EUROPE AND MR. HOFFMAN
MR. PAUL HOFFMAN, the head of the Economic Co-operation Administration, is a public servant with an unenviable task. He has had to hustle members of the Organisation for European Economic Co-operation in the direction of a single and united European economy, while making it clear that he appreciates the enormous difficulties of such a project and at the same time avoiding any suggestion that the United States Congress is dictating a policy to nineteen European Governments. He has also to convince Congress that the aim of integrating the European economy, which is quite fundamental to the Marshall plan, is still practical, that substantial progress has been made towards it, and that there will be sufficient further progress in the near future to justify another large grant of dollar aid next year. It is not surprising that his speech on Monday to the Council of O.E.E.C. contained a note of urgency, that his reference to the advantages of unity should be accompanied by a plain warning of the unpleasant consequences of failure, that his appreciation of the difficulties should be accompanied by a forecast of the much greater difficulties arising from economic nationalism, and that his own programme of action should be couched in rather tortuous terms.
He should not be too harshly criticised for that. In the end the resolution passed on Wednesday was an acceptance of Mr.
Hoffman's proposals by the 17 Ministers wbo, in spite of their insistence on the difficulties of the case, could not produce a convincing alternative. No speech during the Paris meeting of O.E.E.C. made a suggestion for the future of the Marshall plan as balanced and reasonable as that put forward by Mr. Hoffman himself. Certainly Sir Stafford Cripps on Tuesday, faced with his own problems of squaring the policy of a single Government with the needs and ideals of a continent, did no better. The model for a reply to Mr. Hoffman's appeal was given back in 1947 by Mr. Bevin, in his reaction to the short speech in which Mr. Marshall originally raised the possibility of large-scale American aid to Europe. The British Foreign Secretary took all the hints, accepted all the invitations, gratefully received the con- ditional offers of help and undertook to do his best to deserve them —in short, he took the right course for Europe while at the same time doing nothing to complicate Mr. Marshall's relations with Congress. We could do no less for Mr. Hoffman.
The secret of the whole situation is to develop by every possible means, and by any required amount of hard work, the practical implications of a tremendously ambitious ideal—the ideal of European recovery through unity with American aid which was and is the aim of the Marshall plan. If we did not think that that ideal could be achieved at the time when it was first stated, in June, 1947, then presumably we would not have jumped to embrace it, and later taken the dollars that went with it. And now that the organ of economic unity has been created, in the O.E.E.C., several thousand million dollars received, recovery carried to encouraging lengths in many individual coun- tries, and belief in the desirability of economic integration repeated over and over again, the duty to go on io the next and somewhat harder stage is surely greater and not less. If some of Mr. Hoffman's latest proposals sounded a little vague, it is nevertheless reasonable to assume that he made them as definite as he could.
There were five main measures, all of which have been accepted. The first was the co-ordination of national monetary and fiscal policies. Several Continental countries have already interpreted this as a thrust at the British Government, which devalued the pound without consulting O.E.E.C. or any of its members and is spending large sums on welfare benefits at home before creating a stable trading position abroad. Britain must certainly take her full share of responsibility for the present tendency to throw away what has been achieved in the way of monetary consultation and the con- solidation of O.E.E.C., but those countries of Europe whose shortcomings are no less grave for lying below the surface must take their share too. The second proposal, to set up machinery for the adjustment of exchange rates, was also reasonable and practical. The third proposal, for machinery to absorb the impact of temporary disturbances to trade and payments, was less clear, but that is hardly a point for European countries to dwell upon unduly, for such disturbances must be mini- mised and one means of doing the work is to push ahead with the creation of a pool of hard currencies to which the United States might possibly contribute. As to the fourth proposal, for the co-ordination of conflicting commercial policies, it was surely such plain common sense, and so clearly a matter to be settled by the countries whose policies conflict, that there can be no reasonable complaint that Mr. Hoffman gave no details of what he thought was required. The final suggestion that, as a first step to the creation of a single European market, several smaller groups of countries might be formed, is nothing more than the appli- cation to the economic field of a device which has already been adopted for strategic arrangements within the Atlantic Pact and which—in the sense of building out from a firm nucleus—is also a leading idea in Western Union. In fact in all these matters the countries of Europe could employ their time more profitably in following up the proposals in practice than in pointing out the difficulties.
But it should not be concealed from Mr. Hoffman or anyone else that the time to be so employed must be counted in years and decades rather than in weeks or months. It is simply not possible to carry out such measures as the abolition of quantitative restrictions on imports and exports without exposing many Euro- pean industries to such a withering blast of competition as will kill them outright. The adjustment must be gradual and the resources involved must be transferred without undue dislocation. The adjustment of mental outlook will be as difficult as the physical transfer. What, for example, would be the British reaction to a proposal that British coal mines should be closed down wholesale and the coal imported from lower-cost producers on the Continent ? Even the threat that the supply of Marshall dollars may be cut off altogether in the middle of next year will not be enough to force such changes through at short notice. But here there is a really difficult knot, for Mr. Hoffman has been saying as plainly as he can that unless the changes come quickly dollar earnings cannot rise and trade with the dollar area will fall to such a low level that " it will spell disaster for you and difficulties for us." In this context the threat of " difficulties " for the Americans is as serious as the threat of " disaster " for Europe. For Congress faced with such difficulties might be quite capable of cutting the lifeline of Marshall aid.
How is this deadlock to be broken ? If Congress wants prompt and convincing evidence of accelerated progress towards European economic integration, and if the countries of Western Europe are convinced that such a project can only be completed in the distant future, how can any basis of mutual trust and confidence be established ? There is only one answer and it has been very obligingly provided by Mr. Hoffman himself. He has asked the Council of O.E.E.C. to " have ready early in 195o a record of accomplishment and a programme which together will take Europe well along the road towards economic integration. This is something much more ambitious, and much more detailed, than the resolution passed on Wednesday. What Mr. Hoffman wants is a convincing document, and in making his request he is following a valuable precedent ; for it was a convincing document—the report produced in the late summer of 1947 by the experts assembled in Paris and led by Sir Oliver Franks and M. Herve Alphand—which laid the practical foundation for the European Recovery Programme. There is only one change At that time it was enough for the American Congress and people to know that the Western European countries knew what they wanted to do. They were content to let recovery take its course and to assist it with grants of dollar aid. Now, two years later, the stage of recovery of the individual countries of Europe is over. If the dollars are to continue to arrive it is necessary for the O.E.E.C. countries to draw closer together by actually putting in hand those of the schemes outlined in the 1947 Report which are still practical propositions. This is a key point in the history of European recovery—a point at which O.E.E.C. must cease to be a body of civil servants and begin to be an executive agency for carrying out international projects. It is not impossible to carry through the necessary reorganisation in Paris by the date " early in 1950 " which Mr. Hoffman has named as his deadline. In any case the attempt must be made.
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