Evening star., 1950-01-06
By WiIiiom H. Stonemon.
Foreign Correspondent Of The Star and
the ehlease Dolly News


necessary imports from the dollar
area.
AS 1850 starts, almost all Of
these countries, including France,
Britain and Italy, continue to run
heavy trading deficits.
There Is no convincing evi-
dence that any one of them is in
sight Of "self support" There Is
no indication that the Marshall
Plan countries as a whole can
achieve or even approach SOL
vency by June 80. 1852, when the
Marshall plan is scheduled to end.
In these circumstances Ameri-
cans are entitled to ask whether
Western Europe can ever become
self-supporting again and, If 50.
when and how.
We have put this question to
q good many American and Eu-
ropean economic experts recently
The answers were not identical
but the consensus was as follows:
Western Europe's return to
solvency will be slow and diff
flcult process.
There is no possibility that itI
will balance its books, in its deal
ings with the world. by June 80.
1852. when extraordinary Ameri.
can aid under the Marshall Plan
is due to end.
The deficit may be reduced to
$1,000, 100000 or $1.500, 900 900
but 1t cannot be reduced beyond
that figure without serious trou-
BILE.
Europe would not dry up and
blow away If special aid stopped
in 1852. But the subsequent re-
duction In imports from the dol
lar area would bring a danger
Gus drop in the standard of living.
Recovery and reconstruction
would stop and heavy unemploy-
ment would be inevitable. Po-
litical trouble would be bound to
follow.
Cure-Alls Will Not Work.
The return to solvency cannot
be accomplished overnight and I'll
cannot be accomplished by cure
alls Of the kind advocated BY
many responsible. American Of
ficials.
Last summers devaluation of
the pound was a dangerous and
useless experiment. Sudden Gre
alton OF great European eco
nomic union is impossible and
should never even have been men
toned by European Economic
Cooperation Administrator Paul
. Holman, since 1t gave Congress
a mistaken idea of the possibil-
titles.
Solvency certainly cannot be
accomplished by eliminating con-
trolls and protective tariffs in the |
immediate future.
In the long run it will be neces-
sary to create larger European
trading area by the reduction or |
removal of trade barriers.
But at this moment a large
increase in intra-European trade
would increase European con-
sumption Of non-essentials. This |
in turn would require larger i'm
ports of raw materials from the
dollar area. This In turn would
aggravate the shortage of dollars
which Is the biggest problem of
all.
The process of eliminating
protection must be slow and
careful one. 1t will mean dis
placement of long established in
dustries from one country to
another and will create unem-
ployment in some countries.
Plans must be made to absorb the
unemployed in other industries.
One distinguished European
economist suggests the following
steps as the essentials of any long,
term program for putting Europe
into the black again.
/. During the next 20 years
Europe must attempt to recover
its prewar position as far as trade
barriers are concerned. Constant
pressure must be exerted against
the tendency of all countries
toward autarchy or economic
self lf-sufnciency.
The trend toward self -sufii-
cheney. as distinct from self-sup-
port in cooperation with other
nations, has been increased by
wartime security needs and by
state planning. During the war
and since, countries have created
uneconomic industries in order
to be independent. Planning
favors autarchy because you can't
plan" the industrial production
Of another country. II you have
an industry Of your own you can
plan both production and prices.