The Marshall Plan, history homework help

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Humanities

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In this activity you will find background information and directions to resources for further research.

  • Follow the directions as given in the activity.
  • Download the Respond page to guide your research and record your answers. You should always write in complete sentences, and your responses should demonstrate your understanding of the content. Short or incomplete responses will not receive full credit.
  • When responding to the focus question "Why was the Marshall Plan Effective?" your answer should be thorough and take the form of several paragraphs.

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Name 1

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The European Recovery Program, also recognized as The Marshall Plan was
introduced on the 5th of June in the year 1947 by the United States Secretary of State, George
Marshall. It came at the end of the Second World War and was called for due to the devastation
that had been met by the European countries because of the war. Both physically and
economically, Europe was at its knees since industries and residential areas had been destroyed
in the war. There was severe food shortage because agriculture had been stopped and no
transport due to damaged infrastructure. Even if there still was anyone farming, the food was for
self-sustenance and surplus would have no way of being transported to markets, if any. America,
on the other hand, was the only major nation that was relatively undamaged after the war and it’s
rolling out of the Marshall Plan was seen as a cue for the country to take up world leadership at
least in terms of economy and political influence.
The United States had good reason to be involved in literally rescuing Europe’s
economy; in particular to restore economic health and along with that political stability and
therefore, peace. Communist parties in France and Italy were gaining advantage after the war,
and so the US viewed the Marshall Plan as a means to halt the influence of these parties and

Name 2
support the democratic rule used in Europe. Nations such as the Soviet Union were also invited
to take part in the plan but refused, seeing that they would heavily be indebted to the US,
however, seventeen nations generally in Europe agreed to take part in the project to raise the
standards of their economies.
The Marshall Plan restored financial stability in post-World War II Europe. Inflation
was rampant in the countries, and the governments responded to this by retaining controls and
therefore promoting the growth of black markets where one could buy commodities at lower
prices. Farmers, therefore, refused to sell their products and even refused to deliver it to cities as
long as prices were restricted to low levels (De Long and Eichengreen). Ideally, solving the
aforementioned crisis, inflation had to be curbed, prices decontrolled and budgets balanced so as
to coax producers back to the market, ensure price mechanisms worked smoothly and removed
pressure caused by inflation.
The Marshall Plan was able to implement these solutions by increasing the size of the
pie available for division among interest groups by making two and a half percent of the aid as a
share of recipient GDP, in the process closing the excess demand gap and providing an incentive
for governments to impose financial discipline. For every dollar that the recipient nation
received, it was required to place an equal volume of local currency in a corresponding item fund
to be used only for determinations approved by the US government (De Long and Eichengreen).
The free play of market resources was required due to the renewed growth, and The
Marshall Plan made this mandatory by making the recipients of the plan, sign bilateral pacts with
the US in agreement to ba...


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