Allied Cooperation in the Missile Age

...What is really needed is an impartial study of how best to maintain and increase our national purchasing power while protecting the vital interests of our friends...

...Yet, it would be just as effective if we devoted the time now used for arms production to increased leisure, which would itself create new employment possibilities...

...And, since we and our allies are democratic nations, the basis of that cooperation must be popular acceptance of its vital necessity and willingness to make sacrifices...

...As the world's wealthiest country, we must become the world's biggest banker, taking the place England once occupied...

...Today, the great majority of Western Europeans unquestionably are strongly opposed to the establishment of American missile bases on their territory...

...Equally dangerous is the rising wave of protectionism in this country...

...The more prices rise, despite the ever-increasing productivity of our economy, the more demands will be heard for protection against the competition of low-priced foreign goods...

...Before we reappraise our foreign trade policy, however, we must make the necessary adjustments in our national economy...

...At least until such time as we can rely for military defense on intercontinental-range missiles and missile-launching submarines, inter-Allied cooperation is actually as vital to us as arms production...

...We must halt export dumping and liberalize our foreign trade, even if it means compensating certain special interests for their losses...

...Once a sound, non-inflationary growth of the economy is recognized as a basic prerequisite for a successful foreign policy, and hence for our security, Government wage and price controls will be just as essential as the Selective Service Act —and certainly less of an encroachment on our cherished freedoms...

...In 1945, he wrote a memorandum on the economic reconstruction of Europe which previewed the Marshall Plan...

...Today, it is our government which provides foreign nations with aid that formerly came from private investment...

...Moreover, not only have we eliminated free-market operations for our most important agricultural products, but our government is selling surplus commodities—albeit through commercial channels—by methods which are more ruinous to foreign countries than the worst export dumping in the past...

...To sum up, we can count on the support of our allies, and at least the benevolent neutralism of the non-committed world, only if we base our overall policy on the following principles: • Increased space-age armaments must be accompanied by serious efforts to reach a settlement with the Soviet Union...

...All economic previews for 1958, including that of our Secretary of Commerce and, to some extent, the President's Economic Report, stress that increased arms spending will not only check the present mild recession but lead us to new heights of prosperity...

...He is author of the New Leader special section, "More Inflation or More Leisure...

...Yet, it is obvious that the millions who live on fixed incomes—pensions, Social Security, annuities, etc.—lose purchasing power when living costs rise...

...At the same time, we subsidize our cotton manufacturers' exports...

...We must therefore fully implement our Full Employment Act, which provides that the Government shall not only provide full employment but also protect the national purchasing power...

...For America, these sacrifices must mean not only skimming off part of our steadily rising national income, but even accepting minor inroads into our national production, if it is necessary to maintain the economic, social and political stability of friendly nations...

...But we must do even more than that to overcome the rising wave of neutralism abroad...

...In 1931 he helped solve the Kreditanstalt crisis, and for nine years afterward ran its Dutch affiliate, the Amstel-bank...

...After World War II, we sang the praises of our free-enterprise system and of free trade...

...Unfortunately, ever since World War II finally brought an end to the Depression, defense spending has continued to absorb a major part of our gross national product...

...If we turn our people into capitalists instead of debtors, their savings will provide the means both for expansion of our own productive capacity and for investment in the growth of other friendly nations...

...If we want to keep our friends, we must convince them that our economy is too strong and healthy to be dependent on constantly increasing military budgets...

...He organized the Austrian Grain War Office in World War I and later served as the Austrian Republic's delegate to the Hague on food matters...

...must adjust its domestic economic program to the needs of its friends abroad allied cooperation in the missile age By Oscar Schnabel The President's messages on the State of the Union, the Budget and the Economic Report show that he clearly grasps our two basic security needs: adequate armaments and cooperation with our allies...

...Unless we wish to put billions of dollars into the production of missiles for which bases will not be available, we must enter into negotiations with Moscow which, if they fail, will at least convince our friends that they need our missiles for survival...

...In fact, in addition to our present economic plans based on heavy arms spending, we might even draw up an alternative program to be applied when and if arms cuts become possible...

...coming to terms with the Soviet Union have been exhausted...

...It is essential to remember that our friends in Europe, Asia and Latin America are far more dependent on foreign trade than we are, and we must avoid any actions in import and export policy which damage their vulnerable economies...

...Nor is our import policy any better...

...Suspicion of our defense-based economy, however, is not the only threat to our international position...

...What is less certain, unfortunately, is that our lawmakers will take the necessary action on this nation's second maj or security requirement...

...We must convince both our allies and the non-committed countries that our mounting arms expenditures have only one purpose: to protect us and the entire non-Communist world against aggression or military blackmail...

...We can count on Congress to meet—if not, indeed, to go beyond—the White House's arms requests...

...Our allies, on the other hand, will be called upon less to make economic sacrifices than to take major risks affecting their very survival...

...For, while very few people believe that the United States aims at war, there is an increasing suspicion abroad that influential groups in this country want to keep the fear of war alive for economic reasons...

...and her allies clearly demonstrate that all means of Oscar Schnabel, former Austrian Consul General in Amsterdam, has been acquainted with almost all phases of economic life in Europe and the U.S...

...As a result, we continue to arouse animosity here in the Western Hemisphere and elsewhere, and we are driving our friends into constantly expanding trade relations with the Soviet bloc...

...By planning ahead for a peacetime economy, we could prove to other nations that we are not afraid of a peaceful settlement of the cold war...

...Instead of trying to allay this suspicion, we seem to do our best to strengthen it...

...In the United States since 1940, he served as an expert consultant to the War Department in the closing days of World War II...

...The basic principle expounded by some big labor unions—and not too vehemently opposed by big business—is that constantly rising wages are necessary to provide markets for our increased production...

...hence, we have had no opportunity to convince ourselves or the rest of the world that we can be prosperous in time of peace...

...If we follow this policy, we will quickly regain the world's esteem, which we won by our victory in World War II and our postwar aid programs but have lost by our actions of recent years...

...We must make our prosperity independent of arms spending and convince the world of that fact...

...In order to make the last two steps possible, we must adjust our national economy so as to avoid inflation...

...As long as we take the line that we must increase wages and prices in order to maintain a high level of consumption, we will not be able to achieve really effective cooperation with the rest of the free world...

...Since then, however, we have moved steadily toward greater economic restrictions and Government participation in the economy...

...Not only do our tariffs restrict imports—this is partly understandable in view of the difference in production costs here and abroad—but our escape clauses and quotas play havoc with the vital interests of many of our friends...

...This situation is clearly understood by the executive branch of the Government, which unfortunately encounters strong opposition from groups that are more concerned with protecting their own economic interests than in safeguarding the vital interests of this country and the free world...

...Obviously, money saved on armaments could be spent for other vital purposes like schools, highways and hospitals...

...This opposition can be overcome only if the U.S...

...Instead of pushing economic growth beyond its natural rates by means of inflationary credit expansion, we should give content to the term "people's capitalism...

...From 1920 to 1924, he was Managing Director of the Reconstruction Bank for Austria, which later became the Netherlands Bank for Foreign Trade...

...which ran in our issue of December 20, 1954...