1957: America at the turning point

reestablished ‘balance’ through the surrogate arm of the U.S. State Department. Now it remained for the Anglo-Americans to deal with de Gaulle directly. But that was to prove no easy affair. 4

1957: AMERICA AT THE TURNING POINT

While Washington had initially encouraged the creation of a European Common Market, in order to provide a more effi cient market for American industrial and capital exports, the last thing certain circles in the Anglo-American establishment wanted was a politically and economically independent Continental Europe. This problem took on a sinister new twist when, beginning in late 1957, the United States underwent the first phase of a deep, persisting postwar economic recession, with resulting industrial stagnation and growing unemployment—a recession which lasted into the mid 1960s.

The fundamental causes for the recession were not diffi cult to foresee, had anyone seriously sought them. The vast amount of investment into industrial plant and equipment, which had lifted the U.S. economy out of the 1930s depression, had taken place almost two decades earlier, during the wartime industrial buildup of 1939–43. By 1957, plant and equipment, as well as labor-force skill levels, needed to be rejuvenated with more modern resources. The United States in the late 1950s faced the demand of a huge reinvestment into its productive labor force, education system and technology base, if she were to continue to be the world’s leading industrial economy. But, sadly for the United States and the rest of the world, leading U.S. policy circles ensured that precisely the wrong policy alternative dominated Washington in the wake of the 1957 recession.

A debate took place within U.S. policy circles over how to respond to the crisis. The New York Council on Foreign Relations, the Rockefeller Brothers Fund, and others drafted policy options. An ambitious young Harvard professor named Henry Kissinger became an appendage of the Rockefeller group at this time.

The issue was what to do about the deeper implications of the U.S. recession. The natural demand of industry and farmers for cheap credit and technological progress and capital investment was overshadowed by the powerful combination of the liberal East Coast establishment. As we noted earlier, by the end of the 1950s New York banks had merged into enormously powerful concentrations of fi nancial power and were looking far beyond American shores for sources of their profi ts.