A week ago today Paul Hoffman, who runs the Economic Cooperation Administration which runs the Marshall Plan, told Europeans that they had better seriously start thinking about getting rid of their trade barriers.
Hoffman implied that if Europe did not get to work quickly on slashing tariffs and trade restrictions, Congress would be pretty cool towards shelling out more money to keep Europe's economy functioning and happy.
Mr. Hoffman was nibbling at a problem which many economists feel will inevitably scuttle the value of any economic aid we send to Europe, at least on a short-run basis. Europe, partially due to war damage, partially to technical immaturity, can produce neither as cheaply nor as efficiently as the U.S. This means it cannot trade with us in a particularly equal give and take footing. But this situation is even further aggravated by the myriad trade barriers and currency controls still stretched onto the containment; these restrictions are actively preventing what Hoffman calls the "resumption of normal healthy trade."
At the same time, however, Hoffman and Congress are failing to hit at our own trade barriers, the economists claim, barriers which are equally effective in preventing any healthy trade between this country and Europe. Europe has some goods which it could profitably sell to the U.S., goods which can bring in badly-needed dollars. Our tariffs are effectively preventing their importation.
England attempted to get the U.S. to scrap or at least cut down some of these tariffs when she agreed to devalue the pound; the bid was fairly unsuccessful. Considerably similar pressure is coming from other countries. They aren't doing any better.
This disturbs the economists, and probably Mr. Hoffman too. For as things stand new, Europe cannot afford to pay for the dollar goods she must buy from the U.S. to help her own recovery. The Marshall Plan is supposed to cover this gap, but it is due to lapse in 1952. There is a good possibility that it may be continued much longer than this for political reasons. But if Congress fails to renew the Plan, and at the same time tactfully continues to duck the question of our own trade barriers, a dollar starved Europe is going to have to arable around pretty hard to keep from a serious economic cave-in.
Read more in News
AVC Table Has Facts On Ballots, Congress For November Voters