ECA message files, FRC 53A278, Paris: Telegram
The Assistant Administrator for Programs, ECA ( Porter), to the Administrator for Economic Cooperation ( Foster)1
Repto circ 115. At meeting of Mins OEEC August 29 agreed on fol draft declaration.2 Note this will not be released to press until 10 o’clock, August 30 Paris time.
“1. We have examined the demands upon the European economy arising from the needs which are uppermost in the minds of our peoples at this time; namely, ensuring the individual or collective security of our countries and developing their economic strength and well-being. We are convinced that these demands can be met through our individual and joint action provided that the govts and peoples make the great productive effort required and that any serious difficulties arising from external economic relations can be overcome by cooperation with other countries. We believe both these conditions can be fulfilled.
2. The govts agree that the broad objective of their policies will be to expand total production in Western Europe by 25 percent over the next five years. By this large increase in production, improvement in living standards and further social progress can in the course of this period be achieved while meeting defense requirements. The govts acting in the spirit of the convention for European Economic Cooperation will work together to take such steps in common as are necessary to attain this objective.
3. Conditions from country to country may vary, but an expansion of this size is well within the power of the European economy as a whole through the effective use of its resources. The member countries have met tasks as difficult in the past. By the hard work of their peoples and with the generous help of the US, they realized a 25 percent increase of production in the last three years alone.
4. Europe possesses great natural resources, a large industrial potential, a skilled and ample labor force, and a capacity to achieve rapid technical progress. The full mobilization of these resources requires foresight, resolution, a cooperative effort, and the pursuit [Page 55] of policies based on social justice. The govts are convinced that such policies are essential in order to preserve the gains already made and to realize continued progress. Social justice demands a distribution of burdens and benefits that will promote the wellbeing of the less favored sections of the community.
5. At first in many countries the increase in production will have to be devoted largely to strengthening their defenses as well as to expanding exports to meet the higher cost of imports. But progressively a growing surplus will be available to raise supplies of consumer’s goods, build more houses, and increase the contribution of European industrial countries to the equipment of underdeveloped countries and territories.
6. Thus by bold action to expand production, the future can be faced without the fear either that economic betterment must be indefinitely postponed or that a slump will follow the defense expansion. There can be confidence that the present need for restraint is temporary. Industry can be assured that, after the period of rapidly rising defense expenditure, the needs to be met will be such that no part of the capacity created will be left unused. Workers in industry and agriculture can make their contribution to increasing production with assurance of continuous employment.
7. To achieve general econ expansion at the rate desired, steps must be taken and conditions fulfilled which are described below.
Part II.
8. Govts will, as quickly as possible, take steps with a view to arriving in common at objectives for the production increases to be achieved in the fields of coal, steel, electricity, and agriculture. Steps will also be taken to determine objectives in the field of housing and immigration of workers.
9. Shortages in the supplies of coal, electricity and steel are a threat to general industrial expansion.
Coal production has not increased sufficiently to meet the ever growing needs of industrial and civil consumers at home and abroad. Europe must find the way to dispense with costly imports of American coal, to safeguard industry against interruptions in production and to supply the coal required for household use. Demands for electric power are rapidly growing. Increased output of coal and power shld be supplemented by their more efficient use.
To strengthen their defenses, build more houses, and develop their industrial and agricultural equipment the member countries must have more steel. This requires increased production of coke and ferrous ores.
10. There must also be increases in the output of other scarce materials such, for example, as non-ferrous ores, and a fair distribution of available supplies between countries. To this end, the cooperation of other govts through existing international organizations will be necessary.
11. More food must be grown, primarily by using more efficient methods: In particular, to get more meat and dairy products, the production of animal feeding stuffs must be increased.
[Page 56]12. In housing, the shortages are acute and in some areas appalling. More houses are needed especially where opportunities for work exist for those who are unemployed elsewhere.
13. In a few European countries unemployment has not yet been eliminated and vigorous action is required to remedy the sitn. In Western Germany there are still about one million unemployed, in Italy some two million, not counting partial unemployment. This means great hardship and considerable waste. The unemployed in Germany can probably be absorbed through internal economic expansion, but in Italy the dominant role must be played by emigration. The existence of large numbers of refugees in Germany, Turkey and Greece also creates a serious problem. Continued cooperation among member govts is needed for the alleviation of these problems, but the cooperation of other govts is essential for its full solution.
Part III
14. Increasing productivity is the most essential element in expanding production. Great progress can be made by the maintenance of a high standard of efficiency of labor and management and by a real contribution from all sections of the community. Continued extension and modernization of equipment contributes to this progress, but apart from additional investment, productivity can be increased by appropriate production methods and techniques.
15. Inflationary rises in prices must be curbed since inflation jeopardizes the expansion of production, hampers the defense efforts of the various countries and causes great social injustices. Each govt must be responsible for securing a balance between the tools and services available internally and the various demands in the market for them. To achieve this the right fiscal and monetary policies must be pursued; these policies must be inspired by the principle of equitable sharing of burdens. But stability of prices can not be achieved by national action alone. Domestic prices are also influenced by external factors. Cooperation therefore is essential not only among member govts but also with other govts, to introduce a greater measure of stability in raw material prices and enable inflation to be held in check.
16. To most member countries their financial reactions with other countries are still a matter of concern and in the case of certain countries the stability of their balance of payments has been gravely threatened by the recent sharp rise in the prices of their imports as compared with exports. It is vital therefore that the efforts being made through international action to introduce a greater measure of stability in raw material prices shld succeed. Increasing production by the full use of human and material resources and the control of inflation will bring nearer the time when all European countries will be in a position to pay their way without outside assistance. To this end it is essential that their export drive shld continue, and that like-minded countries shld foster conditions which favor its success. In order to assist the expansion of production and to obtain the most effective use of European economic resources, member countries will continue their efforts to reduce obstacles [Page 57] to trade, and to develop their cooperation within the framework of the European Payments Union.
17. The industrial countries of Western Europe have in the past worked with the peoples of under-developed countries where considerable investment is necessary in order to expand their productive capacity; they have continued to do so in the postwar period despite their own recovery needs. It is intended that future economic expansion in Europe will contribute to the further expansion of under-developed areas.
18. The member govts are determined to further the objectives set out in this declaration by their individual as well as their joint efforts. They will be guided by its principles in the other international organizations to which they may belong.
19. In setting new tasks for European cooperation member govts recognize their inter-dependence with countries which share their aspirations and aims. A unity of objectives and a spirit of cooperation with these other countries will continue to be a guide to policy and a condition of success.
20. Confident in the future of Europe and in the capacity of its people to meet the challenging demands of the times, the govts pledge themselves to work together in fulfilling the policies outlined in this declaration and call upon all sections of the community to play their part.”3
- Also sent to Paris for SHAPE and to Heidelberg.↩
- This declaration should be compared with the memorandum circulated to the OEEC by Marjolin in February as reported in telegram Repto 856, Document 2.↩
- In a memorandum of August 30, drafted by Miriam Camp, Assistant Secretary of State for European Affairs, George Perkins reminded Secretary Acheson that the OEEC Council had issued its Manifesto to the press that morning and added that Stikker, OSR, and Spofford had all urged that this statement be warmly welcomed by the United States. It was first suggested that the President might welcome the Manifesto, Perkins continued, but after consideration, “we and the ECA have concluded it would be better for you and Mr. Foster to issue statements.” Suggested statements for Acheson’s and Foster’s approval were enclosed. (850.33/8–3051) Acheson issued a brief statement welcoming the Manifesto on August 30; it is printed in Department of State Bulletin, September 24, 1951, p. 487. Foster’s statement was released in telegram Repto circular 116, August 30, infra.↩