ECONOMICS: In the Anteroom

Americans had come to accept the proposition that “the Marshall Plan is a success.” The proposition was true, up to a point. Yet Americans were also learning that, in the battle for the West’s survival, every success leads only to the anteroom of another crisis. Last week ECAdministrator Paul Hoffman flew to Paris, and into a new anteroom.

A Vicious Cycle. He came to talk to OEEC (ECA’s European governing body consisting of representatives of all the Marshall Plan participants) about Western Europe’s economic integration. That, in addition to Western Europe’s economic revival, had been an objective of the Marshall Plan. Revival had been spectacularly accomplished; integration had so far failed. Paul Hoffman explained why integration was necessary:

“I invite you to weigh the alternative . . . The vicious cycle of economic nationalism would again be set in motion., The consequences would be the cumulative narrowing of markets, the further growth of high-cost protected industries, the mushrooming of restrictive controls, and the shrinkage of trade into the primitive pattern of bilateral barter.” Stated positively, only by. integration could Europe get a home market big enough to support efficient mass production.

Hoffman was calling for integration at a time when the split between controlled-economy Britain and the relatively free-economy Continent was wider than ever. The French and their continental friends were still fuming over the fact that the British had devalued the pound without even consulting them (TIME, Sept. 26 et seq.). They accused the U.S. of granting Britain the privileges of a specially favored nation, at the expense of Western Europe’s unity. Hoffman tried to deflect some of this resentment. He was taking a crack at the British when he called upon the governments to give exporters “direct incentives.” Said Hoffman: “Practically all Europe’s exports are furnished by private producers. Governments may set targets ; they may exhort; but unless sales in dollar markets bring adequate rewards to sellers, the great effort required to enter and hold those markets will never be made.”

A Considered Request. “Unless [your] dollar earnings rise dramatically between now and June 1952 [when ECAid ceases],” warned Hoffman, “Europe’s trade with the Americas will have to be balanced at so low a level that it will spell disaster for you and difficulties for us.” Hoffman’s plea for integration included a warning. Said he: “I do make this considered request: that you have ready early in 1950 a record of accomplishment and a program . . .”

It was a tall order; but anything less might well turn the Marshall Plan’s success into fatal failure.