March 1, 2017

1949. Anticipating the Economic Collapse of the West

The East-West Economic Cold War
Propaganda at Potsdamer Platz in East Berlin around 1950 reads "Wir wollen keine neuen Trümmer! Darum: Ami go home," translated as "We do not want any new ruins! Therefore: Ami go home" (source)
Bill Downs

CBS Berlin

July 2, 1949

The biggest story currently running in the Berlin Communist press is not the lifting of the blockade effected this week; it is not the modus vivendi agreement which is current Russian policy.

Today the entire Soviet-licensed press is quoting its archenemy, The Wall Street Journal, as proof of what it calls the poverty of United States economic and foreign policy.

The Wall Street Journal has caused a dialectical sensation in the Communist press, and they are giving it the kind of headlines that our newspapers reserve for a juicy murder or a spy trial.

The Journal's former Berlin correspondent, Joseph Evans, wrote a story advocating the resumption of East-West trade in Europe and attacking the current State Department policy as negative.

The Communist attention given to this article from the bastions of Wall Street capitalism is interesting, important, and revealing.

The historical position of Marxism is that the Capitalist nations, by the very nature of their competitive economies, must undergo a spiral of ever-increasing violent economic upheavals which eventually bring about their downfall. The Communists say that, in order to perpetuate themselves, the Capitalists must turn their nations toward economic regimentation in the hands of the few—which is fascism—and in order to make profits they must make war.

For the past month the Communist propaganda has been stressing the significance of the decline of the American stock market, and this past week they have been reporting with unconcealed glee the financial difficulties being experienced by nations in the European Recovery Plan.

In other words, the Communists east of the Iron Curtain are waiting for their predictions of imminent economic crisis to hit with full force.

An article from Wall Street which calls for renewed East-West trade, in the European viewpoint, thus becomes big news as a sign of Capitalist desperation—an admission that the only way to prevent a major depression in the Democratic Capitalistic nations of the West is to do business with the Communist-controlled East.

In view of this attitude, the question then is: "If the Soviet Union expects Western Capitalism to enter into another nation-shaking depression, why the softening of its international attitude? Why the modus vivendi agreement on Berlin and East-West trade?"

Economists and diplomats here in Berlin have been asking themselves the same questions. They give two possible answers:

First, that the Iron Curtain countries may be in much more difficult economic straits than anyone knows. We have had no solid production figures from the East since the end of the war. That when the so-called "soft" Russian policy calls for resumption of East-West trade, it means that Eastern Europe needs it as much or more than the West.

The other reasoning by authorities here in weighing the cause of the new Soviet policy goes like this: "If the West is headed for extreme difficulty, the Russians want to do nothing which might provoke the Western nations toward unity, or toward a coalition which, under conditions of crisis, might precipitate an anti-Russian bloc even more solidly anti-Communist than now exists." In other words, according to some observers here, the Russians would like to see each individual Western nation go into its individual economic depression in its own individual handbasket.

There is genuine concern among American authorities here that the interdependent postwar economic complex of America and Western Europe might be heading toward a depression, thus provoking the initial premise of the Communists. If such an economic upheaval strikes in the Democracies, then the nightmare of unemployment, social unrest, and poverty faces the Western World.

The hard fact is that the interdependence of the modern nations now is so close that a stock market failure in Wall Street may mean the fall of pro-American foreign governments. A depression in America can result in the failure of democracy in Europe.

The social and economic forces now at play in Europe will have a profound effect in the United States—in our economy, our government, and our everyday life.

The record of history shows that when a free nation fails to live up to its responsibility to its people and its neighbors the result is chaos, revolution, or war—or all three.

Bill Downs

CBS Berlin

July 8, 1949

It is clear this morning that the struggle between East and West has shifted its ground. The Cold War, which for the past year in Germany has been predominately political in its objectives, today is concentrating on the economic.

Indicative of this new direction in the party line are the headlines of Communist press describing the British pound crisis and today's conference between American and British finance ministers. "Panic in the camp of the Cold War," the headlines say. "Marshall Plan intensifies Western depression—America's extortions."

In Germany itself, the first major test of the two economic systems is in the making. The East German Economic Commission, representing the Russian-sponsored controlled economy, is now negotiating with the Western-backed Free Enterprise Commission from Frankfurt in an attempt to revive East-West trade.

The test will come when this trade begins. The Communists are betting that capitalism cannot find a way out of its economic difficulties without East-West trade—that, by providing this trade, the Socialist states in the Russian orbit will be able to control the economic destinies of capitalism, and thus eventually control the political course of these nations.

I have further information from private sources today that the Communists in the Soviet zone are having their troubles too.

More and more evidence is coming in that a major purge is underway among key German leaders in responsible position of the East German administration. This cleanup also has affected a number of Russian occupation officials, particularly those charged with supervising the cultural side of the occupation. Three Soviet officers in the administration of the Russian-licensed Soviet news bureau have disappeared from their jobs. There is a major shakeup in the Red Army newspaper Tägliche Rundschau. Those Soviet officials who have contact with the Western occupation powers are under surveillance for signs of what they call "infection from the West."

In the Communist-controlled Socialist Unity Party, more than three thousand members have been ousted in the Dresden and Leipzig areas in a major clean-out of suspected cardholders.

The objective of this purge is to create a cadre part of Communist functionaries in Eastern Germany by this fall. The action was under direct order from Moscow.

This is Bill Downs in Berlin. Now back to CBS in New York.