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France, Italy, and the Marshall Plan

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France, Italy, and the Marshall Plan Chiarella Esposito. America's Feeble Weapon: Funding the Marshall Plan in France and Italy, 1948-1950. Westport, Connecticut and London: Greenwood Press, 1994. xxxii + 264 pp. $55.00 US, cloth, ISBN 978-0-313-29340-5. Reviewed by Jeffrey G. Giauque Published on H-France (March, 1997) Since the early 1980s American and European integration. He attempts to demonstrate that Mar‐ historians have debated the extent and impact of shall Plan funds composed only a small portion of American influence in western Europe during the European resources applied to reconstruction and Cold War, particularly during the years immedi‐ he suggests that Europe could have managed ately following World War II. Critics usually por‐ without U.S. support. Milward also asserts that tray the United States as a hegemonic power ex‐ American money enabled Europeans to postpone erting its will over western Europe, or ineffective cooperation with one another and to focus on in doing so. Supporters of United States policies purely national recovery, delaying real economic argue that European leaders welcomed a major integration. On the other hand, Hogan argues that U.S. role in Europe for the sake of reconstruction the Marshall Plan provided a "crucial margin" and stability and that its efforts played a crucial which enabled Europeans to cover budget and role in western Europe's economic recovery and trade deficits and apply their own resources to in‐ political stabilization. The U.S. "European Recov‐ vestment. Hogan concludes that the United States ery Program" (ERP) or "Marshall Plan," an‐ also helped to transform European economies nounced in June 1947 is the central object of con‐ along American lines, reorienting them away tention in this debate concerning the early post- from the autarkic policies of the pre-war years war years. and toward free trade and economic growth and Two works have largely shaped the Marshall integration. Plan debate, Alan Milward's The Reconstruction Chiarella Esposito, a historian at the Universi‐ of Western Europe, 1945-1951 (1984) and Michael ty of Mississippi, stakes out a position between J. Hogan's The Marshall Plan: America, Britain, Hogan and Milward by focusing on the impact of and the Reconstruction of Western Europe, the Marshall Plan in France and Italy. The title of 1947-1952 (1987). Milward portrays the Marshall the book is somewhat misleading, suggesting that Plan as an unnecessary impediment to European the author takes a critical view of the Marshall H-Net Reviews Plan itself. The book is actually a study of U.S. ef‐ riences and their post-war ambitions. France had forts to use "counterpart funds" (or more precise‐ suffered a long enemy occupation, and French ly the withholding of those funds) to shape French leaders hoped to overcome the stagnation of the and Italian economic policies. It is this effort Third Republic, regaining a measure of great pow‐ which she views as a failure, not the Marshall er status. In order to achieve these goals, the Plan itself. During the Marshall Plan years, the French developed the ambitious Monnet Plan, a United States provided industrial and agricultural program of massive government investment and goods to European governments, which in turn economic modernization. During the late 1940s sold those goods to private companies. The rev‐ and early 1950s, French governments adhered to enues thus raised were known as counterpart this program without regard for the potential risk funds and were placed in special accounts under of high inflation. By contrast, Italian leaders, con‐ the control of the United States government. U.S. cerned primarily with fnancial stability and eras‐ officials released the money to European govern‐ ing the fascist legacy of government intervention ments once they had produced detailed invest‐ in the economy, preferred to leave investment to ment plans. U.S. officials also threatened to with‐ the private sector and to use U.S. aid for public hold these funds as a lever to push European gov‐ works in order to reduce domestic opposition. ernments toward the potentially contradictory In France the United States had to cope with goals of fnancial stability and rapid economic in‐ unstable centrist "Third Force" governments com‐ vestment and growth. prised primarily of the Socialist (SFIO), Christian Esposito's book analyzes these efforts in Democrat (MRP), and Radical parties, with the France and Italy. Although aimed primarily at his‐ large and hostile communist and Gaullist parties torians of U.S. and European international rela‐ to either side. Fearing the consequences of a com‐ tions, the book has much to offer historians of munist or a Gaullist takeover, U.S. officials decid‐ postwar France. After examining the relevant his‐ ed to support Third Force governments at all toriography, Esposito analyzes the situations in costs. Because of the instability of the Third Force Paris, Rome, and Washington upon the com‐ coalition and the difficult political and economic mencement of the Marshall Plan. For the United circumstances, cabinets rose and fell with a regu‐ States, the plan served primarily to block commu‐ larity characteristic of the Third Republic. U.S. of‐ nism in western Europe by facilitating rapid eco‐ ficials supported French investment schemes, nomic recovery and consolidating stable centrist such as the Monnet Plan, but they feared massive governments. Secondary U.S. goals included the inflation and constantly sought to pressure the transformation of European economies along French into allocating more resources to debt re‐ American lines, the stabilization of European cur‐ duction and fnancial stabilization. Throughout rencies and economies, and the promotion of in‐ the 1948-50 period, the United States halted coun‐ ternational trade. By emphasizing the danger of terpart fund releases when a government col‐ political collapse if the United States put too much lapsed, but as soon as the new cabinet was estab‐ pressure on them and by focusing on a few specif‐ lished, it had to reopen the counterpart purse. Re‐ ic economic goals of their own, European govern‐ fusal to release funds would lead the French gov‐ ments could take advantage of both the U.S. politi‐ ernment to draw more money from the Bank of cal focus and its somewhat diffuse economic France, producing greater inflation and threaten‐ agenda. ing another cabinet collapse. U.S. officials repeat‐ Esposito explains French and Italian econom‐ edly informed their French interlocutors that re‐ ic priorities in the context of their war time expe‐ lease of counterpart funds depended on fnancial 2 H-Net Reviews stabilization measures, but the French quickly re‐ The case of Italy provides a number of paral‐ alized that they could call the American bluff. lels with and differences from that of France. As Although an unstable political environment in France, the United States was compelled to sup‐ hindered the implementation of the Marshall Plan port the political center--in this case the Christian in France, the situation was ameliorated by the Democrats (DC)--and to tolerate their economic fact that Jean Monnet and his collaborators in the policies. Giuseppe Pella, the Italian budget minis‐ Commissariat general du plan (CGP) had formu‐ ter in the governments of Alcide de Gasperi in lated a precise program of industrial development 1948-50, opposed major government investment which did not depend on any one political party and preferred to focus on fnancial stabilization or cabinet to carry it out. Because U.S. officials and to deal later with stimulating economic wished to support Third Force governments and growth. The United States, with its goals of fnan‐ because they viewed the Monnet Plan as a model cial stabilization and massive investment, was investment program, counterpart funds fowed slow to realize that its dilemma in Italy was pre‐ out in 1948 and 1949. This support enabled cisely the opposite of that in France. Even when French governments to continue funding the U.S. officials understood the dilemma, they hesi‐ Monnet Plan, covered much of their budget tated to speak out against De Gasperi or Pella be‐ deficit, and limited inflation. By early 1950 the cause both were crucial to political stability. French economy showed major improvements. The Christian Democrats never formulated a Inflation seemed under control, industrial pro‐ precise investment program comparable to the duction showed rapid growth, and both standards Monnet Plan, preferring to use American funds of living and the balance of trade improved. for short-term political purposes, such as unem‐ In 1950 with a certain equilibrium apparently ployment relief, public works, and housing achieved, U.S. officials, still primarily concerned projects. Although U.S. officials had advocated with long term political stability, felt able to push similar spending in France, they disliked the hap‐ the Georges Bidault government toward greater hazard Italian approach and hesitated to release consumerism and social spending (low-cost hous‐ counterpart funds for "nonproductive" purposes. ing, schools and hospitals, higher wages). These However, even when Christian Democratic oppo‐ measures were intended to weaken popular sup‐ sition to Pella's policies arose in 1949-- the left of port for the French Communist Party. The French the party called for greater government invest‐ government still hesitated to divert resources ment-- U.S. officials chose to stick with Gasperi away from productive investment for social and Pella for the sake of political stability. Esposi‐ spending, and it responded to American pressure to regrets that American officials did not consider by stalling, which only increased after the out‐ alternatives to Gasperi and Pella, but she con‐ break of the Korean War. Succeeding French min‐ cedes that leading fgures on the left of the party, istries viewed productive investment and rearma‐ such as Giuseppe Dossetti, made frequent anti- ment as higher priorities than social spending. American statements and opposed Italian mem‐ The outbreak of war in Korea produced a wave of bership in NATO, hardly reassuring to the United global inflation from which France was not ex‐ States.
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