Present Prosperity

Out of Geneva's Palais des Nations last week came one of those statistics-studded reports that make the back pages of newspapers but really tell an electrifying story. The news is that Western Europe--not just one country, but all of it--is booming. The U.N.'s Economic Commission for Europe concluded last week that the upturn in European production, "which began in some countries in 1953, is becoming general." Unemployment is dwindling fast in most countries, and Western Europe's gross national product is growing at the rate of 10% a year, a faster rate of growth than that of the U.S.

For 250 million Europeans, the industrial comeback means the return of the first real prosperity they have known for a generation. Much of the prosperity is precarious; old problems remain. Yet the fact is that in 1954 proud old nations, brought to their knees by war, are reasserting themselves, adventuring on new horizons of commerce and technology. Western Europe now produces more than a quarter of the world's steel, a quarter of its coal, and one-third of its foreign trade.

Britain, biggest of Europe's industrial nations, set the pace in 1954. Austerity and rations are now safely behind, and Englishmen are taking seriously the once fanciful talk of a new Elizabethan Age.

The island's industrial boom, less spectacular than West Germany's, is in absolute dimensions far bigger. In the first six months of 1954 Britain's industrial production increased by 6 1/2%. Between 1946 and 1953 British oil refineries have boosted production from 2,400,000 to more than 23 million tons; British steel production, up 5.4% this year, has reached 19 million tons a year--enough for Britain's annual production of 1,000,000 cars and trucks, about a quarter of the world's new ships, and well over half the total of Western Europe's output of armaments. In the first nine months of 1954, half a million British vehicles sold abroad for $725 million--almost one-third more than U.S. automobile manufacturers earned in foreign markets. The vast sterling area, which accounts for 40% of all the world's trade, is selling more than it buys, has a growing reserve of nearly $3 billion.

London, last of the war-devastated metropolises to mend its scars, is about to cover its blitzweeds with bright new stores and office buildings. Plans have been drawn for a Rockefeller Center-like project topped by a 27-story building. Two weeks ago Sir Winston Churchill abolished the controls which have held back reconstruction in the City of London. Business had to wait while materials and labor went first to building homes for homeless Britons--a program which achieved 350,000 new homes in one year.

Factory wages have practically doubled since 1945, and British workers are buying one-third more radios and appliances than they did in 1953. Profits, too, are high. Most are being plowed back into newer and better factories, but other private capital is flowing into the undeveloped areas of the Commonwealth at the rate of $600 million a year. This amounts to 1 1/2% of the total national product, substantially more, in proportion, than the U.S. invests abroad. Most of this foreign investment is handled by the financial wizards of the City of London. Said one of those worthies last week: "We are not an optimistic people, but no sector of the population can honestly be said to take a gloomy view of the future."

France strikes the visitor as the richest land in Europe--and potentially it is. French industry, though backward, unadventuresome and cartelized, is sharing in Europe's boom: steel production is soaring (to almost 11 million tons this year), and the output of French cars is close to half a million a year. France's trading deficit with the rest of the world is still chronic, but between 1953 and 1954 its debts diminished from $203 million to $108 million; last month it actually had a surplus of $43 million.

French agriculture lags behind. Surrounded by protective tariffs, quotas and subsidies, French farmers are indulging in the luxury of concentrating on crops with which France is surfeited (e.g., beet root and grapes), while avoiding the very foodstuffs (e.g., meat and butter) which Frenchmen need most and can least afford to buy. Still, most Frenchmen contrive to eat well, choosing to spend a large part of their income on food.

One result is that the most fertile land in Europe is a net food importer. The central promise of Premier Mendes-France's administration is a pledge to rid the country of the restrictions that keep the French from properly realizing their potential of plenty.

West Germany has practically doubled its gross national product since 1948. Last year the busy Germans built 515,000 houses--half as many as the U.S., which has more than three times the population. Exports have more than doubled since 1950, and in Latin America, German iron and steel goods are squeezing out British and American.

Most remarkable of all, the German boom is now spreading to West Berlin (pop. 2,250,000), for years a chronic invalid needing daily injections of more than $1,000,000 in U.S. and West German aid. Apartment houses are rising from the ruins at the rate of one three-room apartment every 30 minutes. West Berlin's production of precision instruments and appliances (all of them lightweight, high-value goods which can be economically air-shipped in case of another blockade) is up 30% over 1953. Within three years, the half-city expects to be able to stand on its own economic legs.

Not all West Germans have so far received their share of the nation's phenomenal comeback. Wages lag behind increasing productivity; and for all their hard work, German workers eat less, drink less, and drive fewer cars than their neighbors in Britain and France. Overall German living standards are officially calculated as 15% lower than the French.

Italy, land of chronic deficits, is having its best year since World War II. Industrial production is 83% above prewar: city folk have new movie houses and coffee bars; 1,000,000 Italians are whizzing about on flashy little motor scooters. But there still remain, in a population of 47 million, 2,000,000 unemployed and another 2,000,000 underemployed. In the bleak south, says an Italian government report, almost one-third of the population lives in "extreme poverty." The report cites these statistics:

P: 950,000 Italians live in cellars. P: 375,000 live in caves. P: 3,500,000 cannot afford to eat meat and sugar or drink wine.

Western Europe's smaller nations are flourishing as never before.

Belgium (with the aid of the Congo) and Luxembourg have $1 billion in their common gold and dollar kitty.

The Netherlands' worldwide investments helped expand its gold and dollar holdings to $1.2 billion, more than France's. Twice within 1954, Dutch wage rates have been increased, by 5% and 6%. Little Netherlands has achieved its prosperity despite losing Indonesia, the crown jewel of its empire.

In the short run, one effect of Western Europe's comeback was that U.S. businessmen would find themselves meeting tougher European competition in their export markets. But it also meant a healthy decline in European dependence on U.S. aid (which had made much of the recovery possible). Western Europe's comeback also meant stronger allies and better markets. Most of all, it meant that Frenchmen, Germans, Dutchmen, Britons and Italians, who had gone without for so long, at last were coming closer to the good food, new clothes, shining cars and comforts that Americans take as a matter of course.

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