WESTERN EUROPE: The Fourth Force

When the history of the 20th century is written, last week is likely to prove one of its watersheds. For in the seven days which spanned 1958 and 1959, Western Europe began to flex its economic muscles for the first time in a decade, and took its biggest step toward unity since the death of Charlemagne 1,145 years ago.

The simultaneous plunge into limited currency convertibility taken by ten European nations (TIME, Jan. 5) was a dramatic measure of Europe's recovery from the catastrophic economic consequences of World War II. Part of Europe's new confidence in its own currency rested on a decreasing dominance of the dollar. Last year U.S. imports ran considerably above U.S. exports, with the result that $2.2 billion in gold and half a billion in dollars flowed out of the U.S. into foreign treasuries. Armed with increased gold reserves and with the knowledge that the German mark or Swiss franc is just about as desirable a currency as the inflation-dented U.S. dollar, all of Europe's trading nations felt strong enough to accompany Britain into convertibility and thereby to divide the risk of doing so.

Virtually the only European voice raised against this dramatic step was that of British Labor Party Leader Hugh Gaitskell, who charged that it would make the pound "more vulnerable to speculation." (At least part of Gaitskell's fear came from his awareness that a Labor election victory, with its emphasis on welfare-state spending and other inflationary actions, would probably weaken international confidence in the pound.) To the rest of Europe's politicians and money managers, the fact that their nations had at last begun to move toward full convertibility was a source of pride and new hope. Glowed "the engineer of the West German miracle," rotund Economics Minister Ludwig Erhard: "Who will blame me for feeling deep personal satisfaction? After all, it was I who eight years ago in a world of destruction, disorder and disbelief called for convertibility. What did I get? Mockery and scorn. Yet of all conceivable forms of integration in the free world, free convertibility of currencies is the most fertile."

The Dream of the Franks. The timing of convertibility was largely determined by the other major event of the week, the planned birth on New Year's Day of the European Common Market. The boundaries of this new entity are roughly those of Charlemagne's Europe (Charlemagne ruled more of Germany, but only half of Italy). But this new super customs union, among states which remain politically sovereign, has a power potential undreamed of by the 9th century Franks. The 166 million people of the Common Market nations produce more steel than Soviet Russia, do more of the world's trade (one-fifth) than the U.S. No warrior hosts throng around the eight-story Brussels headquarters of the Common Market. Calm-voiced Walter Hallstein, 57, the onetime German law professor who is the Common Market's chief administrative officer, is no Charlemagne. But he has powerful weapons in the freely given adherence and common aspirations of the people of six nations.