Then they will turn around and start blasting us from all directions.
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Then they will turn around and start blasting us from all directions.
The Wages of Production: The Breaking and Making of the European Economy
"Europe has become a colony of those more fortunate than us. The time has come for the French, German, and perhaps other European economies to find a way to counter the competition that weighs heavily on us all."-Gustav Stresemann before the Reichstag, 1929.
"Europe has become a colony of those more fortunate than us. The time has come for the French, German, and perhaps other European economies to find a way to counter the competition that weighs heavily on us all."-Gustav Stresemann before the Reichstag, 1929.
While historians today like to trace the European Coal and Steel Community back to the time before the Great War, when increasingly free flows of capital labor had pushed Europe along the steps towards a common market, most historians agree that actual credit for the plan goes to Jean Monnet. Monnet's plans in the fall of 1939 were nothing new; he had proposed similar pooling of coal and steel in the aftermath of the Great War. But at the time they had been designed as a way for France to extract reparations from a defeated and battered Deutschland; a poor way to preserve peace, and something which had been rejected in favor of opposition on the part of Berlin and the occupation of the Ruhr on the part of Paris.
Disillusioned, Monnet had ended up travelling the world, serving in China for the League of Nations and helping to rebuild the finances of several Eastern European nations. Under the Fourth Republic, Monnet became a, if not a friend, a respected advisor to La Rocque, helping transform the French economy in ways that would revolution the French economy in the late 1930s and early 1940s. Among the cornerstones of the so-called "Monnet Plan" was the rapid increase in the expansion of French steel industry. But in order to expand, the French needed more coal than the fields of Northern France could provide. Polish steel was considered, and purchased, but it could not be bought in sufficient quantities. British coal was too expensive, and transport costs made American coal prohibitive. [1]
Born in the town of Cognac, he had always been connected to the wider world, living in America and Britain for several years. And so, moreso than many contemporaries in either nation, Monnet was aware of how continental Europe was falling behind the Anglo-Saxon powers. He was also aware of how protectionism, at least on a national level, was a dead end. And so by January of 1939, he had a clear idea of the stakes. "German industry expanding; re-establishment of cartels; and France falling back into the old rut of limited, protected production."
And so the French Foreign Officer was already circulating the proposed steel agreement even before the Berlin Summit. There was opposition; La Rocque himself was skeptical, saying, "I understand why we are sharing coal, since we are short of it. But why are we sharing iron, which we possess?"
And yet the Treaty held, out of fear and out of greed; and apparatus of the European Community sprung up alongside it. To legally enforce rulings related to anti-trust regulations, a Court of Justice was needed. To appease French Socialists, a parliamentary assembly, which met one day a year, was drafted. To the surprise of Monnet, the Belgians, Dutch, and Luxembourgers wanted to join, and duly did so; and to help stabilize the tottering post-Mussolini regime, Italy was let in. And then, of course, came the rest; Czechoslovakia, which joined in 1942, and then Poland, grudgingly joining in 1946.
Thus, by 1947, tariffs within the CS were abolished, restrictive practices were eliminated, and rail freight rates were harmonized. Naturally, this had people outside of the Coal and Steel Community a bit worried. And it is here that Wendell Willkie's greatest (only?) achievement must be discussed: The World Trade Organization.
Yet as noted, there had been signs of international cooperation despite the Depression, most notably from the Bank of International Settlements in Switzerland. Established in 1930 to facilitate the flow of reparations under the Young Plan, after the reparations moratorium it continued to promote central bank cooperation. Meanwhile, regional efforts at cooperation continued; the Benelux nations ultimately agreed to a customs union in 1938, and signed an agreement to stabilize their currencies in 1939. [1] And yet things stagnated. Britain was serene and sedate beneath its Sterling Bloc, musing, indeed, how to persuade Scandinavia to join it. [2] Germany's sclerotic bartering agreements threatened Eastern Europe with mercantilism, while the 4th Republic was committed to plannism and the Empire, unhappy with the idea of tying its currency to anyone's or anything.
Historians would later describe the situation as prisoner's dilemma. Each nation would be better off with a return to a liberal trading order, even Britain; yet unless most nations agreed to do so, it would be better off to resort to economic warfare and protectionism. To break the cycle, the world needed a vain, arrogant SOB with an understanding of finances. And it found one in Willkie.
Like many Americans, Willkie saw the British Empire, and Britain, as the main stumbling bloc towards reestablishing a liberal world order, and (more accurately) as the main rival with America for control of the global economy. And so he began talks to break the Sterling Bloc, turning to an unlikely ally: Germany.
During the 1920s, America and Germany had maintained something of an uneasy alliance. American capital proved critical to the maintenance of the Dawes Plan and its replacement, the Young Plan; American capital helped finance what economic growth the Weimar Republic witnessed; and American influence had helped expel the French from the Ruhr.
Yet the Depression, and Smoot-Hawley, had destroyed this fragile relationship. By raising tariffs even as it continued to demand debt repayments, America forced Germany (and Europe as a whole) into an untenable position, demanding repayment in dollars without letting Europeans sell their products. This had led to Stresemann's reparations moratorium. Meanwhile, Roosevelt's decision to take the dollar off gold in 1932 had singlehandedly destroyed the World Economic Conference, and American-German commercial competition had done little to endear relations between the two countries.
Moreover, perhaps in reaction to the dimming of hopes of aid from America, Germany had become increasingly Americanophobic. Even during the 1920s, Germany had been afraid of "Americanization." It flocked to the theaters to watch Westerns and musicals; it listened to jazz at clubs as its girls emulated the American women; and its engineering and production were the envy of the world.
Yet for the conservative, frightened German, there was another side to America. A country where gangsters ruled cities; their jazz was the animalistic offspring of primal Africans; they encouraged their women to be asexual Amazons; and their culture was, frankly, a bit base. Hence Germans across the political spectrum railed against the working class's affection for short shorts and Charlie Chaplin, while the German government published posters like the following, to warn people of the dangers of American culture.
And yet to another extent, by 1942 Germany's efforts to expand trade in Eastern Europe and Latin America had hit a dead end; as Schnacht had predicted, "You do not get rich by selling to coolies." Hence Willkie's decision to approach the Schumacher administration.
Schumacher, for his part, had been a profound admirer of the New Deal, which he perceived as instituting a new era in capital-labor relations. And he had a tremendous respect for a society in which the military didn't get whatever it wanted when it whined pitifully and propped up fascist parties.
The first talks came in 1942, with the details of the Warburg Plan hammered out of the months to come. In essence, it abandoned Germany making concrete moves towards economic liberalization. The Reich would abandon its currency exchanges, make efforts to abolish the clearing accounts, and commit itself to returning to multilateralism. What did Germany get in return?
Access to the world's largest, richest market. And in return, this released the Oslo Group [3] from the threat of retaliation by Germany if they agreed to liberalize trade restrictions. To be sure, Britain was a threat; it had attacked the Oslo Group's proposals to liberalize trade in the 1930s, threatening them with economic retaliation. [4] Yet with the support of Germany, the other main trading partner of the Oslo Group, they could move to liberalize trade (especially as Britain was in the midst of the Pacific War) and not face opposition.
How did Willkie get the power to do this? In the aftermath of the Smoot-Hawley Bill, the Democratic Congress recognized that, quite simply, Congress couldn't be trusted to handle tariff negotiation, and so delegated their power to reduce tariffs to the President in the 1934 Reciprocal Tariff Act. Despite domestic opposition, Roosevelt had managed to get the act renewed in 1937, but in the aftermath of the 1939 recession, Willkie ran into trouble. The isolationist western states were opposed to trade liberalization, while Republican victories reduced the Democratic majority. Willkie was forced to rely on the Southern and Northeastern states to back his proposals, and doing so meant, sadly, ditching much of his civil rights rhetoric.
But once he had this power, rather than bothering with a series of multilateral trading agreements that would require Congressional approve, the US constructed a series of bilateral agreements with a Most-Favored Nation Clause, meaning that each bilateral treaty Willkie could approve would have multilateral effects.
<More to Follow, I just wanted to prove I'm still thinking about this>
[1] Astute readers will note that there is no Tripartite Monetary Agreement, which was signed by France, Britain, and America in the 1930s (later joined by the Benelux) to stabilize their exchange rates. This is because the French only signed it in order to get English support; quotth Blum, currency controls "would have the fatal effect of straining our ties with the Anglo-Saxon democracies."
[2] Actually there was talk in the 1930s of Norway joining the Commonwealth. It wasn't that serious, but it was a sign of the relationship.
[3] Finland, Denmark, Norway, Sweden, Belgium, Holland. Latvia was involved, but is not considered an official member. The Oslo Group were nations who had agreed to reduce trade restrictions without violating free trade agreements.
[4] In essence, Britain said, even with the Ottawa Preference system in place, that any lowered reductions in tariffs would kick in the MFN clauses of their agreements with Britain, even though Britain's tariffs would remain the same.
Thoughts?
So Liberalism is on the march, eh?
A Steel and Coal Community in Europe more than a decade earlier! When will the Balkan states join it?
A Steel and Coal Community in Europe more than a decade earlier! When will the Balkan states join it?
I'm sure Wilkie was upset for literally picoseconds at ditching civil rights, possibly as many as three in fact before he got over it and added them to the vast list of people he had lied to, betrayed or just generally mistreated.
Still excellent news on the German front, if Schumacher things the New Deal was a good idea he'll have driven the economy into the ground within a few years. The destruction of Stresemann's legacy grows ever closer! D:
Still excellent news on the German front, if Schumacher things the New Deal was a good idea he'll have driven the economy into the ground within a few years. The destruction of Stresemann's legacy grows ever closer! D:
"...The bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country...In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal inter-dependence of nations..."
Marx is right, clearly the capitalists are marching towards their own imminent downfall
Marx is right, clearly the capitalists are marching towards their own imminent downfall
Mumble mumble.
I'm trying to think about it actually, we'll see.
Yes, nothing says failure like dramatic drops in unemployment, the creation of social security, the development of the SEC, and, in short, laying the foundations for the longest period of sustained economic growth in American history.
Marx is right, clearly the capitalists are marching towards their own imminent downfall
:rofl:
I think you're confusing WW2 with the New Deal; The former covered up the grievous incompetence of the latter.
I think you're confusing WW2 with the New Deal; The former covered up the grievous incompetence of the latter.
Aww.
What, you don't believe that the New Deal's attempt at state capitalism was such a massive failure that it could only be fixed by the even more massive exercise in state capitalism that was WWII?
Excellent AAR, by the way. I'm currently doing my very best to catch up with it.
I think it was more the fact that everyone else was bankrupt and had their entire industry destroyed that allowed the US to emerge from the depression than state capitalism.
It's very hard not to manage a economic recovery when everyone owes you lots of money and your the only person with any factories left standing.
I think it was more the fact that everyone else was bankrupt and had their entire industry destroyed that allowed the US to emerge from the depression than state capitalism.
It's very hard not to manage a economic recovery when everyone owes you lots of money and your the only person with any factories left standing.
While at the same time propping up a whole bunch of essentially useless second-tier powers which hadn't been viable economic units since the early 20th century?
Right...
And of course, look at how awful the French and German economies performed from teh 40s to 70s thanks to all that state involvement.
I thought the Northeastern States were okay with civil rights...or at least not as opposed as the Southern States.
Don't forget about the FDIC. The protection of bank accounts...I think that is one of the best things to come out of the New Deal.
Of course, you can't mention Wendell Willkie without having El Pip boil over.
Sure, and they're all free trading. The Southern states... well, it varies. They leaned towards free trading. But Texas, and Alabama? Not so much.
Indeed. I might have him show up somewhere else waving an American flag and impaling Hitler on it.
BTW, in light of the Obamessiah's anointment, is it possible for Stresemann to win a 2nd Nobel Peace Prize? He already won one for Locarno....
Mmmh! For the everting the Second-Polish War? Maybe, but then he must again chare the prize with a Frenchman aka LaRoque! But who will get the bigger half eh?
If he does it will be the wrong Hitler, he'll probably be killing the entirely innocent Bridget Hitler as part of a bizarre anti-Scouse rampage.
Apparently, in order to get a Nobel Peace Prize, you need a good speechwriter. Stresemann needs to get one, then.
Reminds of a story I heard last year about a couple in New Jersey who named their son after Adolf Hitler.
So the liberal 20s result into liberal 30s also?
Reichsmark flowing through the world?
Reichsmark flowing through the world?
So when will there be an update?? Faelin, I know you've given up on AH.com, but could you still continue this TL here?? On AH.com there are a bunch of assholes, don't mind them, this is too good to die.