Time for Togetherness

U.S. stockholders may think that they are hurting, but European stock buyers are hurting worse. In the great May 1962 plunge, the majority of European stock markets fell faster and farther than the New York Exchange. In Switzerland and West Germany, indexes dropped 40% below their alltime highs, v. Dow Jones, which dropped 23%. Having dropped farther, most European exchanges are showing even less recuperative power than Wall Street. ''Pessimism reigns supreme," lamented the Milanese financial daily 24 Ore last week.

Signs of Slackening. Each European exchange has its own local reasons for being dispirited. But there is also an overall fear that Europe's mighty postwar economic rebound is slowing down. Fortnight ago, Robert Marjolin, one of the Common Market Commission's three vice presidents, declared that he detected in Europe all the classic symptoms that herald the end of an economic boom, and speculated that "a recession might occur at the end of 1963 or later" And last week Sweden's Per Jacobsson, much respected head of the International Monetary Fund, reminded his fellow Europeans that "business expansion does not go on forever," and warned that he saw "signs of a slackening in some fields."

Europe's principal worry is a critical labor shortage, which has brought on a rapid rise in wage levels. The result has been a profit squeeze that has led many firms to cancel expansion plans and forced them to raise prices. Higher prices have hurt exports, while wage boosts have increased consumer demand, which has raised imports. Economists agree that increased consumer spending cannot offset the downward pull of reduced corporate spending and exports.

The Great Task. No one yet talks of a severe recession in Europe. Italy's vast labor pool in its poverty-ridden south and France's hundreds of thousands of repatriates from Algeria give those two nations manpower to draw on. Other European nations presumably are in for nothing worse than a sharp reduction in the rate of economic growth.

Both Marjolin and Jacobsson believe that right action can counter a descending economic spiral. Jacobsson believes that the great task of his final year as IMF chief will be to persuade the governments of all industrial nations to adopt in concert policies to encourage business expansion--notably stepped-up government spending and easy-money interest rates. The Times of London last week voiced the fear that without such a coordinated drive, "the European economy may slow down at the same time as the American"--a coincidence of events that has not occurred since the Great Depression.

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