Chapter XV DESTINATION EUROPE

AT THE OPENING of the International Autumn Fair in Frankfurt on September 2, 1956, I declared, not for the first time:

‘The integration of Europe is more necessary than ever, it has become almost overdue. But the best kind of integration which I can imagine does not depend on the establishment of new offices and administrative procedures or a growing bureaucracy; it depends in the first instance on the reconstruction of a free international order, as best and most completely expressed in a free convertibility of the currency. Convertibility of the currency, of course, includes complete freedom of movement for goods, services and capital.’

These few words contain my basic views on the question of the purpose of European integration. In my view the world offers untold opportunities, if only we are able to make use of them. The benefit to be derived from a world-wide free economic policy can hardly be imagined. But the exciting prospects of tomorrow still have to face the hard realities of today.

In spite of far-reaching agreement to achieve European unity, and in particular a Common Market, it appears to be essential to clarify certain particular points. To air these problems is a basic pre-requisite to any serious discussion of the future shape of Europe.

In the light of the Messina Powers agreement made several years ago, some space should be devoted to the question of whether creation of a unified Europe by amalgamating partial groups should be pursued, or whether experience and knowledge point the other way. This question played a considerable role in recent years when it threatened to become the fashion for every section and every large branch of the economy to form its own association. I believe it to be wrong if economic integration—whatever sectors it may include—is limited to individual products, i.e. if thinking is confined to the integration of parts only.

It must not be overlooked that the spiritual fathers of the Messina Union were conscious of these shortcomings. They did not wish to confine European co-operation to the Messina Powers or to the sectors of coal, iron and steel. They regarded Messina as a first step only, which would compel the powers to sit together at one table to discuss common national economic problems, and to settle them peacefully. It soon became clear to sympathizers that one could also speak of other questions, for example, investment and economic policy and currency questions. The success of the experiments of the Messina Powers will greatly depend on the speed, extent and direction of further progress towards true forms of integration.

Since no decisive progress has been made in recent years, we find ourselves today (in spite of the Brussels discussions about a Common Market) at an interim stage.

The Aim: Comprehensive Integration

Serious though these problems are, and however much we thus tend to seek new solutions, it must not be forgotten that the true success and the fruitful solution of the problems raised by the Messina Powers lie elsewhere.

We seek integration in absolute terms. Above all we must create the basis for true integration. But in my view this is to be found above all in a different sector—in a currency political order. We must begin with the theoretical knowledge that the national economic order is not based on the sum of partial orders, any more than the national economy can be understood as an assembly of sections. It is a matter of function, of something complete and inseparable. It is a question of relations of a human and material kind, which are indissoluble, and which cannot be separated and then put together at will.

In this connection another point deserves mention. Today there appears to exist a certain lack of enthusiasm for competition, which necessarily follows the creation of a larger market. It is a mistake to think that conditions for free competition would be too unequal to permit the principle of the market economy to be introduced in an integration of this kind. One should—so some economists say—first of all level out these differences, that is, even them out before opening the doors to free competition.

Such attempts could lead to modest success within narrow limits. But it is a complete illusion to imagine that in a competitive world equal conditions relating to separate cost factors could be brought about at the start. Even to attempt such an aim must lead to a form of dirigisme and dilettantism which is bound to be unfruitful right from the beginning.

We can altogether accept that favours are more, or less equally and ‘justly’ divided. God did well when he gave one country some natural advantages in this or that field, while other countries enjoy different advantages. In whatever way the cost components are made up, they will be integrated in the price. Price alone is the economic yardstick by which to judge performance, and which in the nature of things includes quality. For this reason it is necessary to think of integration not merely in a mechanical or quantitative sense, for then we should return all too rapidly to the errors and shortcomings of the past. For anyone with any insight integration means free and comprehensive competition; it means economic collaboration on a functionally higher level.

Sicily is not in the Ruhr

These critical remarks of course also apply to equally wrong ideas under a different slogan—that of ‘harmonization’—which under this banner strive towards a levelling out of all economic conditions. I do not exaggerate when I report that wages, pensions, holidays and overtime payments are considered in this context. If one is prepared to acknowledge the thesis of harmonization then there are no logical limits, and demands for taking into account the costs of electricity and transport or taxes can be made with the same justification.

If an attempt were to be made to harmonize all costs relating to the position of companies from country to country and over a larger group of countries—that is, to balance them so that competition would cease to be ‘disturbing’—then this does not mean integration but disintegration of the worst kind.

In this statement I do not wish to deny that every national malady would certainly disturb inter-State relationships at the same time. Yet this must not lead one to acknowledge the right of any one country to ask its partners in the common market or perhaps to force them to apply its own doubtful principles.

With the catchword of ‘harmonization’ the demand went so far as to suggest that at the end of the transition period the level of wages in the individual member States should be equalized and that their total working costs should be ‘equivalent’. It would be possible to ignore this demand, since economically it is simply unrealizable, for between Sicily and the Ruhr equal productivity does not exist and there cannot, therefore, be ‘equal’ working costs. To practise this principle would lead to economic death. Wage costs at their respective levels are determined by productivity and not by an assumption of equal performance.

Nobody can wish to believe that it would be possible to set the same standard of productivity right through all participating countries for all industries, and to achieve the same progress in productivity. Even if the same starting conditions could be set for a given day through artificial manipulations, the next day would already show changes, since the ideas and attitudes of peoples towards saving and spending, their achievements, their industry and so on, can never be brought to a common denominator even in a common market.

Such demands rest on an utterly fallacious interpretation of economic laws and facts, but at one and the same time it characterizes a spiritual attitude which must under no circumstances triumph, unless human initiative and creative forces, yes, even life itself, are to be suffocated in an integrated Europe.

These ideas rest on the illusion that these natural factors can be changed, and the structural conditions artificially balanced between country and country until every country will work in every sector with the same costs. I do not regard this as in any way desirable—quite apart from the impossibility of ever achieving this questionable aim. There would then be no obstacle to a return towards national isolation, since if everyone can offer goods at the same price why—I ask—should I buy them elsewhere? Here the exchange of goods between countries would lose its final and real purpose. The point is just that all countries work with differing conditions, so that here the advantage is on one side, there elsewhere, so that the one can achieve more here, the other there. It is from this fact that the need for reciprocity and its fruitfulness arises.

The supporters of the theory of harmonization must not dodge the question of who is to make the sacrifices and how the bill is to be paid. In the nature of things such a delusion will lead in practice to justifying the setting up of a fund from which all those who are at a disadvantage, or believe themselves to be so, will either be compensated or helped to improve themselves artificially. But these are principles which do not accord with the market economy. There is no incentive to achievement here, but the contrary is true: the weaker member—for whatever reasons—is subsidized. This does not seem to me to be the right principle to further real progress—that rapid progress which we need so badly in Europe. Along this way the aim to improve the life of our people and that of other European peoples cannot be achieved.

As regards these theses, I have repeatedly pointed to the fact that this ‘social romanticism’ expressed here is extraordinarily dangerous. But I do support the idea of making common means available to increase productivity as well as to maintain some vital branches of the economy. It is not a matter of whether a common market is to be brought about as soon as possible or not; it is a question of the principle of order and spiritual direction.

No Bureaucratically Manipulated Europe

A Europe that does not live within the hearts of men, which is not regarded as a true community of fates worth making sacrifices for, which does not regard freedom as a first principle but wants to keep it on a lead, and finally a Europe whose spiritual and political outlines are not yet visible today cannot appeal to either the world or the European peoples. A bureaucratically manipulated Europe, breeding reciprocal mistrust rather than a sense of community, apparently materialistic in its whole attitude, will bring in its train more dangers than benefits for Europe. West Germany, by its policy of stability, has become immune from the attempts of infiltration from the East, and for that reason alone a common market must apply the same laws. To surrender this policy would mean to sacrifice the basis of this fortunate immunity from Communism.

Besides the political danger, connected with so-called social harmonization, this conception is theoretically insupportable. Social harmonization does not stand at the beginning but at the end of integration. It cannot be realized by a painful construction, but only through assimilating forms and conceptions of life within the rhythm of the progress of integration. Although I support a common market, I believe that even in a Europe thus integrated the conditions of life and production will never be identical. On the contrary the function of a common market rests on the possibility and on the need for a fruitful interchange between the individual countries, according to their special and different abilities and the variety of their natural and structural conditions.

If neither the path of partial union, nor that of a soulless equality, can be said to be possible, it must be asked whether a new Europe can be created through a new institutionalism? In view of present conditions in the national economies it is understandable that there is a general tendency to create new institutions to achieve supra-national co-operation.

Order with a Light Touch

From the economic point of view Europe must not be regarded as an organization or an institution; it must be conceived as a function. But then the question must be asked what we can do to enable this Europe to develop its functions. It is almost tragic if we have to believe that we are so hardened that we can understand order only within the conception of ‘organization’ We have lost the sense for a true order, which reigns most strongly and in its purest form just where it is not noticed and noted as such.

By this I do not mean to say that I oppose European ties in principle. But I want to create the basis for such links. First of all I wish to make secure the inner order in national economies, since otherwise integration will inevitably have to lead to supra-national dirigisme.

Europe cannot be built with little means; it can only be understood as a complex economic and political function. The idea that certain sectors should be progressively withdrawn from national sovereignty and handed over to supra-national administration, and that at a given moment the weight of supranational influence would then automatically lead to a total conquest of national responsibilities, appears to me to be less than realistic, and does not bear theoretical economic examination. The totality of the national function cannot be split into different competences.

The growth of supra-national authorities may perhaps have some political importance, but it can hardly contribute anything decisive to the solution of the economic problems mentioned here. My fears for that reason remain that we tend all too much to visualize European integration as the creation of institutions; in other words, that we overvalue the institutional as opposed to the functional—a fear which in the recent past has been increasingly recognized as being valid.

A word should be said here about the hope of some planners, that those of their ideas and ideologies which they were unable to realize nationally can now be realized on a European plane. In the light of our national experience it need not be explained further why the principles of the planned and directed economy are unsuited now to develop the productive forces of Europe. This economic conception is not even suited to the most primitive division ot labour, let alone a frulttul and easy collaboration between national economies.

For goods and services, money and capital, in the treatment of customs policy and in view of the freedom of man to attain ever larger freedoms, no other way is open to us than to forgo all Government manipulations which contradict these principles. Where institutions are necessary to establish these principles of freedom, I am in favour of them. It appears to me that a truly good European wishes to see this community of action and attitude as an obligation on all participants.

If I have pointed to the fact that the politician may want to see the question of supra-national organization in a different light than the political economist, then, speaking for the latter, I must express my concern that the proper priorities may be lost sight of, and that the political forms of Europe may be settled before equivalent economic integration has been achieved. The great danger still exists today that we all want a free Europe, but that, if politics move forward without corresponding economic developments, a centralism might arise—a centralism which might stifle all that is colourful and different in this old European culture.

The Success of E.P.U.

Such considerations must necessarily lead to a critical analysis of existing European institutions. I have already spoken of the role of the Messina Powers in opening the door to rapid and comprehensive European integration. It is surely not the fault of the Messina Powers if this expectation has remained unfulfilled. How much they can do now to create Europe must be left to individual judgment. In their own sphere the Messina Powers can certainly perform useful services.

So as not to be accused of overlooking the wood for the trees, attention must be drawn here to the great successes which we have achieved with the European Payments Union. It is thanks to this common multilateral system that the member countries were able to rise above bilateral trade agreements, and that with it the development of European economic forces took a decisive step forward. A short glimpse at the statistics confirms this statement. For example, the exports of the West German Federal Republic to the E.P.U. area rose from DM 6.32 milliard in 1950 (the year E.P.U. was founded) to DM 18.53 milliard in 1955. In detail the increase of our exports to the E.P.U. countries was as follows:

Foreign Trade with the E.P.U. Area

	1950	1951	1952	1953	1954	1955	1956 (Jan.-Nov.)
Imports	7.87	8.87	10.15	10.62	12.3	15.49	4.36
Exports	6.32	10.63	12.19	13.24	15.78	15.53	5.64
	- 1.55	+ 1.76	+ 2.04	+ 2.62	+ 3.48	+ 3.04	+ 1.28

Trade between member countries of O.E.E.C. rose from $17.5 milliard in 1949 to $30.0 milliard in 1954 and to $34.176 milliard in 1955, and for the first six months of 1956 to $18.066 milliard.

In spite of acknowledging these successes it is impossible not to point to what is still insufficiently organized, still incomplete, and what still cannot be achieved in the future within the scope of the E.P.U. Here again criticism of this institution does not indicate a turning away or a condemnation but, quite the contrary, an appeal for decisive action.

What is wrong with the European Payments Union? The answer is that the individual national economies participating within the Payments Union cannot be forced to keep to an orderly economic and financial behaviour so as to maintain inner stability in their national economies. Even in the European Payments Union, national sensibilities, falsely understood concepts of the autonomy of economic policy and national sovereignty still play an important role. No European country is prepared to accept generally binding principles. At best the European Payments Union can recommend but it cannot force a nation to act on its recommendations.

‘Stability Begins at Home’

In America they say ‘stability and convertibility begin at home’. That is exactly what is lacking in Europe. To the extent that participating countries do not show the courage and the desire to impose order, the Common Market will suffer the same fate as now befalls the E.P.U. Participation by a country in communities of this kind demands a certain behaviour in the field of economics and finance. A member State can only become ready for integration if it is willing not only to establish its inner order but also to preserve it without fail.

When one reflects how torn Europe was and still is today its present state appears less surprising. How much dogma the individual national economies have had to try out, what different ideas of economic and financial possibilities are still alive, and how many theories have motivated men’s minds! One should, for example, recall Keynsian principles, ‘deficit spending’, the’ policy of cheap money’, and all that goes with it, to understand that it will be extraordinarily difficult to arrive at acceptable common action and a unified rigorous policy in this sphere. Such unity is, however, the condition for freely convertible currencies.

If at the time of the gold standard any sovereign country believed itself able to dispense with an orderly economic and financial policy and a responsible credit policy, or—expressed differently—if any country had indulged in any sort of ideology which contradicted this assumption of inner order and balance, then the consequences of its behaviour would soon have become noticeable. It would have had to carry the consequences itself. If, under the rules of the gold standard, no more capital could be borrowed, and the reserves of gold had become exhausted, then no power in the world could preserve the rate of exchange from going downhill. In the times of the gold standard neither institutions nor persons gave any orders. An anonymous order existed, controlled by the system. It was not burdened with ideas of national sovereignty, nor with the delusion of national economic autonomy, nor whatever else exists in the way of prejudices and national sensibilities. Unfortunately we have not yet progressed this far again.

We use the European Payments Union, so to speak, as a crutch. Only when all member countries in the European Payments Union have begun to realize that it is their responsibility to keep order in their own house will the minimum conditions exist for meeting the real aims of the European Payments Union.

From the start the E.P.U. had this as its main thesis: by liberalizing their trade in goods and services members should find their way steadily towards free convertibility, which means that at the end of the attempts at liberalization all partners should be rewarded by freely interchangeable currencies falling into their laps like ripe fruit. It is certainly no denigration of the achievements of this system if I ask how many still believe and have confidence today that the E.P.U. can either gain or enforce this aim.

Equally it must not be overlooked in this evaluation of the European Payments Union that the system in its practical application maintains discrimination against the dollar area, even if it does not increase it, and thus inhibits integration within the larger framework of the free Western world. America, which helped Europe and wanted to help Europe, can only expect and fear that the flow of trade will increasingly bypass the American market. During the many Paris meetings I repeatedly emphasized that we are dealing here with a fault in construction, since a greater freedom of movement between the European countries and the dollar area will indirectly be felt as an impediment to the effectiveness of the E.P.U. While constantly enlarging our dollar liberalization to what is now 90% we have repeatedly come across this false assessment.

About Bilateralism

That bilateralism today can never lead to satisfactory results hardly needs further elaboration. It is simply inconceivable that the requirements and desires of two countries can be so completely and organically dovetailed that a balance satisfactory to both partners would follow. In such arrangements someone must always remain dissatisfied, for the total volume of any bilateral exchange of goods is automatically set by the ability of the weakest partner to deliver or purchase. The total exchange of goods then remains at such a low level that the economic aim of maximum or even optimum collaboration can never be achieved.

The work of the E.P.U. and of O.E.E.C. must naturally be judged by taking into account the terms of reference of these two institutions. Though we have progressed towards greater liberalization within the framework of these institutions, we know full well that so long as currency restrictions remain the objectives can never be reached.

How then, my readers will ask, do I imagine that Europe will emerge? At the beginning of any attempt to develop concrete ideas must be the statement: All efforts for political and economic integration will founder if all participants do not have the courage and the energy for a progressive liberalization of the exchange in goods and service and capital, a rapid lowering of tariffs as well as other protectionist barriers and manipulations, and act in this sense. What belongs to a free and common market, as formerly with the gold standard, is not wealth and strength but only a modest recognition that a Government, no more than a people, can live ‘above its income’.

From the economic point of view I would clearly give preference to this free approach which is not limited to individual countries or groups of countries, before attempts at integration within smaller areas. Also I believe that this path towards the greater whole would from a rational point of view be the best for Germany, particularly as its prosperity is built on its relations with as many markets as possible.

Europe—Island of Disintegration?

If politically we tread the same path as the six Messina Powers, we must remember particularly that liberalization and freedom of movement must plainly progress faster within this smaller area of integration than within the total area of the Western world. In no circumstances must the removal of the barriers which still separate the different national economies progress faster within the greater international framework of the West than with the future common market area of Western Europe. It would be regarded as particularly grotesque if this European Union were in this way to become an island of disintegration.

Such a European integration, with as its first aim a Customs Union, appears to be morally, economically and politically justified only if this community in turn does not itself trigger off new differences and tensions. This means that the trading policy of the customs union as far as the outside world is concerned must be handled liberally, and that there must be no discrimination against ‘third’ countries.

One must point to the highly important British proposals in the early autumn of 1956 to widen the common market area of the six Messina Power countries to that of the free trade zone. I understand only too well London’s view that a tariff wall protecting the smaller European common market from the rest of the world could not be in the general European interest. Behind this formula lie the same dangers which I had previously wanted to express.

Even if one hesitates to say so aloud, these ideas would have as their result the abolition of currency controls and the return to free convertibility. A national policy which even today barricades itself behind these primitive arrangements precludes any true and liberal economic and social progress. These inhibitions are so vast that only the lack of knowledge of actual facts prevents a spiritual rising of all free men and all free peoples.

Nor must we forget that it is by removing these barriers—and probably only in this way—shall we regain the basis of a true social order in the true sense of the word.

The more we succeed in making men feel as individuals, so that as a result of their personal freedom they become conscious of their power and dignity, the better and the more beneficial the general social order will become. This will be imbued with a much higher social quality than a society which always requires new organizations and institutions to cope with the chaos arising from an economy torn from its context. I gladly accept the unpopularity of being one of the loudest advocates of freedom—out of an anxiety for the shape of the free world and for the collaboration of the free peoples. Even within the supra-national framework I desire an honest order. To it belongs firstly the preservation of human freedom. We must recognize the principles of order which secure free and true human relations—in economics as much as in politics.

In achieving this aim we must be careful that we do not only have procedures and techniques, as perhaps before 1914, but that we arrive at a common spiritual aim, which will permit us to overcome national egoism and protectionism by new forms of real intercourse. True integration would lift us spiritually and morally to a higher plane of collaboration.

Here the differences rest more in quality and less in the quantity of collaboration. Integration and convertibility are not counter-poles, where the striving for the one might hinder or render the other superfluous; they complement each other. For example, if we speak of competition in a common market, we understand a form of collaboration that will overcome the deficiencies of the narrower limits within the European framework. It must be repeatedly asked why the European economies are so much less productive than the American economy.

The enormous discrepancy does not follow from the fact that people in the United States are so much more industrious and efficient than the Europeans. It is the result both of the size of the economy and of greater freedom. Both lead to a higher measure of productivity and to a greater utilization of human and technical productive powers.

This comparison should teach us to aim at these objectives and to accept their realization as a European goal. We must reconstitute ourselves. Above all we must find a new spirit and establish that solidarity which will unite the European economies and peoples for the sake of this aim.

From these reflections it is clear that functional integration, whose characteristics have been repeatedly explained, must first take place. As in all my economic and political thinking I start here from the basic precept of the indivisibility of freedom.

Freedom is Indivisible

For me it is natural that the man standing for a free economic society at home belongs also in the van of fighters for a free economic division of work in the world and for close inter-State co-operation. Out of this realization of the indivisibility of economic freedom in all international spheres and institutions, the Federal Republic has strongly pressed for the freeing of international trade from short-sighted regimentation and small vexations.

Let me also touch briefly on a question of principle which appears repeatedly in discussions, particularly in private circles, but also in public: in a free world must the prosperity of one country provoke worry or fear in its neighbours?

Naturally this must be emphatically denied.

It is an economic truism that one partner can only do well if the others flourish. No business is possible with beggars.

It is as much my conviction as my experience that all that is valid and regarded as proper within a nation can and must be valid beyond its frontiers. As we in our countries face the necessity to free people from poverty and want, to increase the number of people sharing in a higher standard of living, to offer people the chance to expand freely and to become independent of the power of the State, yet accept the obligations of the order of the State, so the same principles must be used in economic collaboration of the free world.

Whoever sympathizes with the seriousness of these efforts will agree with me and demand that freedom must not be choked by one-sided Government measures. So long as such a possibility of regression remains, a declaration for European integration will remain a declaration of platonic love.

That is no longer of use today.

This principle must in the nature of things also apply to the Common Market and the Customs Union put forward in the Brussels recommendations. It would surely not be sensible to allow individual members to slide back on the path towards integration, so that the balance of payments protective clauses could perhaps be invoked to meet a new outburst of sovereignty. It is also not a good solution if the country concerned—as was proposed during the Brussels negotiations—can afterwards be forced to lift these protective clauses, if a decision to do so is taken by a qualified majority. Little imagination is needed to realize that since such a decision would be regarded as an unfriendly act it could hardly ever be taken. Moreover such regulations would not demonstrate the lively consciousness of a community linked by a common destiny. But it is just this which needs to be kindled, for so long as it is lacking we shall never reach the goal, never find sufficient energy to form a true community comparable with North America.

In this field we need deeds. Sufficient words have been exchanged.

Much as wise men may want to discuss it I am firmly convinced that the problem could shortly be brought to a successful outcome if only we handled it with a little more courage. In my life I have repeatedly found that freedom, and above all courage for freedom, have always been worth while. All that has been begun in this way has always turned out well, but wherever we lacked the courage for freedom things have ended in disaster.

Unfortunately I find that on this theme I have to add some water to the wine. As things seem at the moment (January 1957) it cannot be expected that the future structure of the Common Market will do away with the possibility of utilizing the so-called protective clauses. But in return the lesser evil that a standstill or even regression of one country might inhibit other partners in unfolding their dynamic progress must be prevented. Should this happen, relations with the country which is hesitating must always be consolidated to secure the progress achieved.

To me it does not sound convincing if European integration is spoken of with emotion, while alongside free trade in goods and services, people are not to have the chance of working freely everywhere. It is an impossible position when there are still millions of unemployed in one European country while other countries do not know where to find sufficient hands and brains to cope with all the tasks facing them.

This is not a statement which I have just made today or yesterday. I have always taken the view that only when every citizen can find in every other country the same free opportunities of work is it possible to speak of one Europe. As long as this is not the case, then our creed in the last analysis is dishonest.

So long as we do not have the courage to deal with these crucial points, vague talk about integration or a perfectionist mechanism of purely economic rules of action appears to me unsuited to achieve the political, economic and social aims.

Insofar as all attempts to integrate Europe can be brought under one denominator it must be this: to realize freedom in all sectors of life.

Liberalization as the Best Medicine

Let me show by an example what freedom can achieve even when it is in no way complete. The effects of liberalization on our foreign trade are so convincing that they lose nothing in validity when I point to the fact that Germany at the turn of the year 1950/51 experienced one of its most serious—perhaps the most serious—crises of the post-war period. At the time it gave many people the occasion to regard my policy as finished. When in 1948 I accepted office in the Bi-zone, the average monthly export figure moved at around DM 200 million, and was in the main a forced export of coal, wood and other raw materials which were also urgently needed in Germany. Finished goods figured in our foreign trade only negligibly. Today the monthly export figures move between DM 2.4 and 3 milliard—to E.P.U. countries alone they come to DM 1.7 to 2 milliard. These convincing results were achieved not least thanks to the liberalization policy of Western Germany, which has for some time exceeded 90% with the E.P.U. countries and also with the dollar area; as regards the E.P.U. members it is being widened to 100% for industrial goods. Even in international relations, as I have already said, the granting of freedom does pay; it is not a one-sided gift, but produces reactions and results with fruitful and healing effects.

To strengthen the case a short glimpse is needed at the structure of our exports. The proportion of finished goods, which is decisive for the West German economy, has now risen to over 80%. This is a particularly clear demonstration of how much the freeing of trade—in my view far from complete— leads nevertheless to a pattern of exports suited to meet the structural needs of each national economy according to its nature.

What has taken place in recent years is most clearly illuminated by the following figures. I choose the year of the foundation of E.P.U. as the base (September 19, 1950), and deliberately omit the first post-war years when foreign trade was all too much burdened by forced deliveries.

Exports in DM million (monthly averages)

Monthly averages	Total exports	Raw materials	Semi-finished goods	Finished goods
1950	697	97	131	452
1951	1,215	110	176	888
1952	1,409	107	212	1,058
1953	1,544	124	227	1,153
1954	1,836	141	240	1,412
1955	2,143	131	272	1,683
1956 (Jan.-Nov.)	2,529	142	311	2,001

Does it not prove to be utterly ridiculous when we speak of this worst form of disorder—I mean the control of foreign currencies—under the heading of ‘order’? We must surely free ourselves once and for all from the view that the most order reigns where the largest number of people have to be employed to enforce this order to keep disorder at bay.

If no one is to be seen preserving this order then far too many people wrongly believe that no order exists. The same is true of my belief that, in all talks about Europe, we must not only think of what will have to be arranged; we must equally bear in mind what can or must be discarded to enable an organic natural growth of Europe to take place. Since convertibility would bring about a true and at the same time the best solution to many problems, it should be expected that the effect of this order would radiate into almost every sector of social life. Economic policy would then gain a far clearer expression. I go so far as to declare that whoever manages to do away with foreign currency control will have done more for Europe than all politicians, statesmen, members of parliaments, businessmen and civil servants put together.

My constant appeals and admonition to create a new Europe by giving first place to securing its ‘function’ must not be misunderstood in the sense that I completely oppose every institution on a European level. What I do decisively oppose though is the idea that by creating institutions we would succeed in effectively overcoming the real difficulties. It is just here that the real differences of opinion exist.

Who is a Good European?

Every institutional attempt to find a solution brings with it the danger of getting stuck in illusions. There is for me no ‘either/or’ in this complex of questions, but an ‘as well as’—with the accent clearly on priority for functional integration.

I myself have repeatedly found how fruitful it can be when people sit down together to find common solutions. But it is crucial that work based on institutions should not push aside, replace or cancel out the functional work. The institution must serve—and exclusively serve—to support the function of the common market; it must help to open up freedom. If the institution itself wants to ‘order’ it is out of place.

Modern man is in fact quite trained to being able to imagine a true order only if it is expressed in an organization or in an army of officials and, if possible, if sand can be heard in the machine. So it happens that the path to freedom proposed by me is being constantly attacked. I am said to be a ‘bad European’. This situation led me to explain my position in detail in the Deutsche Korrespondenz of July 21, 1955, about ‘Who is a good European?’ I said:

‘I am not prepared to let my European attitude and my beliefs in Europe go unrecognized because I put questions about it differently and because I have asked those participating whether there was only one path and one method to save Europe, or whether another way might not perhaps lead more rapidly and more effectively towards the goal. I wish to say clearly that I do not wish a lesser but a greater Europe than is expressed in the proposals for further partial integration.

‘Every true function is indivisible. Therefore because I care for Europe I fear that such aggregations and combinations will never achieve either the economic or the political aim. Further I do not oppose European links, but quite the reverse. I am trying to create a basis for them when I remind people that in the first place the inner order of the national economies must be secured nationally, since otherwise integration will inevitably lead to a supra-national dirigisme.

‘From this attitude it is clear that I do not tend to regard Europe as the final and absolute goal of economic order. The political economist may differ here from the foreign policy maker. For me integration means a first step, visible to our eyes, in which it is important first of all to reduce the barriers standing in the way of an international exchange of goods.

‘In all circumstances I am striving towards free and liberal relations with all countries of the Western world, in particular of course with our European partners. Europe is in this sense a form of integration of an economic or political kind. But the aim goes further—namely that we must not divide the Western world once again into different economic sectors.’