8 - Holding the line: the ECA's efforts to reconcile recovery and rearmament

Summary

The Truman administration had asked Congress in January 1950 to renew the ERP for another year, the third of four years that had been planned from the start. Conservative opponents mounted the usual arguments. Pointing to an anticipated budget deficit of several billion dollars, they were now more convinced than ever that the ERP and other programs were paving the way to economic ruin and a regime of government controls. Senator Taft said the recovery of production and the restoration of financial stability in Western Europe made it possible to reduce the amount of American assistance by 16 percent. Others said that cuts in Marshall aid would encourage the Europeans to end “costly experiments with socialist devices” and to devote a greater share of their resources to productive investment. Complaints that American aid subsidized socialism in England mixed with charges that neither European nor American recovery planners had done enough to rebuild West Germany, where the new government was committed to private-enterprise capitalism and where the revival of production would do much to reduce the need for American dollars. As in 1948 and 1949, the conservatives also linked the Marshall Plan to the Reciprocal Trade Agreements Act, the International Trade Organization (ITO), and other measures that aimed to lower tariffs and organize a multilateral system of world trade. They identified these measures with the alliance of “internationalists” that had taken shape under the New Deal and went on to warn that “free trade” would destroy noncompetitive firms in the United States, throw workers off the job, and subject government policy to control by the ITO and other “super-states.”