Inconsistencies of European Aid

February 23, 1948

Nothing could be more disheartening than Secretary Marshall’s defense even at this late day of the continued dismantling of German industrial plants. Mr. Marshall himself declared only a few months ago that the restoration of Germany, “the heart of Europe’s economic life.” was essential to European recovery. The New York Times points out that of the 918 plants scheduled for dismantling, including those of the French zone, nearly 600 are in no sense war plants, but include facilities for urgently needed farm machinery, tractors, mining machinery, and locomotives. The Dutch Government has vigorously opposed the dismantling of German plants which can be used to produce peacetime goods. The Harriman Committee declared that the situation in Western Germany, “the most disorganized area in Western Europe,” called for “radical reforms of the policies which the United States has been sponsoring.” The Herter subcommittee of the House has asked that we suspend wholesale dismantling of German industry. In his report to President Truman last March, former President Hoover declared that “the removal and destruction of plants (except direct arms plants) should stop. . . . We can keep Germany in its economic chains, but it will also keep Europe in rags.”

At best the continued dismantling and “transfer” of German plants require scarce labor and bring to an absolute halt, for the months or years that the process requires, the production of which the dismantled factories were capable. And this production is never in fact restored. Industrial machines and plants cannot be casually torn from their foundations and shipped around a continent like so many trailers. They are parts of a much greater integrated whole, vitally tied to each other, to localities, to markets, to sources of raw materials and means of transportation, and manned by trained and specialized local labor and management.

It is senseless to defend this preposterous policy of dismantling by an appeal to the Potsdam Agreement, which Russia has repeatedly violated. Even under that agreement, in fact, all dismantlings and removals were to be completed by Feb. 2 of this year. It is even more senseless to argue that we must continue this idiocy because Britain and France insist on it. It is we, we in America, who are paying the bill. It is we who are pouring hundreds of millions a year into Germany and are scheduled to pour in billions of dollars more to make up for the destruction that we ourselves help to carry on. It is we who are being asked to pour $17,000,000,000 more of the American taxpayer’s money into Europe, largely to make up for the consequences of this destruction not merely to Germany but to the whole European Continent of which it is an inseparable economic part.

The very least we should require of the British and French Governments in return for our help is to abandon their shortsighted insistence on this policy of destruction. We cannot reestablish a solvent and productive Europe without a solvent and productive Germany. We must put revival before reparations. And in any case we will get most reparations out of the income from current German production. Let us take a reasonable percentage of the golden eggs instead of stupidly ripping the insides out of what was once the most productive goose in Europe.

It is not only in Germany that we are shoveling out the American taxpayer’s money for recovery with one hand and imposing economic strangulation with the other. That is merely our most fantastic inconsistency. We are also paying for recovery in France at the same time as the French Government itself is trying to bring about what it calls “a controlled slump.” With what is left of our loan, with the resources of the International [Monetary] Fund, and with additional billions of proposed Marshall dollars, we are helping the British to maintain an artificial level for the pound and an exchange control which systematically strangle multilateral trade, free enterprise, and world recovery. American resources are not merely being thrown away. They are being used to throttle production.