Opinion: Even the Marshall Plan was once called 'Operation Rat-Hole'

A donkey carries U.S. funded supplies to Greece as part of the Marshall Plan. Photo by: U.S. Consulate

April 3 marks the 79th anniversary of the law creating the Marshall Plan, America’s first international development program. It’s now widely hailed as one of our most successful initiatives. But in 1948 its fate was far from certain, with many parallels to the current debate on foreign aid.

One of the plan’s greatest critics was none other than Warren Buffet’s father, Senator Howard Buffett, who dubbed the proposed plan “Operation Rat-Hole,” suggesting the funding would be poorly managed and spent. Another critic, Senator William Jenner of Indiana, took to the Senate floor to describe the Marshall Plan as a “lively fiction intended to obscure the suffering that will inevitably follow for the American taxpayer.”

Then, as is the case for development now, its champions included many of America’s senior military, business, and faith leaders. Some of the key congressional champions were Republican isolationists turned internationalists by the evidence and their own visits to the field.

Returning to 1948 for some context, the U.S. government’s annual budget deficit was 4.5 percent of GDP. It had never been higher. Naturally, some doubted we could afford development assistance for Europe and Asia under those circumstances. Yet between 1948 and 1952, the Marshall Plan provided today’s equivalent of $120 billion in foreign aid to 17 European nations. During those same years, the U.S. provided development assistance of more than $50 billion in today’s dollars to Asian countries. Total U.S. foreign aid was more than $42 billion each year, almost double the FY16 budget.  

What was the compelling national interest that drove the Republican-controlled Congress and President Truman to press ahead? George Marshall, who had served as U.S. Army chief of staff during the war, started it all with a major speech at Harvard describing how U.S. policy should serve as a means of fighting global desperation and poverty abroad to serve the economy at home, ultimately announcing the multi-billion dollar bailout for post-WWII Europe. 

Former isolationist Republican Senator Arthur Vandenberg of Michigan was one of the Marshall Plan’s boldest supporters. Speaking to the United States Senate on March 1, 1948, he successfully argued for bipartisan support of the plan on the grounds that investments in global development are in America’s self-interest: they promote the national economy and improve national security.

That perspective still resonates with America’s military. More than 120 retired three- and four-star generals and flag officers recently sent a letter to today’s congressional leadership drawing on their experience and arguing that military interventions alone cannot combat violent extremism, pandemics, instability and injustice. They must be paired with diplomacy and development

And it still resonates with key Republicans today. Senator Cory Gardner (R-CO) said, “The State Department and USAID work hard every day to implement programs that strengthen America’s standing in the world and help our national security.” House Appropriations Chairman Rep. Rodney Frelinghuysen (R-NJ) has voiced his support of foreign aid as a vital tool that keeps America “open for business.” House Foreign Affairs Committee Chairman Rep. Ed Royce (R-CA) has voiced concerns that eliminating foreign aid would have significant consequences for American job growth and national security.

One can understand a skeptical Congress in 1948, wondering whether investing billions in foreign aid would really benefit the United States. The Marshall Plan was an unprecedented and unproven effort. Yet, huge bipartisan majorities voted yes — 71-19 in the Senate and 333-78 in the House of Representatives.

In considering development budgets today, one key factor has changed: Congress now has the evidence that aid works wonders. In addition to the success of the Marshall Plan, U.S. investments in development have led to the rise of new allies such as South Korea and tremendous gains in global health, education and employment. It reduces threats to Americans, including Ebola, Zika virus, instability, and terrorism. If Congress knew foreign aid was in our national and economic interests even in 1948, why would they walk away from it now with the full weight of history and evidence on their side?

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About the author

  • Justin Fugle

    Justin Fugle is Plan’s senior advisor for policy and program outreach, leading the effort to position Plan as a thought leader and sustainable development organization. Justin regularly organizes policy sessions and speaks on policy panels focused on local solutions and other aid effectiveness topics. To do so, he draws on deep knowledge of Plan’s program approach, institutional experience, and program results.