The Japanese economic ‘miracle’ was starting to terrorize western nations, including the United States. And western economists pointed to Japan as an incredible example of how capitalism can build widespread prosperity.īy 1980, Japan was one of the largest, most dominant economies in the world. Within a decade, the Japanese economy had already surpassed its pre-war level– which was an astonishing feat for a nation that had seen two major population centers demolished by atomic bombs.īy the 1960s, Japanese economic growth was so strong that it began to be referred to as a ‘miracle’. They encouraged competition, loosened regulation, and ended government support for the giant conglomerates known as zaibatsu that had previously controlled every Japanese industry. In addition to grants from the US, Japan’s government set out to replicate US-style capitalism in their own country.
So the Marshall Plan was passed… and Japan became one of its biggest success stories. More importantly, Truman was terrified that if the US didn’t step up to rebuild Europe and Japan, the Soviet Union would fill the void… and communism would rapidly spread. Without substantial aid to help Europe and Japan recover, they were concerned that yet another costly war would break out– after all, Hitler’s rise to power was only possible because of Germany’s economic devastation after the first World War. So dumping another $12 billion (more than 25% of tax revenue that year) to rebuild nations that they had just spent four years destroying seemed pretty stupid.īut the administration of President Harry Truman was adamant. The Marshall Plan was highly controversial the US national debt was at an all-time high in 1945 due to all the wartime spending. On April 3, 1948, when Europe and Japan were still smoldering from the devastating effects of World War II, the United States government passed a massive stimulus bill that became known as the Marshall Plan.
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