The Atlantic and Its Enemies

3. Marshall

When the British announced on 21 February 1947 that they could not go on in Greece, the American reaction went far further than they had expected — ‘quick and volcanic’ was the expression used. In 1945 the Americans had hardly expected to be much involved in the eastern Mediterranean, though they had oil interests in Saudi Arabia. They had not meant to be heavily involved in Europe, even. But now, in February 1947, Greece caused a sea-change. The new Secretary of State, George C. Marshall, spoke — even then, to complaints at his moderation — for the entire Truman administration when on 27 February he said, ‘It is not alarmist to say that we are faced with the first crisis of a series which might extend Soviet domination to Europe, the Middle East and Asia.’ He had spent the previous year in China, where there was a civil war in progress, and had been fooled by the Communist leader, Mao Tse-tung. The behaviour of Stalin was still more provocative. Everyone knew that the Soviet Union needed peace in order to recover from the devastation of the war, and American help was on offer. Instead, after a brief interlude tyranny had been reimposed, with starvation and in places cannibalism, while millions of people were worked to death in the camps, and Stalin had told Marshall to his face that Communism in Europe would win. But by March 1947 the Americans had had enough.

Marshall himself was an old military man, straight, austere, not given to panic, but also unwilling to tolerate untruths. Now he spoke for almost the entire American establishment. Dean Acheson, also a man of much integrity, told the Congress leaders that a Soviet penetration of the Near East ‘might open three continents to Soviet penetration’. The need now was to convince a largely apathetic public of the danger, and on 12 March, at a joint session of Congress, Truman made what was referred to as the ‘All-Out speech’: ‘It must be the policy of the United States to support free peoples who are resisting attempted subjugation by armed minorities or by outside pressure.’ Large majorities gave Truman what he wanted: $300m for Greece, $100m for Turkey. There followed a deliberate American strategy to contain Communism by using the economic weapon.

As Marshall returned from the exhausting and fruitless Moscow conference, without even an Austrian, let alone a German, deal, he could see that the Greek problem was just a small version of a much larger one. Western Europe desperately needed help, and the British themselves were unable to go on shouldering the burden as before. The three western zones in Germany were producing hardly one third of their pre-war level and yet they had been the source of one fifth of Europe’s entire industrial output, including the heavy machinery for which Germany had been so famous. On the official market an egg in Hamburg cost a day’s wage. The former President Hoover had been sent in 1946 to study the food question, on which, with Belgium in the First World War and Russia after it, he was a considerable expert. Early in 1947 he reported that the whole problem was insoluble unless Germany were once more part of a wider European economy.

When Marshall returned he had a flurry of memoranda on the European crises and various officials had been sounding the alarm for some time. The fact was that the Europeans were importing far beyond their capacity to pay, and a businessman, William L. Clayton, who had become assistant for economic affairs in the Secretaryship of State, had written that ‘Europe is steadily deteriorating. The political position reflects the economic. One political crisis after another merely denotes the existence of grave economic distress. Millions of people in the cities are slowly starving… The modern system of division of labour has almost broken down in Europe.’ The American trade surplus by March 1947 ran at over $12m, and American prices themselves rose by 40 per cent in 1946-7, such that imports from Europe themselves declined and made her overall balance of trade even worse. The US wartime deficit ended in 1947, with a budget surplus of $4bn. Had this been peacetime, no doubt banks could have been mustered for relief, or the European currencies could have been devalued, to make imports in the USA cheaper — a device eventually used in 1949. But in the immediate post-war era, and especially with the terrible winter of 1947, these escape hatches were blocked, and besides, the fledgling World Bank and International Monetary Fund, set up in 1944 for such emergencies, were too small to be effective (the IMF made a small loan to Denmark and was otherwise not heard from). Everything depended upon the Americans’ attitude, and in spring 1947 the British Chancellor complained, ‘[they] have half the total income in the world, but won’t either spend it on buying other people’s goods or lending it or giving it away on a sufficient scale’. Here he was quite right, and they even still maintained high tariffs, pricing out such European goods as could be sold. Getting round Congress over such matters was not easy, even if the administration itself clearly saw what needed to be done. Stalin greatly helped: the USA would have to act or Europe might fall to Communism. Marshall understood, and as Daniel Yergin says, ‘the anticommunist consensus was [now] so wide that there was little resistance or debate about fundamental assumptions’. Private businessmen would have to be deterred from pulling out of Europe altogether, as was happening.

In June 1947 Marshall spoke at Harvard and launched into a speech that entered history as one of America’s most positive contributions ever. Veteran diplomats who knew Russia drafted it (Kennan and Bohlen) and their words were carefully chosen — for instance, there was no overt anti-Communism and the Russians were invited to the initial conference (in Paris) to discuss things. The Marshall Plan was ingenious. It was presented as a design to put Europe back on its feet, thousands of millions of dollars being on offer, generally as a gift. That in itself offered hope in the bread queues, and the USA at the time counted as a land of milk and honey, a place of wizardry in typewriters and refrigerators. That in itself would counter any appeal that Communism might have. But the Plan also squared another difficult circle. Western Europeans blamed their own lack of recovery on the failure of the Americans to deliver reparations from Germany, and the Americans had let this happen (in May 1946) because they would have had to pay still more for a stricken Germany. But if Germany were allowed to recover, there were many, many Europeans who would fear the worst, given the German past. But without German recovery, as Hoover had stressed, there would be no overall European recovery given that, for instance, half of Holland’s exports generally went there.

Marshall presented German recovery in the context of overall European recovery, and in the summer of 1947 the Americans informally discussed the political unification of ‘Bizonia’ with the British. This was the restart of Germany: in April, at Frankfurt, an ‘Economic Council’ of fifty-two delegates chosen by the Länder parties had met. ‘Reparations’ were scaled down to permit the Germans to produce 10.7 million tons of steel. ‘Bizonia’ was formally included in the European Recovery Program, as the Marshall Plan was formally called, and after a conference of sixteen European nations in July, including Turkey, a project was submitted in September for increased output and exports, for financial stability and cross-border co-operation. The cost was put at $20bn. The winter had vastly weakened ideas of ‘socialism’, and liberalism, as the Europeans understood it, was coming back again. Marshall obviously meant capitalism, New Deal style, and it floated in on the tide of $40bn that the Americans disbursed in the second half of the forties. This was needed the more because the summer turned out in its way to mark more disaster: there was a drought, and the French had the smallest wheat crop for 132 years; extra rations had to be given to the Ruhr miners in a desperate effort to increase coal production. Importing food, France and Italy found their dollar reserves melting, and such private capital as was free to do so shifted to the USA. There was a run on the pound sterling, and as Truman wrote, ‘the British have turned out to be our problem children now. They’ve decided to go bankrupt and if they do that it will end our prosperity and probably all the world’s too.’ Late in September he told congressmen and said that some interim help (before the Plan started) was essential, ‘or… for all practical purposes Europe will be Communist’. A new international Communist organization had been set up, Cominform, and the French and Italian parties had been instructed to start disruption through strikes and industrial trouble: in fact, news that ‘in France the subway and bus strike is spreading’ caused congressmen to accept Truman’s proposal for a special session, at which the American people could be persuaded to endorse the Marshall Plan. A special session did then authorize a further $600 million as interim aid to Austria, France and Italy.

There was a final postscript when the next Council of Foreign Ministers assembled in November in London. By then, Marshall had no expectation of Russia: she would try to ‘get us out of western Germany under arrangements which would leave that country defenceless against communist penetration’. One such ‘ruse’ would obviously be to accuse the Western powers of dividing Germany, with the establishment of a separate state there (and some Germans did argue that siding with Russia would mean a united and neutral Germany). In due course Molotov was utterly intransigent, and, now, the French came round to the American side, at last willing to accept the principle of a sovereign Germany. Such plans included a currency reform, which would obviously mark off the western zones from the east, which would retain the old, managed, currency. At American initiative, the Council was broken off on 15 December. European reconstruction, under the Marshall Plan, now went ahead.

Over a five-year period, $13bn was given to European countries, including Turkey, and that amounted to 2.5 per cent of the entire American economy. In the first year — 1948-9 — over $5bn went, in accordance with the recommendation of a committee set up under Averell Harriman. For a government to collect sums of that sort was remarkable enough but so too was the degree of international co-operation involved. The European Recovery Program (ERP) financed about one third of all exports, and a central office in Paris, the Committee for European Economic Co-operation, collected the statistics of what was needed, and allocated the dollars to pay for them (in April 1948 it became ‘Organization’ and subsequently became the Organization for Economic Co-operation and Development, today’s OECD). That took time, and a large staff, some of them working in the various countries to check on the statistics and the needs. The Plan operated properly only in 1948-9, when it made a significant contribution to the overall GNP of between 5 and 10 per cent. An Economic Co-operation Administration (ECA) was opened in Washington to supervise the statistics-collecting and co-ordinate it with American spending. There were some grumblers on the Right who did not like this government largesse. Certainly, it amounted to a subsidy for American producers, and the lobbyists got to work — half of the ERP shipments to go in American bottoms, and a quarter of the flour to be sent ready-milled.

German industry was essential, and the Economic Council in Frankfurt became a proto-government, with six ‘directors’ as technical ministers. By February 1948, when the European Recovery Program got under way, there were 104 deputies and by June 1948 there was a prototypical central bank, with the unwieldy name ‘Bank of German Lands’, the ‘the’ omitted because the ‘lands’ did not include the eastern-zone ones. In May 1947 the Christian Democratic Union emerged as a Bürgerblock dominated by Konrad Adenauer. Quite soon, in July 1948, the ministers-president of the Länder were authorized to set up a constitutional convention, and ‘Bizonia’ had its own people in the Marshall offices in Paris. There were still wrangles with the French, who wanted the Saarland’s coal, and there were still debates about ‘reparations’ in 1949, but these were echoes of old shouting, and in summer 1948 the French Zone was to be added to the other Western ones, as a ‘Trizonia’. An agreement at Washington in April 1949 agreed the bases for a new Germany.

The Marshall Plan counted as enormously successful. There were some imponderables. For Americans at that time, Europe was a place of endless interest. As a young CIA man of the time, Michael Ledeen, said, its films, wines and women were endlessly fascinating and stood at great contrast to the tea and cookies on offer at home. It was a sort of emancipation. Nan Kempner, wife of a banker stationed in London, was full of admiration for the stoicism of her British friends, giving dinner parties in the midst of severe rationing; she said she found a way of leaving money on the mantelpiece discreetly; Zara Steiner, then studying at Oxford, also found the place exotic, as champagne fountains flowed for summer balls in bread-rationed and then drought-ridden 1947. Fifty thousand people applied for ECA jobs, of which there were 3,701, 2,612 abroad. There was a further imponderable. The myth of Roosevelt grew as time went by. In his lifetime, he had had enemies. But in the later 1940s and 1950s he came to be seen in a golden glow. The New Deal had made for superb propaganda, as public money was poured, with conviction, into the sort of giant engineering projects that distinguished America — especially the Tennessee Valley Authority, designed to irrigate a huge area with dams or river diversion (the original plan was, as it happens, Hoover’s, and has subsequently been much criticized for its effects on the ecology). The New Deal of the 1930s may not have immediately solved America’s problem with unemployment, but the Second World War certainly had, and the American war economy had been one of the world’s wonders. This war economy, thought the people who managed it, just showed what could be done if the government and business co-operated, with government applying controls (as over petrol rationing) when this had to be. A young economist, John Kenneth Galbraith, rose to positions of power and influence. He had trained at Cambridge with J. M. Keynes and had been beguiled by the ease with which Keynes, himself apparently a grandee, took on the grandees of the ‘orthodox’, stuffy financial world, associated with the old and staid virtues. Galbraith, who went on to write very good books and convincing articles about the modern economy, had controlled some prices during the war. He was, instinctively, a believer in the power of government to liberate people from the bad barons or wicked capitalists or stupid bankers who might attempt to rule their lives. Roosevelt had died in April 1945, just before the end of the war in Europe. But his soul went marching on. The Americans who came to Europe in the Marshall Plan period had a wonderful time. Their attitude (‘can do’) came straight from the New Deal and the war. Now it was on display in Europe. Especially in Germany, it went down very well indeed. The Marshall Plan was the application of New Dealing to Europe. The thirties had been a bleak decade for foreign trade, with quotas, exchange controls and highly complex trade agreements between one country and another, striving for balance, and consuming vast amounts of paper in the effort to work out how many exported turnips translated into an imported locomotive. Exports in 1946 stood at only 60 per cent of the figure for 1938 — itself a poor year, given rearmament and the near withdrawal of Germany from the international arena. That was set to change.

To make the Plan popular, the ECA had a public advisory board on which sat trade unions, Rockefellers, General Motors, the New York ‘Fed’. There were also American businessmen of the classically successful type. Joseph Dodge was a banker, later credited with the restoration of Japan. Paul Hoffman, the administrator of the ECA, was originally a car salesman, had made a million dollars by the time he was thirty-five, and rescued Studebaker. Lucius Clay, Eisenhower’s deputy and then military governor, was an engineer by training and had worked on the Red River Dam and on airfields; at sixty-five, in 1962, he was to become a merchant banker. Averell Harriman, in charge of a committee to popularize the Plan, was a banker, with abrasive manners that irritated the British, who kept trying to prevent him from dominating Paris sessions. His associate David Bruce similarly had a background among what critics called ‘Wall Street wolves’. William Clayton was a Texan oil man, looking everywhere, intelligently, for practical solutions and no-nonsense ways. The operation of the Marshall Plan did involve a great deal of paperwork, with typewriters and carbon copies, as the various government agencies set priorities — food imports, machinery or, more simply, dollars to fend off a crisis with foreign reserves, as was, by and large, the British concern. Foreign trade was generally run by governments, and there was strict exchange control. Cutting through that bureaucracy took energy, and the Americans had it. Already by 1949 a European recovery was going ahead, and the fifties saw a vast rise in prosperity.

But the Marshall Plan was to work as intended only for two years — 1948-9 and 1949-50, when the bulk of the $13.5bn was spent. The $10bn had more or less sufficed to deal with the European deficit and quite soon the Europeans were exporting again. The further $4bn that had been intended was diverted because the Plan, if not derailed, was greatly changed in emphasis, partly because of its own logic, and partly because of international crises. By the end of 1947, the USSR had turned its satellites into fully Communist countries, without any but a formal vestige of opposition.

There was a final decisive moment in February 1948, when Czechoslovakia fell under total Communist control, the ‘Czech coup’, as it was known. This was not at all easy, because the vital ingredients were missing: there was no Red Army occupation, and there was a functioning democratic state — and not only that, but one unlike the others in the Soviet bloc. The Czechs had serious heavy industry, and there were world-class firms such as Bat’a for shoes and Škoda for machinery; there was a substantial middle class, and, uniquely in the bloc, a large and organized working class. Czechoslovakia before the war had been roughly on the same level as Belgium, and even the capitals’ architecture had points in common, especially the ingenious twenties additions. In ordinary circumstances, the trade unions and the Social Democrats would no doubt have co-operated with some farmers’ party, whatever its name, to profit from the Marshall Plan and leave Czechoslovakia associated with the West — a sort of Austria or Finland. Such a solution to the Soviet problem was clearly in the mind of the Czech leader in exile, Edvard Beneš. He did not go down the Polish path, to challenge Moscow; instead, he went out of his way to reassure Stalin, and made no trouble when, at the end of the war, the Soviet Union annexed a strip of land on the Carpathians that had a Ukrainian population. He maintained good relations with the Czech Communists who had chosen exile in Moscow, and his ambassador there even turned out to be a Communist agent. A Czech force, again commanded by a man who turned out to be an agent, operated on the Eastern Front — all of this in absolute contrast to the behaviour of the Poles. The counterpoint was of course that the Red Army would not occupy Czechoslovakia, and in due course it did indeed depart. In May 1945 a five-party coalition took over the government, and a year later there was a free election. Prague, undamaged by war, struck a Polish journalist, Stefan Kisielewski, as a miracle: quite unlike grim Warsaw, its shops were full, the lights were working, the hotels were functioning, and even the old aristocracy could be seen making their way through the cobbled medieval streets in black tie, to this or that dinner party in some Schönborn or Lobkowitz Palace. ‘Our Communists are not like the others’ was a line that foreign diplomats or journalists often heard, and some of them were quite impressed by the fluent and knowledgeable minister of culture, Václav Kopecký, who could talk about film and much else. When the British historian A. J. P. Taylor visited Prague, his old London acquaintance, Beneš, showed him the undamaged Prague skyline with pride: ‘all my doing’. He had even sent a ‘plane-load of senior non-Communists to Moscow to negotiate terms with the Communists there, and Stalin, at a farewell banquet, had assured them, “We will never interfere in the internal affairs of our allies.” ’

But circumstances would prevent Czechoslovakia’s becoming Austria or Finland, let alone Belgium. In 1945 there was indeed a sort of Popular Front regime, as the Communists understood it — an alliance with the Social Democrats and with the ‘progressive’ elements of the middle class (for historical reasons, one element was called ‘National Socialist’, essentially anti-clerical and anti-German). But the two chief political parties had been knocked out because of their behaviour during the war. Hitler had taken over the rump of the Czech lands, as a ‘Protectorate’, and there had been a collaborationist government run by the old Agrarian Party, the chief Czech party before the war. Collaboration had gone so far that the Czech lands, along with Belgium, were the only parts of Nazi-occupied Europe in which industrial production had gone up, not down. Its chiefs were put on trial and the party was banned. Slovakia had been even more heavily involved in collaboration. She had been given independence, and a nationalist or even Fascist regime had followed in 1939, under a priest, Mgr Jozef Tiso. With the blessing of the Yalta conferees, only ‘anti-Fascist’ parties were now allowed into parliaments, such that the two largest elements in Czech and Slovak politics were banned. Slovakia might, as today, otherwise have remained independent, and it was really only Soviet support for the integrity of Czechoslovakia that kept the country together.

On the face of things, restored Czechoslovakia was a functioning democracy, complete with cabinet and parliament and debates. However, the real centre of power lay in the ‘National Front’, a body on which were represented, by appointment, the five permitted political parties, and the administration consisted of ‘national committees’, again not elected. Not only this: the party members in the supposed parliament were under orders to vote as they were told by the National Front. In its regional and local committees, there was not much opposition to the Communists and they had a vast prize to offer. With Stalin’s support, the 3 million German inhabitants of the country were expelled in 1945-6, with a suitcase each. In German-inhabited towns (in Slovakia, to a limited extent, the same happened with Hungarians), placards went up, couched in the same insulting language that had been used by the Nazis as regards the Jews: ‘All Germans, regardless of age or sex’, were to collect in the town square and be marched off or in some cases moved by train, and dumped in shattered Germany. Unknown numbers died, and their property was free for the taking. However, since the Communists controlled the relevant administration, anyone aspiring to take over these lands and houses, including many gypsies, would have to register with the Communist Party (as happened in Poland). The non-Communist elements in the National Front did not object to this — quite the contrary, they were even more vociferous about the process than the Communists themselves, and one of the chief ‘National Socialists’ (or ‘Radicals’, a more suitable translation), Peter Zenkl, argued for the abolition of ‘capitalism’, by which he meant foreign-owned plants and farms. A land reform took over 5m hectares, one fifth of them forest, and three fifths of industrial output was taken over by the State, again with the blessing of the non-Communists. Even the Communists argued for a slower speed of change and put themselves forward as protectors of ‘the small man’. Meanwhile, on any national issue, including irritating little territorial claims against Poland, the five parties were glued together. This mattered very greatly in anything to do with Slovakia. Where the Czech lands were prosperous and modern, Slovakia was in many ways backward: still heavily peasant and Catholic, the educated element often Hungarian and Jewish or, where Slovak, part of the small Lutheran minority. When Slovakia had declared independence in March 1939, it had been a vast blow to the Czechs, hitherto the dominant people, and there was still much resentment at the Slovaks’ behaviour during the war, when they had been pampered favourites of the Third Reich. Since it was Stalin and the Communists who in effect kept the country together, they received Czech support.

This made for the other unique (or, given Chile much later on, almost unique) feature in the case of Czechoslovakia: the Communists were by a long head the strongest party. As part of his deal with Stalin, Beneš had already allowed them a great deal of weight in the National Front, where they took a leading role in Security, the Interior, and (though their man was theoretically non-Party) Defence. They used their weight quite cleverly to make sure of the police and the security services, the StB; they wormed their way into the trade unions; they set up ‘organizations’ for resistance fighters and the like which (as in France) they could parade as democratic and anti-Fascist bodies. In particular, they set up militias based on factories which, if there ever were a clash, could easily dominate the streets, given that neither police nor army would intervene. A free election in May 1946 revealed their strength. In the Czech lands they took 40.17 per cent of the votes, three other Czech parties taking 15-24 per cent each; of these, the Social Democrats contained an element that could easily take the Communists’ part and therefore even give them a slight Czech majority. In Slovakia the proportions were very different. There, a Slovak Democratic Party gained three fifths of the vote, the Communists under a third, which gave them, all in all, 38 per cent of the seats — still the largest party by far, but potentially a minority just the same.

In 1946, as tensions rose in Germany, Czechoslovakia still appeared to be an island of peace and even prosperity. Exports went ahead; Western visitors came and went; Czechs put themselves in the world’s newspapers with this or that far-flung expedition. There were political wrangles as the parties fought over one proposal or another, and the non-Communists managed to win one such, a proposal for a wealth tax that would have damaged small enterprise. But Czechoslovakia, her borders reaching far into the bloc, and even, for a few miles, contiguous with the Soviet Union’s, was no Finland, and there came a moment of truth in the early summer of 1947. George C. Marshall proposed his Plan, and the British joined him in inviting all European governments to attend a conference at Paris. The invitations went to the Soviet bloc, and the Russians did indeed appear in great numbers. The Czechs, and even the chief Polish economist, were anxious to go along with Marshall. But Stalin denounced the Plan, as a plot by which imperialists could take over weak economies such as those of central Europe and the Balkans; the bloc states, including Finland, refused to accept Marshall’s terms, and a Czechoslovak delegation in Moscow was also instructed along these lines. Czechoslovakia therefore missed out on the developments that were to turn neighbouring West Germany, in a short space of time, back into a great trading industrial power.

As that development went ahead, Stalin could see that a rearmed West Germany, part of an imperialist bloc, would be on his doorstep, and an order went out for the Communist parties everywhere to respond. In August, at Szklarska Poręba in Silesia, a one-time German spa called Schreiberhau, in a manor house that had been turned into a secret-police sanatorium, a meeting of the main Communist parties was held, and was harangued by Andrey Zhdanov, the cultural commissar. There would be an end to ‘Popular Front’ tactics, i.e. alliances with treacherous middle-class or peasant politicians; trouble should be made, through strikes or whatever in western Europe, especially France and Italy; a union should be forced through of Social Democrats and Communists, and a one-party regime imposed, with all the paraphernalia of relentless propaganda and faked elections. This programme had already gone through in the Balkans and East Germany; Poland was nearly there; Hungary was about to undergo it, with the September elections. Czechoslovakia stood out but the secretary-general of the Czech Communist Party, Rudolf Slansky, soon had a plan ready. There were two possible routes to takeover. Power might simply, Bolshevik-fashion, be seized. But that would be too obvious, and would shock western European opinion. Better ‘Trojan Horse’ tactics, infiltrating the enemy parties. That programme now went ahead.

It was helped by circumstances — the harsh winter, followed by a severe drought, made for discontent, and there was a fall in exports (even food was imported from the Soviet Union). There was also much grumbling among the intelligentsia, whose wages had fallen quite drastically whereas elsewhere, as the economy recovered, there were patches of prosperity. The Communists blamed the machinations of ‘capitalism’ and the effects of the Marshall meeting; they proposed to head these off with a tax on ‘millionaires’ but suffered an early and misleading defeat. The other parties, recognizing it to be futile, blocked it, and the block succeeded because the Communists had not yet established their own manipulable element among the Social Democrats. On 10 September came a mysterious development: the despatch of parcel bombs to three prominent non-Communist ministers, including the one responsible for Justice, Dr Prokop Drtina. But the essential manoeuvre came over Slovakia. There, the Communist-controlled Secret Service discovered an alleged conspiracy, of exiled ‘Fascists’ colluding with Democrats. There followed 450 arrests, and the trade unions went into action to demand a suppression of the Slovak governors. They were replaced by a commission, in which the ‘organizations’ were represented; and though there was of course opposition in Slovakia, it was in some degree divided by religion (Catholic and Lutheran) and in any case could not challenge the police and the trade unions, who muzzled the media. Later on, the archives of all of this became open, and were written up in somewhat surreal circumstances by Karel Kaplan, who revealed that there had been spies, known in code (agent V101 etc.), in the Catholic ranks. Slovakia had been corralled by November, and there was a great block of opinion in the Czech lands that now saw the Communists as guarantors of the unity of the country against the treacherous Slovaks. Especially, a decisive element among the Social Democrats drifted towards the Communist side, and was led by one of the wartime chieftains, Zdeněk Fierlinger, who had probably been a Communist agent all along. Meanwhile, in Prague, there were barrages of Communist propaganda, and displays of ‘the organized discontent of the masses’, and these hundreds of thousands of people, complete with threatening banderoles, were imposing enough. How were the non-Communists to respond?

In January 1948 a provocation was carefully set up. The parcel bomb incident was investigated by the police, at the behest of the Minister of Justice, Dr Drtina (in his memories, he is, Austrian-fashion, punctilious about recording the title ‘Dr’, even when applied to executed war criminals or Communist agents). They dragged their feet, and did so insultingly, as Czech officials knew very well how to do; the incident was used too as an excuse to plant ‘bodyguards’ on the non-Communist ministers, and the state security service by now contained men who had been given a Soviet training. Drtina’s investigation led towards two police officials, whose arrest by the Minister of the Interior (and police) he now demanded. The affair reached the cabinet, and its chairman, Klement Gottwald, refused to act. We know the sequel from both sides — memoirs on the one, secret archives on the other. Stalin advised confrontation, once he was assured by Gottwald that the Red Army would not have to intervene, and he flew into Prague his long-term Czech expert, the former ambassador Valerian Zorin. On their side, the non-Communist ministers talked to the American and British ambassadors, and conferred among themselves or with President Beneš. Beneš told them not to risk a battle, but they themselves wanted one, in the expectation that early elections would be called, which, given the Marshall Plan as support, they would win. In fact elections were due that May, but Drtina and his friends feared that the Communists, being in charge of the arrangements, would bring off the sort of coup that had worked in Poland, with the fraudulent referendum. So they forced a crisis, and resigned. If a majority of the ministers had resigned from the government and from the National Front especially, there would indeed, formally, have been a government crisis, compelling Beneš to act. On 18 February they threatened to resign, and on 20 February twelve of the twenty-six ministers did indeed do so.

This was not a majority. The Social Democrat Fierlinger stayed on, and so, fatally, did the foreign minister, Jan Masaryk. In his way, he represented the tragedy of the Czechs: vastly talented, an excellent linguist, a good pianist, a bibulous charmer with a long string of affairs and funny stories, and contacts all over the world; but in the end a weak and selfish man, the shadow of his far tougher father, the founder of the republic. Beneš was very ill, not likely to live much longer; the last thing that he now wanted was any kind of crisis. He would bow to force, whether that now shown by the Communists with their militias in the street, or by the Red Army; he dressed this up with reference to the West, which he alleged was forcing him to choose between Germany, which he hated, and Russia. Jan Masaryk thought that he would be Beneš’s successor, and stayed on. Gottwald could hardly believe his luck and said, ‘At first I couldn’t believe it would be so easy. But it turned out that they had resigned. I prayed that this stupidity would go on and that they wouldn’t change their minds.’ They did not. Gottwald now had an opening, to nominate men to the National Front who would replace the resigning ministers, and were ostensibly from the same parties. Thus the Catholic (People’s) Party leader, an aged priest, Dr Jan Šrámek, was replaced by a colleague, Mgr Josef Plojhar, who had been in Mauthausen and no doubt learned, there, to co-operate with Communists; and there were stooge Radicals or Social Democrats as well. The way was clear for Gottwald to proclaim the Communist takeover, which he did, overlooking the statue of Jan Huss from the balcony of the Kinsky Palace on Old Town Square, on 25 February.

Poor Drtina had tried to make amends, saying the day before that ‘the most important guarantee of security rests in close collaboration with the USSR’. But it was too late, and two days later he tried to commit suicide, in a manner befitting the native tradition, by jumping out of the window. Badly broken, he was kept in hospital for a while and then imprisoned, spending long years in this or that castle dungeon, often together with German war criminals or Slovak Fascists whom he himself, in his great days as minister for ‘retribution’, had sentenced. In 1960 there was at last an amnesty and he was released, staying on in Prague until his death, aged eighty, in 1980. The new Communist regime showed its character in other cases. The aged Šrámek, a tough old peasant-priest who had spent the war years as part of the exile government in London, tried to escape on a French aircraft and was held at the airport. He too faced years of dungeon and prison, dying, aged eighty-four, in 1956. Jan Masaryk had a fate all his own. He stayed on as foreign minister, living alone in the official flat at the top of the Czernin Palace, the foreign ministry building (which had also housed the Nazi Protectorate staff). On 12 March he was found splayed on the road, below the bathroom window of that flat. Suicide? Murder? No-one knew, and neither the investigation of the time, nor a subsequent investigation by an American journalist twenty years later, when witnesses were still alive and evidence still warm, cleared up the matter. There were signs of a struggle in the bedroom, and there was blood all over the bathroom, which had only a small window, through which it would have been very difficult to manoeuvre Masaryk, a big man. Perhaps the affair can be explained by drugs. LSD, which had been discovered in Switzerland at the end of the 1930s, can cause a sort of birth trauma: a foetus, struggling inside the womb, then making, head-first, for a small opening through which it has to fight its way. Jan Masaryk, a fashionable thirties figure, probably used the then fashionable drugs of high society in the West, and, no doubt demoralized by what he had done and what had happened to his friends and colleagues, this time overdid the dose. He could have saved his country if he had been less vain. As things were, he deserved the epithet uttered by a celebrated British journalist, Malcolm Muggeridge, who had known him in London, and who knew (from a year in Moscow) his Communists: the window dressing fell out of the window. Beneš himself lingered on for a month or two at his country retreat, then died. In Czechoslovakia, the barbed wire went up along the frontiers, complete with barking dogs, watch-towers, minefields and searchlights — ‘the Iron Curtain’ that Churchill had spoken of. A peculiarly harsh and durable version of Communism descended and Prague acquired an enormous statue of Stalin, on a bluff above the river. It was the start of a military confrontation of East and West.

The Czech coup went together with a further Stalinization of the Soviet bloc. In Hungary, the preceding September, there had been a sort of parade ground version of a fraudulent election, complete with dummy parties, useful idiots and double voting; the unlovely Rákosi had taken over, and the Socialists were forced into union with the Communists. This, and the Berlin blockade, caused blood at last to flow through the bureaucratic arteries of western Europe, and ideas of unity began to take shape.

The British had even supported a Western Union, complete with a Council of Europe and a Court of Human Rights at Strasbourg. The motive was essentially anti-Communist, to lay down guidelines that would prevent governments from putting citizens into camps. There was a grand meeting of a ‘Congress of Europe’ in May 1948, with over 700 delegates from thirteen countries, graced with the presence of anti-Fascist warhorses and of course the lionized Churchill. Parliaments sent delegates to the Council of Europe which then emerged. However, there was no economic content to this. At the time, the British were trying to revitalize their empire, and concentrated above all on dollar-earning exports; the French had their Plan, of which fuel was a vital component — whether through exploitation of the German Saarland or development of nuclear energy. Currencies were subject to exchange control, and all but a tiny fraction of trade was carried out by barter, with mountains of paper in ministries. For this Europe to develop an economic character, French fears over Germany would have to be overcome, and this took time: for the moment, the French aimed mainly to take the coal of the Saarland for themselves, and, if possible, to loot the Ruhr. It was the great heavy-industrial powerhouse, and for the moment it was still operating far below par, partly because of trade controls, partly because the French feared German resurgence, and partly because of British maladministration — the Germans said that it caused greater damage than the bombing had done. But its relative inactivity was harming everybody else. Next-door Holland, half of the economy of which depended upon Germany, was still in poor shape. Two things were needed. Germany would have to be reintegrated into the European economy, and the various countries would have to trade with each other. This needed practical steps, far beyond a Western Union.

It was here above all that the Marshall Plan mattered. In the first two years, with roughly $5bn each for essential goods, and food in particular, it had amounted to a vast charitable enterprise, built upon the already considerable American transfers of the immediate post-war period, when UN Relief and Rehabilitation Administration (UNRRA) and Cooperative for American Remittances to Europe (CARE) parcels had kept body and soul together. That had been vitally necessary, because of the terrible winter of 1947 and the dollar shortages and the inflation which, in most countries, but especially in Germany, had wrenched trade into the black markets and below the counter. But for various reasons the Plan changed character after the first two years. To begin with, each country had taken its handout and kept the money in the bank. But trade was the real engine of growth, the dollars being used as a basis for that, not with the USA but over European borders. That meant the Rhine; the immediate point was German integration, through an increase in European trade. As the international crisis developed, there was a further element of great importance: American defence expenditure shot up, from the $13.5bn of 1949 to the $50bn of 1950, and a good part of this went to Germany, where forty American divisions were now stationed, and which produced the essential steel. The Ruhr wheels turned, slowly, again, and the great smokestacks emitted. Marshall money also saved the French Plan, which, again, required German coal and steel. The British, still attempting to refloat their empire as a bloc, were much less intimately involved. They used the dollars just to pay off debts.

It was on continental western Europe that the Marshall Planners concentrated, and its unity, in that sense, came in the (considerable) logistics trains of the American army. The essential was trade liberalization, and that could not be managed unless there were some means of payment, i.e. recognition of the various paper currencies. The old Bank for International Settlements at Basle in Switzerland — originally set up to handle the Reparations payments of the First World War — was revitalized, with a European Payments Union (in 1950). This again followed an Atlantic example. In 1944, at Bretton Woods in New Hampshire, the Americans and British had developed institutions that were meant to stop the collapse of world trade that had occurred in the Great Slump of the 1930s. The collapse — two thirds — had been a disaster, causing unemployment in millions and millions, and bringing dictatorships in dozens, the worst of them Hitler’s. A chief reason for the disaster had been monetary — the loss of a common standard of exchange, in this case gold, when the British ran out of reserves and neither the Americans nor the French, who had gold, would move in to support the system. In 1944, the Americans recognized that they would have to use their economic weight sensibly, and an International Monetary Fund (IMF) was established (with a World Bank) so that countries importing more than they exported could be tided over with foreign reserves until they could bring their payments back into balance. This was a good idea, but in the first post-war years, as western Europe went through near calamity, the IMF did not have much of a role, and could not, until the various trading currencies had established themselves. With the European Payments Union, there came a limited version. It did not, at the time, seem to be at all simple. Most countries lacked earnings in dollars, the real currency. The Belgians, still controlling the mineral resources of the Congo, did have a dollar surplus, and had to be persuaded to use it for the common good; the British, who needed their European surplus to pay dollar debts, were in a still greater odd-man-out position, and made difficulties.

The Americans lost patience with it all, and preached the virtues of their own big and unified market. Marshall’s successor as Secretary of State, John Foster Dulles, knew his Europe from the old days, when he had been an international banker, and said that unification was ‘an absolute necessity’. More, the Americans lost patience with national currencies and said there should be a common one. This was formally suggested by the deputy director-general of the ECA, William Foster, in June 1950: call it the ‘Europa’, he said, or perhaps the ‘Euro’. The Marshall people saw each country’s storing its Marshall dollars in some bank or other, not using them to trade with, across the various borders. In response, there were indeed ideas of trade areas within Europe, but there were still fears as regards Germany. In part these were French, but the real difficulties were made by the British, fearing German competition. Various phantom schemes came up, to combine Britain, France, Scandinavia, Italy and the Benelux countries as a free-trade area: ‘Fritalux’, ‘Finebel’, ‘Uniscan’, none of which were worth much without the Ruhr. But in October 1949 the Federal Republic of Germany emerged, and the French had to rethink.

There now came an interesting affair, indicating the shape of things to come. The western Europeans received a further fillip, and one that, at least formally, did more for economic recovery than anything else: they devalued. The pound especially had been overvalued, partly to enable the British to pay off dollar debts, and partly to let them reconstitute their pre-war investments (which, strangely enough, by 1950 amounted to more than in 1939). Since trade was strictly controlled, the artificially high exchange rate was not menaced by any great imbalance of exports and imports. However, with the Marshall Plan, trade went ahead, and there was considerable difficulty in controlling it, because an exporter and an importer could connive to make ‘false invoices’, the money held in surreptitious foreign accounts. But the pound was a soft currency, given the size of British wartime debts, and foreigners sold it when they could — at that time, even more dollars were going back to the United States than were coming into Europe through the Marshall Plan. In the summer of 1949, there was a run on the pound. The Labour government that had swept into power in 1945 had become tired and divided: New Jerusalem had not happened, and the severely rationed British were now living at a lower standard than most liberalized Germans. If they were to rejoin the international trading network, to export, then the pound would have to be devalued; if the pound were again to become an international trading currency, alongside the dollar, then Atlantic co-operation would be needed. After discussion with the Americans, the pound was devalued by a good 30 per cent (to $2.80) on 18 September. The International Monetary Fund was not involved in this, and the German Mark was also devalued, but only by 20 per cent — the hardest sign so far of a rift between the Common Market to come and the British.

British exports did in fact do quite well, in part because other countries were still restocking with machinery, and a modest boom was under way by 1950, but the real boom started in continental Europe. The Germans did indeed restock, and for a time had a drastic problem as regards the balance of imports and exports: they had some difficulty in meeting their obligations under the Payments Union, and there was some question, for a time, of their dropping out. But the managers of the German economy held out, and the Americans as ever gave support. For a few months, the other Europeans accepted German IOUs. And then the German economy, on the basis of exports, boomed, and boomed. Then it boomed again, in 1955 overtaking British figures. In fact even by 1951 the export surplus amounted to more than the entire Marshall Plan had done. Now, surplus Germans could carry indebted Italians, whose economic recovery also got under way. There is an interesting question in this period, as to how far the Marshall Plan really produced the European recovery. The ‘dollar gap’ was greater in 1950 than it had been back in 1947, but no-one bothered; the sums spent under Marshall were quite trivial, in comparison with the proceeds; there are German experts who consider that the economy was recovering quite well, under the regulated and semi-socialized regime of 1946, and that it was the terrible winter of 1947 that caused the problem. Later on, international aid programmes, set up on Marshall lines, had very questionable results. Perhaps the answer lies straightforwardly in the presence of those forty US divisions: behind that shield, western Europe recovered.

By 1950 the Europeans had indeed understood that intra-European trade would have to be promoted. A key, here, lay in Paris. Late in 1948 an international authority had been set up for the Ruhr, an attempt to square the various circles — coal, coke, steel being allocated between exports (partly to France) and the Germans’ own needs. But its budget was limited — under $300 million. The French were not going to be able to control German raw materials in that way, and they would have to alter their strategy. In 1949 the American desire to relaunch Germany was clear enough, and the main point of the French Plan was therefore hopeless. The fact was that Marshall and other money alone let the French import the machinery with which their own Plan could work, and the French needed direct access to the raw materials in Germany (or Belgium).

In 1949 there was rethinking, not least in the head of Jean Monnet, architect of the Plan, and a considerable opportunist. He, like so many of the initial Europeans, was an interesting and even a rather fascinating man. He had not bothered to finish school, made money by selling brandy to Eskimos, got a Soviet divorce, and admired American business (he spent both world wars in the USA, acting for the British or French governments). He would as easily have been director of a French five-year plan as founding father of a sort of New Deal Europe, and his influence was formidable. There were by now many Frenchmen arguing that some closer association with booming Germany was essential. The foreign minister, Robert Schuman, was one (he came from Lorraine and had even served in the German army in the First World War) and he talked comfortably not just to Adenauer but to the Italian, Alcide De Gasperi, who had been a deputy in the Austrian parliament before 1914, when Trieste had been an Austrian port.

In 1949 Monnet and Schuman sensed that France must change course, and make an effort to capture the new Germany before she went off in a completely Atlantic direction. Monnet was already irritated at the French metallurgical industries’ inability or unwillingness to compete. Trade with Germany would put an end to that, and Franco-German reconciliation became the order of the day. Even in the twenties, there had been efforts at co-operation, for French steel, and during the war intelligent technocratic heads — Albert Speer, as German munitions minister, and tubby little Jean Bichelonne, head of industrial production for the Vichy French — had talked ‘Europe’, though the sheer clumsiness of the Nazis had caused French workers to run away and hide. Now there were better-organized Germans, and the Ruhr was working again. Collaboration could go ahead without the old collaborators — in fact, on the French side, the Free French had just stepped into their shoes. The French proposed a European Coal and Steel Community, in May 1950, and told the British only at the last minute, just as the British had informed them of the devaluation of 1949 at the last minute. The Germans had agreed in advance. True, their industrialists did not necessarily want to have their hands tied, but a political argument was all-important: ‘Europe’ would be Germany’s way of becoming respectable again. Konrad Adenauer, anyway a product of the western-leaning and mainly Catholic Rhineland, therefore overrode objections.

The heavy industry of western Europe was to be run through some multinational body. It would take charge of coal and steel, set prices, govern cartels, allocate production quotas and generally preside over trade, which would of course be free of tariffs. At this time, Belgium and Luxemburg were major producers of coal and steel, and their adhesion was important; at the same time Italy, re-emerging, and surprisingly strongly so, as an economic power, also needed access to coal and iron, of which she had little. As with all such international arrangements, the details were difficult and complicated, because in each country there were lobbies and interest groups wanting special treatment. The French metallurgical industrialists had long been used to protection; the Belgians subsidized wages in the older, and sometimes nearly obsolete, mines of the French-speaking Borinage country, around Mons and Namur, so that the miners there could match those of the Kempen district, where the mines were very new, productive and in Flemish-speaking country. Such subsidies could not be squared with the rules of competition of an international community, supposed to create ‘a level playing field’. An equalization fund would have to be set up, so that in effect the Germans compensated the Borinage miners whose coal sold at a loss. Even Luxemburg made for difficulties, as its iron and steel needed protection from the Ruhr. In 1951, after difficult negotiations on such points, a treaty established the European Coal and Steel Community. There was a High Authority, sitting in Luxemburg, in some pomp and grandeur, interpreters chattering away. There was a court of arbitration. There was a ministerial council, taken from member country governments, and an assembly of deputies. There were provisions for the Authority to store, say, scrap metal in case prices fell below a certain level. The organization even had a flag — blue for steel, black for coal, six yellow stars representing the member countries (Italy had joined). With adaptations — the black was dropped, as it stood for political Catholicism — this became the flag of the future Europe.