Evening star., 1948-03-07
Trade Knots
TieUpI Italy
Recovery Blocked by
Disrupted Rules
of Commerce
By Bloir Moody

the postwar troubles of Italy.
Nowhere exists a more glaring ex-
ample of what can happen to an
individual nation when the skein of
trade, which ties the world together
In normal times, becomes snarled.
In this case, an Italy which could
do better If her neighbors could
reciprocate is being saved only by
help from the United States. And
we will have to go right on helping,
unless we decide to let Moscow have
the peninsula, the Mediterranean
and probably the Middle East, until
trade flows normally once more.
Wants No Trade Bars
BY necessity, Italy has become
Europe's real leader in the move
. ment for mutual recovery measures,
with the accent on mutual. She
wants to fill the acute shortages of
manpower In Britain, France and
the Benelux countries by exporting
workers. She offers the oppor-
tunity-not very safe one at the
moment-for foreign capital to
&. come In and develop her industries.
Above all, she wants a ripping
away OF trade barriers Of the very
sort contemplated by the Marshall
conception. She would have a Gus
toms union with France, Britain
and Benelux. She has already gone
further, in principle, with France,
the governments of both countries
already having approved not only
customs union but a complete
union of the two economies.
Before the war, Italy imported
most of her coal from Germany and
paid for 1t almost exactly by her
exports of fresh fruits and vege-
tables, largely to the German market
Today she has an abundance OF
fruit, ready to ship to the Germans
Instead, large amounts are spelling
in Southern Italy and Sicily.
Why? Because the Germans can't
pay for it. Our military government
ruled just a few days ago that they
could not use their meager supply
of export dollars Gtaly certainly
does not want marks to pay for a
product which, while pleasant, is OF
low caloric content.
Coal Creates Problem
Before the war Italy paid an aver
age Of S. ton for its coal, and the
Italian steel industry, selecting the
highest quality coking coal, about Sc.
Italian blast furnaces consumed y
of ton of coal per ton Of steel.
Most of it came from Germany.
Today the steel industry of Italy
pays the lire equivalent of roughly
S18 a ton for coal of irregular and
(for steeD low quality and therefore
uses about IL tons of coal per ton
of steel. A private American report,
analyzing this, comments:
THE cost OF steel both from blast
furnaces and from scrap is such as
to raise the costs of production of
the metallurgical and mechanical
industries above world prices. How
can Italy ever place its processed
metal goods in hard-currency mar
kets in competition with steel indus
tries which pay next to nothing for
transporting their fuel? So long as
the price of American coal delivered
in Europe sets the world price for
coal, there can be no recovery
What the Italian steelmaker pays
in lire, of course, goes into the
special fund to be handled jointly by
American and italian governments
Since Italy did not have the dollars
the original cost, including shipping
charges, Is paid by the United
States.
Britains dollar drought and fail
ure to export coal has precisely the
same effect on Italy land Uncle
Sam as Germany's. Any one who
has both been in Italy and eaten
the British excuse for fruit can tell
without trying that those spelling
oranges of Sicily, by all the rules OF
common sense, should be sent to the
United Kingdom.
But not by today's disrupted rules
Of trade. The British, pressed des-
perately for dollars, offer payment
in sterling at rate of 81 each for
pounds which are selling in open
markets all over the world, including
New York, around $3.50.
Union Complicated
For q while the Italians accepted
sterling for their fruit. But they
cannot buy what they need in world
markets with sterling, and the Ital-
lars have acquired "stockpile" OF
35,0Oc, 900 pounds. Britain's produc-
ton is not yet high enough to ship
the coal they need. Result: The
whole deal begged down.
In the French-Italian customs
conference, 80 top Italian indus
trialists met with their French op-
posite numbers and totally sup
ported the move to remove OBJ
stacles at the national border. They
discussed with approval plans to
merge the national markets of Italy
and France to provide the statesmen
of both broader markets.
An economic union between two
nations, or even a customs union,
however, is q great and infinitely
complex job. First, some way must
be found to rationalize the two cur
rencies-so there will be common
medium of exchange. 1t Is the only
way to compare costs and selling
prices.
The French have new tariff, the
italians their prewar tariff. Taxes
on business are different; in an eco
nomic union their weight should be
about the same. And sweeping tax
reform is no simple political task.