Europe Our Next Door Neighbour
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The Empire Club of Canada Addresses (Toronto, Canada), 21 Oct 1948, p. 29-51


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Chipman, Murray R., Esquire, Speaker
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Speeches
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The closeness of Europe in this age of flight and the immense significance to us here of European viewpoints and economic recovery. Implications of the age of flight. Economic problems in Britain, and progress toward solutions. Reasons for production problems. The Economic Recovery Program of Marshall Aid. Speculation as to whether or not the Labour Government will be re-elected in Britain. A plea to continue sending gifts and parcels of food to Britain. Rome in contrast to London. Three factors in considering the Italian situation: Communist votes in the election, unemployment, and the Communist domination of the major labour unions, which has prompted strikes, disorders, wage demands and halts in production. Also the problem of over-population with an agricultural economy insufficient to maintain the nation's food supply. The positive aspects seen in Italy: strength of the government, the spirit of the people, the recognized need for newer mass production methods, as witnessed in visits to the U.S. Czechoslovakia: the coup which brought the nation under Communist control. The liquidation of the opposition under way. The Five-Year plan in industry in Czechoslovakia. Insights into the party line. Czechoslovakia commanding our sympathy: "We are Communists on paper, but not in our hearts." Germany. The extent of the bomb damage. Aid to Germany's recovery and why we are contributing. Germany's industrial recovery. The new currency and its far-reaching effects on the German economy in the Western zones. The lack of food in Germany. Communist efforts to stop the incentive programmes in the mining industry. The issue of reparations. The spirit of the people of Berlin. Reasons for the blockade and Russia's attitude over Berlin. The nature of the German people; some candid comments from a German. Making the decision as to whether or not the occupational forces should be removed from Germany. The issue of peace or war. The feeling that war with Russia is inevitable if we do not mobilize to meet the threat of Russian aggression. A summary of what the speaker saw in Europe. Evolutionary capitalism. Preparedness as the price of peace.
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21 Oct 1948
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English
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EUROPE--OUR NEXT DOOR NEIGHBOUR
AN ADDRESS By MURRAY R. CHIPMAN, ESQUIRE, M.C., M.A.
Chairman: The President, Mr. Thos. H. Howse
Thursday, October 21st, 1948

Honoured Guests and Gentlemen: During the past decade it can very truly be said that the aeroplane has annihilated space, with the result that even continents, which are separated by vast oceans, are now only a few hours of air travel apart and are virtually next-door neighbours.

Today our guest speaker, Murray R. Chipman, Montreal Manager of the Company we both represent, has chosen as his subject "Europe, Our Next-Door Neighbour."

Mr. Chipman has travelled extensively in Europe and is a keen observer. In 1937 he visited England, Germany, Scandinavia, Russia and the former Balkan States and he recently returned after spending two months visiting England, Germany, Italy and Czechoslovakia.

Born in Kentville, Nova Scotia, he is a graduate of Acadia University.

Mr. Chipman served overseas in the first World War with the 85th Nova Scotia Highlanders and was awarded the Military Cross.

He is well and favourably known in Montreal for his enthusiastic work in the interests of the Montreal Community Chest, Canadian Red Cross and many other charitable organizations, and is a strong advocate of a better understanding between English and French-speaking Canadians to the end that they may work harmoniously towards their common destiny.

I now have very much pleasure in introducing Mr. Murray R. Chipman, M.C., whose subject will be "Europe, Our Next-Door Neighbour."

"EUROPE--OUR NEXT DOOR NEIGHBOUR"

The subject "Europe--Our Next Door Neighbour" was chosen to emphasize two facts--the closeness of Europe in this age of flight and the immense significance to us here of European viewpoints and economic recovery. For what happens 'there will touch our lives directly. The age of flight is now taken for granted but I am not sure we realize fully its implications. In some ways it takes the glamour out of going to far places. Leaving Toronto in the afternoon and arriving in London the nest morning makes you feel you have just commuted to Europe.

But commuters are neighbours. We have an interest in our neighbours and they in us. Especially is this true of the Western European countries, which are the cradle of our mutual civilization.

It was fascinating to find that England had all its old magic. We took a motor trip in Southern England and that lovely land charmed us, that compact stage on which so much of history has been played.

London--drab, austere, licking its honourable wounds, recaptured one's heart. Especially as I sat in the Mother of Parliaments and heard Premier Atlee say that what ever might be the benefits of the Union of Western Europe such a plan must not prejudice the strength and unity of the British Commonwealth.

Opposite him Churchill sat, slumped on the front bench, feet on the table, his head and jowls thrust forward from his body like a defiant turtle. Later, as I was leaving the House, Big Ben boomed and one recalled other days. . . . "This is the BBC news. Our troops are being evacuated from Dunkirk." Remember?

A tough and resilient breed are these British, but they are having their problems. Everywhere we went one got the impression that Britain is living on borrowed time. The shortage of dollars, diminishing gold reserves, high prices resultant from the cost of raw materials and the crisis in production are the negative factors. True there has been a remarkable recovery of industry in some fields, notably steel and shipbuilding, and England is in the vanguard in many fields of research. Her exports are showing creditable gains at the expense of local needs.

Recent reports would indicate that the increase in exports will possibly clear up the deficits in trading account by 1951-counting on Marshall Aid to fill in the gap in the meantime and also to ease the depletion of U.K. dollar and gold reserves. Britain's dollar deficit position is of such magnitude in relation to this continent that we must be realistic and expect that she will buy elsewhere, unless we purchase more from Britain or finance our export programme. Britain herself is granting $282 million in sterling to Marshall Aid countries in effect to finance their purchase of British goods.

Britain's prices are high. The crisis in production is an important factor. This stems in part from the policies of the Labour Government. They are telling the workers on the one hand "your future is secure"; and on the other, they are urging them to produce more and more. To date the worker's feeling of security has largely outdistanced his sense of urgency to produce. Socialism does make men content to lean and not to compete. But Britain must sell in a competitive world market.

The rigidity of management, trade association and trade union policies and the traditionalism of the workers are other factors.

Here is a case instance. I spoke to a textile manager. He said their production was 65% of pre-World War TI to which should be added another 6Y 217c to make allowance for the shorter work week. Why this only 71 1/2% production level?

He gave these reasons. First--management. There was over-management. The business was carrying more managerial talent than it needed-too much management remote from the actual production job. Moreover, he felt that they of management had evaded the issue of being frank and realistic with their workers possibly in part because there was a Labour Government in power even although this government was urging production, too.

Also he was candid in saying that dividends were coming in too easily now after many pre-war years of no dividends.

Then there was the factor of frustration. It had taken them fourteen months to get into production with a new product after interminable delays in seeing government officials, getting bureaucratic decisions, filling out forms, getting raw material and rental permits--waiting, waiting to achieve what could well have been done in one month.

And there were the workers themselves. The management had tried time and motion studies to improve production per man but with the worker stoutly holding on to his traditional methods. Incentive pay did not seem to do the trick either. Work habits were stronger than the desire for gain.

Nor was food the factor one might have anticipated. For instance, they had taken on three displaced persons. After some preliminary special diet to restore their below- par health they were on the same diet as everyone else and were out-producing the others considerably.

Inherent in the Economic Recovery Program of Marshall Aid is the self-help of the recipient countries. Mr. Paul Hoffman is on the right track in urging that British industry look at its methods vis-a-vis North American standards. It may be unpalatable but it is the course of wisdom for Britain not solely because Marshall Aid expects it, but because facing up to its too slow work pace and low production per man hour is Britain's basic road to recovery.

The recent study of the National Institute of Economic Research revealed that 1935-1939 average productivity in manufacturing industry in Britain was only half of that of the United States. Between 1935-1947 the United Kingdom index of total production rose 9% while employment rose by 15%. This is a decline in output per man of nearly 5%. This argues not only the need of technical reforms but a revolution in thought on the part of the British worker.

The very optimistic press reports on Britain's industrial production released just prior to Sir Stafford Cripps' recent visit here were a bit baffling to me until I saw the full text of Sir Stafford's comments. Included was this statement "The present increases have been achieved almost entirely by an increase in the total numbers of the population who are working. A further increase in the labour force cannot be expected thus increased productivity per man is the very urgent next step in Britain's recovery."

On this score it was most interesting last week to meet executives of one of Britain's leading woollen mills, who said they had modernized their plants, simplified managerial direction, won the response of the workers who had given them a 23% increase in production so far this year. They had studied American methods to advantage and vis-a-vis had contributed something they thought to their United States associates--and that was better methods in the quantity production of quality goods.

Will the Labour Government be re-elected? An Opinion Survey taken by a Labour newspaper brought out the result that were an election held today the Conservatives would have 49% of the vote, Labour 38%, Liberals 13%, with the middle class and the women the decisive factor. These two groups apparently feel the Labour Government has been concerned too much with its own interest rather than that of the nation as a whole and the women have taken the brunt of the frustration growing out of the bureaucratic controls.

One thing you can do, keep on sending parcels to Britain. The diet of 2560 calories per person per day is inadequate and monotonous. Your gift will be appreciated out of all proportion.

Rome is a fascinating city for the tourist. Untouched by war, it seemed in strange contrast to the austerity of London. Everything was bright and fresh and for the tourist at least there was all the food you could possibly want, and deliciously cooked.

I believe we should not feel too secure in the results of the last election in Italy which confirmed Premier Gasperi's Christian Democrats in power.

There are three factors which must not be overlooked in appraising the Italian situation: First, there were 5,000,000 Communist votes in the election, nearly one-third of the total. Secondly, there are 2,000,000 unemployed in Italy today and a large number of the population living at subsistence levels. There is also what can be called over-employment in industry. This grows out of a government order approved by the Allied Military Government in force since 1945. This does not permit a reduction of staffs in industry, even when there is no work for them. The Fiat Motor-car Works, for example, are today carrying more than 6,000 unemployed employees on their staff.

Thus the cost of production is too high, adversely affecting Italy's urgently needed export trade. Further, this over-employment demoralizes workers, for those who do work do not feel encouraged by seeing other workers standing idly by.

Thirdly, there is Communist domination of the major labour unions, which has prompted strikes, disorders, wage demands and halts in production.

To these negative factors should be added Italy's age old problem of over-population with an agricultural economy insufficient to maintain the nation's food supply.

On the positive side, three years ago Italy had no state, no administration. The North and the South had suffered heavy war destruction. Marked industrial progress has been achieved. And the spirit of the people is good. The great majority of the Italians are faithful, hardworking people, attached to their jobs. One interesting development in Italy is that the heads of a number of firms have visited the United States since the war and have observed their own need for newer mass production methods.

The strength of the government shown during the recent Communist inspired strikes and public disorders indicates that it is ruling with a firm hand, obviously backed by a majority of public support. We should also note the absence of Communists in key government positions, notably where they could effect internal security. That in itself is a safeguard against events as they happened in Czechoslovakia.

This brings us to Czechoslovakia. Prague is a city of old-world charm. Would that that were now so; but the old world has given way to the new.

If one had not been in Nazi Germany in 1935 when all was sweetness and light, and had not been fooled by the outward appearance of things, one could superficially have concluded that all was well in Prague. Life goes on. The streets are crowded with many still pleasantly-dressed people; the shop windows promise more than the counters within fulfill. And every effort was being made to please the tourist, prior to the XI Sokol Gymnastic Festival. Government, press and other officials were most co-operative to me personally.

But then you get behind the facade of people, to discover the real meaning of the bloodless coup which on February 24th last poured Czechoslovakia into the mold of Marx, if there be any resemblance between Marx's theories and the ruthless realities of today's Communism.

This coup which brought the nation under Communist control was largely "an inside job". Moscow took no direct part, save for the timely presence of one or two key figures, because it knew the Communist leaders in Czechoslovakia were equal to the task.

The liquidation of the opposition is under way. The secret police, forced labor, the concentration camp, are tremendously persuasive against the dissenter. So is the simple device of a man's losing his job and being unable to get another.

Having seen the throaty mob acclaim Hitler in his day, it was apparent to me that there was no crowd hysteria for Klement Gottwald the day he was elected president. Admittedly it was difficult to put the same dramatic emphasis into "Nazder President Gottwold" as into "Heil Hitler". Actually, there were no large numbers on the streets. Most of the Czechs went silently about their business.

One old lady asked me if I thought there would be war with Russia soon. I thought not. She said that was too bad. During the German occupation, she explained, you knew whom your enemies were and you had the confident hope of liberation. Today, you did not know who were Communists among your own people and there was no hope of being freed.

Czechoslovakia is embarking on a Five-Year plan. Its greatest significance to us is the switch from the traditional light industries--glass, toys, gloves and textiles--to heavy industry.

The new plan calls for a big increase in steel production. Most of the new equipment and raw materials for this must come from the Western world, already short of supply.

For months a $25 million strip mill for Czechoslovakia's steel industry has been nearing completion in the United States. The great question now is, will it be delivered, in view of political events which have occurred since it was ordered. A recent United Nations Economic Commission report urges that a revival of trade across the Iron Curtain is essential to European recovery. But should we build up Czechoslovakia as an arsenal of Communism?

In 1945 the major industries in Czechoslovakia were nationalized. This was in part a device to re-establish their ownership since the Germans had acquired share control during the occupation. Following the Communist Coup in February, however, all industries employing 50 or over have been nationalized.

What happens to the owner or management in such an industry? They may do one of three things . . . become communists and continue in their jobs; or, because of the shortage of good managerial material in industry, they may be permitted to continue as managers if they agree to take an "objective" view of Communism. Or, if they refuse, they are dismissed from their own business and their jobs. And something new has been added. The former owner goes home and is called upon in due course. His Communist visitors say "This is a lovely home, beautiful furnishings, valuable pictures, all purchased, of course, from the earnings of the now nationalized business. Thank you very much." And they take them.

An illuminating interview with Zdenek Fierlinger, then Minister of Industry, recently made Second Deputy Prime Minister, gives us a revealing insight into the Party line.

Formerly in the diplomatic corps, he had visited Montreal, Quebec City, Murray Bay and had called on the late William Howard Taft, former president of the United States, there.

Later I learned that many of his fellow countrymen do him the doubtful honour of calling him the Quisling of Czechoslovakia, with apologies to Quisling, who at least was what he claimed to be. Fierlinger, they say, was twofaced. He entrenched himself with the Russians during his stay as Ambassador to Russia throughout World War II, and sold out the Social Democratic party to the Communists in February-which was quite a feat, at that, because he had been thrown out of the leadership of the Social Democrats in November last. He returned by the usual strong-arm methods when the success of the February coup was assured. Just for the record, he was Prime Minister of Czechoslovakia in 1945-46.

He was most cordial and suave, with a keen sense of humour.

It was most gracious of him to see me, a stranger, I began. True I did have the honour of representing a leading publishing house in Canada. But I would be reporting in our weekly business publication whose views, I had to confess, were opposed to his own.

His reply was a classic. "Naturally, its views differ; but that does not matter, since capitalism is doomed." He went on to say "Capitalism, of course, carries within itself the seeds of its own destruction."

"May I return the compliment about Communism", I replied. "Has it not demonstrated two fundamental seeds of its own destruction: One, historically it has not improved the standard of living of the people compared with a free society. Secondly, there is the most challenging of all its contradictions--that it limits the full range of man's mind and spirit because he must not contradict the state."

He answered, "On the first point, you will see that the Czech standard of living will rise with the whole energy and will of the working people devoted to production. Russia, despite the devastating setback of the war, has brought her peoples infinite advantage compared with the Czarist clays." (But still the standard of living does not stack up by any comparison.)

"On the second point, modern man serves his own interests best when he is one with the majority's concept of what is best for the state."

Superficially his latter answer looks alright. It evens fools some people over here. I have had them say to me "Isn't that the same as our democratic concept of the rule of the majority?" The answer is emphatically "no" because in the Communist view an alleged majority entitles you to persecute the minority. This persecution of the minority is the most pernicious of the Communist doctrines and is the simplest and most effective formula for clarifying the meaning of applied Communism.

Earlier in the interview Minister Fierlinger had said--"Who would have thought, 40 years ago, that the then-ridiculed Socialists would come to power. Or, for that matter, who would have conceded Christ's followers a. chance at the beginning?"

On this latter point, the Minister was most vulnerable. Because Christ's daring view in the totalitarian Roman Empire, of the dignity and worth of each individual, is precisely why it won against such odds; even as the Communists fear most the free spirit of man.

There is great good will among many Czechs towards Canada. One evidence is the many enquiries about emigrating to Canada. And it was still possible to obtain the necessary passports and exit permits from the Czech Government. But Canada requires that relatives provide the ocean ticket and proof of financial stability to take care of the newcomers. Ninety to one hundred and twenty a month were obtaining permits to emigrate to Canada. In most cases they must leave the bulk of their worldly possessions behind.

The International Service of the Canadian Broadcasting Corporation came in for a good word. Typical was the unsolicited comment of a waiter in a restaurant. He asked if I were English. I replied that I was a Canadian. He said he had became familiar with Montreal through our International CBC broadcasts. He liked these broadcasts for the objectivity of our news reporting. Groping for words lie put it rather quaintly "Canada is a country without envy". He continued: "Perhaps that is why your news is unprejudiced. Keep up that feature. We rely on it."

Czechoslovakia commands our sympathy. As one older person put it "We are Communists on paper, but not in our hearts".

Germany is the subject of a whole address in itself. Therefore I will try to highlight only what seemed of greatest interest.

First was the extent of the bomb damage. One has to see it to comprehend in any sense just how stupendous it was. I saw it first in Frankfurt. Speaking to a very able German lawyer there--he had represented the new Germany at the New York Herald-Tribune's Forum last spring--I mentioned that his city had taken quite a beating. He replied that I had seen nothing yet. Subsequent visits to Essen in the Ruhr and Berlin proved his point. In the latter city the main streets only are cleared. There is unbelievable damage.

"But you get used to living in such ruins", he said. "My children, for instance, find it exciting to play in the rubble. I took my eight-year-old boy to Heidelberg last week. After we had walked around the unbombed town for a few minutes he startled me somewhat by saying--'But, Daddy, where do the children play'."

Secondly, we are busy at great cost trying to aid Germany's recovery. For three very good reasons, to get the load off our own backs; to aid European recovery; to prevent the spread of Communism.

The United States share alone for 1948, for the cost of essential imports into Germany, will exceed one billion. dollars. Britain's share is seventy million dollars. Off setting this total in part is the income from German exports which has amounted to 409 million dollars since January, 1947.

The above, of course, does not include the cost of maintaining the occupational and administration forces in Germany, and now can be added the expense of supplying the Western Sections of Berlin by air. In addition there are five hundred and fifty millions of Marshall Aid dollars.

No wonder I found the view expressed quite frequently in Germany by Americans, the British and Germans--"Will the American taxpayer get tired of paying." The most potent reason why he will not get tired lies in the alternative. A continued prostrate Germany is going to menace the North American security because it will adversely affect the whole of Europe and will be to Russia's advantage. As a key American economic advisor put it "Germany is the thrust bearing of Europe. It is the abrasive point. Here the issue of Europe will be decided. Germany's economic recovery and stability is of the utmost importance to all of us of the West."

Thirdly, how successful has been Germany's industrial recovery? It has lagged behind that of other European countries, similarly war-damaged. With 1936 as 100 industrial production in Bizonal Germany (U.S.-British) was 26 in January, 1946. It is 50 today. Western Europe, excluding Germany, is 99% today. Why the lag? One of the key reasons has been met by the new currency reform. It is difficult for us who live on this North American continent with its sound currency to realize what it is like to live in a country where simple commodities had a more stable accepted value than currency.

I was in Frankfurt the week-end when the new currency reform was announced. A German friend came by train to see me. He was able to purchase his ticket with the old reichsmarks. But I had none of the new currency. Nevertheless, he was glad to accept compensation for his coming in cigarettes, chocolate bars and silk stockings. His hotel bill I paid in chocolate bars, soap and cigarettes. The manager and manageress, the owners of the hotel, were tremendously excited by what seemed very little to me but was largess to them.

The new currency, our Deutschmark, however, will have far-reaching effects on the German economy in the Western zones. In the first place it has provided an incentive for manufacturers to produce and, in fact, a large supply of goods immediately came out of hoarding for consumer purchase.

It provides the incentive for the individual German to work, to save, and to buy. Two important factors are fundamental, however: First, the confidence of the Ger man people in the new currency. It is backed only by their "will to work", and the resources of Germany. But it differs from Adolph Hitler's former reichsmark currency which was similarly backed, by the fact that it is a controlled currency, limited in issue, and, therefore, has a scarcity value. Secondly, no currency long has validity without a supply of consumer goods to meet consumer demands and desires. '

There was gratifying evidence of acceptance of the currency. Consequently, the new impetus of the production in German industry with needed raw materials sup plied in part through Marshall Aid plus the arranging of the import of a steady flow of consumer goods, will help to solve the second point.

Commenting on this, Sir Cecil Weir, President on the British side of the Economic Sub-Commission in Berlin told me: "I am hopeful that with Marshall Aid providing over $200 million dollars of imports into Germany in the fiscal year ending June, 1949, that Bi-Zonal (American and British) industrial production may reach 70-75°/0 of 1936 totals."

The currency reform has far reaching effects in other ways. For instance, industry in Germany has carried on its staff frequently more personnel than needed, discipline of workers has been low and absenteeism not dealt with too severely.

I learned of one large manufacturer who called his entire staff together and said, "I do not propose to dismiss any of you. I do propose, however, to watch the will to work, the quality and quantity of your production. They will be the decisive factors in your future with us." This means that greater efficiency will reduce production costs and consumer prices in Germany. This reform has had another marked effect, that of largely eliminating the black market. This is having a great impact on the morale of the German worker who frankly resented seeing the black marketeers enjoy a degree of luxury he, the worker, could not attain.

Evidence of the effect on prices of the new currency were given to me thus. In '39 with the reichsmark at 30 cents bicycles sold 80 to 100 marks. Recent black market prices reached 3,000 marks. Today the price is 120 of the new Deutschmarks. Similarly men's suits ready-made in 1939 were 80 to 100 reichsmarks; black market 3,000 to 4,000; today 100 marks.

Fourthly, another factor in Germany's slow industrial recovery and perhaps the most important, is food--or rather the lack of it. My German friends, for instance, lived in a small community. Said he "The basic ration of 1560 calories per day exists only on paper. Actually it is around 800 to 900. For the last month our family had no meat, no milk, no potatoes. The bread ration has been raised to 12.5 grams per month and the sugar ration raised to 500 grams per person per month. We have had some rations of fish. Even though we live more or less in a farming community we have had no vegetables. The farmers have enough but they have become Germany's most hardboiled people. I am not complaining, I am simply stating the facts."

The food supply, therefore, is an ever present factor in the daily lives of the German worker and his family. The Ruhr miner is getting a substantially better diet, al though this is still insufficient for sustained manual labour. Here on the North American continent we look upon 4,500 calories per person per day as a minimum to sustain good health. The Rhur miner is getting 4,000 calories, some 800 calories less than his British counterpart.

The miner is responding to the latest incentive programme which gives him extra food parcels, including fats and meat--plus the availability of extra clothing for himself and his family. I have observed since that the production target of 290,000 tons per clay has exceeded 300,000 tons.

But it is conceded that 400,000 tons per day is a realisable objective and this amount is essential before Germany's industrial recovery programme and export quotas are full out.

Here is an American view of one very close to the production question. "Coal in the Ruhr is a complex substance and creates complex problems," he said. "For instance, it produces political situations. Take the de-Nazification programme. This has gone to extremes and has touched the lives of a number of first rate people because they had been listed as members of the Nazi party, which in many cases was a mere formality. As a result all the smart boys in the mining industry who knew how to get coal production, through long years of experience, are not now available to us including both workers and those of managerial levels."

He went on to say that whilst the Communists were in the minority, nevertheless, they had pretty successfully wormed their way into the Works Councils and were a factor in deterring production. He felt it was time the administration of the mines got tough with the Communists but this had not been done in part because of the Labour Government in Britain. One might remember that the head of the British Mine Workers Union in Britain is himself a Communist.

He was also inclined to think that Labour had been given too much leeway in the Ruhr but also wished to emphasize that the Labour Unions had done a rather remarkably good job.

He mentioned the efforts made by the Communists to stop the incentive programmes, where the Ruhr miners were given extra food parcels. The men themselves had voted to work on Sunday and the Communists had made a tremendous effort to stop them.

He spoke of a meeting of the Union people around his desk at which the Vice-president of the Union was a Communist, who was loud in his condemnation of the new incentive plans. So the American said he walked around the table and said to the Communist, "If I understand you, you are completely against this incentive programme." When the Communist replied in the affirmative, he said "Alright, we'll publish your views--that you are against incentive food packages--in the local paper." My American informant said that after that the Communist never said a further word.

He went on to discuss one problem, that of reparations which I ran across from many sources and always with the same view. He said that for sheer madness the current dismantling of industrial plants was tops to destroy those German industrial plants of war potential. But the point which seared this man's soul was the fact that we were vitally concerned with Germany's industrial recovery, were spending millions to that end, yet we were spending time and money to destroy plants already in existence which could be used to build equipment which would improve production as soon as we could supply the raw materials.

The question of the ownership of the mines in the Ruhr is also affecting coal production. It has an effect upon management, as they do not know for whom they are working. The decision regarding ownership has been left to the German authorities to decide. Some of the management were recommending public ownership because of the immense amount of capital involved in reconditioning the mines. The companies have been denuded of capital and of liquid assets.

Although the decision was being left to the Germans as to the final form of ownership, there were among the Western allies wide differences of opinion. Heretofore, the mines did work in cartels and syndicates although nonpolitical. The British favoured nationalization of the mines, the creating of a giant monopoly. The American view was exactly the contrary. The French were satisfied with any system which neutralized the war making potential of the Ruhr area.

Last in Berlin in 1937, revisiting it was a most impressive experience. Touring the Soviet sector included that part of Berlin I had known best--Unter der Linden, the Wilhelmstrasse, Alexander Platz, etc. A little narrow gauge construction train was busy going through the front door of what had been the British Embassy, now in ruins as was Hitler's Chancellery. The Russians have blasted his air raid shelter. But the site of the bunker remains where the bodies crisped into oblivion the "one thousand years of Nazidom."

I confess I had flown into Berlin with some trepidation--in an R.A.F. plane in which I was one of three civilians. The city itself, even the Soviet sector, was a bit of an anti-climax. Superficially it seemed so normal, but behind the curtain of normalcy was the struggle which has now been submitted to the United Nations.

The spirit of the people of Berlin was most encouraging. For instance, they were accepting our new currency in the Western sectors, which headed up the Berlin crisis and were refusing to believe the Soviet claims for their new mark. Our Deutschemark was commanding 18 to 20 of the Soviet marks. Those in the Western sectors and many in the Soviet sector obviously are anti-Communist and fervently hoping there will be no breach of our decision to stay in Berlin, not that they love us more but they dislike us less. I met a German woman in her 40's who with her younger sister had gone through the entire war in Berlin. Said she "We have relatives in the United States who are urging us to go out there. I am a Berliner born and bred. Here I shall stay. But I hope most devoutly that the Western Powers stay too."

People ask why has Russia been so arbitrary in its attitude over Berlin. Why did it institute the blockade in the first place. There are three reasons. First, she had every strategic advantage because of our lack of road and rail access and she underestimated the amazing results we have achieved with the air lift. Secondly, to get us out of Berlin would consolidate eastern Germany to her military advantage, as well as having great effect on the morale of all Germans-and to the advantage of the Communist cause in such unstable situations as you have, for instance, in France and Italy as well as consolidating more strongly the satellite states.

But, thirdly, and this was the powerful immediate reason. When the German people in the Western Zones and in our Western Sections in Berlin showed a decided preference for our new Detitschmark currency it was essential to the Russians that they prevent consumer goods getting into Berlin shops because with an oasis of goods in our sectors in Berlin in a desert of scarcity in the Soviet sectors, no amount of Russian propaganda could convince the Berliners that Communism was the better way of life.

What of the German people? Have they got over their war making instinct? One able British observer in Berlin mentioned he thought the terrific destruction of the home land in World War II might very well prove to be a deterrent on future German aggression. Especially was this so since Germany was in the path of the conflict between the World's two giants-Soviet Russia and the United States.

I asked the same question of an astute German. He said, "You know the capacity we Germans have demonstrated to be led around by the nose. Presently there is strong anti-Russian feeling among the Germans outside the Soviet zone--and a rather refreshing evidence of German morale within the Soviet sector. Should any more of Germany come under Soviet control, however, history would seem to lead us to conclude that the Germans would join the Russians as a result of propaganda and the instinct for power which is always held out as a bait in war. It can be said that we Germans want to be in the big league. The Western powers offer us the best hope for the future, but we would urge that the authority of the present military government be mitigated. In effect, our attempts towards democratic government will gain experience best through authority and responsibility. Today Germany has no clear cut administration and there is a division of authority. You can't get competent people without their having authority."

And he made this candid comment in reply to my question re Germans feeling a sense of war guilt. "The people were shaken in a moral sense. Not so had Germany won the war. Today, though, they see less tendency to nationalism in Germany than in many neighbouring states. And their sense of guilt is further mitigated by the knowledge of today's Russian concentration camps."

It is a very great decision to make whether or not the occupational forces should be removed from Germany, with perhaps the odds in favour of doing so, at the same time this time keeping a more watchful eye on what is developing. There are 1,000,000 de-Nazified Germans between the ages of 24 and 35 who are not permitted to do other than manual labour. They represent a pretty disgruntled group and could become mercenary soldiers for any leader.

It was encouraging to find that German youth to some degree was coming under the leadership of both the Protestant and Catholic Churches and that youth groups such as the Boy and Girl Scouts, and Y.M.C.A. movements are making some headway. As long as family units, however, are faced by insufficient income and food, this strikes at the very heart of the moral integrity of people because even parents condone acts outside the strictly moral code when the welfare of the family and its health are concerned.

What of the issue of peace or war? I did not find any top-ranking authority but felt that war with Russia was inevitable if we did not mobilize to meet the threat of Russian aggression.

Even that might not prevent war because of pressures from within Russia, because of the importance to Russia of preventing the success of Marshall Aid to European recovery and because Russia would profit from the dislocation and chaos, in any case, following war, assuming that the Russian leaders themselves survived. We are winning the "cold war".

On my motor trip to Essen the guide was a most likeable lad in his early thirties. I said to him, "You speak English very well." He replied, "I should, for I was six years in Canada." He went on to ask, "How is Sunnyside and Casa Loma in Toronto." When I enquired in what capacity he had been in Canada, it was somewhat of a surprise to have him say, "As a prisoner of war". Since this did not jibe with his question concerning Toronto, I asked him for his story. He said that in the latter days of the war he had been in a lumbering camp north of Schreiber, Ontario. Along with another prisoner he engaged illegally in the trapping of furs and sold these to the Indians. He had bought an identification card from an intoxicated Indian of his acquaintance and thus acquired the Indian's name of Simon Desmoulins. He escaped from the lumber camp with $250 in his pocket.

Arriving in Toronto he lined up at Selective Service but before he got to the desk, a man came along and asked him how he would like to work for him. Feeling a bit nervous about going to the desk, he accepted and worked for seven months with a firm in the galvanizing business.

He asked "Do you know Joe ....... the welterweight champion of Ontario." When I replied in the negative he said, "I was his sparring partner at the Y.M.C.A."

Later he came to Montreal on a visit and with the cessation of war gave himself up in order to get back to see his parents, whom he had not heard from. "You have a wonderful country in Canada. I wish with all my heart I was back there."

I have seen an Europe in which there is vitality, evidence of recovery and hope for the future but there is also fear, hunger and desperation and, as in Czechoslovakia the death of values that had great meaning to them and to us.

I have seen Communism at first hand again. Their's is a phony democracy. They use-or misuse-the great words such as "the peoples democracy" that have a great tradition of human freedom to us but in practice with Communism these words do not mean the same thing but a ruthless denial of the rights of the individual.

Last week a young Czechoslovakian girl who arrived in Montreal put the case with simple eloquence. "It is true I was sick and got free hospitalization, but that is no compensation for the loss of my personal freedom". She knew what freedom meant because she had seen her friends taken from their homes and never heard of again.

The Socialism of England is being tried in the one place in the world where there is the longest tradition of love of freedom and political wisdom. Its advocates believe that the large-scale monopoly of the state can achieve more for all and without affecting the personal freedom, opportunity for reward and the standard of living of the individual. Personally, I believe the experience of socialism and the instinct of self-reliance of the British peoples will result in a change of government.

But it remained for a Czechoslovakian in Prague to put most succinctly the values of our way of life on this continent. Said he: "What the authoritarians here do not realize is that there is such a thing as evolutionary capitalism.

"Capitalism on your continent can and does learn. Since the depression of the '30's it has greatly broadened its humanitarian base, its team work and partnership with its workers. It has retained the essential freedoms of the workers and the amazing power of production of your system. Some planning is necessary in any economy but yours has succeeded precisely because it has no stifling overall plan but flexibility at the point of production.

"Here in Czechoslovakia we are witnessing first the liquidation of the middle class which is the key to any successful revolution. For a time there will be a class less society and then the new privileged group arises made up of the successful bureaucrats, the Communist Party leaders, and the successful managerial types.

"In the meantime, the lot of the worker worsens, he loses his prized freedoms, his union right of criticism, and the standard of living will fall."

One returns to this favoured land with a feeling of immense gratitude for our material blessings and for the spirit of free men and women that has made them possible.

But the price of peace is preparedness. We have been speaking of our European neighbours. What kind of neighbours are we? The name of Canada stands high for its past generosity. I do not believe we can or should escape a further share of the cost of aiding European recovery. This means in part that as we benefit from European purchases resultant from Marshall Aid I believe we will ultimately be required to underwrite a part of this responsibility. So far I have been talking essentially about trade but we must not overlook our share in the underlying problem of defence and on a much larger scale than we presently envision. This is going to cost us something as taxpayers, although current surpluses will enable us to meet immediate demands.

But it will be a small price if through preparedness we can keep the peace.

A writer in the New York Times recently referred to an apparent shibboleth that has gripped many of mankind, turning them toward the sheltering bosom of the state. He called it a "fear of freedom". Let it never be said of us Canadians that we are afraid of freedom. But let us remember our pioneer and self-reliant past. Ours is a great heritage-economic, political and spiritual. We must share our abundance and be vigilant for our priceless freedoms. Thus shall this continent with its partners of the Empire tradition be a hope for all mankind--and our Canada remain the true north, strong and free.

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Europe Our Next Door Neighbour


The closeness of Europe in this age of flight and the immense significance to us here of European viewpoints and economic recovery. Implications of the age of flight. Economic problems in Britain, and progress toward solutions. Reasons for production problems. The Economic Recovery Program of Marshall Aid. Speculation as to whether or not the Labour Government will be re-elected in Britain. A plea to continue sending gifts and parcels of food to Britain. Rome in contrast to London. Three factors in considering the Italian situation: Communist votes in the election, unemployment, and the Communist domination of the major labour unions, which has prompted strikes, disorders, wage demands and halts in production. Also the problem of over-population with an agricultural economy insufficient to maintain the nation's food supply. The positive aspects seen in Italy: strength of the government, the spirit of the people, the recognized need for newer mass production methods, as witnessed in visits to the U.S. Czechoslovakia: the coup which brought the nation under Communist control. The liquidation of the opposition under way. The Five-Year plan in industry in Czechoslovakia. Insights into the party line. Czechoslovakia commanding our sympathy: "We are Communists on paper, but not in our hearts." Germany. The extent of the bomb damage. Aid to Germany's recovery and why we are contributing. Germany's industrial recovery. The new currency and its far-reaching effects on the German economy in the Western zones. The lack of food in Germany. Communist efforts to stop the incentive programmes in the mining industry. The issue of reparations. The spirit of the people of Berlin. Reasons for the blockade and Russia's attitude over Berlin. The nature of the German people; some candid comments from a German. Making the decision as to whether or not the occupational forces should be removed from Germany. The issue of peace or war. The feeling that war with Russia is inevitable if we do not mobilize to meet the threat of Russian aggression. A summary of what the speaker saw in Europe. Evolutionary capitalism. Preparedness as the price of peace.