London

on the World Today

THE British people were able to peer into their future, at least into 1953, when their Labor Government published its four-year plan. What they saw, upon squinting through the mist of statistics, was a sweating John Bull trudging over rock-bound country and arriving, after his four years’ trek, at living conditions that would be just about level with those from which he set forth on his career of self-denial in 1939. Not luxury or comfort, but negative avoidance of poverty and disaster, would be the reward for his plodding journey.

In the year before an election most administrations would be tempted to offer a more alluring picture to the voters, and the British Government showed honesty in issuing this report.

Authors of the plan were frank in underlining its provisional character. They have presented their targets for higher production, larger exports, and vast investments as general aims that might be cut to more modest dimensions with the passage of years. The plan contains many elements of chance. Its fate depends on factors beyond any British Government’s control.

Without continuance of adequate Marshall aid, the British four-year project would collapse. Unless American economic assistance is supplemented by generous military lend-lease, Britain’s recovery will be crippled by diversion of its manpower and production to rearmament. Movement of world prices introduces a still greater uncertainty; for the plan could easily be upset if the relative prices of imports and exports veer to Britain’s disadvantage.

Raising of new trade barriers could derail British planning, which must also rely on America’s willingness to import British manufactures. The unpredictable grain crops of the future will dictate prices of essential British food imports. The success of the plan will be influenced by the volume of East-West trade. With commercial rivals girding to capture Western Hemisphere markets, Britain must sharpen its competitive power.

Finally there is the unknown factor of industrial strife at home. In the past three years Britain lost 10 million days’ work in labor-management disputes, compared with 150 million in the same period after the 1914-1918 war. Would this relative calm survive if the next general election should put a Conservative cabinet in the place of the Labor Government ?

These are among the incalculables that inject uncertainty into the four-year plan of a nation which must lean heavily on foreign trade and which recoils from totalitarian economic controls. The British plan is bound to be tentative, moreover, because it is to be blended into a master plan with those of the other Marshall Club members. This welding will be a slow and painful process.

French luxuries go begging

Britain has already been accused of arranging its recovery at the expense of other Western European nations. France has protested that Britain’s austerity program will deprive the French of one of their traditional markets for luxury or semi-luxury goods like wines, silks, fancy leather products, perfumes, toys, jewelry, and tasty cheese. Under the British plan, the profit most European countries, including France, used to reap from commerce with Britain will be turned into a deficit.

Foreign Secretary Ernest Bevin told Parliament: “There was a luxury market in the nineteenth and early twentieth centuries. The French must appreciate that that luxury market has gone. Britain with her new needs, with her greater equality of income, will for a long time be a necessity market. I therefore appeal to my friends in France to shape their economy to meet a necessity market rather than a nonessential one.”

German rivalry

If this Anglo-French wrinkle can be ironed out, a more formidable difficulty may arise in relation to Germany. As the Morgenthau concept of a pastoralized Germany has yielded to one decision after another in favor of restoring Western German industrial power, it has become increasingly probable that the Germans will reappear as serious competitors of Britain in the world market. By 1953 Bizonia’s industrial output, now about 25 per cent below the 1936 level, is to rise to 10 per cent above it.

Like Britain, Western Germany is to put its major effort into expanding production of finished goods and capital equipment. Bizonia’s export campaign will be directed broadly into the same holds as Britain’s.

Coal from the Ruhr, as well as from Poland, is sure to crowd British coal exports in competitive markets unless those markets are partitioned in an intergovernmental cartel. So German rivalry may interfere with British recovery.

Self-support by 1953?

Against all these and other hazards, Britain has set out on her war of economic independence. Anxious to avoid the lasting status of Uncle Sam’s poor relatives, the British intend to be self-supporting by 1953. How do they propose to do this?

Fundamental to the scheme is an expansion of output, in industry, mining, and agriculture to one third above the 1938 level, with manufacturing at 40 per cent above pre-war. Exports are to be pegged at a volume at least 50 per cent greater than before the war. The nation’s dollar deficit is to be lowered to manageable proportions. In 1952-1953, Britain is to earn a total surplus of 100 million pounds.

By 1952, British farms are to yield the biggest crops in their history, although even this will leave the country drawing half its food from abroad.

More capital for industry

Perhaps most striking of all is the program for capital investment at the rate of 8½ billion dollars a year for four years. That is to say that 20 per cent of the national income will be plowed back into expansion and modernization of Britain’s production apparatus.

Coal mining, electric generating capacity, transport, agriculture, iron and steel, are to be the principal beneficiaries. Sixteen per cent of all capital expenditure would go into housing and 7 per cent for health, education, and other social services.

With steel production now at the rate of about 15 million metric tons a year and this industry working at full capacity, output is to rise to 17 million by 1953. Mines are expected to yield 257 million metric tons of coal, of which 40 million would be for export. This presumes an annual 5 per cent rise in the individual miner’s productivity. In 1948 Britain produced 208½ million tons, of which about 17 million were exported.

Expansion of output by one third over almost the entire economy assumes an average increase of 10 per cent in the worker’s productivity over the next four years.

An important, share in recovery is assigned to the oil industry. Britishowned companies are to double their crude-oil output compared with the 1947 total of 54 million tons. Seven new refineries are to be completed at home. This is one of the points in the plan being questioned, for it relies on other participating Marshall Plan countries to supply some of the 34 million tons of steel needed for the oil industry’s enlargement.

By 1953 a spurt in the textile mills is to increase output of cotton and rayon cloth by more than a third over 1947, while exports of cotton goods should be fully 80 per cent greater, and exports of woolens from 60 to 80 per cent higher.

Chemicals and shipbuilding, especially of big, fast oil tankers, are two of the other fields on which the fouryear plan would train a steady jet of new capital.

New homes

An immense building program is contemplated. In 1949 alone it is planned to invest 1660 million dollars in erecting new homes and mending old ones.

Britain has large arrears to make good. German bombs completely destroyed or made uninhabitable 470,000 houses, and construction was almost entirely suspended during the war. Meanwhile, the population has increased by 2¼ million since 1939.

In the first three post-war years a good start has been made with 330,000 permanent and 155,000 temporary dwellings built and 235,000 additional homes provided by repairs or conversion of non-residential premises. Preference will be given to building in agricultural and mining districts to accommodate more recruits on farms and at the coal fields.

These are some of the highlights of the 55 printed pages into which the British Government has packed its four-year plan. Many of the estimates are subject to a wide margin of error. What remains is an accurate general forecast of Britain’s economy in the years ahead, with the details arguable. The earlier aim of raising British exports to 175 per cent of their prewar volume has been abandoned in favor of a more realistic 150 per cent. When (or more precisely, if) all this is done, food imports are still to be held at 15 to 20 per cent below their pre-war quantity, despite growth of population. The import program as a whole in 1953 will be kept 15 per cent under the pre-war volume.

Redistributing the wealth

Owing to the redistribution of wealth which occurred during the war and in the early stage of the Labor regime, even a slightly smaller food supply would be spread more generously among smaller-income folk. Sir Stafford Cripps, Chancellor of the Exchequer, gave an illustration of “the social revolution" in Britain.

The number of net incomes over $20,000 a year, after taxation, has dropped from 11,000 before the war to 250. Wage-earning and lower-salaried citizens have a larger slice of the pie. In 1938 there were 670,000 persons in the $2000 to $4000 income brackets and they earned 1660 million dollars, after taxes. In 1946 there were 1.74 million people in this same income group and they earned 3804 million dollars, after taxation.

To achieve the modest livelihood foreseen at the end of the plan, the British are being asked to work harder than ever, to acquiesce in continued starving of the home market to promote exports, to cut imports until it hurts, to accept a system of rationing and other economic controls sterner than those of any other democratic nation, and to go on carrying a terrific load of taxes.

The alternative is to accept a much lower standard of living, to strip the country of its defenses, to scrap social advance, or to stay in a state of dependency on the United States, which would hardly be willing to carry such a burden permanently.