ERP, the Ark

The carpenters, the smiths and the State Department Noahs hacked and hammered away last week building ERP,* the ark, to float Europe out of the deluge of its economic misery.

Councilors hauled in reports. Conferees fashioned policies. Committees nailed together legislation to submit to Congress. Other little arks were knocked together: ERP would actually be a flotilla by the time it was launched. Within two or three weeks after Congress convened on Nov. 17, the Administration hoped to have its whole program for aid to Europe and the world ready to go down the ways.

The flotilla would look something like this, in order of State's priorities:

P: Legislation authorizing a $642 million stopgap for France and Italy (TIME, Nov. 3), and an added $30 million for Austria, to keep those three nations solvent until April.

P: A supplemental appropriation of $400 million to the Army for occupation costs in Japan and Korea, and for taking over more than half of Britain's current obligations in Germany.

P: Legislation establishing ERP and an agency to administer it.

P: An appropriation bill covering just the first year of the program, tentatively set at $6.5 billion. Tentative cost for the whole four-year program: $16 billion.

P: Legislation widening the lending authority of the Export-Import Bank so that the Bank can advance dollars needed to buy Canadian and Latin American goods for Europe.

P: Legislation to permit sale of cargo ships to foreign nations after Dec. 31, 1947 (the present deadline for such sales).

P: A $1.5 billion recovery program for China.

Sudden Change. This last item represented a sudden and major change in Administration policy. Secretary of State Marshall has been insisting that the U.S. take on one job at a time and that the first job is Western Europe. For that reason he suppressed Lieut. General Albert Wedemeyer's report on the critical condition of China (TIME, Oct. 20). Last week, largely at the insistence of Senator Arthur Vandenberg, Marshall added China to the tag end of the program.

Total funds, therefore, which Congress would be called upon to appropriate for next year were more than $9 billion. Not included were loans to Europe from the World Bank and the Export-Import Bank, which would not have to be appropriated by Congress. These loans would probably reach $1.5 billion the first year.

The Administration schedule called for action, during the special session, only on the France-Italy-Austria stopgap aid bill, and possibly the Army funds bill. G.O.P. Senate Boss Bob Taft saw some hope, "if faint," that the entire legislation could be finished by Christmas.

Points of Difference. Conflicts were already apparent. The chief one would be over the size of appropriations. Taft would limit ERP to something around $4 1/2 billion the first year. The Administration maintained that anything less than $6 1/2 billion would be worse than nothing. Said a White House spokesman: "All we'll be doing is to make things that much better for the Communists when they take over."

A serious point of disagreement was over how closely the U.S. should supervise the spending of funds. Congressman Christian Archibald Herter, who headed the congressional "show-me" expedition to Europe, suggested that lire, francs, pounds, etc. realized from the sale of fuel, fertilizer and food in each country should be strictly controlled. The controllers would be two representatives of the country and three watchful Americans. Already sensitive to Moscow's yammering that the Marshall Plan was only a dodge to control the politics and economy of Western Europe, the State Department shrank from any such idea. The State Department did not want even to seem to intrude on the sovereignty of other nations.

These points could be unraveled. The important point was that Republicans, who had voted only with great reluctance for the piddling $400 million aid-to-Greece-and-Turkey bill last spring, were now prepared to support a foreign aid program of billions.

In Another Boatyard. But Republicans were not prepared to support--in fact, they were getting set to fight--a domestic price-control program, which Harry Truman had tied to ERP two weeks ago (TIME, Nov. 3). The subject of high prices was a political issue which grew more unmanageable as Nov. 17 approached. The President and his private aides labored over that issue in a separate boatyard.

The President finally had the report of his Council of Economic Advisers, headed by Economist Edwin G. Nourse. The report, revised six times, said reassuringly that the foreign aid program would have no serious effect on U.S. economy. The worst strain would result from the exports of grain, steel and heavy equipment, and even that would not be more than the U.S. could bear, provided there were adequate controls. Domestic demand, said the report, is the real inflationary factor.

As one way to dampen down domestic buying, the Nourse committee urged continuation of high income and corporate tax rates.

Said Taft: "I have not agreed with any economic policy advanced yet by the Administration." To help curb inflation, Taft and his colleagues would introduce bills to reduce income and corporate tax rates.

The uproar over high prices might drown out the discussion over foreign aid. But meanwhile ERP would slide down the ways. However stable or unstable, sound or leaky, ERP, the ark, would certainly be launched.

*European Recovery Program, now the official name for the Marshall Plan.

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