Called by Winston Churchill the "most unsordid act of history," the Marshall Plan (European Recovery Program) was broadly outlined in U.S. Secretary of State George C. Marshall's Harvard commencement speech (June 5, 1947). Marshall explained that war had resulted in economic chaos in Europe; that the situation needed to be remedied not only to end "poverty, desperation and chaos" but also to "permit the emergence of political and social conditions in which free institutions can exist." Marshall called on European leaders to take the initiative. Although the Soviet Union and Eastern European countries were asked to participate, eventually they all refused. Sixteen Western European nations, including representatives for the Western zones of occupation in Germany, attended a Paris conference (July 12, 1947) establishing the Committee of European Economic Cooperation (CEEC). The CEEC tasked its members with quickly gathering detailed information on the various European economies and their needs. Two months later (September 22, 1947), CEEC issued its final report.

President Harry S. Truman called a special session of Congress for November 17 to discuss the plan, which emphasized intra-European and trans-Atlantic cooperation. The ERP established the Economic Cooperation Administration (ECA) to administer the program, working in tandem with the European body, the Organization for European Economic Cooperation (OEEC). The OEEC's responsibilities included the division of aid among the 16 countries and encouraging intra-European trade. The plan had four components: grants (dollar aid), counterpart funds, technical assistance and guarantees. Grants were received by European countries to buy primarily U.S. goods and services. Counterpart funds, which matched U.S. assistance, were set aside by each European country to rebuild infrastructure. Technical assistance paid for Europeans to learn modern U.S. industrial methods. Guarantees, used to encourage U.S. businessmen to invest in modernizing Europe, promised that returns on investment could be obtained in dollars.

Although some congressional leaders doubted the need for such a plan, the establishment of Cominform by the Soviets (October 1947) and the communist coup in Czechoslovakia (February 1948) helped change their minds. The ERP passed the Senate 69-17 and the House 329-74 (March 1948). The Economic Cooperation Act became law on April 3, 1948. Recently, debate about the Marshall Plan has focused on the degree to which the plan was necessary for the economic recovery of Europe after the war.