Chapter I. Will Dollars Save the World

THERE is a widespread belief that the United States has a duty to lend or give huge sums to other countries, principally in Europe, if it is to save the world from communism and chaos. This belief is held almost as strongly in the United States, which would make the sacrifices, as it is in the European countries that are expected to benefit from them.

In its most widely held form the conclusion rests on the assumption that the present economic difficulties of Europe are in the main the consequences of the destruction and dislocations of war. It is assumed that there is a definite deficit that America can make up by loans or gifts, that America must supply this if Europe is to recover, that Europe’s economic recovery is essential for America’s prosperity, and that therefore it is “good business” for America to make these gifts or loans, even if the loans are never repaid. The sacrifices in the present, it is argued, will be more than compensated by gains in the future.

This set of assumptions found expression in the celebrated speech of General George C. Marshall, the American Secretary of State, at Harvard on June 5th:

“The truth of the matter is that Europe’s requirements, for the next three or four years, of foreign food and other essential products—principally from America—are so much greater than her present ability to pay that she must have substantial additional help, or face economic, social and political deterioration of a very grave character.”

The implication of this statement is that Europe’s shortages are being imposed upon her by conditions beyond her control, and that the present import surplus of Europe is solely the result of these shortages and not of other factors. This is also the contention that runs throughout the report of sixteen European nations on the Marshall plan.

It would be ungenerous and short-sighted to minimize the appalling physical destruction and the enormous economic and political problems that the last World War brought upon Europe. We can never forget that in the war against Nazism England stood for a whole year alone. Thousands of her houses and factories were destroyed by blitz. Her peacetime equipment ran down. Her export trade was reduced to less than a third. Most of her foreign investments had to be sold.

Yet when all this has been admitted, we must go on to ask ourselves in all candor whether it is the destruction and dislocations of the war or the governmental policies followed since that war which are primarily responsible for the present European crisis. And whatever we decide regarding the causes of the present crisis, we must also keep in mind that the central question we have now to answer is not what caused it, but what measures and policies are most likely to cure it. Our real problem is not the past, but the future.

Let us begin, therefore, by taking a closer look at the existing situation in Europe.