The Atlantic and Its Enemies

by Norman Stone

  It was helped by circumstances — the harsh winter, followed by a severe drought, made for discontent, and there was a fall in exports (even food was imported from the Soviet Union). There was also much grumbling among the intelligentsia, whose wages had fallen quite drastically whereas elsewhere, as the economy recovered, there were patches of prosperity. The Communists blamed the machinations of ‘capitalism’ and the effects of the Marshall meeting; they proposed to head these off with a tax on ‘millionaires’ but suffered an early and misleading defeat. The other parties, recognizing it to be futile, blocked it, and the block succeeded because the Communists had not yet established their own manipulable element among the Social Democrats. On 10 September came a mysterious development: the despatch of parcel bombs to three prominent non-Communist ministers, including the one responsible for Justice, Dr Prokop Drtina. But the essential manoeuvre came over Slovakia. There, the Communist-controlled Secret Service discovered an alleged conspiracy, of exiled ‘Fascists’ colluding with Democrats. There followed 450 arrests, and the trade unions went into action to demand a suppression of the Slovak governors. They were replaced by a commission, in which the ‘organizations’ were represented; and though there was of course opposition in Slovakia, it was in some degree divided by religion (Catholic and Lutheran) and in any case could not challenge the police and the trade unions, who muzzled the media. Later on, the archives of all of this became open, and were written up in somewhat surreal circumstances by Karel Kaplan, who revealed that there had been spies, known in code (agent V101 etc.), in the Catholic ranks. Slovakia had been corralled by November, and there was a great block of opinion in the Czech lands that now saw the Communists as guarantors of the unity of the country against the treacherous Slovaks. Especially, a decisive element among the Social Democrats drifted towards the Communist side, and was led by one of the wartime chieftains, Zdeněk Fierlinger, who had probably been a Communist agent all along. Meanwhile, in Prague, there were barrages of Communist propaganda, and displays of ‘the organized discontent of the masses’, and these hundreds of thousands of people, complete with threatening banderoles, were imposing enough. How were the non-Communists to respond?

  In January 1948 a provocation was carefully set up. The parcel bomb incident was investigated by the police, at the behest of the Minister of Justice, Dr Drtina (in his memories, he is, Austrian-fashion, punctilious about recording the title ‘Dr’, even when applied to executed war criminals or Communist agents). They dragged their feet, and did so insultingly, as Czech officials knew very well how to do; the incident was used too as an excuse to plant ‘bodyguards’ on the non-Communist ministers, and the state security service by now contained men who had been given a Soviet training. Drtina’s investigation led towards two police officials, whose arrest by the Minister of the Interior (and police) he now demanded. The affair reached the cabinet, and its chairman, Klement Gottwald, refused to act. We know the sequel from both sides — memoirs on the one, secret archives on the other. Stalin advised confrontation, once he was assured by Gottwald that the Red Army would not have to intervene, and he flew into Prague his long-term Czech expert, the former ambassador Valerian Zorin. On their side, the non-Communist ministers talked to the American and British ambassadors, and conferred among themselves or with President Beneš. Beneš told them not to risk a battle, but they themselves wanted one, in the expectation that early elections would be called, which, given the Marshall Plan as support, they would win. In fact elections were due that May, but Drtina and his friends feared that the Communists, being in charge of the arrangements, would bring off the sort of coup that had worked in Poland, with the fraudulent referendum. So they forced a crisis, and resigned. If a majority of the ministers had resigned from the government and from the National Front especially, there would indeed, formally, have been a government crisis, compelling Beneš to act. On 18 February they threatened to resign, and on 20 February twelve of the twenty-six ministers did indeed do so.

  This was not a majority. The Social Democrat Fierlinger stayed on, and so, fatally, did the foreign minister, Jan Masaryk. In his way, he represented the tragedy of the Czechs: vastly talented, an excellent linguist, a good pianist, a bibulous charmer with a long string of affairs and funny stories, and contacts all over the world; but in the end a weak and selfish man, the shadow of his far tougher father, the founder of the republic. Beneš was very ill, not likely to live much longer; the last thing that he now wanted was any kind of crisis. He would bow to force, whether that now shown by the Communists with their militias in the street, or by the Red Army; he dressed this up with reference to the West, which he alleged was forcing him to choose between Germany, which he hated, and Russia. Jan Masaryk thought that he would be Beneš’s successor, and stayed on. Gottwald could hardly believe his luck and said, ‘At first I couldn’t believe it would be so easy. But it turned out that they had resigned. I prayed that this stupidity would go on and that they wouldn’t change their minds.’ They did not. Gottwald now had an opening, to nominate men to the National Front who would replace the resigning ministers, and were ostensibly from the same parties. Thus the Catholic (People’s) Party leader, an aged priest, Dr Jan Šrámek, was replaced by a colleague, Mgr Josef Plojhar, who had been in Mauthausen and no doubt learned, there, to co-operate with Communists; and there were stooge Radicals or Social Democrats as well. The way was clear for Gottwald to proclaim the Communist takeover, which he did, overlooking the statue of Jan Huss from the balcony of the Kinsky Palace on Old Town Square, on 25 February.

  Poor Drtina had tried to make amends, saying the day before that ‘the most important guarantee of security rests in close collaboration with the USSR’. But it was too late, and two days later he tried to commit suicide, in a manner befitting the native tradition, by jumping out of the window. Badly broken, he was kept in hospital for a while and then imprisoned, spending long years in this or that castle dungeon, often together with German war criminals or Slovak Fascists whom he himself, in his great days as minister for ‘retribution’, had sentenced. In 1960 there was at last an amnesty and he was released, staying on in Prague until his death, aged eighty, in 1980. The new Communist regime showed its character in other cases. The aged Šrámek, a tough old peasant-priest who had spent the war years as part of the exile government in London, tried to escape on a French aircraft and was held at the airport. He too faced years of dungeon and prison, dying, aged eighty-four, in 1956. Jan Masaryk had a fate all his own. He stayed on as foreign minister, living alone in the official flat at the top of the Czernin Palace, the foreign ministry building (which had also housed the Nazi Protectorate staff). On 12 March he was found splayed on the road, below the bathroom window of that flat. Suicide? Murder? No-one knew, and neither the investigation of the time, nor a subsequent investigation by an American journalist twenty years later, when witnesses were still alive and evidence still warm, cleared up the matter. There were signs of a struggle in the bedroom, and there was blood all over the bathroom, which had only a small window, through which it would have been very difficult to manoeuvre Masaryk, a big man. Perhaps the affair can be explained by drugs. LSD, which had been discovered in Switzerland at the end of the 1930s, can cause a sort of birth trauma: a foetus, struggling inside the womb, then making, head-first, for a small opening through which it has to fight its way. Jan Masaryk, a fashionable thirties figure, probably used the then fashionable drugs of high society in the West, and, no doubt demoralized by what he had done and what had happened to his friends and colleagues, this time overdid the dose. He could have saved his country if he had been less vain. As things were, he deserved the epithet uttered by a celebrated British journalist, Malcolm Muggeridge, who had known him in London, and who knew (from a year in Moscow) his Communists: the window dressing fell out of the window. Beneš himself lingered on for a month or two at his country retreat, then died. In Czechoslovakia, the barbed wire went up along the frontiers, complete with barking dogs, watch-towers, mine
fields and searchlights — ‘the Iron Curtain’ that Churchill had spoken of. A peculiarly harsh and durable version of Communism descended and Prague acquired an enormous statue of Stalin, on a bluff above the river. It was the start of a military confrontation of East and West.

  The Czech coup went together with a further Stalinization of the Soviet bloc. In Hungary, the preceding September, there had been a sort of parade ground version of a fraudulent election, complete with dummy parties, useful idiots and double voting; the unlovely Rákosi had taken over, and the Socialists were forced into union with the Communists. This, and the Berlin blockade, caused blood at last to flow through the bureaucratic arteries of western Europe, and ideas of unity began to take shape.

  The British had even supported a Western Union, complete with a Council of Europe and a Court of Human Rights at Strasbourg. The motive was essentially anti-Communist, to lay down guidelines that would prevent governments from putting citizens into camps. There was a grand meeting of a ‘Congress of Europe’ in May 1948, with over 700 delegates from thirteen countries, graced with the presence of anti-Fascist warhorses and of course the lionized Churchill. Parliaments sent delegates to the Council of Europe which then emerged. However, there was no economic content to this. At the time, the British were trying to revitalize their empire, and concentrated above all on dollar-earning exports; the French had their Plan, of which fuel was a vital component — whether through exploitation of the German Saarland or development of nuclear energy. Currencies were subject to exchange control, and all but a tiny fraction of trade was carried out by barter, with mountains of paper in ministries. For this Europe to develop an economic character, French fears over Germany would have to be overcome, and this took time: for the moment, the French aimed mainly to take the coal of the Saarland for themselves, and, if possible, to loot the Ruhr. It was the great heavy-industrial powerhouse, and for the moment it was still operating far below par, partly because of trade controls, partly because the French feared German resurgence, and partly because of British maladministration — the Germans said that it caused greater damage than the bombing had done. But its relative inactivity was harming everybody else. Next-door Holland, half of the economy of which depended upon Germany, was still in poor shape. Two things were needed. Germany would have to be reintegrated into the European economy, and the various countries would have to trade with each other. This needed practical steps, far beyond a Western Union.

  It was here above all that the Marshall Plan mattered. In the first two years, with roughly $5bn each for essential goods, and food in particular, it had amounted to a vast charitable enterprise, built upon the already considerable American transfers of the immediate post-war period, when UN Relief and Rehabilitation Administration (UNRRA) and Cooperative for American Remittances to Europe (CARE) parcels had kept body and soul together. That had been vitally necessary, because of the terrible winter of 1947 and the dollar shortages and the inflation which, in most countries, but especially in Germany, had wrenched trade into the black markets and below the counter. But for various reasons the Plan changed character after the first two years. To begin with, each country had taken its handout and kept the money in the bank. But trade was the real engine of growth, the dollars being used as a basis for that, not with the USA but over European borders. That meant the Rhine; the immediate point was German integration, through an increase in European trade. As the international crisis developed, there was a further element of great importance: American defence expenditure shot up, from the $13.5bn of 1949 to the $50bn of 1950, and a good part of this went to Germany, where forty American divisions were now stationed, and which produced the essential steel. The Ruhr wheels turned, slowly, again, and the great smokestacks emitted. Marshall money also saved the French Plan, which, again, required German coal and steel. The British, still attempting to refloat their empire as a bloc, were much less intimately involved. They used the dollars just to pay off debts.

  It was on continental western Europe that the Marshall Planners concentrated, and its unity, in that sense, came in the (considerable) logistics trains of the American army. The essential was trade liberalization, and that could not be managed unless there were some means of payment, i.e. recognition of the various paper currencies. The old Bank for International Settlements at Basle in Switzerland — originally set up to handle the Reparations payments of the First World War — was revitalized, with a European Payments Union (in 1950). This again followed an Atlantic example. In 1944, at Bretton Woods in New Hampshire, the Americans and British had developed institutions that were meant to stop the collapse of world trade that had occurred in the Great Slump of the 1930s. The collapse — two thirds — had been a disaster, causing unemployment in millions and millions, and bringing dictatorships in dozens, the worst of them Hitler’s. A chief reason for the disaster had been monetary — the loss of a common standard of exchange, in this case gold, when the British ran out of reserves and neither the Americans nor the French, who had gold, would move in to support the system. In 1944, the Americans recognized that they would have to use their economic weight sensibly, and an International Monetary Fund (IMF) was established (with a World Bank) so that countries importing more than they exported could be tided over with foreign reserves until they could bring their payments back into balance. This was a good idea, but in the first post-war years, as western Europe went through near calamity, the IMF did not have much of a role, and could not, until the various trading currencies had established themselves. With the European Payments Union, there came a limited version. It did not, at the time, seem to be at all simple. Most countries lacked earnings in dollars, the real currency. The Belgians, still controlling the mineral resources of the Congo, did have a dollar surplus, and had to be persuaded to use it for the common good; the British, who needed their European surplus to pay dollar debts, were in a still greater odd-man-out position, and made difficulties.

  The Americans lost patience with it all, and preached the virtues of their own big and unified market. Marshall’s successor as Secretary of State, John Foster Dulles, knew his Europe from the old days, when he had been an international banker, and said that unification was ‘an absolute necessity’. More, the Americans lost patience with national currencies and said there should be a common one. This was formally suggested by the deputy director-general of the ECA, William Foster, in June 1950: call it the ‘Europa’, he said, or perhaps the ‘Euro’. The Marshall people saw each country’s storing its Marshall dollars in some bank or other, not using them to trade with, across the various borders. In response, there were indeed ideas of trade areas within Europe, but there were still fears as regards Germany. In part these were French, but the real difficulties were made by the British, fearing German competition. Various phantom schemes came up, to combine Britain, France, Scandinavia, Italy and the Benelux countries as a free-trade area: ‘Fritalux’, ‘Finebel’, ‘Uniscan’, none of which were worth much without the Ruhr. But in October 1949 the Federal Republic of Germany emerged, and the French had to rethink.

  There now came an interesting affair, indicating the shape of things to come. The western Europeans received a further fillip, and one that, at least formally, did more for economic recovery than anything else: they devalued. The pound especially had been overvalued, partly to enable the British to pay off dollar debts, and partly to let them reconstitute their pre-war investments (which, strangely enough, by 1950 amounted to more than in 1939). Since trade was strictly controlled, the artificially high exchange rate was not menaced by any great imbalance of exports and imports. However, with the Marshall Plan, trade went ahead, and there was considerable difficulty in controlling it, because an exporter and an importer could connive to make ‘false invoices’, the money held in surreptitious foreign accounts. But the pound was a soft currency, given the size of British wartime debts, and foreigners sold it when they could — at that time, even more dollars were going back to the United States than were coming into
Europe through the Marshall Plan. In the summer of 1949, there was a run on the pound. The Labour government that had swept into power in 1945 had become tired and divided: New Jerusalem had not happened, and the severely rationed British were now living at a lower standard than most liberalized Germans. If they were to rejoin the international trading network, to export, then the pound would have to be devalued; if the pound were again to become an international trading currency, alongside the dollar, then Atlantic co-operation would be needed. After discussion with the Americans, the pound was devalued by a good 30 per cent (to $2.80) on 18 September. The International Monetary Fund was not involved in this, and the German Mark was also devalued, but only by 20 per cent — the hardest sign so far of a rift between the Common Market to come and the British.

  British exports did in fact do quite well, in part because other countries were still restocking with machinery, and a modest boom was under way by 1950, but the real boom started in continental Europe. The Germans did indeed restock, and for a time had a drastic problem as regards the balance of imports and exports: they had some difficulty in meeting their obligations under the Payments Union, and there was some question, for a time, of their dropping out. But the managers of the German economy held out, and the Americans as ever gave support. For a few months, the other Europeans accepted German IOUs. And then the German economy, on the basis of exports, boomed, and boomed. Then it boomed again, in 1955 overtaking British figures. In fact even by 1951 the export surplus amounted to more than the entire Marshall Plan had done. Now, surplus Germans could carry indebted Italians, whose economic recovery also got under way. There is an interesting question in this period, as to how far the Marshall Plan really produced the European recovery. The ‘dollar gap’ was greater in 1950 than it had been back in 1947, but no-one bothered; the sums spent under Marshall were quite trivial, in comparison with the proceeds; there are German experts who consider that the economy was recovering quite well, under the regulated and semi-socialized regime of 1946, and that it was the terrible winter of 1947 that caused the problem. Later on, international aid programmes, set up on Marshall lines, had very questionable results. Perhaps the answer lies straightforwardly in the presence of those forty US divisions: behind that shield, western Europe recovered.