Western Europe between 1945-1970
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World War Two left Europe in state of economic distress. The war had left many areas of Western Europe in complete ruin, and the world’s major industrial areas were brought to disintegration. Western Europe could not longer conduct the prosperous trade in which it once participated in. In this state of devastation, both the Soviet Union and the United States reached out to lend a hand to help economical revival in Western Europe. Since communism was firmly rebuffed in Western Europe, and the Soviet Union was a communist country, the United States’ aid was accepted to help Western Europe begin its long period of economic revival. Through the Marshall Plan, Europe began to rebuild its factories, farms and transport systems, which had been destroyed by the war. Although the economic revival of Western Europe from 1945-1970 was relatively effective, many weaknesses can be seen in this strategy to help Western Europe rebuild itself.
The United States did not have to deal with rebuilding its home front. In actuality, the United States’ economy was better then it had been before the war. By the end of the war, the United States held two-thirds of the world’s gold, and created two-thirds of its world industrial production. Economy in the United States grew rapidly after the war.
But while the United States was booming, the countries of Western Europe were suffering from the brunt of the damage done by WW2. Transportation and exchange were ruined, the imports in which many of the countries desperately needed became too expensive for them to pay, and their markets became weakened. Seeing that Western Europe needed serious economic help, the United States sent billions of dollars worth of goods to Western Europe. Through this aid, the countries of Western Europe began to rebuild their economies. By 1947, the nations of Europe were achieving the amount of production in which they were creating before the war. Economic recovery seemed to be a short road in which the countries of Western Europe would achieve quickly.
However, that was not the case. In the spring of 1947, the poorest harvest in the century was feared. Combined with Cold War tensions, the people of Western Europe became terrified, and began launching strikes. The United States feared that the Europeans would revert to help from the Soviet Union if they did not take action. George C. Marshall drew up plans for economic recovery of both Eastern and Western Europe. Although the Soviet Union and the Eastern Bloc countries did not take the initiative, the countries of Western Europe did. Through the Marshall Plan, transportation, and infrastructure was modernized and improved. Trade barriers were reduced, and trade was reinitiated. Through the Marshall Plan, the world market was restored. Although this plan was not perfect, it hastened economic recovery. But although this plan was very beneficial, like anything else, it had negative side effects. In this case, the Marshall Plan created a severe separation between the Soviet bloc and the West.
Western Germany also became well on it way to economic revival. The currency reform of 1948 initiated economical revival and expansion. Western Germany benefited from the Korean War of 1950, for the American demand for goods boosted their economy. From 1948-1974, the Western economies grew tremendously.
The European Coal and Steel Community, and the European Market also helped to strengthen European economies. With the European Coal and Steel Communities, steel moved freely among Belgium, Italy, West Germany, France the Netherlands and Luxembourg by 1958. In the European Market, free movement of capital and economic policies and institutions were created. These programs strengthened the European economy.
A competitive free-market, government intervention, social services and full employment kept economies running. The fifties and sixties expressed a golden age. But however, setbacks did occur. The flow of the population from the European empires created severe difficulties for the European people. By 1970, the birth rate, which had increased in the years before, began to decline. The welfare state, although in theory was well organized and successful, did not really begin to work until after 1970.
In Italy, it was still economically divided into the prosperous North and the rural South, which was agricultural and did not have a booming economy. Although Italy did develop economically, it faced many problems along the way. After 1970, Italy’s inflation rate increased and unemployment soared. Although the Marshall Plan was very beneficial, it did not solve all of the problems in which Western Europe faced.
The economic revival of Western Europe came with strengths and weaknesses. Although most of the nations of Western Europe got well on their way to prosperity by the Marshall Plan, Italy still suffered. The Marshall Plan also divided Europe into Western and Eastern Europe, in which hostile relations occurred between the two. Although economic recovery can clearly be seen during this period, many harmful results, such as bad social relations between countries was caused because of it.