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From Labor Action, Vol. 14 No. 2, 9 January 1950, pp. 1 & 4.
Transcribed & marked up by Einde O’Callaghan for ETOL.
The newest slogan of the Marshall Plan is “integration.” The November 1 speech of Economic Cooperation Administrator Paul Hoffman laid down the line that if the countries of Western Europe hoped to receive Marshall money after July 1, 1950 they would have to liberalize trade and “integrate” Western Europe into a single economic unit.
Specifically Hoffman wanted Western Europe to cut import restrictions by 50 per cent, to sharply limit import quotas, to allow for the free flow of capital, curtail cartels, set up customs unions and allow for the free convertibility of currencies. Or as Hoffman phrased it: “the formation of a single large market within which quantitative restrictions on the movement of goods, monetary barriers to the flow of payments and, eventually all tariffs are permanently swept away.”
This demand for “integration” is an indication that the initial phase of the Marshall Plan has been accomplished. Western Europe has reached the pre-war production levels; it is now in the vicinity of 120 per cent of 1938 figures. Western Europe economy is beginning to be faced by the old problems, the chronic problems. Overproduction is on the agenda.
Already there are signs of the slackening off of production. The trade arteries of the old continent indicate the hardening of overproduction. This, in a sense, is the paradox of the Marshall Plan. The recovery brought about with the assistance of the $7 billion of U.S. aid meets its crisis in the success of the recovery aspects of the plan.
So serious is this development that Tinies correspondent Michael Hoffman reported on December 2 “that almost without exception European and U.S. officials and statesman close to the inside workings of the Marshall Plan feel that it stands at a point of peril and is in imminent danger of failing.”
Introducing stability into the sick old giant of European capitalism is the goal that the State Department has set for itself. But now the time has come when that giant is beginning to ask for more than the share that the U.S. apportioned to it. The question is how to divide the limited markets in the face of rising production.
The Marshall Plan, the regulator of Western Europe’s economy during the recovery phase, now turns to the task of being the regulator at a time when the chronic problems are beginning to appear. The time is clearly at hand for the U.S. “to put capitalist Europe on rations.” And this is what is called today “integration.”
The strategic needs of the U.S. in the cold war necessitate the building of Europe into a viable force. At the same time there arise economic interests that conflict with the strategic concepts and with the economic interests of the U.S. These insurmountable conflicts form the background against which the U.S. works out its policy for Western Europe.
The Marshall Plan countries have balked in their response. The interests of each national economy are not those that the U.S. has set for it. To the businessman of Western Europe this “single large market” means the entrance of foreign goods and “competition” which threaten to put him out of business. Their “solution” is just the opposite of what “integration” demands: private cartels and import restrictions. To the U.S. this means threatening the market for U.S. export goods.
This conflict between the strategic and economic needs of the U.S. and the economic drives of Western Europe to recover its old position in world trade is nowhere more clearly outlined than in the question of oil.
To each nation of Western Europe the road toward greater financial stability and the end of the dollar crisis appears to be one of increasing exports and restricting imports. This means the striving for greater production. However, because the production of coal has been relatively stable, a new source of energy is needed—oil.
Therefore the oil companies in Western Europe, predominantly British and Dutch, decided to embark on a program of increasing their oil production and refinery facilities. This would decrease their dependence on U.S. oil and thus ease the dollar shortage.
However, the American oil companies, recognizing the trend in Europe, wanted to build these refineries themselves. They
In October 1949 a conference began between British and American government officials to plan control of production and explore possibilities of allocating markets (N.Y. Times, Oct. 9). The U.S. began to force the British to curtail their expansion plans and recognize the “legitimacy” of the interests of the U.S. oil companies.
At stake was more than the mere “legitimacy” of these companies, the strategic plans of the State Department itself. Oil is an integral part of the American defense plans, the blood of the modern war machine. The American oil fields in Arabia and Venezuela could not be allowed to fall into disuse and deteriorate.
The “stability” of these areas, in the first place, depends on oil production. Therefore the political and economic consequences of the depression and the possibility of social upheavals demand continued production. Second, these oil fields may be leased out to another nation, perhaps even Russia, and thus the U.S. would lose direct control over them.
Consequently there is the necessity for the maintenance of the foreign markets in order to continue production at the present level at least. This, in turn, runs head-on into the attempts of the European nations to solve their dollar crisis, for which American “aid” is necessary, by producing and refining their own oil. The British plans call for an increase in oil output to meet the needs of the entire non-dollar world.
Thus the ECA (European Cooperation Administration) intervenes in early October and overrules the European Marshall Plan Council, which is supposed to have the “authority” for coordinating the Marshall Plan nations by the Europeans themselves and curtails the expansion plans. Though almost the entire amount of machinery necessary had to be bought in the U.S., with 88 per cent of non-Marshall Plan dollars, the over riding determinant was the strategic need of oil.
That this strategy is the determining factor is seen in the attempted solutions put forth by U.S. officials at the above mentioned October conference. The American oil companies were willing to take dollars in exchange for sterling only to meet their costs, and take a chance at being able to convert their profits. Undoubtedly this meant that the U.S. government was going to subsidize the oil companies. Continued and expanding production was the goal.
On December 20, Britain, forced by the failure of the sterling devaluation to make any significant dent on the dollar shortage, announced the curtailment by one half of dollar oil import and the use of oil bought with sterling.
The significance of the proposed British action is seen in the immediate response it brought from the petroleum industry, from congressmen, the ECA and above all the State Department, which indicated its “concern at the present action in this field.” The N.Y. Times of December 21 reported that “Marshall Plan officials canvassed the possibilities of indirect sanctions in the form of a cutback in funds already allocated for expansion of British petroleum refining.”
The more direct forms of action to be applied by the ECA and the State Department remain to be seen. But evident at this time is the practical meaning of “integration,” the fitting in of the economy of Western Europe to meet the imperialist needs of the U.S. in the cold war.
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