Editorial Note
On October 31 ECA Administrator Paul G. Hoffman addressed the OEEC Council at Paris with respect to the United States attitude toward the political and economic integration of Western Europe. A [Page 439] draft of Hoffman’s address had been transmitted to Washington for comment by officers of the Department of State and ECA, and the final text included revisions made after consideration by Acheson, Webb, Labouisse, and C. Tyler Wood, Assistant to the Deputy Administrator of ECA. In his speech Hoffman applauded the early successes of the OEEC in confounding Communists and others who were cynical about the European Recovery Program. With the program approaching the half-way mark, the ECA Administrator stressed that two problems still confronted the organization: first, to balance Europe’s dollar accounts so that it could purchase raw materials, and second (the reason for Hoffman’s presence in Paris), “to move ahead on a far-reaching program to build in Western Europe a more dynamic, expanding economy which will promise steady improvement in the conditions of life for all its people.” This would mean “nothing less than an integration of the Western European economy.”
To achieve these goals Hoffman outlined a Series of steps to be taken by the participating countries. Action, particularly budgetary action, must be taken to prevent the inflation that had been given new impetus by the various currency devaluations. A single large market should be formed free of quantitative restrictions on the movement of goods and monetary barriers to the flow of payments. National fiscal and monetary policies must be substantially coordinated, and exchange rates adjusted. Commercial policies and practices must be reconsidered to eliminate barriers to trade within the area, which comprised 270 million consumers. Finally, arrangements between smaller groups of participating countries should be encouraged so long as their provisions were in harmony with the wider possibilities of European unity and raised no new or higher barriers to trade than already existed.
Hoffman then requested the formulation by early 1950 of a plan by the OEEC that would be at once a record of accomplishment and a program that would take Europe “well along the road toward economic integration.” The record of accomplishment should include removal of quantitative restrictions on trade and elimination of dual pricing. Hoffman stressed that the high stakes being played for were the prosperity of an economically unified western Europe, a goal which President Truman had recently reaffirmed to him as United States policy.
Documentation on the speech is in the ECA Telegram Files, FRC Acc. No. 53A278, Paris Repto and the text (which was distributed in Repto circular 367 from Paris, October 30), is printed in the New York Times, November 1, 1949:
Meanwhile a study group of the OEEC to examine submissions by the participating countries regarding trade liberalization had reported that greater efforts would have to be made. The group judged [Page 440] that even if all of the B lists of conditional items were added to the A lists of items freed from quota restrictions, the resultant freeing of trade would not “contribute very significantly to the increase of competition within Europe”, which was the “primary object of the exercise”, and it was unlikely to go far in breaking down the system of bilateral trading. OSR supported this view.
After extensive discussions another group was formed to draft a Council resolution that would take into account Hoffman’s statement of October 31 as well as other proposals. The texts of the various reports and submissions and related documentation are in AID files, Mutual Security Agency, 53A278, Box 8.
The Council on November 2 agreed unanimously to embark “wholeheartedly” on measures to implement Hoffman’s proposals, and it decided on various steps for liberalization of trade, widening of the area of transferability of currencies among member countries, and study of ways to eliminate dual prices, achieve closer economic cooperation, and absorb surplus manpower. Member countries should “adopt the objective” of removing quantitative restrictions before December 15 “on at least 50 per cent of their total imports on private account from the other member countries as a group.…” The text of the Council’s resolution was printed in Keesing’s Contemporary Archives, Volume VII, 1948–1950, page 10359, and summarized in the New York Times. November 3, 1949.