announcer: washington journal continues. host: welcome back. it has been 75 years since the marshall plan started. the flow of billions of dollars in u.s. aid to parts of europe after world war ii. our guest is benn steil, the author of the book "the marshall plan". he joins us from new york city. welcome to the program. >> thank you for having me. host: describe the economic conditions of europe at the end of world war ii and what was at stake for europe and united states? guest: conditions were very dire quite obviously. there was massive destruction, factories, roads, bridges, canals all destroyed around the continent. most importantly, the intricate division of labor that we count on in developed countries in

order to move food from rural areas to urban areas, to move manufactured products from urban areas to row areas had all broken down. a lot of that ot massive lawlessness throughout the continent. tens of thousands of people were murdered in just the immediate aftermath of the war and extra deep judicial -- extrajudicial killings. people were accused of being collaborators. the u.s. was extremely concerned about this. not just from a humanitarian perspective but from an economic and security perspective. if the european continent cannot be stabilized, the u.s. was very concerned that the people of europe would turn to extreme ideologies.

in other words, maybe another form of fascism like nazi germany where they would turn to soviet style communism. in particular, the u.s. was very concerned about signs that the soviet union had expansionist aims in europe, asia, and elsewhere. host: before we talk about the marshall plan, tell us about marshall himself. he was a military man before becoming secretary of state. guest: he was an army chief of staff under fdr during the war. he played a critical role in the war planning and strategy, implementation. after the war, president truman asked him in the beginning of 1940 seven to take over as secretary of state.

so, very quickly after that, in 1947, general marshall went off for his most important diplomatic mission that was six weeks of intense negotiations with his soviet counterpart in moscow, to soviet foreign minister, and stalin himself. the purpose of those meetings was to finalize a peace treaty for germany which would allow an end to the occupation of the country, and facilitate complete american withdrawal of all its troops from europe. but general barr -- but general marshall left moscow in april 1947 extremely concerned that the soviets were not going to be a cooperative partner and they in fact wanted to see germany

and western europe sink into chaos, which would better help them facilitate their expansionist aims on the continent. marshall immediately, when he came home, put in motion the plans to rescue western europe economically to try to integrate it, revive its production as quickly as possible, so it would be able to provide for its own security and protect political integrity of its institutions. host: give us a little bit of specifics as to what the marshall plan proposed and which countries specifically to help. guest: general marshall introduced the ideas that became the marshall plan. in various general form in a

speech at harvard university in june 1947. the speech was, i should emphasize, very general and did not lay out specifics at the time. that was for a very important reason. two important reasons. first, he wanted the york -- the europeanto cooperate on a unified plan to revise their economy. he did not want there to be 16 sepate national shopping lists that would be presented to the u.s. for example, that each country should have their own self-sufficient steel industry. he wanted them to coopete, to use their resources efficiently, to integrate their economies, to revive trade. it was important to him that these ideas come from europe so this was not anything the u.s. was imposing on europe. second, he was very concerned about the soviet union.

he knew that the soviets were not going to be a cooperative partner. they might want to get to usa but they were not going to participate in an -- u.s. aid but they were not going to participate with them. he wanted the world to understand that this was an open invitation to europe. no country would be excluded, including the soviet union. but he wanted the soviet union to exclude itself. that is precisely what happened. host: i will remind our viewers that you can get a call if you would like to ask a question of our guests. the numbers are by region. eastern or central time zones, (202) 748-8000. mountain and pacific, (202) 748-8001. you can send a text on our line, (202) 748-8002.

--(202) 748-8003. you mentioned a speech in 1947 at harvard. i wanted to show a portion of that where he lays out his argument for the plan. [video clip] >> the u.s. should do whatever it is able to do to assist in economic return. without this, there could be no political stability and to know and short speech. our policy is not directed against any country or anything except hunger, desperation, and chaos. it is to permit the emergence of political and social traditions in which institutions can exist. it must not be on a -- basis as various crises develop. any assistance in the future should provide a cure.

any government that is linked to assistance in the task of recovery will find full cooperation, i am sure, on the part of the united states government. any government which when we were to block the recovery of other countries cannot expect help from us. [applause] furthermore, governments, political parties, or groups which seek to perpetuate human misery in order to profit critically or otherwise will encounter the opposition. host: going back to the specifics of the plan, how was the money used? did the u.s. send cash over? were there specific guidelines as to how the money could be used and in what ways? guest: i just wanted to point out with regards to marshall's

speech, did you notice the applause in the middle? the only applause during marshall's speech came where he without naming the country, once the soviet union not to interfere. -- warned the soviet union not to interfere. the subtitle of my book is "the dawn of the cold war". this is the beginning of the cold war conflict between the u.s. and the soviet union. over the course of time between june 1947, marshall's speech, april 1948, when the marshall legislation is passed, the outlines of the program are put together. the basics were that there was $13.2 billion dedicated to aiding the participant countries. these were ultimately 16 countries that participated.

in current dollars, we are talking about $165 billion. as a percentage of u.s. gdp, that is the percentage of u.s. output. if we were to launch the equivalent of a marshall plan today, we would be talking about something approaching $1 trillion. almost all of this money was in grants. it was not loans. the u.s. was determined not to dump further debt on nations that were already indebted. but the scheme was very clever in that it did not simply write checks. it had complicated mechanisms called counterpart funds in order to ensure that the money was well used and that the u.s.,

where as it did not dictate the programs, but have some say in how the money was used. host: what about fraud and abuse? was there oversight of the aid money that went over there? guest: there was indeed. but the basic mechanism was such that the incentives were really right on the part of the recipient countries. this is just a brief example of how counterpart funds work. say a french farmer needed a tractor and he wanted to buy that from the u.s. and it was not available locally. he could buy the tractor with his own money and he could buy it in french francs. the french francs were held by the french central bank. the u.s. would provide that

tractor. there would be no trans growth friends -- funds from france to the u.s. so the former would get the tractor he indeed wanted, needed, and paid for in order to rebuild his farm. the french central bank would then put in matching money. money that matched that money that the farmer had put in. then the french government could use that money for a national development program. the united states, in theory, had veto power over how that money was used but ultimately, 95% of the decisions were left to the national governments. indeed, the various participant governments chose to use the money in very different ways. host: we are taking your calls for our guests on our lines by regions.

eastern and central time zones, (202) 748-8000. pacific or mountain time zones, (202) 748-8001. you can also text us and reaches us on social media. how successful was the marshall plan and in what ways? guest: quite successful. if we just look at the basic statistics from 1948 to 1942, output in this of recipient countries expanded by a massive 50% -- 60%. if you read the early accounts by the marshall plan, you get the impression that all this growth is just massive quick revival of economic activity on the european continent, owed to the dollars that the u.s. was sending over. but that was not really the case. it was not for some decades

until you economists darted putting the mechanisms behind the marshall plan, trying to understand how it actually worked. the basic findings where it was not the money per se that was an important primer to get reconstruction going again. there was a massive revival of private investment on the continent and there were two reasons behind that that people often overlook. one was the complete reversal of the u.s. occupation policy in germany in 1944. occupation policy was set according to a morgenthaler plan named after henry morgan that. the idea was to turn it into an agricultural country so it would not be able to threaten its neighbors again.

that was a disastrous policy in that it was fueling starvation in germany and was returning the revival of its own neighbors' economy -- neighbors' economies. france, britain, etc. were dependent on germany. so there was a complete reversal of that policy, turning germany once again into an industrial engine. integrated western europe became a critical component of the marshall plan. the second is the provision of u.s. security to participating countries. france and britain in particular said it was dangerous for them to go forward with the u.s. economic integration policy without guarantees from the u.s. for their security.

if they integrated, they would no longer be economically self-sufficient and could not protect themselves on their own. a year and a day after the marshall aid the deflation was passed, in april 1989 -- 1949, the nato legislation was passed. this commitment of the u.s. providing security to the participating countries was absolutely critical to their rapid revival. it convince investors that americans were not going home as they had after world war i but were committed to the ongoing security of western europe. host: you see the creation of nato as a direct result of the marshall plan? guest: it was not an intended result. after world war ii, the u.s. had over 3 million troops in europe

and p bed -- president truman began withdrawing them very quickly. the literary spending collapsed from $963 billion to $95 billion in 1948. the u.s. was trying to disengage from europe militarily but our new european allies made clear to us that security commitments from the u.s. were going to be absolutely critical to first their economic revival and second, their ability to protect the integrity of their own political institutions against potential threats from either a revived germany that may go down a hostile path again or more importantly, the soviet union. host: let's talk to callers. george in new york. caller: good morning.

you were talking earlier about the tractor and france. are you aware that the john deere company manufacturer -- today star at that time? guest: i do not know who were the major tractor any fractures in the u.s. at that time. it was obvious, given the destruction in europe, that's a of the manufacturers have to be provided directly from the u.s. because the capacity was not there in europe. i should emphasize the marshall plan was a long-term vision. whereas in the short term, the u.s. was providing industrial goods machinery like tractors to western europe, the aim was to overtime integrated western europe economically so that the

economy would be a balanced and germany would once again be put in its place as a dominant provider of industrial goods to europe. agriculture would flourish again in the regions where it was most beneficial. and the economies of western europe would no longer be dependent on the united states. the u.s. in fact used some very clever means to revive trade in western europe from 1950 to 1958, well beyond the tenure of the marshall plan. the european payments union was put into place under which the united states guaranteed payments among the various participating nations in order to get them to trade again. for example, countries did not

want to trade with germany because if you sold something to germany, you were afraid he would never get paid because so many countries had claims on germany. by the united states standing behind those contracts, the united states was able to revive inter-european trade in western europe. host: devon in ohio. good morning. caller: for morning. i was just curious how much you believe the u.s. investing in postwar europe helped lay a foundation for a very positive american western european relation during the cold war and helped with the foundation of nato? guest: absolutely critical. as i emphasize, the two things went together. the economic aid and the military guarantees.

that was not the original intention of the marshall plan. the original intention was to allow the u.s. to disengage militarily from europe. the lesson we learned very quickly was that the two things had to go together. i could just give you a quick example of why those two things go together. consider iraq and afghanistan. since those wars, we have spent $250 billion on reconstruction aid alone. that is around $50 billion more than the totality of marshall aid in current dollars. yet we have almost nothing to show for it politically. the reason is we were unable to provide the necessary external and internal security to those countries that would have allowed their colonies --

economies to develop along the lines we saw in western europe after world war ii. the security element is absolutely imperative. host: i wanted to ask you about a reaction within the u.s. to the marshall plan. was congress fully on board? or was the american public on board? guest: initially congress was not on board. we had divided government at the time. a democratic president, harry truman. a republican house and senate. the public and congressmen in particular were quite skeptical about the idea of using massive foreign aid as a tool to reinforce u.s. economic and security interests. the administration launched a massive public relations and

education campaign, beginning in the fall of 1947. many congressmen, including republican congressman, visited europe to see conditions on the ground. many of them, like young congressman richard nixon from california, came home convince the u.s. really did have to do something radical, something new, in order to protect its interests in europe without having to depend on the military . general marshall himself traveled around the u.s., speaking to farms, women's groups, labor groups, emphasizing the importance of this aid. then, there was also a galvanizing factor in the international sphere. in february 1948, the soviets

instigated a communist coup in czechoslovakia. there had been a coalition government in czechoslovakia at the time. the democrats were pushed out and the communists took over. that's really convinced a lot of wavering republican congressman that they needed to support the marshall aid legislation because if they did not, stalin would use these same tactics further and further west, more and more threatening u.s. security and economic interests. host: before we go to the phones, i wanted to show our viewers a portion of secretary of state george marshall testified before congress about the marshall plan in early 1948. [video clip] >> within its own resources, your cannot achieve within a reasonable time economic stability. the solution would be much

easier if all nations of europe were cooperating but they are not. the soviet union and the communist parties have proclaimed their opposition to a plan where european -- a plan for european economic recovery. it is a difficult program and you know better than i do the political difficulties involved in this program. there is no doubt in my mind that if we decide to do this thing, we can do this successfully. there is also no doubt in my mind that the whole world hangs in the balance. host: he said the whole world hangs in the balance. guest: yes. he very much meant it because this was not just the future of western europe. that was in doubt. it was the future of asia, where we also had deep security

concerns. china was in the midst of a civil war. the soviet union was supporting mao and the communists. of course, we had the korean war break out in 1950. there was a big debate in the u.s. about whether we should pursue a mutual japan or whether we should -- a neutral japan or whether we should try to turn japan into a u.s. military ally, as we wound up doing with germany and europe. this sort of idea that we applied in the marshall plan in western europe were ultimately applied in asia as well. host: brian in fulsome, pennsylvania. good morning. caller: good morning.

you sound very knowledgeable about what you are talking about and i do want to go get this book. when i have seen pictures of europe, the devastation that world war ii created. the amount of machinery and the productivity of the u.s. at that time was incredible. i think the war helped because we were so mobilizing for the war that it allowed us to provide provisions that france, england, germany or what ever countries needed. when i see some pictures of devastation, i have to say it is not unlike some devastation imc in our inner city today. old factories just shuddered -- shuttered and demolished.

how are we going to turn the marshall plan for our nation? do we have the ability or will we need foreign help? that is my question. guest: you make an excellent point. in order to kickstart the reconstruction of europe. and remember, this was just kickstarting. we cannot do this civilly with government money. we had to mobilize private investment. the private investment came into western europe and eventually swamped the marshall aid from the u.s.. what was absolutely critical is in the u.s., it was standing behind this reconstruction. the western europeans understood that this was a strategic imperative. when we look at problems that we have at home, and he talked about the economic devastation

of certain inner cities in the u.s., it is very important that we have a plan, not just to put public money in but to give maximum incentives to the private sector to invest in these communities, to make it clear the government is absolutely determined to make life better for the citizens of those communities. host: lee in bronx, new york. caller: you speak of the marshall plan and i have to play devils advocate and say there are two sides to the story. security was imperative to russia as well because germany had invaded them twice. i know that malnutrition disappear and it helped form nato and all of that but what

are your thoughts on the berlin blockade? and that they were not for the --. we have to understand that the whole world is not going to be a democracy. what do you think of the berlin blockade? guest: i think you asked an absolutely excellent question. i point out the subtitle of my book is "don of the cold war". after marshall's speech in june of 1947, you really do get the beginnings of serious cold war conflict between the u.s. and the soviet union. prior to marshall's speech, you did have coalition governments of sport in the central and eastern europe and poland and romania and hungary and bulgaria. the most legitimate of those was

czechoslovakia as i mentioned. but stolen, after marshall's speech became very concerned with two things. one is that the u.s. with spread marshall aid to what he called satellite nations in eastern and central europe. he was determined this would not happen so he cracked down on all the coalition governments in central and eastern europe and entrenched communist control with regard to germany, stalin's spies in washington and london made it clear to him the u.s. was reversing occupation policy in germany and it would no longer be the morgenthau plan. the u.s. was going to

re-industrialize germany and may even create a democratic west derman state which the u.s. did in 1949. as he pointed out, the soviets were very concerned about an industrially revived germany which they believed would once again reemerge as a military threat to the soviet union. i do argue in the book that given the enormous teaching differences between the u.s. and the soviet union, the cold war was probably inevitable but there is absolutely no doubt that the marshall fan accelerated the path to cold war and accelerated the division of europe. host: james from green bay, wisconsin. good morning. caller: good morning.

how are you today? host: good. caller: thank you for taking my call. i am going to touch basis. i served in europe in the 1960's. please do not pass my name on. i want to know, what the status of the russian agreements with europe contributed to the marshall plan? guest: i am not clear what you are referring to in terms of the statuses of forces agreement. there is no doubt, as i emphasized, the creation of nato. the combining of national military forces in western europe was critical to the marshall plan. but i am not quite sure what it is you are trying to for size. caller: the forces agreement

allowed civilian governments to take over any military person that they thought committed a crime. they were instantly accused and convicted then from the local government. the marshall plan never involved that because it was u.s. or nato running the whole works. the status of forces agreement was to get people protection to the german government of people of america. it is an interesting question because i left there and i never went back. guest: there is no doubt that after the creation of the marshall plan and tomato, there were various issues of conflict. sometimes deep conflict among allies, particularly in the

military sphere but also in the trade sphere. that was anticipated by the marshall planners. people on both sides of this divide. i cannot emphasize enough how much this was intended to be a long-term plan where the u.s. recognized there were going to be difficulties that we were trying to create allies, not colonies of brine, not just transactional -- colonies abroad , not just transactional counterparts, allies who would be with us for generations. you had congressman ultimately talking about this being a fifty-year plan. not a fifty-year plan of economic aid from the u.s. but a fifty-year plan in the sense

that we were going to produce alliances in europe and asia that would endure with us through the generations. i think when the berlin wall fell in 1989, we saw just how powerful that vision was. because the alliances that have been created by the soviet union after world war ii, in particular the warsaw pact, crumbled immediately. whereas the alliances that spring out of the marshall plan, in particular nato but also the european union, because european clinical integration was also a game of the marshall plan. they became as popular as ever. newly liberated countries in eastern europe were clamoring to get into the institutions. that is a great legacy of the marshall plan.

host: we covered your remarks about this on book tv in an event in 2019. you call the marshall plan " visionary but hardheaded". explain that? guest: the reason we are talking about the marshall plan today is because we see it as a success. it was a success partly because of the way we had to find the boundaries of the plan. if we had, at the time, to find success in terms of being able to bring poland and czechoslovakia into the marshall plan, two countries that very much wanted to participate, but which stalin would not allowed to participate. if we had made that fundamental to the marshall plan, we would not have succeeded and we would

not be talking about the marshall plan today. the reason is we would ultimately have had to go to war with the soviet union in order to even try to achieve the same. it was a fundamental objective of the marshall plan to secure vital american interest in europe without having to go toward. we made some very hardheaded decisions with regard to czechoslovakia. for example, george kennan in the state department projected the desk predicted -- the state department predicted the failure and jerome marshall made the decision not to interfere because he felt we did not have to conventional force levels necessary, more would we ever have the conventional forces

necessary in order to defend czechoslovakia. it was sensible to keep out and understand that geography cannot be changed. the u.s. was not of intent. today, in europe, we are dealing with the same questions with guard to ukraine. to what degree can we ultimately integrate ukraine into western economic political and military structures given that it has a long unprotected order with a hostile russia? these are very difficult questions with the same sort of questions that we had to deal with in formulating and implementing the marshall plan. host: i want to talk about what is going on today. you mentioned reconstruction in iraq and afghanistan. spent a lot of money and did not get a whole lot for it because of the security situation. what happens when ukraine gets

to the point of needing to be rebuilt? what lessons do you think we can take from the marshall plan? guest: that is a great question. most likely -- unfortunately, a war in ukraine will not end immediately with a peace treaty. it is more likely to be something in the form of an armistice like we have in korea between north and south. unfortunately, it will probably involve russia still occupying parts of ukraine. it is very difficult to imagine, for example, russia and abandoning crimea -- russia abandoning crimea. under those circumstances, it would be very difficult to use massive reconstruction in ukraine as a means of stimulating massive, foreign,

private investment in the country because that would involve integrating it into western political economic and military structures that russia is, right now at least, determined to oppose. i am not, by any means, calling for appeasing russia. but we have to understand that there are limits to what we can achieve without some degree of cooperation from russia. i believe we have to take a long-term vision with regard to reconstruction thing -- to reconstructing ukraine. vladimir putin is 70 years old. he is not going to be in power forever. we should in the short term continue to use economic and diplomatic pressure to try to

compel russia to withdraw its forces, to end its aggression against ukraine. ultimately, a productive settlement of the conflict will almost certainly require a new administration in russia. host: sherry in margaret bill, new york. caller: thank you for taking my call. i was not aware of your book so i just ordered it this morning. i am just calling -- i think you probably answered a couple of my questions i had most recently about ukraine and the type of cooperation that we could get now to help rebuild it after the conflict is over with. initially, i wanted to stay -- say that my father was stationed in germany right after world war ii.

he did not speak a lot about germany at this time. only that it was a complete mess , just destruction. dirty seven years later, i was stationed at -- 37 years later, i was stationed in the army as an mp and it was amazing how you would never know there was a war there. the highway system was brought over to the u.s., everything was so beautiful. originally, what my question was is, going back to ukraine, what kind of cooperation do you think we in the u.s. or nato would get to help rebuild ukraine? i do not think it would be very much in today's political climate -- the right-wing

politicians and their supporters are against sending supplies into money to ukraine right now to help fight russia. i was just wondering if you had anything more on that. also, sorry i am flip-flopping back and forth. but going back, what kind of cooperation was the local populace like in germany after world war ii in helping to rebuild their country? were there limitations? i know that when i was there, there was a percentage of nationals that we had to hire to work on the posts. guest: one of the many heroes of mine -- my narrative is u.s. general lucius clay, who was the military governor in germany

after the war. he deserves enormous credit for reversing u.s. occupation policy in the country and getting the u.s. to understand that yes, indeed, we could with a positive vision and economics support make west germany into a democratic, peaceloving, prosperous ally. indeed, that is exactly what we did. it was only western germany. we were not able to do it throughout the entire country. we tried. general marshall spent six weeks in moscow trying to bring about unification of germany in march and april of 1947. but we were unable to do it so we had to limit the scope of our

objectives. in ukraine, likewise, we are going to have to limit the scope of our objectives at least in the first phase of reconstruction. almost certainly, crimea will remain in russian hands. unfortunately, it is likely that the eastern part of ukraine will still remain under russian occupation. there are creative means that we can use to leverage financial -- western financial aid to ukraine. one of the topics that is being discussed, very controversial, is the possibility of using russian central-bank assets that have been frozen abroad. our talking about roughly $300 billion -- we are talking about roughly $300 billion to reconstruct ukraine.

but there is very difficult, strategic questions involved. obviously, russia will not cooperate. we are also sending the message around the world that if your country holds u.s. dollar assets, and you get involved in geopolitical conflict with the u.s., there is the possibility were central-bank assets could be seized -- your central-bank assets could be seized. it is important that if we do something like this, do it strictly according to legal mechanisms and do it in conjunction with our allies. it should not be the u.s. operating alone. but we should be operating in concert with our western european allies so the world understands that this is not the u.s. dictating terms. host: louisville, kentucky.

hello. caller: good morning. the u.s. is putting too much control financially in the hands of the military. it still is today. you talk about us sending money to france and france distributing it out. ok, we set a goal. the french franc currency. the goal says i am getting all this money from the u.s. and i am selling it out and using french francs? you kept to the gold and -- to france with the gold. they ended up sending it to stalin.

stalin is supposed to be making a plan with czechoslovakia, poland, and all this. you solve a happened there. they invaded those people. guest: i am not clear what you were referring to with regard to the goal and gold. i should emphasize that the goal was not a supporter of the marshall plan and that the u.s. was almost as concerned in 1947 about the goal coming back into power as they were about the communist in france -- communists in france coming back into the coalition government. it was central to u.s. strategy in the time that the marshall plan was launched to support

centerleft and center-right governments throughout europe. we were trying to avoid the emergence of extremes on either side, on the right or the left. at times, this involved very difficult calculations for the u.s.. in britain, the truman administration was very much against the british labor governments policy of nationalizing certain industries . ultimately, the state department felt it was very important in the u.s.'s strategic interest to make clear to the europeans that the u.s. respected their sovereignty. even if we found it distasteful or did not think it was sensible, we needed to support, at times, what the state department called the non-communist left.

we were going to support any parties in europe that were ultimately dedicated to maintaining democracy. as long as they were dedicated to democracy, we were going to support them irrespective of our opinions about whether their policies could be improved. as i emphasize, france, italy, britain did very different things with their economic aid. we had long, quiet, behind-the-scenes disputes with all those governments about how they use to their aid. ultimately, 95% of the decisions were made at the local level area -- local level. host: john in pennsylvania. caller: you hear a lot of people in this country badmouth socialism versus communism and compare the two. but the marshall plan was the

greatest example of socialism as far as i'm concerned. people helping people. that is what socialism is. have a life socialism in our country. fema, the post office, the military or whatever. there is a list of about 30 or 40 things are socialistic in this country. people who badmouth socialism should buy your book and read about the marshall plan because that was probably the greatest example of socialism ever . guest: the republicans in particular were very concerned that the marshall aid would wind up supporting socialism. it is an ill-defined term today and was an oath find term back then. but i should emphasize that the truman administration put in very clever, and i think effective, mechanisms to ensure

that we were not helping to promote state run economies in western europe. that is why i gave the example of how aid was used in france. ultimately, aid to france was triggered by a private decision in france. say a farmer who needed a tractor who paid with his own money. this was not a gift. ultimately, the funds that were deposited with the french central bank as a result of this tractor order were leveraged into economic development projects within france but again, most of this had to go towards stimulating private economic activity. this was really a public-private

partnership. host: that is all the calls we have. benn steil is the author of the book "the marshall plan" the marshall foundation was begun by president truman before

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