Evening star., 1948-07-04
|WestEurOpe
TradingLags
Most Countries Too
Poor to Buy From
Each Other
By Tom WiIIioms


The crisis, which threatens to
delay economic recovery, is one that
dollar aid from the United States
can ease only partly. 1t is partly
a problem of monetary exchange.
The 16 nations taking part in the
European Recovery Program have
worried with the problem, but SO far
have not come up with an agreed
solution.
Drastic Steps Likely
Likelihood, however, is that before
the end Of the year something dras-
tic will have to be done if the Mar
shall Plan is made to work. British
economic advisers are supporting
two schemes:
Direct exchange of raw materials
and commodities, and creation of a
pool OF European currencies which
deficit countries, such as France
and Britain, may draw upon.
In effect, the currency pool would
be a smaller version of the Inter-
national Monetary Fund which has
provided dollars for debtor nations
to help meet their hard-currency
obligations.
Explaining the situation, Brit
ish treasury spokesman said:
European countries between
themselves are as bad OF in ex-
change as the whole of Europe is tt
the United States. Therefore, We
must have some kind OF Marshal
aid within Europe for those coun.
tries which are worst of. -..
Experts with the European Eco.
nomic Cooperation Administration
In Paris. busy with the task of allo.
eating Marshall Plan goods, so fal
have made no headway toward 8
monetary agreement.
British advisers, however, conf.
IDENTIFY believe that some system o1
intra-European payments will be
devised before the end of the year
France is the worst sufferer from
the currency shortage.
France was in danger of stop.
ping dead her trade with Britain
and Belgium" Whitehall source
said, explaining why Britain gave
the French a 1O,0OO,00O- pound
(s40,00O,0O0) loan a few weeks ago
Repercussions Noted
He said. The idea of the loan was
to keep things going until Marshall
aid arrived and some kind of a
money plan could be got going"
The deterioration of trade already
has caused serious repercussions il
Belgium and Italy, where commodi-
ties and manufactured goods art
piling up because there is no one tt
. buy them.
Economic experts in Brussels sale
Britain, Holland and France hav,
cut their purchases from Belgium 81
drastically that Belgian factorie
have been forced to curtail produc.
ton.
Belgium made a quick recover,
after the war, but now many indus
trialists fear an economic crisis.
Italy. too, is having trouble find
ing buyers. She could export much
greater quantities of fruit, vege.
tables, textiles and some mechanical
products and would like in return
grain, coal, fuel, cotton, wool anc
steel.
Italy is reluctant to sell on credit
for fear the drain on her resource,
would create imitation at home.
| Italy now is a creditor to mos
/ other countries in Western Europe
Britain, the largest of her debtors
owes about s4O,OOO,OOO and the
: others a total of about 100000 900.
Prof. F. A. G. Keesing, adviser tt
the Dutch Finance Department, ii
one of the proponents of an inter.
national money pool.
Existing monetary difficulties,
, he said, prove very clearly that nor
, NAL economic relations between
European countries will return yer,
, slowly when a system of bilatera
transfers of payments is maintained
, This can be shown by the fac
that the Dutch stocks of foreign
currency and money have dwindlet
|, incessantly, though the Dutch bal
ance of trade with Western Euro
, pean countries as a whole is posi-
, tive"
Temporary Relief
A monetary pool, he said, woule
provide relief until multilatera
transfer of payments scheme ha
been developed.
The Marshall Plan offers th'
long-term solution OF the tradl
problem which, fundamentally. is 6
question of production of the thing
Europe needs.
It calls for Western European co.
operation that foreshadows consid.
erable revision OF national eco.
nomics.
France. for example. is now short
of foreign exchange because most
of her export items are luxury
goods" things that hard-up coun-
tries can do without during their
economic trials. At this time
Britain wants mine props and wheat
that France could produce-not the
wines and perfumes France has te
offer.
Italy is in a similar position.
i Britain would offer her more
badly needed coal if the Italians
could, for example, provide more
olive oil in return. But greater oil
production in Italy would require