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SPEECH TO THE NATIONAL COTTON COUNCIL
January 22, 1948
The Congress of the United States now has under consideration the program recommended by the President for American assistance to the economic recovery of Europe. This is more than a legislative proposal of unusual importance. It is more than an unprecedented international enterprise for the regeneration of a great community of nations, the initial aid of a people remote from the scene of the trouble. It is a great cooperative effort to save western civilization itself. The outcome of that effort will determine not only the immediate course of events in Europe, but it will affect the future security and welfare of all Americans—North, South, East, and West.
This measure is so broad of purpose and so far-reaching in its ultimate effects that no section of our country can afford to remain indifferent. If it should fail to accomplish its purpose, no section will be spared the consequences of that failure.
I wish to use this occasion to discuss certain aspects of the European Recovery Program of importance to the agricultural interests of the South, and to some extent, of American agriculture as a whole.
What we propose is to furnish the 16 cooperating European countries during the next four and a quarter years with the minimum supply of raw materials and goods they require to return to a self-supporting basis. Their essential needs for this purpose, in excess of what they themselves can pay for in cash, for the most part will be financed by the United States Government through dollar loans and free grants. On their part, the European countries have undertaken to exert every effort, both individually and collectively, to make the most efficient use of their own resources and the commodities we send them. It is necessary that they do this if they are to achieve genuine recovery and to terminate their dependence on us in the time allotted, that is four and a quarter years. They will be asked to pledge themselves, in agreements which this Government will negotiate with each of them, to fulfill certain other stipulated conditions. These conditions will include, for example, measures to counteract inflation, measures to restore confidence in national currencies, and to facilitate the movement of goods, money and labor across national boundaries. These conditions will not infringe on their rights but they will insure the most effective use of the combined resources. They are designed to protect not only our interests but at least equally the interests of the Europeans themselves. For the European people would be the main sufferers if there were to be any wastage or misuse of the limited amounts which our economy can afford.
I mentioned on another occasion that the commodities for Europe to be financed by this Government make up only a small part of the total production of the European countries—perhaps not more than five percent. But this marginal fraction is indispensable to the effective development of the whole program. Without the food American assistance is to provide, European workers will not have sufficient stamina to make the increased and sustained effort required for recovery. Without the scarce fuel, raw materials and machinery that only we can supply, many furnaces will remain cold and many factories will lie idle.
As you know, the manufacture of textiles is one of the principal industries in Europe and employs many hundreds of thousands of people. The operations of this industry were drastically curtailed during the war. Plant maintenance was neglected and machinery deteriorated and fell into a state of disrepair. New machinery and spare parts are still hard to obtain because of a severe shortage of steel and machine tools. But the principal difficulty which lies ahead of the industry is the necessity to import cotton and other raw materials at heavy cost in foreign exchange, principally dollars. And Europe’s supply of dollars is almost exhausted.
If prompt assistance is not afforded Western Europe, that area will be unable to continue to import the necessary cotton and other raw materials for the textile industry.
Meanwhile clothing has been worn threadbare and little progress has been made in meeting the enormous accumulated demand. The depressing effect on the morale of the civil populations becomes an increasingly serious matter. Moreover, Europe not only must clothe its own expanded population; it must greatly increase textile production for export, in order to earn money to pay for food and other imports it has always lacked. Most of the world is short of clothing. But added to the complications, the checks on recovery, is the fact that the currency of one country has doubtful value in another. The sale of raw materials or goods is often impeded because the currency of the buyer is not acceptable to the seller.
One of the materials most needed is cotton. The South has made progress in recent years, through diversification and industrialization, toward eliminating the adverse effects of a one-crop economy. But cotton remains, I am told, the principal cash crop of the South and will continue to be an important product of this section. Therefore the South is directly interested in the volume of cotton exports to Europe under the proposed recovery program. Such shipments are estimated to total more than 10 million bales in the four and a quarter year period. During the first 15 months, April 1, 1948 to July 1, 1949, shipments are planned to total 3 million bales. The volume of cotton to be supplied by the other Western Hemisphere countries will be approximately half as much as the United States is to supply.
In estimating the prospective allocations of cotton to Europe from this country, careful consideration had to be given to the question of assuring an adequate supply for domestic consumers. As you well know, domestic demands, coupled with last year’s short crop, have reduced our cotton stocks to a minimum level of safety. Allocations of United States cotton to be provided under the recovery program must be limited accordingly.
Tobacco is another staple that will be shipped to Europe in considerable volume. It is not as essential as food and clothing, of course, but even under austere living conditions and rationing it is found advisable to make some concessions to human nature. Tobacco comes within the category of incentive goods. As a practical matter, it has been found that the availability of tobacco is an effective stimulus to morale and productivity. Incidentally, I don’t smoke. I did but now I don’t.
The amounts of grain, cotton, tobacco and other farm products required for the European Recovery Program are of immediate and practical concern to the agricultural producers of the United States. But their stake in the fundamental issues involved in this enterprise goes far beyond any question of temporary profit or advantage. An adequate appraisal of American agriculture’s interest in European recovery must necessarily include a clear understanding of the United States position in relation to the rest of the world.
Producers of agricultural commodities in the United States are conspicuous for their remarkable achievement in increasing production by at least one-third to meet the greater demands for food and fiber arising from the war and the abnormal conditions which have followed. The rewards have been commensurate with the success of the effort. Farm incomes today are far greater than at any time in our history.
But it is generally recognized, I believe, that the present profitable overseas market for American farm products is being sustained in part by measures which are artificial and are uneconomic in the ordinary commercial sense. Dollars appropriated by the United States Government are being used to a considerable extent to pay for the shipments of American grain, cotton and other agricultural commodities to the countries of Western Europe. We have been forced to adopt this extraordinary procedure because only in this way could we hope to prevent a serious deterioration in Europe, with incalculable economic and political consequences to this country.
The additional aid we now propose for Europe would not be extended as relief to meet separate recurrent emergencies, but as part of a carefully developed constructive plan by which Western Europe can coordinate its efforts and regain its ability to support itself. The program has for its purpose the early restoration of Europe to a self-supporting basis which will enable it to function substantially as it did before the war—as a great center of a world trading system.
Before the war western Europe accounted for approximately half of the total world trade. In 1938 the 16 countries participating in the proposed recovery program bought 35 percent of all United States exports and supplied us with 21 percent of our total imports. Trade with Europe provided Canada and the Latin American countries with much of the money they spent with us. This was the normal, mutually profitable pattern of world trade which the United States is now working to see restored, and to be expanded in the years to come. This is the character of trade relationship that holds the prospect of greatest benefits for American industry, commerce and agriculture alike. This is the stake, in economic terms, that the American farmer has in European reconstruction.
American agriculture consists of a large number of independent producers, whose output is affected by the individual’s estimates of such factors as aggregate supply, demand, prices and costs, as well as by unpredictable variances in the weather, damage by insects, et cetera. Moreover, the impact of world supplies and rates of consumption is a major influence, particularly in the case of commodities of which a large portion is produced for export. From its very nature, therefore, agriculture is perhaps more vulnerable to the vicissitudes of international trade conditions than any other factor of the national economy.
The present situation in regard to the export of our agricultural products, while involving many abnormal elements, is extremely favorable to producers in this country. This government hopes that conditions will continue to favor our producers as more normal trade relationships are restored. In fact, that is one of the major objectives of our foreign policy.
The many uncertainties that now prevail, however, make it very important for us to weigh the possible adverse effects of certain eventualities which we are striving to avoid. I think I need say no more than that if—despite all our efforts to the contrary—Europe should be forced to abandon its traditional role of a trade partner and customer of this country and forced to use its great resources in ways detrimental to our interest, the consequences to our economy would be extremely serious.
The adverse effects would not be confined to the commodities intended for export alone. The harmful consequences would be felt throughout our country and would gravely disturb our internal economy.
Since this effort is so clearly necessary, agricultural producers should frankly count the costs. The proposed program calls for 6.8 billion dollars of federal appropriations in the first 15 months. This would be the initial and largest part of a total of perhaps 17 billion dollars for the four and a quarter year period. These sums will be a factor in federal taxes. The continued shipment of essential goods and commodities to Europe at a time when our domestic demand is still not fully satisfied may sustain the pressure on certain prices. However, exports under the program during 1948 will be less than in 1947.
There are factors that impinge directly on certain groups. For example, the farm producer may not be able to buy quite as much nitrogen fertilizer as he wants. There is a world wide shortage of nitrogen. Europe desperately needs increased supplies for greater food production, but the United States will export only small amounts of nitrogen to Europe in the first two years of the program. Other Western Hemisphere countries will supply the bulk of Europe’s nitrogen requirements.
Farm machinery is another category in which Europe’s needs compete to some extent with domestic demand. To enable Europe to increase its indigenous food supply, the United States will send limited quantities of farm machinery.
The sharing of these and other supplies with Europe may cause some hardship for a few American farmers. Such sacrifices and inconveniences as may result will be really insignificant by comparison with the tremendous handicaps under which European farmers are laboring. They are minor when measured against the alternatives—the situation that would face American agriculture if the structure of world trade and social order should collapse.
For these alternatives carry us far beyond the sphere of economics. Never was it more true than it is today in Europe that “man does not live by bread alone.” The war, with its legacy of hardships and suffering, has placed cruel strains on the peoples of that continent. It has caused them to question in many cases the basic principles on which their society—and ours—has developed.
Today, they are troubled not only about their economic problems but also about some of the most profound questions of political philosophy. And, they are extremely sensitive to the impulses which come to them from outside, and to the degree of support which they feel they have from this country.
What is at stake here is not only the economic basis of European society. It is the confidence of the Europeans in themselves and in this western civilization to which they and we belong. There are powerful forces which are urging them to part with this faith, and to entrust themselves to a political system which involved the abandonment of their liberties.
It would be foolish for us to think that we would not be affected by such developments. We should not deceive ourselves into assuming that the principles of individual liberty and representative government will be safe if we are their sole custodians.
We are a strong nation. But we cannot live to ourselves and remain strong. We need friends, and particularly friends who share our outlook on the organization of society and on the importance of the individual. The cause of liberty cannot have too many defenders. And its defenders must stick closely together; for their collective effort, and not just their individual efforts, will be required if the cause is to be effectively served.
There was great historic significance in the movement toward self-help that got under way last summer in Europe. Sixteen nations declared their readiness to submerge individual national prejudices and traditions in a joint effort to promote the good of their community as a whole. This great step forward in response to an American suggestion is bright with the promise of a new western Europe.
I feel it is absolutely essential to the ultimate success of this program that the movement towards European unity by voluntary cooperation, begun at the Paris conference, should go forward.
Given this cooperative effort—the concerted action of 415 million people, Americans and Western Europeans alike, inspired by the same great purpose—I have complete faith in the ability of western civilization to survive and flourish.2
GCMRL/G. C. Marshall Papers (Secretary of State, Speeches)
1. The National Cotton Council of America, an organization representing cotton producers, ginners, warehousers, and merchants, was established in November 1938. The council’s annual meeting in 1948 was held at the Atlanta Biltmore Hotel. Marshall spoke at 2:30 p.m.
At a press conference the following week, Marshall praised the press corps, off-the-record, “for respecting my confidence” on the state of his health at the time of the Atlanta speech: “I got in deep trouble down in Georgia. I went straight from the all day questioning by the House Committee to the [Walter Reed] hospital and stayed out there two days and a half, and got punched full of holes, and among other things they gave me penicillin. That came out on my back and just about wrecked me. That is the worst thing I struggled with when I was talking to the Cotton Council. I think I am in the clear now. . . . That was the worst two weeks I ever had in my life.” (Memorandum of the Press and Radio News Conference, January 28, 1948, NA/RG 59 [Office of the Special Assistant to the Secretary of State, Verbatim Reports of Press Conferences].)
2. Following Marshall’s speech, the council endorsed the European Recovery Program, insisting only that it support private enterprise. (New York Times, January 24, 1948, p. 4.)
Recommended Citation: The Papers of George Catlett Marshall, ed. Larry I. Bland, Mark A. Stoler, Sharon Ritenour Stevens and Daniel D. Holt (Lexington, Va.: The George C. Marshall Foundation, 2013- ). Electronic version based on The Papers of George Catlett Marshall, vol. 6, “The Whole World Hangs in the Balance,” January 8, 1947-September 30, 1949 (Baltimore and London: The Johns Hopkins University Press, 2013), pp. 335-341.