BLS and the Marshall Plan: the forgotten story: the statistical technical assistance of BLS increased productive efficiency and labor productivity in Western European industry after World War II; technological literature surveys and plan-organized plant visits supplemented instruction in statistical measurement

Monthly Labor Review, June, 2005 by Solidelle F. Wasser, Michael L. Dolfman

The European Recovery Program (Marshall Plan) has been recognized as the most successful foreign-aid program ever undertaken by the United States. The Bureau of Labor Statistics (BLS) role in the accomplishments of the Marshall Plan's Technical Assistance Program has largely been ignored. This article highlights the BLS achievements in the Marshall Plan.

The Marshall Plan was named for then Secretary of State George C. Marshall, who, on June 5, 1947, proposed his solution to war-devastated Europe. The proposal was enacted into law in April 1948 as the European Recovery Program, which created an Economic Cooperation Administration Agency to organize and administer the program. The Marshall Plan recognized that the economies of Western European countries had continued to deteriorate in the immediate post-World War II period and that provisions of massive loans to individual countries had proven to be a failure. (1) Marshall's recovery plan proposal was revolutionary in that it required mutual cooperation among those 16 countries (a 17th, the German Federal Republic, joined in 1949) that responded to the invitation to participate. Recipients of American assistance under the Marshall Plan joined together to produce multilateral solutions to common economic problems. The result was a massive effort to improve the economic condition of 270 million people in Western Europe through increasing their domestic production by collaborative effort. The participants proposed to do this by strengthening the economic superstructure of Western Europe.

An important component of the Marshall Plan was the statistical technical assistance offered by BLS and directed at increasing productive efficiency and labor productivity in Western European industry. Because of the special circumstances caused by the war crises, BLS efforts widened to include foreign assistance. These efforts "reached almost every plant in every industry, marketing agency, and agricultural entity in Western Europe, introducing them to a technology more than a generation in advance of what they were using." (2) Increases in industrial efficiency and productivity have been acknowledged as a major contributing factor to Western Europe's postwar economic recovery. Analysis by BLS of dislocations caused by the crises of war gave it good preparation to analyze post-war production problems. Therefore, BLS was not only capable of using its statistical measures to identify problems of inefficiency, but also could instruct Europeans in the most modern American industrial practices. Surveys discussed in technological literature and, more directly, plan-organized plant visits supplemented BLS instruction in statistical measurement.

On June 7, 1940, Congress passed an act authorizing BLS "to make continuing studies of labor productivity" and appropriated funds for the establishment of a Productivity and Technological Development Division. The vehicle for the Marshall Plan's Technical Assistance Programs in each Western European country was a high priority national productivity drive, an area in which ms had developed expertise through congressional mandate. Two basic methods of productivity calculation were advanced by BLS: (1) calculation from existing figures by dividing a time series on output by a time series on labor input; and (2) preparation of productivity reports by direct collection of comparable data for output and labor input in special studies. The latter approach examined the labor requirements per unit of output. The direct collection methods were effectively used during the European Recovery Program, and the funding for this approach was eventually transferred to the Marshall Plan's Agency, the Economic Cooperation Administration. (3)

In retrospective comments on the productivity studies that BLS performed for the Marshall Plan, BLS Commissioner Ewan Clague remarked, "It would be a gross exaggeration to say that statistics did the trick, but it is fair to say that these studies played a significant role in the spectacular economic recovery of Western Europe." (4) It may have been a gross exaggeration to say that statistics did the trick, but this statement cannot be said of the BLS statisticians and economists who applied the statistics.

Key roles

Isador Lubin. To fully understand and appreciate the contribution of BLS staff to the success of the Marshall Plan, it is necessary to initially focus on Isador Lubin, Commissioner Of BLS from 1933 until 1946. Sworn in during the depths of the Depression, "Lubin provided the impetus for the Bureau's development into a modern, professionally staffed organization equipped to deal with the many tasks assigned." (5)

Prior to and during the Second World War, Lubin was assigned an office in the White House West Wing and served as special statistical adviser to President Franklin Roosevelt. Thus he expanded not only his own personal influence but also, by extension, that of BLS.

Philosophically, Lubin was among the new breed of economists who postulated an increased role for government in the economic affairs of the Nation. In 1932, as adviser to Senator Robert LaFollette, he pioneered the notion of government responsibility for the national accounts. (6) He stimulated passage of the Senate resolution, which reads in part, "That the Secretary of Commerce is requested to report ... estimates of the total national income for each of the calendar years 1929, 1930, 1931 ..." (7)