9.2 Rebuilding Europe

Two years after the war, recovery had stalled. The winter of 1946–1947 was brutally cold, coal and food were short, and countries lacked the dollars to buy American goods they needed to rebuild. Communist parties were large and popular in France and Italy, in part because of their role in the wartime resistance. U.S. leaders feared that poverty would push Western Europe toward communism.

In June 1947 U.S. Secretary of State George Marshall proposed a large aid program for Europe. The European Recovery Program, known as the Marshall Plan, ran from 1948 to 1952 and gave about 13 billion dollars, mostly as grants, to 16 European countries plus the western zones of Germany. Europeans had to plan together how to use the aid, through a new Organisation for European Economic Co-operation (OEEC), which encouraged cooperation and reduced trade barriers.

The aid was offered to the East too, but Stalin refused it and forced Poland and Czechoslovakia to withdraw their interest, seeing it as a tool of American influence. The Soviet Union set up its own bloc economic organization, COMECON, in 1949 (9.4).

Historians still debate how much the Marshall Plan caused recovery. Some argue that recovery was already beginning and that European workers and governments did most of the work. Others stress that the aid came at a critical moment, bought fuel and machinery, and restored confidence. Most agree its political effect was large: it tied Western Europe to the United States and to each other.

From about 1950 to the early 1970s, Western Europe enjoyed the fastest sustained growth in its history.

Several common causes explain the boom: rebuilding created demand; the United States kept trade open and supplied investment; cheap oil and new technology raised productivity; workers moved from farms to factories and from southern Europe and former colonies to the north (9.11); and European cooperation, from the Coal and Steel Community to the Common Market (9.10), widened markets.

As wages rose, ordinary families could buy goods once reserved for the wealthy. Cars such as the Volkswagen Beetle and the Fiat 500, televisions, refrigerators and washing machines spread through Western Europe in the 1950s and 1960s. Supermarkets, advertising and installment buying, paying for goods over time, changed how people shopped. Paid vacations and package holidays let workers travel to the Mediterranean.

Consumerism, a culture centered on buying goods, had critics. Some saw it as Americanization (9.13), and student radicals in 1968 attacked it as empty materialism (9.14). Still, the rising standard of living gave Western democracies a powerful argument in the Cold War.

Eastern Europe rebuilt on the Soviet model, with state ownership, five-year plans and an emphasis on heavy industry such as steel over consumer goods. The Soviet Union also took reparations, including whole factories, from its zone of Germany. Growth was real in the 1950s, but living standards stayed well below the West's, and shortages of housing and consumer goods were common. The contrast between the two halves of Germany was especially visible.