SNAGS IN THE MARSHALL PLAN
Bolles, Blair
Snags in the Marshall Plan By BLAIR BOLLES IF Gen. George C. Marshall knows about the stockings the women in Zurich are wearing, he realizes that the European Recovery Program is not working out...
...Perhaps Hoffman can persuade Congress that his catch fills the creel...
...The chief danger of the barriers is their contribution to aggression...
...The manufacture of "non-essentials" for export creates jobs in the Marshall Plan countries, but all the beneficiaries fix quotas for the quantity of goods they will take from any one of their partners in the recovery program...
...is made up of the representatives of each of the Marshall Plan countries...
...But France, Switzerland's favorite neighbor, has different ideas...
...The Europeans for two years had been going through the motions of preparing for cooperation, and he took their words at the value of deeds...
...But the psychological reaction of nations in the past has been always to rely on isolation and trade protection in the face of commercial war...
...It makes recommendations, but it lacks the power to enforce any of its suggestions...
...Marshall had prescribed...
...Parliaments neither in Rome nor in Paris have approved the France-Italian Union...
...The road to European cooperation and real success for the Marshall Plan is rugged...
...But even continental planning might fail to unite Europe until the United States itself is willing to integrate its tariff system with Europe's...
...The Committee for European Economic Cooperation, which Britain and the continental powers set up soon after Marshall's speech at Harvard, forecast in the summer of 1947 that Europe could get out of the woods by 1952...
...The zone could import only American butter...
...The recovery program stimulates the adoption of economic controls and the advancement of national planning by forcing the beneficiary countries to decide what commodities to produce at home— and in what quantities to produce them—and what resources from abroad they should rely on to fill the remainder of their needs...
...The individual governments can welcome or spurn the advice from O.E.E.C...
...That device simplified the bookkeeping on the currency debts and credits the various countries had with one another for their trade, but it was no customs union...
...Furthermore, the United States might find Europe progressing more speedily if it decided to distribute E.C.A...
...In 1946 he served as a special adviser at the Copenhagen conference of the UN Food and Agriculture Organization...
...But the bounding forward leaps halted in the spring of 1949...
...On his November trip to Paris...
...Marshall Europe is a barter area...
...The North Atlantic Pact, which joins together Italy, France, Britain, Belgium, Luxembourg, the Netherlands, Denmark, and Norway in a military alliance with the United States and Canada, calls for the leveling of trade barriers and the establishment of economic cooperation...
...Pricked by doleful thoughts of a balky Congress, ECA Administrator Hoffman set out for Paris last November to tell Europeans in plain language that they must either tear down the trade barriers among themselves or risk the loss of the Marshall Plan two years before they counted on its ending...
...Gall, on the looms of their "native land...
...The shift from dependence on the U. S. to self-reliant trade within Europe is still a dream for the future...
...money according to a European economic plan instead of a series of competing national economic plans...
...His notion of "cooperation" turned mainly on the need for letting down the trade barriers, which for centuries have made the progress of goods from one country to another a weird obstacle race for buyer and seller...
...For Britain to cooperate in a European customs union, it would have to sacrifice the sterling bloc...
...The Marshall program cannot succeed unless Europeans cooperate...
...Planning on a country basis makes for economic isolation...
...Hoffman went fishing for muskel-lunge and came back with a perch...
...Their hearts are set on nylon stockings...
...The U. S. is at fault in this failure of Europe to close the gap in their commerce with us, because American tariffs remain high...
...Marshall that "assistance must not be on a piecemeal basis...
...uses now persuade only the E.C.A...
...Held in check by reluctance to buy from one another, the Marshall Plan countries' production is leveling off, when full recovery still lies in the future...
...The optimists surmised, moreover, that the European countries, by regaining their economic health in intra-European trade, would soon find their currencies so stable that Americans would be willing to change their dollars into francs, belga, kroner, and guilder...
...But the program as managed to date actually prevents them from cooperating...
...Like women everywhere, they want to be up to date...
...Most Swiss women wear either the old-fashioned silk stockings, or pay a premium price for nylons from France...
...Marshall counted on the European beneficiaries of his program to cooperate with one another, in order to make the plan succeed...
...Belgium, the Netherlands, and Luxembourg had been working at the task of setting up a customs union...
...Most commerce moves between private buyers, who operate within the bonds of, elaborate schemes for licensing imports and exports...
...The agreement is a kind of psychological prod...
...Since 1946...
...III Before November, 1949, Hoffman had found signs that cooperation was just around the corner...
...in Lyons, France—licensed by Du Pont to monoplize the sale of nylon thread to Switzerland...
...members heard him seriously, and then agreed to reduce by 50% their import quotas on goods bought by governments...
...The Marshall Plan world is a conglomeration of sovereign states...
...Gall operate only part time...
...The same Frenchmen who fret about Swiss nylons fear that Italian goods, made by workers receiving lower wages than French labor, will flood France...
...On paper, however, Hoffman had stronger reasons for hope...
...The date of cooperation had been set for January 1950, but now it is delayed to June...
...But such talk was forehanded...
...By linking its economy closely with the~ economies of our recent Allies, Secretary Acheson has given the Marshall Plan countries outside Germany something to worry about...
...The U. S. must take part of the rap, because Americans make it difficult for Europeans to buy American without Marshall Plan help...
...In other words, the Europeans wanted four years of help...
...By last autumn optimists were discussing the possibility of joining the French-Italian Union and Benelux into a super union, to be known as Fritalux...
...Commercially, Hitlerean overtones still hang over Europe...
...The name of that world is the sterling bloc, and in it London's word is commercial law...
...But very few European imports are bought by governments...
...Western Europe has thus far been more successful in increasing, production than in increasing exports," Economic Cooperation Administrator Paul G. Hoffman told Congress in his Nov...
...Britain, which receives more Marshall Plan help than any other country, has been in the forefront of negotiating those great schemes for cooperation, and Britain is more reluctant than any continental power (except the Scandinavians and Switzerland) to make arrangements within Europe for reducing trade barriers...
...That day is hardly likely to arrive, however, until the Economic Cooperation Administration appreciates the fact that the various European countries fundamentally are proud of their national distinctions...
...Within its empire, meanwhile...
...And he strengthened Germany while he weakened his neighbors by trading to them what they did not need in exchange for goods necessary for munitions production—a barter commerce, the very opposite of the, fair trade which Marshall looked forward to...
...The operation of the Marshall Plan promotes national planning, although the Economic Cooperation Administration, which manages the program, favors free enterprise and the elimination of economic controls abroad...
...Somtimes the quota is zero...
...On Oct...
...He assured the Senate Foreign Relations Committee last February that the Europeans were working together, as Gen...
...Marshall country trade usually is conducted under government supervision but not often by governments...
...But the Europeans are not alone to blame for this failure...
...To encourage the French stocking factories, Rhodiaceta refuses to sell Switzerland more than a third of the nylon yarn it needs...
...Perhaps by 1952 the United States will find the key for persuading Europeans—even the British— to combine their economies, or at least to strike down the trade barriers...
...Such a change, the economists in Washington reasoned, would enable the Europeans to maintain active national economies whether dollars were scarce or not...
...Thus the beneficiaries are contradicting the very purpose of the Marshall Plan, which was intended to raise production and to keep production high by expanding trade...
...The program had been working only 19 months when they heard Hoffman's stern admonition...
...BLAIR BOLLES is director of the Foreign Policy Association's Washington bureau...
...The smothering effect of nationalistic trade practices began to be felt...
...The looms at St...
...As long as the E.C.A...
...It may spur the countries to cooperate in order to save themselves in combination from ruin by German competition...
...Congress, during consideration of the Marshall Plan Bills in the spring of 1949, vividly left the impression that it might refuse to carry the Plan beyond 1950 unless the European countries receiving help coordinated their trade policies...
...The O.E.E.C...
...believes fallaciously that Europe really wants to be joined together like the United States, its officials will not find successful arguments for true cooperation which can appeal to the Europeans...
...They cannot return to the situation that existed before Christopher Columbus discovered the New World and cease all purchases in North America...
...A new agreement signed on July 2, 1949, gave the countries a wider choice of places to buy, but it still did not get at the roots of Europe's problem...
...In the days when silk hose were chic, Swiss women could buy stockings made at St...
...At the same time France notifies Switzerland it will buy no "non-essential" watches...
...Europe needs to sell in America, however, in order to finance its purchases from America...
...George C. Marshall knows about the stockings the women in Zurich are wearing, he realizes that the European Recovery Program is not working out the way he expected when he outlined it in his Harvard speech two and a half years ago, in his greatest hour as Secretary of State...
...as they wish...
...15 report...
...While Winston Churchill conducts a crusade for a United States of Europe, with Britain as a member, the Government of Clement R. Attlee pleads its obligations to the members of the British Commonwealth, Canada, the Union of South Africa, New Zealand, Australia, India, Pakistan, and Ceylon—all outside Europe—as an insurmountable reason for staying aloof from European economic affairs...
...16, 1948, the members of the Plan (except Switzerland, which accepts no Marshall help)— Britain, France, Portugal, Italy, Trieste, Austria, Western Germany, Belgium, Luxembourg, the Netherlands, Denmark, Norway, Sweden, Iceland, Ireland, Greece, and Turkey—signed an agreement for intra-European payments and compensations...
...But nylon is a patented yarn, which Swiss textile mill operators may get legally only from the Rhodiaceta Co...
...Before the establishment of the Western German Federal Republic last September, the U. S. refused to admit butter from Denmark to its zone of occupation...
...American dollars, the only currency for which American exporters will sell, are scarce in Marshall Europe, and their scarcity made it impossible for the Europeans in 1947 to pay for what they bought here...
...Each national plan competes with every other national plan...
...One goal of the recovery program was to finance European purchases in the U. S. while the Europeans shifted their buying and selling to their neighbors...
...Hoffman declared that the Organization for European Economic Cooperation was in itself an agency for cooperation...
...The readiness of Britain to subscribe without qualification to the thesis that trade must be free on a worldwide basis, is a continual source of astonishment to Americans who note too late that actually Britain stands by its policy of preferences and special trading on a barter basis...
...As long as there is a United States, the Marshall Plan countries will buy something here...
...II The trade drought within Europe is defeating the purpose of the recovery program in another respect: it keeps European purchases channeled to the United States...
...The Marshall Plan nations insist on selling to one another, but they willingly buy in return only "essential" goods, which enable the buyer to produce more commodities for foreign sale...
...Each of the 15 countries that draws the subsidy from Washington uses the money it receives for its own national purposes almost entirely without regard to the planning of its neighbors...
...France finds that Belgium objects to buying "non-essential" perfume...
...The sad reality is that Marshall Plan help is a piecemeal program...
...Politically it was a dangerous admission...
...The frauen of Zurich and the rest of Switzerland are the victims, where history is concerned, of old European commercial rivalries which the Marshall Plan has stimulated...
...The caution in commerce narrows each nation's market almost to the needs of the home market, despite high-pressure merchandising schemes like the French effort to force Switzerland to buy its nylons in France...
...But in the life of the Marshall Plan Europe has been buying about $1,400,000,000 worth of stuff in the U. S. every three months, or $10,000,000,000 in all...
...The Marshall Plan has paid for $5,300,000,000 of those purchases...
...In March, 1949, France and Italy negotiated a customs union agreement, which called for elimination of duties between the two countries and establishment of a common tariff at the borders of the union...
...Bolles is a frequent contributor to national magazines and is the author of "Who Makes Our Foreign Policy...
...Disillusionment hung over Hoffman as he set out on his mission...
...But the special interests of cartels slowed down the progress...
...As a matter of fact, that organization — known as the O.E.E.C.—is as powerless to act as the Continental Congress was before the American Constitution was adopted...
...So rises a new trade barrier, built on a major international commodity—style...
...The arguments the E.C.A...
...The O.E.E.C...
...The Council of Europe, a discussion forum for 10 nations — Britain, France, Italy, Belgium, the Netherlands, Luxembourg, Denmark, Sweden, Norway, Austria—meeting for the first time, resolved in Strasbourg, France, last September that the member states should give it superpowers to pass laws, including trade laws, for all its members...
...Hitler furthered his preparations for war in the 1930s by taking advantage of our Europeans' trade jealousies...
...Members of Congress recall the statement of Gen...
...The United States itself has played for a shutout...
...European sales here have dropped since the Marshall Plan went into effect in April 1948—from a rate of $280,000,000 every three months in 1948 to $190,000,000 every three months in 1949...
...The Europeans, of course, make it hard for themselves by keeping the prices steep on many goods which the tariffs do not affect...
...For nine years he was on the staff of the Washington Star, where he specialized in foreign and diplomatic news...
...Western Germany has been the factory center of Europe for 300 years...
...So it is no wonder that actual cooperative accomplishments of the Marshall Plan countries are far more modest than the fine sentiments of the North Atlantic treaty call for...
...The United States laid a new kind of foundation for European trade cooperation after Hoffman's visit to Paris by the agreement Secretary of State Dean Acheson concluded, also at Paris, for integrating Western Germany into the economic scheme of western Europe...
...Britain has perfected a special trading world of its own...
...The 18 Marshall Plan countries are linked commercially by more than 150 bilateral barter trade agreements...
...Production did soar during the first year of the European Recovery Program, until factories in Britain, France, and Belgium were turning out goods in larger quantities than they did before World War II...
...The world existed before the war but it lacked the rich development it has had since 1948...
Vol. 14 • January 1950 • No. 1
