Keeping large events in perspective is difficult, a case in point being the recent hoopla over the Marshall Plan to help Europe recover from World War II. Admirers invoke the plan for a variety of worthy causes, but often with little understanding of what it was. Critics and revisionists, on the other hand, question whether the plan made any difference at all. Some even argue it was counterproductive, delaying recovery by making some Allies dependent on subsidies and forestalling needed adjustments.

A close examination of the economic and historical facts,however, refutes the efforts to downplay the Marshall Plan - and, at the same time, enables us to apply its real lessons to today, placing acumen ahead of sentimentality.

By one common view, manifest in pleas for a package of $100 billion or more for Eastern Europe, the Marshall Plan was simply a matter of generosity. America could have dropped dollars from an airplane and had nearly as much impact.

Money alone, though, surely did not make the difference. In fact, many of the countries that received the most Marshall Plan aid per capita - such as Sweden, Britain and Greece - enjoyed weak economic recovery: Gross national product rose 39 percent in Sweden, 31 percent in Britain and 21 percent in Greece from 1947 through 1955. By contrast, others - Germany and Italy, for example - got relatively less aid. Yet over the same period, their output grew by 148 percent and 57 percent, respectively. (Germany also grew by 96 percent against its 1938 output, weakening any suggestion that it just made a rapid recovery from artificially reduced levels.)

Countries that received Marshall Plan aid and joined the General Agreement on Tariffs and Trade significantly outperformed those that only got foreign aid dollars. A group of five countries (Germany, France, Japan, Britain, Sweden) that received Marshall Plan aid (or significant foreign aid in the case of Japan) and that joined GATT enjoyed annual average GNP growth of 8.3 percent from 1947 through 1955, and unemployment of 2.6 percent. Four countries (Italy, Denmark, Austria, Greece) that received significant Marshall aid but were not part of GATT for much of the period had GNP growth of 3.7 percent and 7.6 percent unemployment.

This has led to a further case that the Marshall Plan, in fact, didn't matter at all. It was the eventual reform of domestic economic policies by the Europeans that did the trick.

There is a large element of truth to this. An index of European trade liberalization by Robert Triffin, extended to cover the years 1946 and 1948 by the Alexis de Tocqueville Institution, shows that European trade liberalization moved to a rate of more than 80 percent by 1956, from a level of less than 40 percent in 1946.

After significant devaluations in the early postwar years, Germany (1948), France (1949), Italy (1950), Austria (1953) and even Britain (late 1950) finally succeeded in stabilizing their currencies and adhering to the discipline of the Bretton Woods monetary system. It was at precisely this point that each of their equity markets - an excellent daily monitor of how market actors judge the likely output of a nation's capital - began to soar. And it was some six months after, in each case, that production began to surge as well.

The problem with using this evidence to conclude that the Marshall Plan didn't matter is that the plan was aimed precisely at encouraging such reforms and enabling fragile governments in war-shattered Europe to enact them. When Will Clayton, a Houstonian and the plan's architect, was asked which was more important to the European recovery - the Marshall Plan, GATT or Bretton Woods - he answered, ""I find it impossible to talk about them separately. ''

The European Recovery Plan and the Clayton GATT, in fact, were both adopted in October 1947. The Bretton Woods framework had been in place since 1945, but only began to be seriously implemented by Europe with the German monetary reform of 1948.

This came, not by coincidence, just as the Marshall Plan aid began to flow.

Ludwig Erhard, the father of the German reforms, later called the Marshall Plan ""absolutely essential'' to the monetary stabilization that followed. ""Currency reform and the Marshall Plan,'' he told an audience in April 1948, ""are both contributory factors of economic recovery . . . and must operate simultaneously if they are to be fully effective. '' He continued: ""Thanks to the aid we received, we could take the safe road of systematic reconstruction and recovery. '' The links between the two, he said, ""are inextricable. '' The plan not only provided a flow of money and imports, ""but also confidence . . . preparing the ground for new capital to be raised. ''

This capital helped lead to an average annual rate of growth in German stocks of 47.9 percent from the summer of 1948 through December 1955. It would not have happened without the Erhard reforms; but the Erhard reforms, according to Erhard, depended on the Marshall Plan.

What is the Marshall Plan's relevance? By some standards, Russia, Poland, Ukraine and the rest of Central Europe are worse off than Germany, France and Britain were in 1947. All, in fact, have some industrial base, and a work force that performs better on standard math and science tests than the average student in the United States, Britain or Germany.

There is even some funding, though it pales in comparison to the Marshall Plan's ultimate $15 billion as a share of current U.S. output.

What we do not have is a vigorous U.S. or Western Europe policy of promoting economic growth among our former enemies.

Trade integration by Western Europe has been sluggish and stubborn. Western aid has been mostly contingent on International Monetary Fund fiscal conditions that have often continued burdensome income tax rates, crushed industrial production and accelerated a surging black market and mafia-based economy from Moscow to Kiev to Budapest.

If there is any lesson in the Marshall Plan, it is that our help is most effective when it is leveraged. Dollars work best when they are used as an inducement - an incentive to implement intelligent reforms and a facilitator of them. Of these, the most important is the IMF, the principal institution charged with reviewing economic policy with the developing countries.

The IMF should serve the role Clayton and the Marshall Plan announcement did in Europe in the summer of 1947, promoting policy reforms that lead to growth. On the evidence, though - from Africa to Europe - IMF policies have only a spotty record of promoting growth.

The United States, for its part, lacks some of the vision, and some of the sheer bureaucratic cohesion, that was once present. The State Department and the Agency for International Development play only a confused role in international economics, deferring to the Treasury Department, which in turn defers on most matters of policy conditionality to the IMF.

Our foreign aid policies would be more effective if the old spirit of coordination returned. The recent appointment of Stuart Eizenstat offers hope here, giving the State Department a gravitas on economics it perhaps has not enjoyed since Will Clayton's days (with the possible exception of the Reagan administration's John Whitehead.)  Fifty years ago, under conditions less auspicious than today, Americans launched a daring initiative that helped preserve democracy and economic freedom for hundreds of millions.

Today, the danger is different; but the challenge is real. In the deluge of reminiscences, we should not lose sight of why the Marshall Plan was so successful.
 

Richard Holbrooke, vice chairman of Credit Suisse First Boston, was U.S. ambassador to Germany and assistant secretary of state for European affairs.