Evening star., 1947-11-09

6TdI 1GSScl VIC odIlh, ob. oooiS'
method of obtaining high productiv-
ity, it does not believe that any
foreign aid program should be used
as a means Of requiring other coun-
tries to adopt 1t. The imposition
Of any such conditions would con-
stitute an unwarranted interference
with the internal affairs of friendly
inations.
Goals Vary With Problems.
The goals which the European
governments have set for themselves
and with which our government may
legitimately concern itself are con-
ditioned by the nature of the Euro
pean economic problem. The rea-'
sons for the inability Of Western
Europe to balance it's accounts with
/ the rest of the world at the present
time are generally understood and
are ably analyzed in the CEEC re-
port. (The initials stand for the
Committee on European Economic
Cooperation which met recently in
PariS.D Western Europe is cut of
from the food and supplies which
flowed from Eastern Europe before
the war. Foreign investments and
shipping revenues have been lost.
The costs Of essential food and raw
material imports have risen and
are still rising. To overcome these
isadvantages European production
must expand well above prewar
levels; yet IN important industries,
especially coal mining, and impor-
tant areas, especially Germany, 1t
is tagging badly.
1t is the judgment Of all compe-
tent observers that these troubles
tfow from an acute shortage of
working capital and from the seri-
Gus disintegration of organized eco
nomic life rather than from war
time physical destruction. Working
capital in the form of fuel, raw ma
teria,s and food is needed to sustain
Europe until its production is built
up. Some capital equipment is
needed to further the rehabilitation
of industry An effective restoration
of the purchasing power of money
Is essential to the resumption Of
ordered economic life.
Initiation Danger Cited.
Postwar experience has abund-
antly proved that if money demand
is vastly in excess of the supply of
goods, the effects of "repressed in
fation" are almost as bad as the
disease itself. Germany is merely
| the most horrible example of an at
| tempt to restore economic life with
out giving people money they can
trust.
In this situation, the rapid spread
of black markets undermines the
respect for law. Normal monetary
incentives cease to operate. The
worker has no just reward for his
labor and the farmer refuses to sell
his produce. Resources are dissi-
pated. Trade degenerates to barter.
Controls tend to become self-perpet-
uating.
Achievement Of monetary stabil-
ity would allow a gradual restora-
/ ton of normal incentives and a
gradual return to a system where
individuals and enterprises, both
public and private. can operate IN
markets. It would also allow the
stabilization of exchange rates.
which Is all but impossible so long
as imitation proceeds apace. 1t Is
! obvious that this situation makes
balance of payments problems that
much more difficult The committee
believes that in the near future some
adjustment of exchange rates must
be made. The prelude to that is
internal monetary reform. -
III. NEEDS AND CAPACITIES.
The committee found little evil
dence that the goals set at Paris to
restore standards of living were ex-
cessive in terms of basic necessities.
Even if all the estimates submitted
at Paris were to go through as
planned, Europeans would not be
eating as well in 1851 as they ate In
1898. If food were available, it
would pay to meet these estimates
/ in full in the interest of political
stability. This is especially true in
the case of Western Germany,
where more food is essential to Sc
cure more coal production and the
revival Of an economy now obviously
on dead center.
The committee, however, Is not
convinced that the participating
nations at Paris we're wholly realistic
In their plans for capital expansion.
On the first point, it is obvious that
If Europe is to be revived and made
self -supporting-if our aid program
| is not to degenerate into just an
other relief program-the European
nations will have to rehabilitate
their capital plant,
But it cannot be too strongly
stated that the process of invest
ment and capital formation imposes
severe strain on the country
undertaking it. It means the in