5 - Changing course: European integration and the traders triumphant

Summary

The first half of 1949 saw unmistakable signs of progress toward the strategic and economic goals on the American agenda for Western Europe. Policymakers began to coordinate their economic and military policies and negotiate agreements looking toward the formation of a West German government. They also extended the transnational pattern of public–private power sharing, further strengthened the OEEC, and helped to revise the intra-European payments plan. In addition, industrial output in the OEEC countries climbed 18 percent above 1938 figures, agricultural production went up, Western Europe's overall volume of trade recovered to prewar levels, and many participating countries made progress in curbing inflation and balancing budgets. These gains came in part because member states were investing approximately one-fifth of their gross national income in new capital goods. Compared to this kind of self-help, as Paul Hoffman admitted to Congress, American assistance was playing a “marginal” role in Western Europe's revitalization. Still, the United States had extended $5 billion in Marshall aid to participating countries and this aid, according to Hoffman, had provided the critical margin on which all other investment depended. It enabled participating countries to cover their deficits in trade with the Western Hemisphere and thus to import the essential commodities that made self-help possible.

Hoffman's remarks came in the midst of a stormy congressional debate over a bill to extend the Economic Cooperation Act for another year. As in 1948, the debate revolved around the cost of the Marshall Plan, the plan's impact on the American economy, and the general objectives being pursued.