Evening star., 1950-02-05

OUT. Inc Marshall Plan, as Secre-
tary Marshall himself told the
Senate, offered Europe from $15,-
o00,OO0,000 to nearly $18,0o0,000,-
600 in exchange for the European
countries pledges to promote their
own lasting economic recovery
through effective cooperative
measures" The failure as yet to
bring that promise within sight
of realization is what has been
worrying Mr.. Hoffman's organiza-
tion.
For months now, Mr.. Hoffman
has been shouting himself hoarse
on the theme that the European
ERP countries must "integrate''
economically. For years Western
Europe has beep a honeycomb of
all sorts of governmentally i'm
posed barriers to intracontinental
trade: Tariffs and import quotas
commonly designed to regulate
the individual trade of pairs of
countries; government monopolies
Of the international trade in vari-
GUS commodities; maintenance of
dual prices, like the low price for
British coal sold at home and the
much higher export price; null
tiple rates of exchange admin
istered by choking bureaucracy
and the like. And the frontiers
which partition Europe into sense
less trade compartments have
their Qualifications in differences
of language, religion and plain ma
tional jealousies, but no more eco
nonlic justification than the fact
that back in 814 AID, the sons
of Charlemagne each wanted an
independent kingdom.
Trade Bars Lowered
Behind each of these jig-saw
frontiers during the past two years,
with the help of the cheapest
money in the world, Marshall Plan
dollars, and American technical
know-how, practically every one
of the ERP countries has been
racing to equip itself with a steel
industry and all sorts of other
accoutrements of international
economic rivalry. For France,
Belgium and Luxembourg, ETC.,
substitute New York, Connecticut
and Rhode Island and you'll see
how much sense all this makes to
Mr.. Hoffman, apart from the fact
that Rhode Island is a good deal
larger than Luxembourg. I'm
tegrate. Abolish your trade quotas
and currency regulations" Mr.
Hoffman pleads with Europe, land
you'll open up a great continental
market in which European goods
will supply much larger part
of your needs and thereby lessen
your dependence on the United
States" Do they go for it? Like
a child goes for castor oil. Il
With an eye on the congress
sional appropriations for ECA,
Europe has begun to reduce guam
titative restrictions on trade with
in the continent. How much this
will contribute toward independ-
ence from American aid is a mat
ter.of hot debate among Wash
ington economists. 1t depends on
whether the quotas and trade
barriers removed relate to eco
nomically important commodities
uncovering presently sheltered in
dustrlal and agricultural produc-
ton to the buffeting of real COM
petition. 1t depends, too, on what
happens to state trading against
which private enterprise is help
less: to cartels, to tariffs. If the
real trade barriers hampering
commerce between European
countries are ultimately removed
under Mr.. Hoffman's prodding
and Western European countries
take in more of each others wash
ing, the beneficial effects will
have to be weighed against at
tendant adverse effects. For in
stance, if European goods are di-
verted from present markets on
this side of the Atlantic to a
European destination there will
be tendency for Europe's dollar
earnings to be reduced and the
dollar shortage" to be actually
intensified.
Common Currency Idea
AS an important separate step
toward economic integration ECA
has proposed to the ERP coun-
tries establishment of clearing
union for all their currencies.
Through it the export earnings
of any one could be freely spent
in any other ERP countries, sub
ject to specified limitations. In
effect the clearing union would
lump together all the, bilateral
trade and payments agreements
of those countries with their re-
spectively limited trade ceilings
beyond which payments must be
made in gold. There would come
into being a new common Euro
pean trade currency, which would
be freely convertible into any ex-
isting ERP country's currency
This would be a great advance
over the cumbersome system now
in vogue in Europe.
Naturally, as between any pair
of countries, imports and exports
cannot be expected to balance.
If the surplus, can be settled by
gold, well and good. But gold is a
scarce commodity in Europe to-
day. Apart from goods and serv-
ices, most European countries can
pay each other only in paper units
whose value has been sapped by
imitation. That is why in bilateral
trade and payments pacts coun-
try like Britain. for instance, puts
ceilings on the amount of its
goods it will sell to Holland for
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