Russia’s Repeat Failures
Moscow’s New Strategy in Ukraine Is Just as Bad as the Old One
FRANCE is about to undergo a very difficult winter, the most difficult she has known since the Liberation. The frosts of last winter, which ruined half the sowings, and the fierce heat of last summer, which reduced the yield on the land sown in the spring, resulted in a wheat harvest less than one-third of that needed for normal consumption and the smallest produced in France since the days of Napoleon I. Only by the most determined efforts and with the assistance of imports from the United States will we be able to maintain a ration of 200 grams; and that will be composed of a mixture in which there will not be very much wheat. Similarly, the drought aggravated the milk problem by substantially reducing the yield of the dairy cows. At present, milk is reserved exclusively for children and old people. Here again the ration can be maintained only by supplementing natural milk with condensed or powdered milk from the United States. Finally, the meat problem is still serious. The abolition of meat control resulted in higher prices, and they are still mounting every day. Increased consumption of meat in the rural centers has resulted in lowered consumption in the large cities. Today, the workers cannot obtain a ration of meat even half as great as what they consumed in prewar times. That is why there has been a wave of strikes for the higher wages which promise to permit the purchase of meat in a rising market. The value of such wage increases is, of course, illusory. They serve only to increase the demand for food; the supply, unfortunately, remains stationary. The result is that any wage increase granted to the workers passes within a few days into the hands of the middlemen in the food trade, especially butchers and cattle dealers.
However, the seriousness of the French position in the coming winter derives not only from extraordinary factors such as frost and drought; it comes also from the conditions created by the war and from certain continuing obstacles which France has met with throughout her task of reconstruction.
To begin with, the French food supply is limited, from the agricultural point of view, for two reasons:
First, agricultural production itself has not yet returned to the prewar level. For four years, French farmlands were not properly cared for and did not receive the necessary amounts of fertilizer. The soil thus has become impoverished and has lost some of its essential chemical elements. Furthermore, throughout this time there were no replacements of machinery, with the result that at present French agriculture lacks tractors, plows, harvesters and every other type of agricultural equipment. The manufacture of these vital tools has begun again, but it is restricted by the steel shortage and cannot possibly meet all the requirements of the farmers.
Secondly, the entire output of foodstuffs does not reach the market. Actually, it is not to the interest of the peasant to sell his products, because the money he receives in exchange cannot buy the industrial commodities he needs. All through the French countryside today there is an enormous demand, accumulated over four years, for textiles, shoes, rubber boots, furniture, bicycles, radios and other consumer goods which industry cannot at present supply in large enough quantities. In this situation, the farmer simply increases his herds of cattle instead of bringing them to market. The recovery of French agriculture, therefore, and its ability to satisfy the nutritional needs of the country in the fullest possible measure, depend upon two factors: procuring for the farmer the necessary machinery and equipment, and offering sufficient manufactured goods to give him an incentive to sell his agricultural products.
Yet industry also is in an extremely difficult position. It must not be forgotten that France emerged from this war much more weakened than from the First World War. True, the amount of material destruction did not total much more than last time. Then, however, only one part of France was occupied, and the rest of the country, including Paris, remained in contact with the other nations of the world which were participating in the conflict. Like them, France expanded and renewed her productive apparatus, and she emerged from the war with certain basic industries considerably developed and in some cases reëquipped. This time, all of France was occupied and isolated from the rest of the world. Not only were no replacements of machinery made during a four-year period, but plant equipment was abused, worked to the breaking-point. That is why it can be said that the problem of France today is not only reconstruction, but modernization and the creation of almost entirely new means of production.
Substantial progress has already been made along these lines. By a miracle of "management," the railroads now are functioning almost as well as they did before the war; they are carrying an even greater traffic load with decidedly reduced rolling stock. Roads, bridges, ports have all been reconstructed, and the average level of industrial production is not very far from that of prewar days; indeed, during the last few months it reached 95 percent of the prewar figure. Nevertheless, certain observations must be made in this connection:
1. It must be recalled that 1938 was a year of economic crisis in France. If we wish to have a true picture of the relation of present-day output to normal output, we should take as our point of comparison the last year before the economic crisis, for example 1929, when the level of production was 25 percent higher than it was in 1938.
2. The 95 percent figure is an over-all figure, made up of figures higher than the prewar ones in the case of the principal industries producing the means of production, but considerably lower-than-average ones in the case of consumer-goods industries. Since the Liberation, France has embarked upon an extensive program to raise her productive capacity, but the French people will not reap the benefits for a long time. For the moment, they still lack essential consumer goods: food, clothing, furniture and housing.
3. The 95 percent figure represents the over-all output. From it must be deducted the considerable quantity set aside for export, both to the territories of the French Union and to foreign countries. The export of textiles, especially to the French Union, is an absolute necessity. Unless we provide them with the clothing and textiles they need, the native populations will not supply us with the foodstuffs we require and make it possible for the necessary political reforms to be realized speedily in an atmosphere of coöperation. But while the exports necessary to ensure our balance of trade represent a considerable deduction of the supplies available to the home market, they are still completely inadequate; for after rising sharply from one billion francs' worth in January 1946 to 12 billions in June 1947, they fell in September of this year to eight and one-half billions, as against 22½ billions' worth of imports. Thus, the entire economic situation of France is dominated by the need for the modernization of industry, the development of scientific working methods and a general increase in production.
Everyone realizes the need for this effort. The labor unions have accepted a 48-hour week, and if the average working time at present is not more than 45 hours, that is because the available supplies of raw materials and power do not permit more. This is the real bottle-neck of French economy. Everything is held up because of the shortage of steel, which is directly due to the inadequate supply of coking coal. In 1938, the French output of steel was 6.2 million tons; in 1929 it reached 9.7 million tons. In 1947 it is only 5.8 million tons; and a number of blast furnaces in the east of France are idle, while iron ore piles up in our mines, because we do not have an adequate supply of coking coal.
France has put forth a great effort in her coal mines. Already, although modernization has hardly begun and most of our mining machinery still needs to be replaced, we have attained a rate of production five percent higher than the prewar figure. But our imports, notwithstanding the considerable effort made by the United States to send us coal, are still only 70 percent of the prewar total; in particular, our coke requirements are not filled. Thus, it is evident that all the economic difficulties of France are connected with the coke problem. More coke means more steel. More steel means the possibility of increasing the use of farming machinery and furnishing the peasants with the industrial products they need; and that is the way to solve the food problem. More steel means more industrial equipment, permitting a general rise in production and an increase in exports; and that is the only means of achieving a satisfactory balance of trade within a fixed period. The whole economic future of France -- her industrial and financial recovery and her political stability -- thus depends upon the decisions to be taken concerning the international allocation of coal and coke.
This grave situation is not characteristic of France alone. The entire European continent is at present suffering from the same evils and is meeting the same obstacles to reconstruction. All European countries have experienced similar destruction, varying only in degree. For four years they were cut off from the world. Their equipment was not renewed.
Moreover, as a result of Russia's domination over her satellites, Europe now finds herself cut into two blocs. This is probably the gravest of all the present unhappy phenomena. The east European countries which formerly used to exchange their food produce for the industrial products of western Europe have been absorbed into the Russian economic sphere and economic relations with them are exceedingly difficult. As a matter of fact, those countries are not deriving great profit from this new relationship, for Russia is not yet capable of furnishing them with the necessary manufactured goods. Western Europe as a result suffers considerably, for she must get from the United States the products which she used to obtain from eastern Europe. As a result of this heavy demand for American goods the western European countries have a hopeless deficit in their trade balances.
With this situation in mind, one may lay down certain basic principles for a possible retrieval of the situation in France and in Europe:
1. The problems of western Europe are impossible of solution without immediate American aid. In particular, France and Italy have completely exhausted their last reserves. If immediate credits are not to be forthcoming, they will find themselves obliged to stop their wheat imports -- which will mean immediate famine -- or their coal imports -- which will slow down their industrial production and leave their factories idle. Both would lead to terrible misery and inevitably to social unrest. In such circumstances, no one could foresee what the political outcome might be.
2. American aid must be substantial, it must extend over a long period of time and it must follow a clearly defined plan. The aim must not be relief; but it must be recovery. After having furnished the consumer goods indispensable to meeting this year's exceptional conditions, it must plan to provide the European countries with raw materials and the equipment necessary to the recovery of their industries and the steady improvement of their trade balance.
3. The effectiveness of American assistance will also depend on the close coöperation of all the countries of western Europe. In the grave situation which we now face, it is very clear that salvation is impossible in only one country. Reconstruction cannot be attained to any extent if it is conceived of as a purely national affair. We no longer can think in terms of France, Italy, Belgium or England alone. We must think in terms of the west. The means of reconstruction must be sought on a general western European level.
This is why, at the Conference of the Sixteen Nations in Paris, France took the initiative of proposing a Western European Customs Union. A committee has been nominated to investigate the matter; meanwhile, and, in order to lose no time, we have entered into direct negotiations with Italy for the preparation of a customs union between our two countries. A similar approach has been made to "Benelux;" and we hope progressively to obtain agreements of this type with the rest of our neighbors, thus laying the foundation of a general customs union for the whole of western Europe.
Along with this enlargement of the commercial markets a whole series of agreements is necessary to organize the coherent progress of industries in the different countries. One thing is certain: the successful application of the Marshall Plan requires a coördinating body for the allocation both of the goods furnished by the United States and of the same products made in Europe. In the case of wheat, coal, steel and other essential raw materials, the countries of western Europe must take joint action and handle the allocation of goods in order to obtain the maximum efficiency by the specialization of various industries in the nations involved. Thus in the case of electricity, we have to plan a common policy for the use of the hydraulic power in the whole region of the Alps. Similarly, we must standardize freight cars, electrical machinery, and other forms of equipment. The work begun in this field before the war has to be enlarged by a European agency, acting in the interest of all the people, for the utmost possible increase of productivity on the basis of the division of labor.
Only too plainly the current division of the Continent into two blocs does not favor the complete fulfillment of this project. If difficulties are ever to be completely overcome we shall have to reduce the demands which western Europe at present must make upon the United States and strive for the maximum development of commercial relations inside of the Continent, namely with eastern Europe as well as with the Middle East. Unfortunately, the achievement of this aim does not depend on us. As far as we are concerned, we shall do all we can in that direction; and we can only hope that Russia will not force her satellites to refuse commercial exchanges with us.
We now reach the most acute part of the problem: What is Germany's rôle to be in the effort of European reconstruction? The answer will determine the entire political future of Europe. It also will determine the success of the economic recovery plan upon which we are now embarking.
A basic principle can be stated at the start, one on which there can be no discussion at all. Germany is part of western Europe and she should participate in its economic reconstruction. Whatever the crimes committed by the Nazis, whatever the individual or collective responsibilities of the German nation, we cannot incriminate future generations of Germans simply because of the faults of their parents and we cannot turn Germany into an eternal concentration camp. A miserable Germany would be a cancer in the heart of Europe, a source of disorder and anarchy which would inevitably spread to her neighbors. Germany, therefore, has her place in the economic reconstruction of Europe. She must be given a chance to reconstruct her industries and to raise their production level bit by bit.
However, if the production level of German industries is really to be raised, steel, coal and coke are needed. These can be procured only from the mines of the Ruhr, whose production is at present indispensable for the reconstruction needs of French industries. The problem is, therefore, one of priority. Which is to have its steel industry developed first? Germany or France? The criminal or the victim? France opposes too rapid a recovery of the German metallurgical industries, for this would give German steel production the edge over French steel production and enable Germany to develop her exports in a way to hamper the necessary increase of exports by the other western European countries. On the other hand, France insists that the portion of the Ruhr coal and coke allocated to those neighboring countries should be sufficient to enable them at once to make the investments necessary for the reconstruction and modernization of their industry, so that they may be able to produce and export on a competitive basis. At present, the modernization of industries disrupted by the war is more important and urgent than the increase of the production of consumer goods by German or other factories. France is not demanding a sufficient share of Ruhr coke and coal only for security purposes, to prevent the reconstruction of Germany's military potential. She is doing it because it is for her, here and now, a question of life or death. Only the coke of the Ruhr will permit the French industries to recover and her metallurgical industries to develop Europe.
The coke must be delivered to the place where it can produce steel under the best conditions and with the highest productivity for the benefit of all of us. This place is not necessarily Germany. It would pay better to use the coke for the development of the Franco-Belgian metallurgical industry rather than to concentrate everything again in the Ruhr. The steel obviously must be produced in western Europe with German coal and French iron ore (minette lorraine). But to produce one ton of steel you need three tons of ore and only two tons of coal; it is therefore more economical to bring the Ruhr coal to the Lorraine ore than to send the minette to the Ruhr. As a matter of fact, in the last years preceding the First World War, the Germans began to remove their steel production from the Ruhr to Lorraine, and Germany's development of the Ruhr steel production was only a consequence of her loss in 1918 of Alsace-Lorraine. Of course the Ruhr steel industry could work with the richer Swedish ore; but this source of supply could be cut off under foreign pressure, and it would be dangerous from the economic point of view to destroy the natural unit formed by the German coal mining basin and the French iron ore. This unit would be entirely integrated if France could buy imported German coal with steel exported to Germany.
In any case, it is now clear that all France's economic difficulties are traceable to her inadequate production of steel and that this, in the last analysis, depends upon the lack of coke. Since dozens of furnaces are at present not working because of this lack of coke, measures must be taken to ensure the complete utilization of metallurgical equipment existing in France and Belgium before allowing an increase in Germany's metallurgical output. We think, then, that a sort of sliding scale ought to be arranged, establishing a close unity of interest between the metal industries of France, Belgium and Luxembourg and the metal industry of Germany, the maximum steel output of the Ruhr being fixed each year with reference to the previous year's output in the other countries of western Europe. Thus Germany could be restored as a part of western Europe, and in the service of western Europe, not separately, as a privileged country and contrary to the interests of the other nations of the Continent.
But this is bound up with a last question, that of the ownership of the Ruhr mines. It is a fact that, at the present time, Great Britain having ceased to figure on the coal export market, and the mines of Silesia having been ceded to eastern Europe, the Ruhr supplies the life-blood of all western industry and, no matter what we may do, in the future the master of the Ruhr will be the master of economic life in the west. Just at this time when Europe is becoming conscious of herself she faces the problem in unequivocal fashion. Shall the Ruhr be at the service of the west and be jointly administered by all the nations for which it is an indispensable source of supply, or shall it become again an instrument of German domination, first economically and later politically? Here the results of the war are once more in danger. The people of France will not accept any system which puts the mines either under the control of a German Government or, worse still (even though they may be favored by some American investors), magnates like Thyssen and Krupp who, after they had put Hitler in power, were directly responsible for the war.
If we wish to rebuild Europe, the Ruhr must become the collective property of the western states and its administration must be ensured by a strong Rhine Valley Authority, similar to the TVA, in which Germany and the Ruhr trade union organizations will have their part -- but only in coöperation with the United States, Great Britain, France and the other neighboring countries that depend for their very lives upon the coal and coke of this basin.
Such is the main tenor of French opinion on the economic reconstruction of the west. France received the Marshall Plan as an act of generosity and intelligence, as an expression of America's awareness of her international responsibilities, as an effort to organize the reconstruction of the European countries and thus to organize international exchanges. At the present time, the French Communist Party is attacking the Marshall Plan with the utmost violence, representing it as a proof that American capitalists wish to gain control of Europe and impose their will upon the whole Continent. We know that this is an unfounded accusation, that American policy respects all political opinions and sentiments. Furthermore, we know that America herself was built up by the investment of European capital, and that the fact never endangered her liberty. We therefore welcome American investments and any measures of any kind whatsoever that will ensure the most rapid development of international exchanges between the European and the American continents. But our entire reconstruction problem is bound up with the problem of coke, which in turn closely depends upon the solution that is adopted concerning the status of the Ruhr. We want Germany to recover along with us, at the heart of Europe and in its service. We cannot permit the rhythm of her recovery to be such as to deprive the other countries of raw materials and manufactured products urgently required for reconstruction, thus making more difficult the adjustment of their balance of payments.
On the London Conference depends the final decision. A decision of one kind will definitively give Europeans the courage necessary for their common effort towards a common reconstruction. An opposite decision, ensuring the recovery of the aggressor nation before that of the victim nations, would sow despair among our peoples and would play into the hands of Communist propagandists. I restate the issue once more, since I believe, with many Europeans, that there is the possibility of a great and perhaps deadly error in policy toward Germany. The problem is how to let Europe be dependent on the Ruhr (a fact which cannot be altered) without letting her be dependent upon a powerful Germany. The solution is to shift some of the Ruhr steel production to French mills -- and to put the Ruhr coal under western control. Let us hope that our governments will succeed in reaching agreement and in organizing the development of the Ruhr's coal resources and industries for the profit of the nations of western Europe and under the direction of the whole of western Europe.