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Consequences to Europe generally.
Thus there is a still wider aspect of this
"level of industry" - the needs of the rest
of Europe. Germany has been for a century
one of the great European centers of produc-
tion of capital goods -"heavy industry,"
which I may repeat are construction
materials, factory equipment, railway equip-
ment, electrical arid heavy machinery. The
other nations of Europe are in desperate
need of such goods for reconstruction from
damage. Moreover, a considerable part of
the European equipment on these lines is
German-made, and today, they cannot even
get replacements and spare parts, in con-
sequence of which their productivity lags.
From the standpoint of other nations, the
expansion of "light industry" to a point of
self-support for Germany will, by competi-
tion, injure these industries in the rest of
Europe'. On the other hand, the' products of
"heavy industry" is Europe's first necessity
for recovery.
It must not be 'overlooked that Germany
was the market for every nation in Europe
and such a reduction of her economy will
tend to demoralize the industries and em-
ployment in those countries. For instance,
Germany was the market for over half the
exports of Turkey and over one-third of
those of Greece. In consequence, their loss
of this market contributes to increase the
relief they seek from the United States now.
- Another illustration is the proposed limits
on steel. Large and efficient steel and iron
plants, undamaged or only partly damaged,
are standing idle in Germany. Formerly the
Germans imported millions of tons of iron
ore from France and Sweden. These mines,
under the "level of industry," must remain
idle until a new steel industry is built else-
where. That will require years and an
amount of capital that is not in sight. In
the meantime Europe needs steel for re-
construction as she never did before.
To indicate the anxiety of surrounding
states a memorandum of the Netherlands
Government of January 1947, in presenting
the absolute necessity to the surrounding
nations that a productive economic state be
created in Germany, said: "The provisions
of the plan for reparations and the level of
German economy of March 1945 require to
be revised-. . . it is inadvisable to lay down
maximum quota for production of German
industries including the iron and steel in-
dustries."
The sum of all this is: Germany, under the
"Level of Industry" concept, unless she is to
be allowed to starve, will be a drain on the
taxpayers of other nations for years and
years to come. In the meantime, if her light
industries were built to become self-support-
ing, she would become an economic menace
to Europe; if her heavy industries are allow-
ed to function, she has an ability to export
and would become an asset in Europe's
recovery. To persist in the present policies
will create, sooner or later, a cesspool of un-
employment orpauper labor in the center of
Europe which is bound to infect her neigh-
bors.
We can keep Germany in these economic
chains but it will also keep Europe in rags.
A new economic policy.
Therefore, I suggest that we adopt at once
a new economic concept in peace with new
Germany.
(1) jWe should free German industry, sub-
ject to a Control Commission, which will see
that she does no evil in industry, just as we
see that she does not move into militarism
through armies and navies.
The differences between this concept and
the "Level of Industry" concept is the sav-
ing of several hundred millions of dollars a
year to the American and British taxpayers.
It is the difference between the regeneration
and a further degeneration of Europe.
(2) The removal and destruction of plants
(except direct arms plants) should stop.
(3) A further obstacle to building Ger-
many as an essential unit of European
economy arises from the Russian Govern-
ment's acquiring a large part of the key
operating industries in their zone. Germany
in peace must be free from ownership of in-
dustry by a foreign government. Such owner-
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