The first notice of a new American foreign economic policy that recognized aid as an integral part of its overall approach to the world came on 12 March 1947, when President Harry Truman went before Congress to ask for $400 million in military and economic aid for Greece and Turkey. Since 1945 the royal government of Greece had been struggling against communist forces within, aided by heavy infiltration from Greece's three northern neighbors, all satellites of the Soviet Union. Great Britain, which had been aiding both Greece and Turkey, informed the United States in February 1947 that it was no longer able to do so. Truman promptly accepted the responsibility for the United States. In asking authority and funds to assist Greece and Turkey, he propounded a general principle that came to be called the Truman Doctrine: "I believe that it must be the policy of the United States to support free peoples who are resisting attempted subjugation by armed minorities or by outside pressures."
President Truman's proposal met a general favorable response in America, though some critics thought its scope was too broad. Congress acted after two months of debate. An act of 22 May 1947 authorized the expenditure of $100 million in military aid to Turkey and, for Greece, $300 million to be equally divided between military and economic assistance. The act also empowered the president to send military and civilian experts as advisers to Greece and Turkey. American aid thus begun and continued from year to year proved effective as a means of "containment" in that quarter. But the Truman administration moved quickly to assume broader responsibilities.
To Europe as a whole the danger from communism lay principally in the economic stagnation that had followed the war. Western Europe in the spring of 1947 was facing catastrophe after a severe winter. Food and fuel were in short supply, and foreign exchange would be exhausted by the end of the year. Large communist parties in France and Italy stood ready to profit from the impending economic collapse and human suffering.
The best protection against the spread of communism to western Europe would be economic recovery. On this reasoning, Secretary of State George Marshall, speaking at the Harvard commencement on 5 June 1947, offered American aid to such European nations as would agree to coordinate their efforts for recovery and present the United States with a program and specifications of their needs. Congress established the Economic Cooperation Administration to handle the program in April 1948 and at the end of June appropriated an initial $4 billion for the purpose. Thus was launched the Marshall Plan, or European Recovery Program, which was to continue for three years, cost the United States nearly $13 billion, and contribute to an impressive economic recovery in Europe.
The Marshall Plan was designed to aid in the recovery of nations with advanced economies that had been dislocated by the war. But communism was also a threat among the poverty-stricken masses in countries of Asia, Africa, and Latin America, where the modern economy had made little or no progress. The containment of communism required measures to raise the standard of living in countries such as these. It was with this purpose in mind that Truman, in his Inaugural Address of 20 January 1949, proposed his "Point Four," or Technical Assistance program: "We must embark on a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped areas." The Point Four program got under way in 1950 with a modest appropriation of $35 million. Authorized expenditures for the next three years nearly totaled $400 million.
To stimulate the flow of private capital that hopefully would supplement government-to-government loans and grants, the legislation creating the Marshall Plan also called for establishing the Investment Guaranty Program. Initially, the agency issued insurance contracts for investments in Europe against the possible inconvertibility of local currency; in 1950 the coverage was extended to loss through expropriation or confiscation. As a result of the Korean War, U.S. foreign aid programs shifted in emphasis in 1951 from economic to military aid, thus increasing the importance of private U.S. overseas investment. In that vein, the Mutual Security Acts of 1951 (amended in 1953) and 1954 expanded the focus to guarantees to certain friendly developing countries. After several mutations, including a stay in the Agency for International Development, the guaranty program in 1969 was reestablished as the Overseas Private Investment Corporation and placed under the jurisdiction of the secretary of state. The program history over three decades appears to have been both a substantial inducement to private investment and, because of the fees charged, a profitable undertaking for the government.