Help Wanted

By midsummer 1950, five years and eight billion EGA dollars after V-J day, Western Europe was nicely back on its feet. Its industrial production was higher than in 1938. Then came Korea. Prodded by the U.S., Europe grudgingly agreed to rearm. U.S. arms production got going first, though slowly (see NATIONAL AFFAIRS), and in the worldwide inflation that followed, Europe's convalescing economy suffered a setback. Last week, in two countries, it was in perilous condition.

No More Steak-Hunting. The worst case was Britain's. Short of coal, food and labor, Britain is going broke at the rate of $2 billion annually. In the House of Commons last week, Tory R. A. ("Rab") Butler, in his maiden speech as Chancellor of the Exchequer, grimly announced that in October alone Britain's dollar deficit was $320 million; additionally, Britain owes its continental neighbors some $500 million.* The sterling area's gold reserve (down to an approximate $2.8 billion) is dwindling faster than ever before. "If we do not . . . correct the disparity between what we earn and what we buy," warned Butler, "we shall [become] bankrupt, idle and hungry."

He ticked off some of the causes underlying Britain's worst postwar crisis: P:With an arms budget of $13 billion spread over three years, Britain is putting more coal, steel and manpower into defense than any other European country. P: Imports of raw materials and food are costing Britain 40% more than they did before Korea; the prices of her exports are up only 25%. Uneven worldwide inflation means that Britain must exchange almost twice as many automobiles and tweeds as she did for the same amount of wheat and wool she bought a year ago. P: Britain is not producing enough coal and steel to supply both her export industries and the rearmament drive. Once the world's largest coal exporter, she is now carrying coals to Newcastle, and this winter will again import coal from the U.S. The rest of Europe, deprived of the coal Britain once exported, is also forced to spend precious dollars on U.S. coal. British steel production is higher than in 1938, yet a crippling steel shortage threatens.

Asked Chancellor Butler: "How are we to get out of this?" His remedy sounded much like those of his Socialist predecessors, Cripps and Gaitskell: more austerity. Imports will be slashed $1 billion, partly by reducing purchases of canned meats, sugar products and fruits in Europe, paring another 2-c- off the tiny meat ration (total: two small chops weekly), buying less butter, bacon and cheese. The dreary British menu will be thinner and less nourishing than it was after Dunkirk. British tourists will find it more difficult to take steak-hunting vacations on the Continent: their annual foreign travel allowance will be decreased to $140 apiece. There will be fewer housing starts; government stockpiling of strategic materials will be slowed down. To counter inflation, Butler plans to reduce the amount of money in circulation--by hiking interest rates, imposing a stiff excess-profits tax.

It was a grim program, certain to make the new government unpopular during the cold, hungry winter ahead. But even the optimists knew that grin-&-bear-it austerity was not enough to save Britain from economic disaster. Glumly, the British treasury announced that it would ask to be let back into the Marshall Plan, which it had so proudly left last January. Probable initial request: $300 million. Churchill would undoubtedly be asking for help when he makes his projected personal call on Harry Truman.

Too Many Tax Dodgers. France, which grows most of its own food, is less hungry than Britain but is also close to bankruptcy. French dollar reserves are down to $230 million, which is $30 million less than one U.S. company (General Motors) has in its reserves. The 2.3 billion U.S. dollars pumped into France since 1948 has been, in effect, drained off at the other end by the Indo-China war, which has cost France over $2.5 billion.

At $2.1 billion, France's rearmament budget for 1951 is much smaller than Britain's, but its inflationary impact on French living standards may be even more disastrous. Meat, milk, fuel and cigarette prices are running hog-wild. French workers grumble bitterly that "the rich are getting richer and the poor are getting poorer." They have a point. France's small capitalists, Europe's most expert tax dodgers, dislike U.S. capitalism's system of sharing higher profits with its workmen in the shape of better wages and cheaper goods. They prefer to grab all they can, as fast as they can.

Last week, France's trade deficit with the U.S. rose to $184 million. Finance Minister Rene Mayer made a desperate move to balance incomes and expenditures. Following Britain's lead, he proposed to slash French imports by 25%. Such a cut--if it could "be maintained--would wipe out most of France's dollar deficit. But its most serious effect would be to jeopardize French rearmament, for it would deprive arms plants of U.S. coal, oil, cotton, nonferrous metals and machinery. Committed to the rearmament of Western Europe, the U.S. could not allow this to happen. France, like Britain, would have to have more U.S. aid.

*Britain's debt to the U.S. in postwar loans: $4.4 billion.

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