World War II altered global relations. Its aftermath would lead to new alliances and political tensions. The two new superpowers, the U.S. and U.S.S.R. competed for power around the globe, each using its own alliances and policies to further its cause. The Marshall Plan was a rational effort by the United States aimed at reducing the hunger, homelessness, sickness, unemployment, and political restlessness of the 270 million people in sixteen nations in West Europe. The political and military alliance of the Soviet Union and East European socialist states, known as the Warsaw Pact, was formed in 1955 as a counterweight to the North Atlantic Treaty Organization (NATO), created in 1949.
Marshall Plan funds were not mainly directed toward feeding individuals or building individual houses, schools, or factories, but at strengthening the economic superstructure. The program cost the American taxpayers $11,820,700,000 over four years and worked because it was aimed at aiding a well-educated, industrialized people temporarily down but not out. The Marshall Plan significantly magnified their own efforts and reduced the suffering and time West Europe took to recover from the war. The idea of massive U.S. loans to individual countries had already been tried and had failed to make significant headway against Europe's social and economic problems. The economic problems in 1947-48 included not only the lack of capital to invest, but also the need for Europeans to overcome a U.S. trade surplus with them so massive as to imperil further trade and to encourage unmanageable inflation. Marshall Plan money helped stimulate the revival of European trade with the world and increased trade among European countries.
The Warsaw Pact essentially functioned as part of the Soviet Ministry of Defense during much of its early existence. In fact, in the early years of its existence the Warsaw Pact served as one of the Soviet Union's primary mechanisms for keeping its East European allies under its political and military control.
