What are the differences between the Dawes and Marshall Plans?

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The Marshall Plan was much more ambitious in its scope and in its underlying aims. At that time, the economies of war-ravaged Europe lay in ruins. The Truman administration was worried that that the parlous economic situation would provide the perfect breeding ground for communist infiltration, especially in countries such as France and Italy, where there was a long tradition of well-organized parties of the extreme Left. Having looked on powerless as the USSR extended its domination over Eastern Europe, Truman was determined that the same thing would not happen in the West. The gigantic package of financial support unveiled under the Marshall Plan was thus primarily a political and strategic initiative, a clear expression of commitment by the Truman administration to contain the spread of communism.

The Dawes Plan was much more of a financial measure, without any of the strategic ambition of the Marshall Plan. The Germans were chronically unable to pay off the enormous reparations they owed under the terms of the Versailles Treaty. The Dawes Plan was an attempt to solve this seemingly intractable problem. In basic terms, the Dawes Plan meant that the German economy would be managed under the supervision of the United States, with the existing currency replaced by the Reichsmark. Reparations payments would also be substantially reduced. None of these measures were designed to prevent political extremists from capitalizing on economic chaos; they were put forward simply to ensure that the Germans could pay off their reparations and that the Allies in turn could pay back the substantial debts they owed to the United States.

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The Dawes Plan and Marshall Plan were similar in that they were both meant to try to help European countries' economies recover from the impacts of the world wars.  However, there are some important differences:

  • The Dawes Plan involved more Allied control of the Germany (the main country affected by the plan).  It would, for example, give the Allies the power to reorganize Germany's central bank.  The Marshall Plan did not try to "meddle" so much.
  • The Dawes Plan involved mainly the forgiveness of loans and the reduction of reparations.  In other words, the Dawes Plan was about not making people pay things back.  By contrast, the Marshall Plan was actually involved in giving money to the countries and in giving them in-kind donations.

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