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270 BroadwayNew York 7i New York

.x ~ ^ ' ""


September 2h, l?li7

(Address of Elliott V. Bell, Superintendent of
Banks, before the Annual Convention of the
National Association of Supervisors of State
Banks at the Mayflower Hotel, Washington, D. C.)

Within the past two months there have been piling up along the
economic horizon the thunderheads of a great approaching storm.


Europe is facing the immediate prospect of economic collapse unless the
United States once again comes to the rescue.
As most of you know, I have only just returned from Europe, where
I spent the better part of the Summer talking to bankers, business men,
economists, public officials and people of all sorts in an effort to obtain
a better understanding of this approaching crisis.

As a result, I am con­

vinced that the crisis is real and that it has profoundly serious implica­
tions for all of us.
The problem of European recovery is enormously complicated.
There is a crisis in material things and a crisis in morale.

Both these

crises have their immediate and their long-term aspects.
It is becoming increasingly clear that both here and abroad
everyone underestimated the degree of physical and spiritual damage wrought
by five years of total war.

Even today, nearly two and a half years after

Germany's surrender, the evidences of destruction are on all sides.
In the City of London, the heart of what was formerly the finan­
cial center of the whole world is still a vast, flattened area of rubble,


2 -

where the purple fireweed blooms among the crumbled bricks and mortar.


Rotterdam, Holland's great seaport and commercial center, you can still
look right through the middle of the city without anything to obstruct the
view of the countryside beyond save, here and there, a stujsp of ruined

Berlin is only a ghost city v:hose people live in cellars and in

the shattered wreckage.
Throughout the liberated countries farmers till their fields be­
side the roofless ruins of their old stone barns.

Here and there the

twisted wrecks of Tiger tanks still lie in fields and along hedgerows to
mark the places where the tide of battle passed.

Hardly a town seems to

have escaped without some wrecked homes.
Even in the great cities many buildings, otherwise undamaged, still
lack glass for their windows.

Everywhere along the main roads, at intersec­

tions, and especially near the coast, there remain the massive concrete
pill-boxes and bunkers that the Nazis built.

Literally, the people of Europe

are still living upon the battlefields.
The destruction wrought by five years of total war must be re­
paired before there can be any hope of a resumption of normal economic

Think for one moment what it meant to have all the bridges de­


Before any materials could be moved or the most rudimentary com­

merce re-established all of those bridges had to be repaired or replaced.
To add to the difficulties, Europe has been afflicted this year with a
Winter of unprecedented severity and a Summer marked by the worst drought
in many decades.

The sheer physical problem of recovery from the destruc­

tion and dislocation of war is enormous.

- 3Beyond this, it is gradually becoming apparent that the long-term
problem of restoring economic stability to Western Europe reaches even deeper
than the ravages of the Second World

Europe is, in fact, suffering from

the effects of two World Wars and the depressed years that intervened.


is facing the necessity of adjusting to a world that has greatly altered in
the period covered by those two World Wars.
The position of Great Britain illustrates the profound changes that
have taken place.

During the nineteenth century Great Britain rose to a posi­

tion of unquestioned primacy in the world.

She was the leading industrial

nation, the world*s bankerj her navy ruled the seas and the sun never set upon
her possessions.

Britain at that time was immensely rich.

The products of

her industry were in eager demand among the food and raw material producing

Her huge business in shipping, banking and insurance brought in a

share of profits from the commerce of many other countries.

The income from

her world-wide investments was very large.
Britain’s adventurous sons had scoured the earth and brought her
back the riches of many lands.

Thus situated, Great Britain was able to main­

tain at a relatively high standard of living a population far larger than
could be supported by her own soil.
In the First World War Britain lost almost the entire manhood
one whole generation.

She lost her primacy as the world's banker.


She ac­

quired heavy external war debts which she ultimately had to confess herself
unable to meet.

Her people, for the first time, found themselves burdened

with onerous and discouraging taxes.

As an aftermath of that war Britain's

pound sterling ceased to be the world's foremost medium of exchange and became


an irredeemable currency.


Her industrial plant became more and more anti­

Yet Great Britain remained a great power and it was Britain in the

end that drew a line past which Hitler could not go without having to fight.
In the Second ’
¿orId War Britain suffered further terrible losses.
The bulk of her foreign investments is now gone.
largely destroyed.

Her shipping has been

Her debts are crushing and her industry is in need of

large-scale rebuilding and modernization.

Add to this the fact that she must

devote much of her energy to the repair of her bomb-damaged towns and cities
so that her people can once again have a place in which to live and work.
Today more than ever it is true that Britain must export or die.
Yet the world has greatly changed since the days of the nineteenth century
when Britain developed the pattern of her industrial economy.

Eastern Europe,

from which Western Europe formerly received much of its foodstuff, is now cut
off behind the iron curtain.

The whole area under the influence of Soviet

Russia is withdrawn from the channels of normal trade and is seeking to
develop a self-sustaining autarchy.

The United States has become by all odds

the leading industrial nation in the world. . Other raw material and food pro­
ducing countries are seeking more and more to develop their own industries.
Among all nations trade is throttled by a spirit of nationalism and the desire
for self-sufficiency.

The ties of empire have been loosened and in some cases

In such a world there is a very real question whether Britain, weak­

ened by two world wars and a world depression, can survive without drastic

In a broad sense what is true of Britain is true of v
festern Europe

- 5as a whole, although there is much variation among the nations.


Europe has a population far larger than can be supported by the food and raw
materials produced by that area.

Its past prosperity was based upon indus­

trial supremacy which enabled it to exchange the products of its factories
for the food and raw material it needed.
has been destroyed.

But the basis of that prosperity

Europe no longer enjoys industrial supremacy.

The tra­

ditional sources of much of its food have been cut off or diverted and in­
creasing difficulties lie in the way of the exchange of Europe’s industrial
products for the food it must have if its people are not to die.
From the standpoint of sheer economics, both short-term and long­
term, the situation is certainly grim enough, but it is further complicated
by psychological and social factors.

The scars of the war show plainly.


the Continent, in the city streets the pock-marked walls of buildings show
where bullets have spattered.

Perhaps there will be a little tablet nearby

saying, in effect, ’Here a hero died for his country”, or perhaps it Trill
merely be left to some passerby to say, "Here the Gestapo took some people
from their homes one night and shot them."

Everywhere there are reminders of

fear and hate and death.
In Great Britain one can sense the weariness left by years of des­
perate effort, nights of terror and danger and the long dreary time of scanty
food, shabby clothes and only work, work, work, with nothing to show for it.
No tiling, that is, except a victory which has thus far failed to bring the
freedom from want and freedom from fear that the common man was promised.
In France there is a sense of frustration left by years of occupa­
tion, of political division and wounded national pride.

- 6 -

Intimately associated with this universal feeling of frustration in
victory is the growing but disagreeable realization that Europe cannot revive
without Germany»

Save possibly in England there is nothing but hatred and

unforgiveness toward Germany in Europe, and yet it is becoming plain that the
idea of reducing Germany to a level of agrarian subsistence will not vrork.
The most important single industrial region in Europe, the Ruhr, is currently
producing virtually no steel and only half its pre-war output of coal»
Europe needs the coal and steel which the Ruhr can produce and which only the
Ruhr can produce quickly enough.

Europe needs to revive at least some of the

old lanes of trade with Germany in order that that country may contribute to
European recovery instead of acting as a continuing drain upon European
Beyond the psychological scars left by the war, there is the contin­
uing influence of the Great Depression and the world-wide trend toward Social­
ism which it evoked.

Obviously from the standpoint of simple economics the

situation in which Western Europe finds itself today is one that calls for
harder work than ever before, and yet, quite understandably, great masses of
the people feel that victory should have brought them the right not to harder
work and a lower standard of living but to less work and a more abundant life.
For many years Great Britain's Socialist labor leaders have been
telling their followers that most of the evils of the modern vrorld were due to
the shortcomings of capitalism.

They have promised that, under Socialism,

poverty and hardship would disappear, the danger of war would vanish and every­
one, except possibly the wicked bankers, would work less and have more.

Yshen the war came to England in 1939 there were able-bodied men

- 7UO years old in that country who had never had a job.

Fear of unemployment

had become deeply ingrained in the working people and a philosophy of go slow
and stretch out the work in order to make as many jobs as possible was fixed
in the mind of labor.
The repercussions upon Great Britain of our oivn New Deal, with its
emphasis upon curtailed production, shorter hours and redistribution of pur­
chasing power, only served to strengthen this point of view in 3ritain.
During the war opinion seems to have crystallized among the majority of the
British people.

They wanted social security from the cradle to the grave,

large-scale public housing, nationalization of key industries, a five-day week,
more leisure, better living, better education for their children, better work­
ing conditions.

Moreover, they were bitter against a Tory party that was

tarred with the brush of appeasement and -which had been in office during the
critical years when Hitler rose to power and when a war that might have been
prevented was allowed to become inevitable.

So the British people elected a

Socialist government! but the dreams and promises have turned to bitterness.
Less work still stubbornly produces less coal.
Unhappily the average Briton still does not grasp the gravity of his
country's position, nor has it yet been made clear to him by Britain's leaders.
There is endless talk of a "dollar shortage," the implied suggestion being
that this is due to American parsimony.

There is much brave talk about the

need for "pulling in our belts" and going on shorter rations and giving up
what few pleasures remain in the dreary life of the average Englishman today.
Actually, of course, there is no shortage of dollars.
great plethora of dollars in the world.

There is a

Ihat is short is goods and the

- 8 -

production of goods.

What is needed is more work, increased efficiency, a

greater willingness to face facts no matter how disagreeable.

And it is a

fact also that pulling in one's belt and reducing one's already scant food
ration, however praiseworthy, vóli not of themselves produce one additional
lump of coal.
There are men in Europe, as well as here, who argue that in the light
of all these adverse factors it would have been better if the United States had
limited its post-war aid and that it will be better if all future aid is denied.
Stripped to its essentials the basic argument of these men is this:

That the

fundamental problem of Europe is poverty, that poverty can only be cured by
hard work, that men will only work hard if the lash of hunger is laid upon
their backs.
Those who reason this way are, of course, men of extremely conserva­
tive social and economic views.. Curiously enough they find themselves in
agreement with the Communists, who also are opposed to American aid.


Communist argument is that American aid means enslavement to the dollar and the
exploitation of Europe by the predatory economic imperialists of Wall Street.
There are other men who argue against any further aid to Europe on
such grounds as the followings

That we cannot afford to feed the worldj that

our aid will only encourage European countries to defer the fundamental ad­
justments they must ultimately makej that our so-called loans to Europe are
really gifts that will never be repaidj that by financing large exports through
government loans we are dangerously adding to our inflation here at home; that
it is a delusion to think we can prevent the spread of Communism by making
loans to Socialist governments; that the billions already spent have produced

only demands for more billions j and that in the end we shall have little grat­
itude but probably much abuse.
There is a good deal of disagreeable truth in these arguments, but
it is not the whole truth.

Lurope is in a most difficult and unhappy position

and Europe is not in all respects behaving very well*
alone that has some difficult decisions to make.

Yet it is not Europe

We also must choose between

alternatives, neither of which is very attractive.
On the one hand, we can help Europe through the difficult period of
recovery and re-adjustment which it faces.
backs I have already mentioned.
struggle alone.

This involves many of the draw­

On the other hand, we can leave Europe to

In this case we will certainly condcmn large numbers of our

comrades in arms to literal starvation; we shall certainly face conditions of
financial crisis and economic depression over a wide and critical section of
the worldj we shall risk the plunging of all Europe into such chaos and misery
as may lead to a political and social upheaval of lasting significance.
We would be foolish to take such a risk in the world as it exists

We must help to bring about an orderly recovery in Western Europe.

But in giving this help, it seems to me, our country might well take the atti­
tude of a prudent banker who is consciously making a rescue loan.
is not likely to be either unlimited or unconditional.

Such a loan

It should not be neces­

sary to attempt to tell our late allies how they must run their internal af­
fairs, but we should certainly ask in broad terms that they show satisfactory
plans and progress in bringing about expanded production and in restoring
financial stability.

Our people will require, and rightly so, that their aid

to the nations of Europe achieve its purpose and they will expect these

- 10 -

nations to undertake such specific programs of self-help and reform as will
bring success to the -whole crucial enterprise*

For our own part we shall need

to show the qualities that made our nation great:

Courage and common sense

and the willingness to lend a helping hand to those who will help themselves.
It is not too much to say that having fought a war to preserve
human freedom in the world, if we now pull back from Britain, France and the
rest of Western Europe, T e may see that freedom for which we fought strangled
before our eyes*

It must not be forgotten that when men are faced with hunger

and privation they have been known to barter freedom for the promise of se­
curity even though the promise is false.
7/hen the choice is stripped to its essentials, there is only one

In a world still reeling and gasping from a five year struggle to

break the stranglehold of tyranny we are the one strong, freedom-loving nation.
V7 cannot now abandon those whom we helped to rescue from one dictatorship to
allow them to fall helpless victims of another.