Cu. (,ny Jl* t-*~-^- **-o Letter No. 13

DEC 3 1949

Mr. George S. Messersmith 44 Genova Mexico, D. F.

Dear George: ANOTHER LOOK AT EUROPE

This letter is being written - or at least started - in London's airport, which at the moment is filled with many impatient and disappointed passengers whose planes, like my own, are grounded by an impenetrable fog that has been hanging over London for nearly f 9 days. London is the last stopping place on my world tour and I arrived here exactly on k^iedule. However, if this fog does not lift within the next twenty-four hours, I may yet lose that bet I made last August to the effect that I would be back in New Orleans at" 5:00 a.m. on November 3«

After leaving Damascus I visited Brussels, Antwerp, Amsterdam, Rotterdam, Paris, and London, and besides enjoying my stay in each one of these important cities, I was able to get much interesting information regarding economic and political developments in their respec­ tive countries. Since there would be nothing particularly new to you Ln the description of the life of these well known centers I shall not burden this letter with such details of my visits there as I did in previous letters written from less well known places. I shall also make my comments about postwar conditions in France and England quite brief because I wrote you about them each year during my previous three annual visits there since the end of the star. However, I do expect to devote a little more time to telling you of my impressions in Belgium and Holland because of the very interesting developments I found there.

During the week I spent in Paris I talked with many bankers and other business leaders and their comments confirmed my impression that slowly but surely France is mak­ ing real headway towards economic recovery and stabilization. To be sure the country was at that time in; the midst of one of those frequent political crises' during which first one and then another political leader tried unsuccessfully to form a cabinet, but that did not seem very important to the Frenchmen with whom I talked nor did it seem to have the slightest effect on business. In fact, I gained the impression that we Americans worried ever so much more over the apparent crisis than did the average Frenchman,

It is generally accepted that the fall of the Queille government was due to the devaluation of the franc and its effect on wages. It was a pleasant surprise, therefore, to find that the readjustment of the franc - necessitated by the devaluation of the pound - was accomplished without any appreciable increase in the price level, and that the "free" market and the "black" market in the conversion of francs into dollars moved much closer together. Of course purchases in the dollar area are now even more difficult than before and if anything the acuteness of the dollar shortage has been ac­ centuated. As a consequence, France fully realizes how important it is to work towards the gradual removal of European trade barriers and towards the ultimate stabilization and interchangeability of the various currencies.

The week I spent in London added little to my previous knowledge of England's present unhappy economic condition. The debate was still poing on, especially in political circles, as to whether it was wise or not to have devalued the pound sterling at all and if a change was necessary, whether the government had not gone much farther than it should in lowering the conversion rate into dollars. Personally, I believe that devaluation was an inevitable step in the right direction but in itself it will cer­ tainly not solve Britain's problems.

To make up the great difference between the old rate and the new rate of ex­ change England must now increase her exports by at least 33$o The only way in which she can hope to extend her exports to any such extent is to get down her production costs, which iriust another way of saying she must get more efficiency out of her labor. If along with di -luation it had been possible to also re-establish the free conversion of the pound sterling into other currencies and if London could thus have regained its former position as-the clearing center of a large part of the world, many of her economic problems would h been solved. Page 2

However, it was not feasible to bring about such general convertibility, and conse­ quently multilateral trade is still almost as difficult as it was before devaluation. To be- -sure, all of the members of the British Commonwealth - except Pakistan - promptly followed England's lead and devalued their own currencies correspondingly, which left England's trade relations with her Dominions more or less undisturbed., But I do not see where' devaluation has as yet been of much help in promoting that greater integration of the Western European countries upon which Mr. Hoffman has lately laid so much stress. In spite of Churchill's offer for union with France in 1940 and Bevin's more recent approval of the principle of Economic Dnion of Western European nations, Britain finds great diffi- c Mes in the way of joining wholeheartedly with the other European nations without dis- tu,. oing those delicate relationships with the various members of her commonwealth.-

But in spite of all these problems and difficulties some real progress is being D 5 towards that ideal of ultimately creating a United States of Western Europe, The best evidence of the earnest desire of all the European nations to work towards that end is the formation during the past year of the Council of Europe, which now holds regular _sessions in Strasbourg, attended by official parliamentary representatives of the twelve Western European countries. 'Phe declared purpose of this body is the ultimate creation of a real Economic Union among these nations and their dependencies, and the convertibility of their various currencies with regard to each other and later with the rest of the world.

Unfortunately, the progress towards accomplishing these laudable pumoses has been and will probably continue to be slow, but I really found considerable encouragement in what I learned during my visit to Belgium and Holland, of which I will now give you a brief summary..

The energetic and thoughtful Belgian Consul - Mr. Charles J. Leonard - had very kindly advised some of his ministers of my contemplated visit, with the result that a special (and I must add delicious) luncheon had been arranged for me at the famous Restaurant de la Couronne in Bruxelles. There was present a galaxy of highranking officials, especially from the Ministry of Economics and the Ministry of Foreign Affairs, all of which seemed re­ markably well informed on the activities of New Orleans in the international field, and deep­ ly interested in the development of Belgian exports and imports now being encouraged by the splendid exhibit of Belgian manufacturers in our International Trade Mart. It was most pleasant to hear the views on international affairs of this forward looking group and to discuss with them plans for still closer economic cooperation between our respective countries. Another thrilling experience was to hear a first hand report on the progress of "Benelux" negotiations (to which I will refer later ) by men who were the country's accredited represen­ tatives in that constructive effort towards Economic Union in the three countries involved.

A few days later I had a similar experience in Holland when I was guest of honor at a luncheon in Amsterdam at the club rooms of the American Businessmen's Club, where most of the business leaders and high officials from Rotterdam and Amsterdam were present. In­ cidentally, there were two things thst caught my eye as I entered the attractive quarters-- one was a big pennant advertising the City of ^ew Orleans and the other was the picture of our own Mayor Morrison, who is well known among these Hollanders, and who is affectionately referred to as "Chep„" I was assured that both of these New Orleans displays had not been put up just for my benefit but really occupied their accustomed and permanent places. Of course, the best proof this organization has given of its genuine interest in New Orleans was the excellent delegation - of eighteen people - who came to New Orleans early in 1949 to acquaint themselves with the facilities of our port and to confer with our leaders of International House and our International Trade Mart. Apparently they were tremendously im­ pressed with what they saw and heard for they are all great boosters for our city, antl con­ fidently expect a return visit to Holland in 1950 from a similar group of New Orleans' business leaders.

A brief trip to Rotterdam, which I had not visited since before World War II, enabled me to visualize the terrible destruction which that city suffered early in the war, but also permitted me to realize the courage and determination of its people, who are steadily rebuilding a better and more modern Rotterdam.

But now let me tell you a little more about "Benelux" to which I referred ab/*~e. I was told that the name was coined by Americans who used the first letters of Jlgium, Netherlands and LUXemburg, the three countries which, ever since their liberation from German occupation realized what great benefits would come from some form of Economic Union of Western Europe, and who decided to do something about it by se .ng an example in their respective countries. They were fully aware of the diffi­ culties connected with so ambitious a program and realized it could not be accomplished \,*r Page 3

in a brief period. They were determined, howler,, to at least make a start as quickly as possible and proceeded to tackle the problem from all angles. They decided the plan would have to be carried out in three stages.

The first, involving the establishment of a customs union eliminating all duties among the three nations, has been accomplished. The second establishing what they are pleased to call a "pre-union", is partially completed since all restrictions have been thus far lifted on about thirty per cent of the trade between these countries. The third and final step: Full Economic Union presenting a united front both at home and abroad, was sup- ed to have been accomplished by July 1, 1950, but it is now clear that this result can­ not possibly be brought about so soon. There are a number of reasons for this inevitable delay. It is not an easy task to suddenly break down century old custons and other barriers without disrupting the living standards of the countries involved. It is even more diffi- t to adjust and unify fiscal and monetary policies and to unify various controls on pro­ duction and distribution so that goods can flow freely across the borders.

What adds still more to the difficulties to be overcome in making these adjust­ ments is the fact that the Netherlands suffered so much more from World War II than did Belgium, and consequently has had a much larger and more unfavorable trade balance and much more government regulation of private business than has Belgium. The pessimists still de­ clare it is impossible to reconcile these differences and many selfish interests secretly hope they are right. But the painstaking Belgians and the determined Dutch keep right on working on these problems and slowly but surely they are making headway towards their ultimate goal of full Economic Union within their three countries.

If they do succeed - and I believe they ultimately will - it will mean the realiaation of a dream and an ideal which will help to restore the faith of the world in the possibility and efficacy of cooperation among nations. Moreover, it will serve as a model and an inspiration for the extension of these same principles to all of the other countries of Western Europe. The working out of such a program and the elimination of existing trade barriers seems the only remedy for Europe's ills and the only hope for the economic survival of the Western nations after 1952 when the Marshall Plan aid will no longer be available.

In any event, I must confess that after having witnessed so much political tension and international bickering during my trip around the world, I have realized more than ever the need of proving that different people can live together in peace and harmony. It strikes me that "Benelux" is making the most constructive and heart-warming effort to­ ward that International Cooperation which is so sorely needed in the disturbed world in which we live.

H. S. Hecht