SITUATION THAT LED TO THE AGREEMENT

Chronicle (Levin), 2 July 1949, Page 5

SITUATION THAT LED TO THE AGREEMENT

Received Friday 7 p.m. WASHINGTON, June 30. While industrial production in Europe ..was increasing, Marshali Plan cquntrjes were facing complex problems of economic balance, the Economu'. Oo-operation Administration reported to-day. "Overall trade is being sustaiued. at high levels, industrial production continues to expand and the inflation threat seems to have been eased. llow evpt, the trade volume among tlie par ticipating countries continues to lag. There are signs of difficOlties in sustaining the domestic demand and in absorbing the labour force freed By increasing productivitv. " Market, trade, price and distribution problems were replacing those of production, alloeation and rationing. On tlie bright side, E.C.A. reported that the industrial output during the first quarter of 1949 was 113 per eenl of prewar — 14 per cent above the corresponding quarter of I94S. A further increase was indicated for the secon.i quarter in tlie light of preliminary roports from major industries such as coal, steel and textiles. Prices have been stable or had declined slightly m all countries except Turkev. Revenue from taxation was more than sufficient to cover the regular expenditures of the | governments in all countries except • Greeee and Austria. On the other liand the E.C.A. report showed that European exports to Nortn Ameriea were meeting resistance. Experts to the United States declined to 65,000,000 dollars in April from an avprage of 83, 000, 000 dollars monthlv in the first quarter and 91,900,000 dollars m the last quarter of 1948. Position in Britain Wall Street Joumal, in a leader, says that the real trouble with Britain is a fljght of eapital which now is reaching an aeute stage. The paper says that unless that fact is eiearly understood and faced, the job of helping Britain can become even more expensive than it has been with expenditures •producing no results. "British citizens are dumpihg the bonds of their Government and if they were not prevented by legal Oarriers, they would get their eapital out of the country. Very probably muny have, despite the barriers. Nq oue oqtside Britain will hold British eurrency if he is in a positiqn to convert it into something better. Customers wili not buy in Britain because they must pay prices. expressed in an inflated pound. The cause of this situation is a set of Government policies where in no one has confidence. The cure for the situation is the abandonment of thos^ pqlicies."' . '