I need not tell you gentlemen that the world situation is very serious.
That must be apparent to all intelligent people. I think one difficulty is
that the problem is one of such enormous complexity that the very mass of
facts presented to the public by press and radio make it exceedingly
difficult for the man in the street to reach a clear appraisement of the
situation. Furthermore, the people of this country are distant from the
troubled areas of the earth and it is hard for them to comprehend the plight
and consequent reaction of the long-suffering peoples, and the effect of
those reactions on their governments in connection with our efforts to
promote peace in the world.
In considering the requirements for the rehabilitation of Europe the
physical loss of life, the visible destruction of cities, factories, mines,
and railroads was correctly estimated, but it has become obvious during
recent months that this visible destruction was probably less serious than
the dislocation of the entire fabric of European economy. For the past 10
years conditions have been highly abnormal. The feverish maintenance of the
war effort engulfed all aspects of national economics. Machinery has fallen
into disrepair or is entirely obsolete. Under the arbitrary and destructive
Nazi rule, virtually every possible enterprise was geared into the German
war machine. Long-standing commercial ties, private institutions, banks,
insurance companies and shipping companies disappeared, through the loss of
capital, absorption through nationalization or by simple destruction. In
many countries, confidence in the local currency has been severely shaken.
The breakdown of the business structure of Europe during the war was
complete. Recovery has been seriously retarded by the fact that 2 years
after the close of hostilities a peace settlement with Germany and Austria
has not been agreed upon. But even given a more prompt solution of these
difficult problems, the rehabilitation of the economic structure of Europe
quite evidently will require a much longer time and greater effort than had
been foreseen.
There is a phase of this matter which is both interesting and serious.
The farmer has always produced the foodstuffs to exchange with the city
dweller for the other necessities of life. This division of labor is the
basis of modern civilization. At the present time it is threatened with
breakdown. The town and city industries are not producing adequate goods to
exchange with the food-producing farmer. Raw materials and fuel are in short
supply. Machinery is lacking or worn out. The farmer or the peasant cannot
find the goods for sale which he desires to purchase. So the sale of his
farm produce for money which he cannot use seems to him unprofitable
transaction. He, therefore, has withdrawn many fields from crop cultivation
and is using them for grazing. He feeds more grain to stock and finds for
himself and his family an ample supply of food, however short he may be on
clothing and the other ordinary gadgets of civilization. Meanwhile people in
the cities are short of food and fuel. So the governments are forced to use
their foreign money and credits to procure these necessities abroad. This
process exhausts funds which are urgently needed for reconstruction. Thus a
very serious situation is rapidly developing which bodes no good for the
world. The modern system of the division of labor upon which the exchange of
products is based is in danger of breaking down.
The truth of the matter is that Europe's requirements for the next 3 or 4
years of foreign food and other essential products -- principally from
America -- are so much greater than her present ability to pay that she must
have substantial additional help, or face economic, social, and political
deterioration of a very grave character.
The remedy lies in breaking the vicious circle and restoring the
confidence of the European people in the economic future of their own
countries and of Europe as a whole. The manufacturer and the farmer
throughout wide areas must be able and willing to exchange their products
for currencies the continuing value of which is not open to question.
Aside from the demoralizing effect on the world at large and the
possibilities of disturbances arising as a result of the desperation of the
people concerned, the consequences to the economy of the United States
should be apparent to all. It is logical that the United States should do
whatever it is able to do to assist in the return of normal economic health
in the world, without which there can be no political stability and no
assured peace. Our policy is directed not against any country or doctrine
but against hunger, poverty, desperation, and chaos. Its purpose should be
the revival of working economy in the world so as to permit the emergence of
political and social conditions in which free institutions can exist. Such
assistance, I am convinced, must not be on a piecemeal basis as various
crises develop. Any assistance that this Government may render in the future
should provide a cure rather than a mere palliative. Any government that is
willing to assist in the task of recovery will find full cooperation, I am
sure, on the part of the United States Government. Any government which
maneuvers to block the recovery of other countries cannot expect help from
us. Furthermore, governments, political parties, or groups which seek to
perpetuate human misery in order to profit there from politically or
otherwise will encounter the opposition of the United States.
It is already evident that, before the United States Government can
proceed much further in its efforts to alleviate the situation and help
start the European world on its way to recovery, there must be some
agreement among the countries of Europe as to the requirements of the
situation and the part those countries themselves will take in order to give
proper effect to whatever action might be undertaken by this Government. It
would be neither fitting nor efficacious for this Government to undertake to
draw up unilaterally a program designed to place Europe on its feet
economically. This is the business of the Europeans. The initiative, I
think, must come from Europe. The role of this country should consist of
friendly aid in the drafting of a European program so far as it may be
practical for us to do so. The program should be a joint one, agreed to by a
number, if not all European nations.
An essential part of any successful action on the part of the United
States is an understanding on the part of the people of America of the
character of the problem and the remedies to be applied. Political passion
and prejudice should have no part. With foresight, and a willingness on the
part of our people to face up to the vast responsibilities which history has
clearly placed upon our country, the difficulties I have outlined can and
will be overcome.
Source: Congressional Record, 30 June 1947