PROF THEODORE GEIGER: I had been in Europe, beginning in September of 1945, after I was discharged from the army, and I became a member of a special mission of the United States Government, stationed at the Embassy in London, to help the Europeans restart their economies after the German defeat. And so I travelled over pretty much all of Western Europe during 1945, '46 and '47, although my headquarters was in London, and so I had good opportunity to observe not only what the governments were saying about the condition, but also what people in the street were doing, what they had... could buy to eat, and what their clothing looked like, and more particularly the housing in which they were living, which were often wrecked buildings that had just been temporarily set to accommodate a family, but no... amenities of any kind. So I had a good picture of what Western Europe particularly was like, both at the governmental level and at the level of the people themselves. 1946 was not a bad year in Europe. The Europeans were able to do what they could with what was left after the war, in restarting production, replanting their farms; began to even rebuild the roads that had been wrecked and so on. But the winter of 1946-47 turned out to be an extremely bad winter: heavy snow, unusual cold in Europe, northern and central Europe particularly; transportation broke down, fuel became very short. Most people... most... the most common fuel was coal in those days, not only for industrial purposes but also for heating homes, cooking and so on, and coal was... is a heavy commodity, had to be transported by rail or by road, and with the railroads iced up and not operating, with inadequate rolling stock, with the roads not yet repaired from the devastation of the war, it was very difficult to get coal to where it was needed. And this was true even in England, which produced enough coal for its own needs, but many of the mines could no longer be worked because the machinery had worn out and not been replaced, and...(Clears throat) many of them had been flooded during the war and had not yet been pumped; the ceilings had collapsed in the mine tunnels. And I remember living in London during the winter of '46 and '47; we had no heat from 8 o'clock in the morning until 4 o'clock in the afternoon, and you couldn't even boil water during that period. So things were very difficult, and they were deteriorating rapidly. The food supply... because of the severe winter, the winter crop, wheat crop failed. They replanted in the early spring of '47, but then floods washed away the seeds; there wasn't enough seed, so the food situation became very grim. Many plants could not produce because they could not get raw materials, or they could not get power from the power stations, or their machinery had broken down and there were no repair parts to be had, so production began to drop very precipitously during the spring of 1947. And the governments did not have the foreign exchange to import the needed parts and the needed raw materials, the needed food and the needed fuel. In most countries in Europe... all of the countries in Europe, except for Switzerland, were running very impor... serious deficits in their government budgets. Revenue was falling off because the economic activity was going down; therefore the taxes were... taxation didn't produce the amount of revenue needed. They couldn't float bonds in the market because nobody had the capital to buy their bonds, so they printed money, and inflation therefore was running at a very rapid rate all through the spring of 1947.

TG: Yes, very definitely. This was mainly done by the embassies in those countries. My... the mission of which I was a member did not report on the political situation but only on the economic situation; but I can say that the political situation was equally serious. Naturally, with deteriorating economic conditions, workers went on strike because they weren't being paid, their wages were inadequate in view of the inflation; there were demonstrations in the streets. The Communist parties, particularly in France and Italy, were growing in size. They held enormous demonstrations which paralysed the streets in many cities in France and Italy - very much like what recently happened in France last summer. And... so the political situation interacted with the economic situation. As political unrest and strikes and demonstrations grew, that had a further adverse effect on production; and in turn, the decline of production had... stimulated further the political unrest, so it was an interacting situation. And that was all being reported both by the mission of which I was a member and by the political officers in all of the embassies in Western Europe.

TG: Well, in my talks with the people on the economic side in the continental governments, in France and Italy particularly, the governments were very weak; they were coalition governments; they would last in office for six months, eight months, and then they would fall. So you had these weak centrist coalition governments in France and Italy - in Belgium too, to a certain extent - and of course, no... only military occupation government in Germany. And... so there was great alarm on the part of the non-Communist political parties on the continent, and of the government officials themselves, the civil servants, at the deteriorating political and economic situation, and fear that the domestic Communists in Western Europe would become so active and so disruptive that it would lead to economic collapse, which was probably going to happen anyway unless something was done, and this would give an opportunity to the Soviets to extend their influence in Western Europe. There was also fear at that time... don't forget that the Russians still had... oh, I don't know... three... two or three million men under arms in Germany and Austria. The United States, on the other hand, had... when the war ended in August of 1945, there were 12 and a half million men and women in the armed forces. By the spring of 1947, there was less than a million, and so there was an enormous disparity between the armed forces which Russia had poised in Eastern Germany and what the Americans had left in Europe. And so... (Clears throat) there were always stories in the paper or on the radio about how the Red Army could sweep through the Channel in a week, you see, and this further exacerbated the psychological situation in Europe. People felt that after the exhaustion and the terror and the sacrifice of the war years, that there was nothing in their future for them. Economic conditions were getting worse, political conditions were getting worse; they were powerless to make any decisions about their own future. So, psychologically there was a substantial deterioration of morale in Western Europe during the spring of '47.