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EUROPEAN RESPONSES
The Committee for European Economic Cooperation meeting in the grand dining hall of the French Foreign Office, Paris, July 1947
One thing that emerges from Milward's account (pp.76-7) is that 'Most intra-Western European trade was conducted through bilateral agreements, usually of annual duration, which aimed at a near equilibrium in payments between the countries in question over the year.' That, surely, is very close to the Schacht/Funk model. One regional grouping that had an interest in breaking this system down was 'Benelux', and especially Belgium. Belgium, the Netherlands and Luxemburg were already in the process of breaking down the barriers between themselves, and Belgium seems to have been the one country in Europe that was enjoying a substantial export surplus. The bilateral agreements were an obstacle to this expansion. Another obstacle was the limitations imposed on Germany. According to Milward (pp.66-7):
'The exclusion from all decision-making about Germany had been particularly resented in Brussels and The Hague. There, anxious eyes were turned on the crippled German economy and angry protests beginning about Allied policy. The coming conference was seen as a chance to bring pressure to bear on the greater powers over the German question. The Anglo-French attempt to dominate the procedure and structure of the conference only stoked the fires of resentment the more and these circumstances no doubt made the task of formulating a common Benelux policy easier. The first element of this common policy was that the growth of European and therefore German output must be as rapid as possible. Translated into action this meant that United States aid should not be used to subsidise long-term capital investment plans such as the Monnet Plan, whose purpose was to create over a four- to five-year period new comparative advantages for the French economy at the expense of countries, like Belgium, seeking to maximise output as quickly as possible.'
Belgium was also keen to support currency convertibility and higher levels of industry in Germany. This is the more interesting when we consider that all three of the Benelux countries, like France, had been occupied during the war and therefore, one might have thought, would have had the same feelings of resentment and desire to prevent a German resurgence as the French - the more so because, whereas France had been defeated in a war the French had themselves declared, the Benelux countries had been occupied as a defensive measure without any provocation on their part. It seems to me that with regard to the overall process of European integration the Franco-German relationship was always a problem that had to be overcome. The reliable core of the European project was the Benelux-German relationship.
Another distinctive position was taken by the Scandinavian countries which wanted to maintain the connection with the Eastern bloc and were therefore very unhappy that European integration was being proposed as an alternative to the United Nations: 'The Scandinavian countries, though accepting under protest that the aid requests should be drawn up in Paris and not by the United Nations Economic and Social Commission for Europe, were opposed to creating any permanent rival to the United Nations.' (p,81). This was also the British position. It was only at the very last minute that 'Britain finally accepted a purely Western European organisation, instead of the United Nations organisation which she had originally supported' (pp.84-5). So much for Adonis's view (my Kindle edition doesn't give page references) that 'Bevin moved swiftly to set up a bespoke West European organisation to plan and administer Marshall Aid with no Soviet involvement: what became the Organisation for European Economic Co-operation (today’s OECD). He was anxious to avoid a role for the existing United Nations Economic Commission for Europe because of Soviet membership. Having closed the front door to Stalin, he wasn’t going to admit him through the back door.' (17)
(17) Adonis's source is probably Bullock. Bullock says (p.406): 'He [Bevin] was particularly anxious to avoid the initiative being taken by the Economic Commission for Europe which the United Nations had just set up and which he feared would be used by the Russians to block progress.' This comes from a Foreign Office brief dated 17th June, that is, as Bullock points out, before he had talked with either the French or the Americans, ie before the discussions with Clayton, at a time before the formal break with Molotov when he still thought Poland and Czechoslovakia at least could be involved in an ad hoc steering committee to discuss the European response to Marshall. That is all Bullock has to say about the UN Commission. Milward by contrast is referring to a Foreign Office document dated 5th September 1947, that is, at the very end of the CEEC hearings. He says: 'The United Kingdom was still officially supporting a position where the technical committees of the CEEC would be discontinued and their work transferred to the United Nations Economic and Social Commission for Europe.' In a footnote he says that the Commission produced a report: A Survey of the Economic Situation and Prospects of Europe' (Geneva 1948), supervised by the great Swedish economist Gunnar Myrdal, which 'was far more professional than the two volume report of the CEEC. Its appearance created a minor alarm in Washington because it also constituted a scholarly critique of the bases of American policy in Europe ...'
One realises, of course, that the United Nations, aspiring to represent the whole world, including the Soviet Union, was part of the old Roosevelt-Morgenthau-White programme now being overturned by the State Department under Truman and Marshall.
Milward concludes his account of the Committee of European Economic Co-operation negotiations by saying (p.89):
'In spite of the large number of countries which participated in it and the length of time it lasted, the CEEC had proved an indecisive event. It had done more to reveal the economic and political differences of opinion between Western Europe and the United States and between the Western European countries themselves than to create the strategic bloc which Marshall Aid was intended to produce. For such a great effort it did virtually nothing to promote either reconstruction or integration in Western Europe. There could be no effective steps in either direction until, firstly, the size, conditions and objectives of Marshall Aid were more clearly determined and, secondly, the question of what was to be done in Germany was answered.'
I started this series of articles with the idea of simply giving an account of Joseph Halevi's articles on 'The political economy of Europe since 1945.' Everything I have written so far has been by way of a preface, setting the scene. Having reached this stage in the negotiations over the Marshall Plan I may now be able to revert to my original intention. Suffice it to say here that, as mentioned earlier, Marshall Aid eventually, in 1950, evolved into the 'European Payments Union', which could be described as a clearing union somewhat along the lines proposed by Keynes in his wartime negotiations with White, with the dollar functioning something like Keynes's 'bancor'. It was when this arrangement came to an end in 1957 that the Treaty of Rome was signed.