London

on the World Today

WHILE Britain’s gold and dollar reserves were running out, uncertainties in connection with the European Recovery Program forced the Government in London to shelve long-term planning. The British Government’s Economic Survey for 1948 admits this plight by restricting its whole import plan to the first half of this year.

Early last winter Attlee’s ministers were declaring that Britain must avoid relying on Marshall Plan aid. The Cabinet, they said, was shaping its plans on the supposition that the nation would have to creep along on its own power. This pretense was dropped when the Government published its Economic Survey. Absence of U.S. help, the Survey confessed, would bring wholesale unemployment, distress, and dislocation of production, and would delay for years the prospect of a decent standard of living for the people.

What the Survey omitted, however, was acknowledgment that totalitarian compulsion repugnant to the British people would have been unavoidable if Uncle Sam had not pulled Marshall Plan dollars out of his stovepipe hat. Instead of the present rare “direction” of a few citizens into essential trades, there would have been compulsory mobilization for farming, mining, and other industries. Existing controls, which Conservatives and business are denouncing, would have had to be extended. Apart from a state monopoly of import and export, the furtherance of state ownership would have become a live possibility.

How does Britain’s economy look this spring? The dollar shortage dominates the picture. To cope with this, the Government has reduced purchase of goods from the American continent. Britain has almost entirely ceased buying food from the United States. Of all British imports, 49 per cent were drawn from the Western Hemisphere in 1946 and 44 per cent in 1947, but this rate is being scaled down to 34 per cent in the first half of 1948. Britain intends simultaneously to raise her exports to the Americas.

Last September the Government decided that by the end of 1948 the total volume of British exports must be 60 per cent above that of 1938, the last normal pre-war year. That target has now been lowered to 50 per cent, owing to saturation of certain overseas markets, imporl restrictions abroad, and lack of steel for Britain’s export industries. At the beginning of 1948 Britain’s gold and dollar reserves totaled about 2720 million dollars. The Survey estimates that by midyear these reserves will have fallen to 1800 million dollars, and by the year’s end to 900 million — which is below the minimum for practical trade and credit operations.

Next to dollars, steel has become the great shortage. Steel output is to be raised from last year’s 12.7 million tons to at least 14 million in 1948. This will still lag far behind Britain’s steel requirements for motorcars, machinery, and other exportable engineering products. Lack ol steel will also hamper manufacture of farm implements, impede building, and delay modernization of many industries and coal mines. It will prevent erection of oil refineries and new steel plants.

To increase sales abroad, the British will make a terrific drive to raise textile exports by 40 per cent, this year. The number of men and women making cottons, woolen goods, and other textiles is to be enlarged from 652,000 to 760,000. This is only one illustration of the large shift of labor which is indicated by Government plans.

Unconditional Europe

The Economic Survey informs us that even with American aid, the best Britain can do is to scrape through this year with a small worsening of home conditions. Without the ERR the British would face certain insolvency, near starvation for many citizens, severe unemployment, and rising political ferment. Leftists have been insisting that no political strings be tied to American help. The truth is that the United States could have attached merciless conditions to the ERR, and the British and other European anti-Communist governments would still have had to accept them.

The U.S. Congress and the Administration have intelligently rejected demands to make American aid depend on Western Europe’s renunciation of socialist experiments. Almost all non-( ’ommunist countries of Western Europe have chosen a way of life part capitalist, part socialist. By trying to substitute private enterprise for the limited sector of Western Europe’s socialized economy, the U.S. would simply be antagonizing its friends and feeding the suspicions Russia has been inflaming against the Marshall Plan.

America should continue to resist suggestions of reimposing straight capitalism upon nations with a mixed economy. As things are, many Europeans are champing at their dependence on the United States. Communists never weary of reminding Western Europeans that they are at America’s mercy. In coming elections and at political conventions on Europe’s side of the Atlantic, resentment or fear concerning loss of independence will impinge on gratitude for U.S. aid.

All roads load to Washington

Immune to Bolshevist propaganda, Britain has her own sensitiveness. With the decline of naval power, the spread of mechanization to other countries, and exhaustion after fighting two world wars within a generation, the British are uncomfortably aware of having abdicated their role in world affairs to the United States. Their sensitiveness explains recurrent moves to create a British-led Western European bloc as a Third Force, tilting the scales between the U.S. and Russia.

But countries on the rebound from Russia find only one bridge intact, and it loads to Washington. Individually and collectively, economically and strategically, the West bloc depends on the United States. The signing of the Brussels alliance formalized a situation that already existed. If this new alignment receives an American military guarantee, that will simply extend the application of the Truman Doctrine.

Without American backing, the Western union would be hopelessly incapable of “stopping Russia” in war. With the Soviet mechanized armies and air force on the Elbe, the Russians could swiftly overrun Western Europe and hold the English Channel ports. As was the case in 1943, an American expeditionary force would have to fight its way back to the Continent.

Military inferiority of the West bloc (without the U.S.) will persist even if the Brussels alliance is expanded by adherence of Italy and later of Western Germany. The coal, coke, and steel of the Ruhr are to restore the non-Russian zones of Germany and to speed recovery of France, Belgium, Holland, and Luxembourg. However, one must weigh the economic and strategic asset of the Ruhr against its political and psychological liability.

Germany: arsenal of power

A strong Western Germany is a nightmare to Poland and Czechoslovakia. It also alarms our French and Benelux friends. Allied supervision of Ruhr industries, producing under German management, will fail to allay the deep distrust of German nationalism.

The race between Russia and the United States for Germany’s favor has been gaining momentum since the fiasco of the Big Four conference in Moscow a year ago. Early in March Germany, the richest prize in the East-West struggle, was the topic of a series of American-British-French talks in London, with Belgium, the Netherlands, and Luxembourg participating.

Progress towards agreement was achieved mainly as the result of concessions by the French. The conference witnessed France’s absolute abandonment of her former demand for detachment of the Ruhr district from German sovereignty. Agreement that the Western Allies shall supervise merely distribution of Ruhr output means that France also relinquished the claim to Allied control of Ruhr production. Distribution of Ruhr output is to be watched only at the top, instead of installing Allied inspectors to control production and distribution, as the French had asked, from top to bottom.

The American Ambassador to Britain, Lewis W. Douglas, who led the U.S. delegation in t hese seerel negotiations, requested Britain and France to fall into line with previous American action hv terminating all future shipment of German machinery to Russia on reparations account. The legal advisers of Foreign Ministers Bevin and Bidault have felt that despite grave Soviet provocations, suspension of these deliveries would give a certain justification to Moscow’s inevitable charge of violation of the Potsdam accord.

We have grown used to describing the United States as a great power, without pausing to think how that power is making itself felt. Britain’s economic dependence; the reliance of Western Europe upon ERP dollars and goods; the Brussels security pact, acquiring significance only because it enjoys American support; the wishes of the United States supreme in Western Germany — all underline America’s new responsibility.