A Vision of Strength

Like most Englishmen of his caste, Britain's Chancellor of the Exchequer Harold Macmillan frowns on public displays ot deep emotion, but when the spirit moves him he has a ringing voice and a rolling turn of phrase that can strike sparks in even the most phlegmatic audience. Last week, as he faced 300 reporters in one of his rare press conferences, debonair Harol Macmillan was under the spell of a vision that gave him eloquence. "I have seen in my lifetime the steady Balkanization and disruption of Europe." he said. "Europe has suffered wars. It has torn itself to pieces twice in my lifetime like the ancient states of Greece. [Now] a great future opens up, a great progressive future. If Western Europe, including the United Kingdom could develop into a free trading area, this would be a source of great strength--a common market of nearly 250 million people."

In these emotion-packed words Macmillan opened Britain's most fateful economic debate since World War II. What he was calling for was a program, revolutionary but gradual, that could alter the course of British economic history. As an island economy dependent on imported food and raw materials, Britain must export to live. Once she did so under the flapping banners of free trade. For the last quarter-century, however, British manufacturers have cowered behind high tariff walls and foreign competitors have imposed retaliatory tariffs that have prevented British goods from finding mass markets abroad. The result: Britain, drained by the war, has been unable since to raise her economy much above subsistence level.

The Advantage of Bigness. In greater or lesser degree, most of the nations ot Western Europe have faced the same economic dilemma as Britain, and for years farsighted Europeans (and Americans) have been arguing that the answer lies in a common West European market. A common market would allow each of the member nations to specialize in the goods that it produces best. If tariffs were abolished, for example. Britain's camera manufacturers might well be swept away in a flood ot superior German-made Leicas and Rollei-flexes (now subject in Britain to 50% ad valorem duty), but the host of new amateur photographers that would spring up once German cameras were cheaply available to all Europeans would buy a great deal more of Britain's excellent film.

Such specialization would inevitably throw up industrial giants. A combine of Volkswagen and British Motors, say, might dominate auto manufacture in a large part of the world. A combination of German camera manufacturers and British film makers might produce a colossus rivaling Eastman Kodak. This would not only make for better yet cheaper products and vastly expanded trade, but would help solve one of Europe's fundamental social and economic problems. In most European nations today, increases in real wages are blocked by the fear that they might make exports more expensive and less competitive. In a common European market there would be the same strong incentive to keep raising wages that exists in the U.S. --recognition that each wage increase stimulates new demand for the products of large-scale industry.

Thorny Choice. Last year the six nations that make up the European Coal and Steel Community (Germany, France, Italy and the Benelux countries) decided it was time to make the common market more than a dream. At a meeting in Messina, Sicily their economic experts drew up plans for a customs union that, from the trade point of view, would convert the six into a single "country" with no internal tariffs and common external tariffs. Since creation of such a union would have a drastic effect on the economy of other European powers, the 17-nation Organization for European Economic Cooperation last July established a working group to investigate the possibility of welding all O.E.E.C. nations into a common market area.

So Britain was faced with the outline of a thorny choice. If a European customs union actually came into existence and Britain stood aloof, there was every likelihood that the tariff wall thrown up by the new group would bar many British exports from European markets. (One-eighth of British exports now go to the Messina Six.) But could Britain consent to have her tariff policy toward the rest of the Commonwealth, the system of "imperial preference," tampered with by an outside authority? If Britain were forced to choose between Europe and the Commonwealth, said Harold Macmillan, "we could not hesitate. We must choose the Commonwealth."

The way out of so intolerable a choice, Macmillan decided, would be what he called a "partial free-trade area." Unlike a full-fledged customs union, the partial free-trade area would have no common tariff against outside nations, and even between member nations certain goods would still be subject to tariff. Under such an arrangement the British could exchange manufactured goods tariff-free with the rest of Europe, but would still be able to maintain imperial preference on food, fodder, drink and tobacco--goods which make up a substantial chunk of Commonwealth exports to Britain.

Chills & Fervor. Before broaching his scheme to the British public last week, Macmillan was careful to talk it over with the Commonwealth Finance'Ministers. The reception he got was, he said, "sympathetic, friendly and amicable."

As outlined last week, the British plan was still mostly yeast in the vat of the future. The Cabinet, Macmillan emphasized, "has not yet arrived at a conclusion on this vital matter." There were strong reasons for the government's hesitation. British entry into a European free-trade area would involve painful adjustments. While some factories would prosper and expand, others would go out of business--a prospect to send cold chills down the spine of many a British industrialist. Some labor leaders were sure to make a fist at the very suggestion of even temporary disruptions of employment.

All the more surprising, therefore, was the first reaction to Chancellor Macmillan's announcement last week. Enthusiasm for the idea cut across class and party lines. Fifty leading bankers, industrialists, economists and union leaders promptly joined in publishing a statement which declared that "the European common market could enable Europe to establish healthy economic relations with the rest of the world. If we neglect to minister to its birth, it may outgrow us and have little need of Britain." A group of 82 Labor M.P.s and another of 89 Tories, more than 25% of the House of Commons, got behind similar resolutions. The press, save only Lord Beaverbrook's empire-minded Daily Express, chorused fervent approval.

As time went on, exceptions, dissents, second thoughts were certain to chill the first fervent breath of approval. And time would indeed be required, at least ten years, perhaps 15, to convert the economic-union dream into working reality. A few weeks ago few would have predicted that the dream was feasible at all. After last week's discussion, however, Harold Macmillan's vision could be rated a distinct possibility.

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