president ratified it on the 25th. This marked the first time the country had entered into a peacetime military alliance since the signing of the Constitution. “I don’t care whether entangling alliances have been considered worse than original sin since George Washington,” pronounced the State Department’s Hickerson, one of its driving forces. It was, he believed, a vital response to the threat the country was facing—even if it was, in Acheson’s words, a step “completely outside our history.”71 For Truman it would rank, with the Marshall Plan, among his proudest achievements in office.72 There was an unhappy irony in this pride, in that he had seen the Marshall Plan as a means of avoiding military commitments.
Kennan argued right up to the end that the drive for rearmament in Europe was based on a misconception. Europeans, he insisted, needed “to save themselves from communist pressures [through] economic recovery.” A western defense pact would instead lead to a dangerous “militarization of the present dividing-line through Europe.”73 But Acheson rejected these views. “The Pact and the ERP are both essential to the attainment of a peaceful, prosperous, and stable world,” according to a March 20 statement from the State Department. “The economic recovery of Europe, the goal of the ERP, will be aided by the sense of increased security which the Pact will promote.”74
Kennan’s formulation ignored the fact that Europeans would not follow the American blueprint for recovery, which was based on economic and political integration, without security guarantees. French prime minister Henri Queuille stressed that France had “taken dangerous steps to bring about a freer and more effective economy in Europe” while adopting “a friendly attitude towards Germany which it had been very difficult to persuade the French people to endorse.”75 NATO—which was, according to its first secretary general, Lord Ismay, founded “to keep the Russians out, the Americans in and the Germans down”—provided a guarantee critical to maintaining French popular support.76
As with the Marshall Plan, there was a vital element of psychology in NATO. It alleviated fears that the United States would once again withdraw into isolation. Still, only two of the fourteen western divisions stationed in Europe were American; Communist forces outnumbered western forces 12 to 1.77 Washington, of course, had nuclear weapons (though few of them at this stage): “[T]he first priority of the joint defense,” General Bradley would tell the House Foreign Affairs Committee in July, “is our ability to deliver the atomic bomb.” Yet, in the words of then-State Department official Louis Halle nearly two decades la
ter, in practical fact “its use could hardly [have been] contemplated” by the western European publics—particularly to the extent that they might themselves be affected by it.78 And most everyone recognized that the U.S. nuclear monopoly would last only a few years, at best.
The Truman administration also aimed, as with the Marshall Plan, to elevate Germany’s role over time. “You cannot have any sort of security in western Europe,” Acheson would say later that year, “without using German power.” The only question was whether it would “be integrated into western European power or grow up to be a power of its own.”79 But this aim was not highlighted during the pact’s formation to contain eruptions in Paris.
On the ground in Germany, Clay continued to protest bitterly over French terms for trizonal fusion, particularly unlimited three-power veto rights over German legislation. “What a price to pay for a French zone that cannot sustain itself,” he cabled Army assistant secretary Tracy Voorhees on March 19. “[We] obtain a partner who may be essential to our European program but who enters into partnership in Germany for sabotage only.”80 Adenauer, in spite of his determination to develop a constructive rapport with the French, would later tell Acheson privately that the “Americans were the best Europeans.”81
Certainly, the French price for acquiescence on Germany—the Marshall Plan and NATO—was much steeper than it had been after War World I: the Dawes Plan and Locarno.82 Yet, in Acheson’s words at an April 8 press conference, the combination of “the Marshall Plan and the North Atlantic Pact have tremendously changed the whole attitude of all three [Allied] governments. . . . It was that background which made it possible in two days to reach complete unanimity on these questions of Germany.”
Clay, still afflicted with more than a touch of localitis, was also being shortsighted. Jean Monnet levered American aid and security guarantees to push forward ideas for Franco-German economic fusion that had come to naught when he first unveiled them in the 1920s. Inspired by Monnet, Schuman would in a year’s time, May 1950, propose his namesake plan to place the joint output of coal and steel in France and Germany within a supranational structure. This would lead to the creation of the six-member European Coal and Steel Community in 1952. The ECSC would become the building block of Franco-German rapprochement, marked by the return of the Saar Protectorate to Germany in 1957. This rapprochement would in turn be essential to the creation of the European Economic Community in 1958 and, decades later, the European Union.83