Marshall Aid and British policy on reparations from Germany, 1947–1949

Abstract

The object of this article is to examine the impact of the Marshall Plan (ERP) on the strategy of reparations from Germany that was pursued by the British government in the postwar era. In order to put this into some kind of context it will first be necessary to provide a brief survey of the mechanism of reparations and then of the rationale behind the system of financial assistance afforded by the USA to Western Europe known as Marshall Aid (its title derived from the US Secretary of State, George Marshall, who pioneered the scheme). The idea of extracting some form of compensation from Germany, to be apportioned among the victors, came to be debated in Whitehall during hostilities, but little attempt was made to coordinate plans among the Allies until the conference at Yalta in February 1945. No consensus could be attained there among the participants (the UK, the USA and the USSR). Stalin lodged a claim for $10 billion of reparations in ten years, which entailed that the Soviet Union would be allocated half of all payments from Germany. The lack of assent from the Western powers led to a new body, the Allied Reparations Commission (ARC), being convened in Moscow, which also failed to reach a conclusion. Reparations were then settled at the Potsdam Conference between the same three powers in July–August 1945.