840.00/3–653
No. 159
Memorandum by Ruth
H. Phillips of the Office of European Regional
Affairs to the Director of the Office (Moore)
Washington, March 6, 1953.
Subject:
Attached is a story by Michael Hoffman in the New York Times of March 6,1 summarizing this year’s ECE Survey,2 which was
released to the press yesterday. A similar account appeared in the Washington Post. Although
Hoffman’s summary overly simplifies the Survey,
he does catch the tone of the report, which, similar to previous
Surveys, is gloomy and pessimistic regarding Western European
developments and fairly uncritical when addressed to Soviet bloc
accomplishments. The Survey is, however, an impressive achievement,
covering the period 1947–1952.
[Page 290]
For your information, I am attaching an impressionistic view of this
year’s Survey prepared for Miriam
Camp’s use by Bob Asher after
discussion with the few people in the Department, including myself, who
had read the Survey. The Survey arrived very late this year, reaching
Washington only a day before the ECE
Session opened. Moreover, only a few copies are available, making full
Departmental and inter-Departmental review of the Survey in time for use
by our Delegation in Geneva impossible. As a result, a cable was sent to
Miriam Camp giving her
discretion to prepare her own statement, reserving her Government’s
opportunity to comment further at a later date. It was also requested
that, if it were feasible, the Delegation inform the Department in
advance of the main points of the proposed Delegation statement.
In addition to the attached paper by Asher, the Delegation also has DRS comments on the Soviet bloc chapters and some brief
comments from various specialists in “E” and “EUR” on specific aspects of the Survey. These were sent
informally. These are available if you wish to see them. Most of these
comments are addressed to giving a better balanced and constructive
statement of Western European developments than does the Survey and to
pointing up the deficiencies of the chapters on Eastern Europe.
Since we have not yet had any indication from the Delegation of the
approach they plan to take on the Survey, we are suggesting that if
Department officials are questioned on the report they comment along the
following line: The Survey, which was issued on the responsibility of
the ECE Secretariat, is now being
studied by the Department; the Survey, as is customary, will be
discussed as one of the principal items at the current ECE Session and U.S. comments will be made
in the first instance by the U.S. Delegation now in Geneva.3
MSA may also suggest to SRE that the latest production statistics
now available for OEEC countries on the
fourth quarter be released in Paris. These figures indicate that the
index of industrial production which stood at 126 in July, 122 in
August, and 139 in September, rose to 146 in October and 149 in
November. There was a seasonal drop to 139 in December. These statistics
should assist in refuting the Survey charge of “stagnation” in Western
Europe.
[Page 291]
[Attachment]
Memorandum by the Special
Assistant to the Assistant Secretary of State for
Economic Affairs (Asher)
[Washington,] March 3,
1953.
Latest
ECE
Survey
The similarity of the latest Survey to previous ECE Surveys suggests that a similar US
approach might be used this year.
The latest Survey, however, is more ambitious in scope than previous
editions since it covers the entire 1947 to 1952 period. Like its
predecessors it is a rich source book. It brings together a wealth
of statistical material, offers a detailed analysis of the material,
and presents the results of its analysis lucidly and skillfully. We
know of no United Nations publication in the economic field that is
more valuable as a reference work.
A careful review of the facts and figures to be found in the Survey
indicates that a rather remarkable amount of progress has been made
by the free world in the past five years—in increasing production,
in bringing inflation under control, in expanding trade, in
maintaining a high level of investment, in avoiding any major
recession, in achieving a more equitable distribution of income, and
in developing habits and institutions for international economic
cooperation and greater collective security. In short, an impressive
groundwork for continued progress and for an expanding world economy
has been established.
Yet this is not the impression one receives from the ECE Survey. This year’s edition is in
the traditional gloomy and pessimistic vein. The remarks made by the
US Delegate at the session two years ago are still relevant (see
attached excerpt from 1951 statement4). The detailed discussion of
Western European problems which takes up most of the space in the
Survey is replete with references to “stagnation”, “failure”,
“ill-conceived policies”, “disintegration”, etc. Success, when it is
too self-evident to be overlooked, is attributed to “exceptional
circumstances” or is described as “abnormal” or “unusual”, or due
more to luck than sense; it is, therefore, unlikely to last.
There is a formal recognition in the Survey of the fact that the
world’s major economic problems can only be solved in the context of
the kind of expanding economy that has characterized the postwar
period, but the authors take a dim view of the capacity of the free
world to continue this expansion. The writers tend to look
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upon the world economy as
a battleground of fixed dimensions in which country “X” can expand
its exports only by displacing the exports of country “Y” or
allocate resources to new fields of activity only by decreasing the
volume of resources allocated to existing sectors of the
economy.
While they feel free to use words like “stagnation” in describing
free world problems, the authors are much more circumspect in
dealing with other areas. Results that are wide of the target are
described not as “failures” but rather as “short-falls” or
occasionally as “overfulfillment”. Judgments are made in Olympian
fashion and with the penetrating wisdom of hindsight about the value
of different Western European courses of action, their social cost,
their impact on various sectors of the population, their effect on
other nations, etc. The totalitarian methods used in Eastern Europe
do not come in for similar critical scrutiny although their cost in
human misery is almost beyond calculation. It is as if the authors,
when discussing Western Europe, psychologically placed themselves in
the main stream of civilization and generously exercised the right
of every free citizen to criticize the acts of his government. When
discussing the Soviet bloc, they seem to have placed themselves
psychologically under the thumb of the all powerful dictatorship and
seem to recognize the apparent futility of criticism against the
powers that be.
It is not easy to detect the theme of the present Survey. As far as
the US Delegation is concerned, however, the main message is perhaps
best stated in the last paragraph of the introductory portion of
Chapter 6 (page 86). Here it is stated that “While notable progress
has been made, the extent of the adjustments needed is greater, and
the limitations and uncertainties arising from factors external to
Europe more serious, than has been recognized in the policies so far
pursued or in some of the current proposals for seeking short-cut
solutions, and that there is still need for more direct measures to
redress the underlining imbalance in world production and
trade.”
The US Delegation need not disagree that the problems have proved to
be more serious, deeper rooted, more challenging than was foreseen
some years ago. This is becoming fairly widely known, however—both
in the US and elsewhere and can hardly be classified as a trade
secret now revealed for the first time by the ECE Secretariat. Nevertheless, to the
extent that the ECE has helped
create public understanding of the magnitude and complexity of the
problems ahead of us, we are of course grateful. We think they can
be solved without sacrificing the freedom which is essential if the
economy is to remain dynamic and responsive to the needs of the
times.
