Europe

ATLANTIC

July 1948

on the World today

CHEERED by the prospect of the best crop year since the end of the war, the Marshall Plan nations of Western Europe are embarking upon their drive for economic rehabilitation with new energy. By midsummer of 1947, according to a survey issued last month by the United Nations Economic and Social Council, the industrial production of the fourteen leading European nations taken together, and exclusive of Germany and Russia, had already approximated the pre-war level of 1938. At the same time the total agricultural output for twenty-two European countries — again excluding Germany and Russia — stood at only 76 per cent of the pre-war figure.

This 24 per cent deficit in agricultural production, caused by protracted winter storms, devastating floods, midsummer drought, and inadequacies of farm equipment, will, it is now believed, be more than offset by the harvests which will begin to come in within a few weeks. Large increases in acreages planted, a steadily rising supply of farm tools and fertilizer, and exceptionally favorable weather promise to carry the farmers’ contribution to recovery well above pre-war volume for the entire area, with the possible exception of Bizonal Germany.

On the land, Europeans are largely at the mercy of nature. In industry they are more nearly masters of their own destiny. The industrial production figures in UNESCO’s latest report disclose the real measure of Western Europe’s efforts.

Great Britain

By midsummer of 1947, Britain, which in 1938 accounted for about 22 per cent of all industrial production in Europe, boosted her output to 110 per cent of pre-war figures. By the end of the year she had added another 10 per cent to that staggering figure. Her own estimates indicate that she has raised the level still higher during the first quarter of 1948.

Some of Britain’s key industries, however, continue to lag — textiles, building, and coal, for instance. Yet, though her nationalized coal industry managed to send only 1,057,000 tons into export for the entire year 1947, her current coal exports are running more than a million tons a month. If this rate continues, a substantial portion of her pre-war share in world coal markets will be recovered by the end of 1948.

Despite this impressive comeback there is trouble, both in the pits and in the administrative sector of the coal industry. Attempts to push nationalization by closing uneconomic pits or consolidating adjacent mines continue to meet with opposition from the miners, who dislike moving to new work fields in a time of acute housing shortage.

The recent resignation from the Government’s coal board of Sir Charles Reid, famed production expert, because of his insistence upon a greater driving power in its decisions, has brought the whole problem of the mines to a head. For both political and economic reasons British socialism cannot afford to permit its initial experiment with nationalization to flounder.

That point is emphasized by the progress of three of Britain’s other great industries, which have not yet been nationalized. Steel boosted production to 140 per cent of pre-war levels early in April. At the same time British engineering output stood well above 125 per cent of pre-war figures, and British chemicals were more than 160 per cent of pre-war production.

France

Belgium, France, and Denmark enter the first fifteen months of the reconstruction program with over-all industrial production comfortably above 1938. Pressure on manpower for industry in France is tremendous. She is still short of requirements, even though she has combed the displaced persons camps of Western Germany for skilled workers, has absorbed some 80,000 Italian workmen under her recent plan for joint economic coöperation with Italy, and has settled nearly 40,000 Poles (mostly in industrial areas) and 120,000 former German prisoners of war who have elected, as free men, to make France their future home because of the appeal of steady work and good pay.

French coal production is already ahead.of the goal of 51 million tons set for 1948. The program for expansion of electric power, though delayed by shortages, will add another 10 per cent to French power facilities before the end of the summer. With her index of industrial production standing at 106 per cent of 1938 as spring ends, despite the harassments of last year’s strikes, France is pushing forward with vigor. Greater mechanization of farms is strengthening the role of French agriculture. Before the war there were 30,000 tractors in the country. Today there are nearly 75,000.

The Netherlands

The pace of industry in the Netherlands can be measured in many ways. In 1920, after World War I, 2,000,000 man-days were lost to production because of strikes. Last year, thanks to the excellence of Dutch labor-management relations, firm price controls, and a carefully devised scheme for stabilization of wages, only 200,000 man-days went to waste for this reason.

Holland’s industrial production soared nearly 40 per cent last year over the preceding year. It is still climbing. The number of industrial workers doubled in thirty-six months. A study of 9800 Dutch industries, completed this spring, shows productivity of workers up more than 250 per cent over 1946. The production index of the Netherlands, which stood at a low of 46 in the final quarter of 1946, hit 110 in the first quarter of 1948.

Norway

Norway moves into the reconstruction program harassed by continuing shortages and dollar difficulties. The latter may be eased somewhat by her allotment of credits under the aid plan. Only in February of this year did her export industries attain pre-war levels, despite the fact that her fishermen last year chalked up a world’s record with a catch of more than a billion pounds.

Concentration on the job of rebuilding Norway’s great merchant marine is resulting in prodigies of accomplishment. The Norwegians take a long view of recovery. In this they differ to some degree from their neighbors. They expect real results not this year, but in 1949 and 1950. New motordriven tankers, ranging up to 16,000 tons, further expansion of their magnificent whaling fleet , enormous new underground hydroelectric power stations— one of them tucked under a mountain — will all be contributing to productive output in another year or two.

Meantime, Norwegian labor and management have once more placed the general good above the expediencies of the moment by renewal of the famous “ blanket labor contract" for the remainder of 1948. This arrangement has kept the industrial peace for well over a year. It is based on moderate pay adjustments and an honestly administered control of prices.

Italy

In Italy the pleasant ruminations of the postelection period are giving way to hard realities. Though the lira has been stabilized at 570 to the dollar, and though ERP aid brought the hope that all bread and pasta rationing would end by midsummer, the persisting problems of unemployment, land reform, and fiscal distortion hung like death’sheads over the new De Gasperi regime.

Italy’s allotment of aid from the Western Hemisphere exceeds a billion dollars. But will this solve the riddle for a nation sorely deficient in almost all essential materials for production, whose population is increasing at the rate of 500,000 a year Unless genuine effort is put into the task of land distribution soon, ERP may well represent for Italy’s hundreds of thousands of landless peasants merely another brief respite. And until some means can be devised for fitting the living wealth of Italy’s manpower into a general coöperative scheme with her neighbors, her dangerously high unemployment will continue to burden her economy.

Greece

Italy’s status under the Marshall Plan is nevertheless far more comfortable than that of her Mediterranean partners in the sixteen-nation group. Matters in Greece proceed from bad to worse with little prospect of real economic rehabilitation this year. The extreme reactionaries in Athens have managed to stalemate most of the major administrative reforms proposed by the American mission and to embroil themselves in a quarrel with the American press, which is chiefly significant in that it is uncovering, for the first time, the real nature of the Greek government to many Americans.

Morale among the people is at a new low. The burden of hundreds of thousands of refugees from the civil war is squeezing relief funds. Despite optimistic predictions by the military, there is little likelihood that the approach of autumn will find the “pacification campaign” a success. As Exhibit A for the Truman Doctrine, Greece offers Washington little to cheer about.

Turkey

Barred from the tobacco market in Bizonal Germany by decision of the American directors there, Turkey’s great tobacco industry languishes with half its crop unsold for lack of foreign outlets, and bankruptcies accumulate. The first fine rapture of enthusiasm over unexpected windfalls from Washington is giving place to sharp criticism of American businessmen and American policy.

Turkey’s share of ERP aid is relatively small, though it has been eked out rather handsomely by the latest grant under the Truman Doctrine. The difficulty is that the economic crisis is growing, while the benefits which may flow from new arterial highways (which are still in the print stage), gifts of submarines, and new increments to armament are all in the speculative future. Trade is tangled in the knots of Middle East unrest, war in Greece, Balkan enigmas, and the preoccupation of Western Europe with its own concerns.

Coöperation and freedom

The movement toward cooperation among the nations of Western Europe continues to gather strength. Indeed, it is one of the most remarkable phenomena of the entire post-war period. Within less than six months it has developed from a rather nebulous suggestion put forth by Ernest Bevin into a series of concrete achievements. The Organization for Economic Cooperation set up at Paris in April is Europe’s device for affirming not only the will to cooperate but her determination to maintain essential freedoms while participating in a delicate economic enterprise which, without safeguards, might well impair some of them in the very process of building new strength.

The present aim of the Marshall Plan nations is to achieve greater cooperation without trying to do too much too soon. Recovery of economic health is their primary task. There is no diminishing of European concern about the riddle of Russian policy. But most Europeans are of the opinion that unification is more likely to advance through a process of gradual integration than by attempting to follow a hasty blueprint.