Holland's Economic Disaster
The true magnitude of the economic blow
that has been dealt Holland by the recent floods
will not be measured precisely for some time to
come. Preliminary estimates run as high as
$1.3 billion. The evidences of destruction and
the obvious extent of the rehabilitation which
will be necessary offer little hope that the final
figure will be lower.
Beyond the human side of this tragic event,
it is ironic that this disaster should have struck
at the very time when the little country had
brought its economic fortunes to a high state of
recovery and had Just announced its own deci
sion to forgo United States economic aid during
the current fiscal year. It was in this brightened
atmosphere that the Hague government had
planned to welcome Secretary of State Dulles
and Mutual Security Director Stassen during
their current European trip.
Both American and Dutch authorities were
fully aware that the favorable situation of the
current year was due in large part to several
non-recurring factors and that Holland's dollar
position had not been restored to permanent
balance. Two of the non-recurring items were
the payment in dollars to the Netherlands of
a surplus to its credit in the European Pay
ments Union and a reduced requirement for
the purchase of raw materials from the dollar
area. On a longer-term basis, there has been
a consistent upward trend from 1947 through
1952 of American imports from Holland, the
value in the first of those years being $19 mil
lion while that of last year was $150 million.
Nevertheless, normal Dutch purchases from the
United States have greatly exceeded the reverse
flow and are estimated for 1952 as $270 million.
Before the floods, Holland's hopes for con
tinued improvement in its dollar position rested
upon several possibilities. One was the "trade,
not aid" principle; another was that its skilled
industriessuch as shipbuilding and manufac
ture of electronics equipmentwould benefit
increasingly from the offshore procurement
part of the mutual defense effort. The Dutch
had also helped their own situation by resort
ing to classical measures to combat inflation,
namely, increase of the official bank rate, in
crease of taxes and limitation of bank credits.
The potential of these constructive devices
remains today but their capacity to make Hol
land independent of foreign economic assist
ance has been sadly impaired. Terrific demands
will now be imposed upon Dutch industry, for
example, to repair itself first and then to con
tribute to the internal rehabilitation of the
country. The share of its energy that can be
channeled toward foreign trade or participa
tion in offshore procurement has been reduced.
There is no doubt that Holland can and
will do much to speed its own recovery but the
encouraging colors of the preflood picture have
now taken on the somber cast of the very waters
that have worked so much damage.
