The Schuman Plan (1950) and the European Coal and Steel Community (1951)

On 9 May 1950 Robert Schuman, the French Foreign Minister 1948-52, made his surprise announcement proposing the pooling of coal and steel production. Following protracted negotiations, the Treaty of Paris was signed by ‘the Six’ on 19 March 1951, which established the supranational European Coal and Steel Community (ECSC). This created a common market for coal, steel, coke, iron ore and scrap between France, Germany, Belgium, the Netherlands, Luxembourg and Italy. Britain declined to participate in the talks from the outset. The fact that coal and steel were the first economic sectors to be incorpo-

rated into an integrated organisation is acknowledgement of their central importance to nation states’ economic and military power. Coal and steel had provided both the military capacity for invasion as well as being a motive for German and French territorial acquisition. Alsace-Lorraine, a French province, and its iron ore deposits changed hands between France and Germany in 1871, 1918, 1940 and 1945. The Saar, a German district rich in coal, was administered by the League of Nations, 1919-35, with its mines controlled by the French to compensate for German damage to French coalmines in the World War I. Following World War II the French again ran the Saarland for its coal between 1945-57. (Plebiscites in 1935 and 1957 resulted in Saarlanders opting to rejoin Germany.) Robert Schuman himself came from the disputed territory of Alsace. He fought in the German army in 1914-18, had German as his first language and only became a French citizen in 1919. Germany had big reserves of coking coal (used in steel production),

whereas France, not being well endowed geologically with coal, depended on German coal supplies. Geology, economics and foreign policy became inevitably and tragically intertwined – it was a significant component of FrancoGerman relations and rivalry. In January 1923 French and Belgian troops had occupied the coal-producing Ruhr Basin as Germany failed to pay its quota of war reparations (under the terms of the Treaty of Versailles 1919). There was a precedent here as, following defeat in the Franco-Prussian War 1870, France had to pay a five billion franc indemnity in 1871 to Germany whose army remained in France until it was paid. During World War II, under German occupation 75 per cent of French iron ore production and 15 per

cent of French coal output was compulsorily exported to Germany. In 1944 this traffic accounted for 85 per cent of all rail movements in France. At the end of the war in 1945 it was assumed by West European states,

occupied by Germany between 1940-44, that their access to German coal and markets would be safeguarded and German steel output heavily restricted. Steel was the major element in states’ post-war economic reconstruction (needed for railways, buildings, ships, vehicles, machinery). After the war, Norway and the Netherlands started their own steel industries for the first time. The demand for steel was high and there was a shortage of raw material inputs. After the war German steel production was restricted by the Allied Coal

and Steel Control Boards and military governments, whereas in 1938 German steel output amounted to 38 per cent of Europe’s total, by 1949 it was 18 per cent (Milward, 1984, p. 371). The Petersburg Protocols imposed limits on German shipyard capacity, ship size and speed (controls which lasted until 1952) and German steel plants came under the statutory authority of US and UK military governments. The production limit for steel was 7.5m tonnes in 1946. Dismantling of many listed German steel works – Herman Goering works at Salzgitter, Krupps at Essen and Thyssens at Hambourn – continued in French and British zones until 1949. German coal and steel industries were both ‘decartelised’ (the six biggest steel companies were broken into 24 smaller ones) and ‘deconcentrated’ – in 1944 33 per cent of coal production in Germany was controlled by steel companies, by 1947 it was 16 per cent (Milward, 1984, pp. 369, 371, 384-86, 411). In France the Monnet Plan for the Modernization and Re-equipment of

the French Economy that started in March 1946 was intended eventually to make the French economy internationally competitive and, following the ‘lesson of 1940’ to reverse the technological inferiority of the French economy. In 1946 France had 0.5 million machine tools, many of which were 20 years old, whereas Germany had 1.5 million, which were more modern. The success of the Monnet Plan, intended to rectify such relative technological weakness, depended on three conditions being met. The first, according to Frances Lynch, was France getting priority access to the Ruhr’s resources of coal and coke, that is, priority over Germany for the Ruhr’s coal. The second was that French industry must recover and reconstruct before Germany’s economy revived, as German industry had lower production costs (16 per cent lower in the case of steel making). Finally, the Monnet Plan aimed to replace German goods in both Germany and her export markets with French goods (Lynch, 1984, pp. 233, 235, 239). Therefore, as Lynch shows, the Monnet Plan for the modernisation of the

French economy was originally based on ‘the traditional view that French political and economic strength lay in German weakness’ (Lynch, 1984, p. 242). The best guarantee of French security, peace and avoiding a fourth German invasion was not the reassurance of the protection of France by her allies via guarantees in treaties, but by limiting German capacity for steel production and expanding French steel and heavy industry through access

and the ECSC (1951)

both to German coking coal resources and German markets. French foreign policy towards Germany clearly reflected these French national economic interests enshrined in the Monnet Plan – the permanent dismemberment of the German state, the Ruhr being made an International Zone separate from Germany; and the dismantling, deconcentration and decartelisation of the German steel industry. The problem for France was that this policy proved unacceptable to the

Americans and British: it would mean that the US would have to pay continually to keep German steel-making capacity under-utilised and German labour idle to the detriment of the European Recovery Programme as a whole. While it was US policy in 1945 to limit expenditure on Germany (under directive JCS1067) to the avoidance of ‘disease and unrest’, this formula was abandoned with the Cold War and Marshall Aid. The Western Zones of Germany received $3.6bn in 1947-50, which along with monetary reform and the Berlin blockade (the coal and steel kept out of West Berlin ironically helped West Germany’s revival) fuelled economic expansion. Steel production doubled in a year and coal output rose by 50 per cent, and by 1949 industrial output was at 80 per cent of the 1936 level (Kindleberger, 1987, pp. 34-35,196). German steel production, which had been ‘fixed’ at the limit of 7.5m tonnes in 1946, was fixed again at 11m in 1947 by the Allied Control Commission, much to the annoyance of Georges Bidault, the French Foreign Minister 1947-48, who argued that with sufficient German coking coal France and the Benelux could produce any increased output. By the summer of 1948 at the London Conference France had to accom-

modate herself to two approaching unpalatable developments – the gradual emergence of a new West German State and the revival of its economy. Much of the Conference was devoted to the issue of the exact remit of the International Authority for the Ruhr, which had been set up to placate France, over future allocations of German coking coal and steel production controls. Although the International Authority of the Ruhr from 28 December 1948 divided quantities of Ruhr coke, coal and steel between domestic and export markets with a compulsory allocation to France in accordance with the OEEC programme, in reality it had little real power and no control over German coal and steel production, which remained with UK and US military governments’ Coal and Steel Control Boards. It was another rather weak interdependent organisation lacking power and any guarantee of permanence (Milward, 1984, pp. 157, 160). Achieving the conditions required for the Monnet Plan’s success looked more remote with this prospect of a revived German state and economy. This setback to the issue of overriding importance in French foreign policy

was potentially dangerous, requiring an urgent solution. It threatened both national security and French national economic recovery through the Monnet Plan. If France opposed the emergence of a West German state, the British and Americans could go ahead anyway in their Bizone and France would appear as an adversary of German democratic revival: undermining French

Plan (1950) and the

influence over West Germany as a whole and jeopardising any prospect of Franco-German association or co-operation. French planners had to find a way to guarantee the future of its modern-

isation and in effect the Schuman Plan subsequently rescued the Monnet Plan, as it guaranteed continued French access to the resources of the Ruhr (Milward, 1984, p. 475; Lynch, 1984, p. 242). The issue of a Customs Union including West Germany was examined in the CUSG from 1948. German economic recovery meant a rising tide of exports from Western Europe to Germany in 1949, cut off from its eastern sources of grain and potatoes (Kindleberger, 1987, p. 39), revealing both the need for and possible advantages of a common market to France and the Netherlands. Following the 1948 London Conference, Robert Schuman recognised the

urgent need for a radical change in French policy towards Germany. The only alternative (to their 1944-48 policy of weakening and dismembering Germany) was a more positive policy of co-operation or association. Dean Acheson, US Secretary of State 1949-53, recognised that only France could integrate Europe (by 1949 it was clear that Britain would not) and he made a personal appeal to Schuman to take the initiative to reconcile West Germany to Western Europe (Milward, 1984, pp. 391-92). Jean Monnet, who was head of the planning organisation, he was Com-

missariat Géneral au Plan and eventually High Commissioner of the modernisation and re-equipment plan and played a formative role in the Schuman Plan and invented the concept of a supranational body, the ‘High Authority’ to run the ECSC. Monnet, who was neither an elected politician nor a French professional civil servant, led the French negotiations with West Germany and the other four states in 1950-51. He said that without the USA there would have been no treaty (Duchêre, 1994). Jean Monnet subsequently became the first President of the High Authority

of the ECSC. Whether he was, as he is invariably seen in retrospect, ‘the founding father of Europe’, Monnet certainly rescued the modernisation and re-equipment plan and so safeguarded French national economic interests and preserved security, through starting a Franco-German alliance, which has now endured for more than 50 years. Frances Lynch (1984, p. 242) argues that to disguise the highly political

nature of the Schuman Plan the ECSC was created under a smokescreen of idealistic European rhetoric. Statements by Schuman that it was ‘the first concrete foundation of European federation’ were music to American ears and satisfied the US Congress that Marshall Aid was creating a European framework to contain Germany. Dissimulation concealed this second French attempt to reshape Europe’s economic and political environment to suit the needs of the French domestic economy, safeguarding French reconstruction plans by creating a common market in coal and steel, so providing equal access for France to the Ruhr’s resources. What did the ECSC actually do? Schurnan’s original announcement on 9

May 1950 proposed that ‘the entire French and German production of coal

and the ECSC (1951)

and steel be placed under a joint High Authority within an organization open to the participation of other European nations’. The High Authority was to ensure the supply of coal on equal terms inside a common market. France was keen to end the dual-pricing of coal (with German domestic coal prices lower than for exported coal) and discriminatory freight rates that in 1950 made the price of German coke in Lorraine, France, 46 per cent higher than the Ruhr (Milward, 1984, pp. 378-79), giving German steelmakers a significant cost advantage over France. The Treaty of Paris 1951 was a complex commercial treaty establishing the

ECSC as a regulated market-sharing arrangement under supranational control. It was designed to balance the six states’ particular vested interests in coal and steel and to facilitate achievement of national objectives in these two sectors. The common external tariff of the ECSC’s Customs Union was fixed lower than that of France but higher than the Benelux and a five-year transition period was allowed before full operation of the agreement. Italy was allowed nevertheless to retain its fixed tariff to protect its small,

high-cost steel industry within the Common Market. Scrap was included in the agreement as this constituted the prime raw material for Italian electricarc process steel making. Italy also got access to French North African iron ore resources (Milward, 1984, p. 414). There were complicated arrangements for fixing the price of coal. Prices

were set artificially high to allow the restructuring costs of Belgium’s declining coal industry to be subsidised mainly from the Netherlands and Germany by $45m between 1953 and 1958 with another $5m as an export subsidy for Belgian coal (Milward, 1984, p. 399; 1992, Chapter 3). France, negotiating from a strong bargaining position in 1949-51, obtained

equal access to the Ruhr’s resources within the Common Market and the end of dual-pricing and discriminatory freight rates. France had received $205m for coking plant from the High Authority’s investment funds by 1958. In 1952 German steel prices were increased to virtually close the gap between French and German prices prior to the common market in steel coming into operation. Germany also agreed that France would supply the Southern German market with steel for three years (243,000 tonnes in 1952 and 855,000 tonnes in 1954). German car exports from South Germany were manufactured from the output of modern French strip-rolling steel mills (constructed under the Monnet Plan) in the Thionville and Metz area (Milward, 1984, pp. 413-14). Overall German imports of steel doubled between 1953 and 1956 because of the booming German economy and the ECSC agreement. The ECSC created a single common market from six national markets, in

coal, steel, coke and scrap metal, but also safeguarded specific national interests, as in Italy’s case, assisted Belgium grappling with its ailing coal sector and facilitated, through international agreement, French national economic objectives. The essential elements of the Monnet Plan were indeed rescued by the Schuman Plan, as Lynch and Milward’s research demonstrates, the ECSC providing equal access to Ruhr coal and guaranteed

Plan (1950) and the

markets for French steel in Germany Moreover, the supranational High Authority meant the collective day-to-day control and regulation of steel and coal markets throughout the Common Market and therefore within West Germany itself. How else might France and Benelux, in the circumstances of 1948-50, have exercised real, certain, durable or better influence over West Germany’s coal and steel sectors? For Monnet, Schuman and Quai d’Orsay officials of the French Foreign

Ministry the solution by 1949 of a Franco-German association in an integrated organisation under supranational control was inspired by France’s two bad post-war experiences in the 1920s (starting with the failure of the Treaty of Versailles 1919 and the 1927 Treaty) and in 1946-47 (with the Allied Control Council’s ‘fixed limits’ on German steel output being raised regularly). The French were understandably extremely sceptical of the value of treaty guarantees that relied for compliance only on the good faith and consistency of national governments. (France had also broken a ‘solemn obligation’ contracted with Britain in June 1940 by concluding a separate peace with Germany.) The Treaty of Paris 1951, in contrast, created the first integrated organisation offering the prospects of permanent compliance – with a supranational High Authority policing the Treaty and a Court of Justice to settle disputes. This was Monnet’s ingenious solution to the problem of coexisting and conducting business securely with Germany The bold brave political act of Schuman – a massive ‘U-turn’ in French policy to Germany – created a Franco-German alliance that has endured for 60 years and laid the basis for peace and prosperity in Western Europe since 1950. Why did West Germany agree to join this alliance on basically French

terms? What did West Germany hope to gain from the Treaty of Paris 195l? When the Federal Republic emerged in May 1949 made up of the UK, US and French zones, it was still subject to numerous restrictions and controls. The Occupation Statute prohibited full responsibility for foreign affairs, defence or foreign trade, and ownership and decartelisation of Ruhr industries. The International Authority of the Ruhr 1948 undertook the compulsory allocation of coal between domestic and export markets. Konrad Adenauer, Federal Chancellor 1949-63, had as his main objective the removal of these irksome constraints and to obtain full sovereignty for his fledgling state (in fact West Germany could only start negotiations over the ECSC with the permission of the Allied High Commission in the Federal Republic). Adenauer’s strategy for achieving this was full co-operation and close collaboration with the three Western powers. For Adenauer, therefore, political considerations were of upmost importance in negotiating the Treaty of Paris 1951. Adenauer was keen to co-operate with France on equal terms and he insisted on equal terms of entry for the FRG into the ECSC. In the negotiations France was helped by US pressure on the FRG to

accept French terms and by using the International Authority of the Ruhr as a bargaining counter. Professor Walter Hallstein, State Secretary in the Office of the Federal Chancellor 1950, negotiating for the FRG, was told by

and the ECSC (1951)

Monnet that if West Germany accepted the Schuman Plan France would press for the abolition of the International Authority for the Ruhr. Indeed when the Treaty of Paris was signed in April 1951 controls on the

German steel industry were ‘drastically changed’ (Milward, 1984, pp. 412, 420), with the end of most of the economic constraints imposed after the Potsdam Conference in 1945. So the FRG made political gains from the Treaty of Paris by winning

recognition as an equal partner having equal status and by the removal of most of the limitations and controls over steel and coal. Whereas for France the prime motive for the ECSC was economic (Monnet and the planners prepared the plan which Schuman and the Ministry of Foreign Affairs then took up), for Germany the motives were political. Accepting the Schuman Plan and signing the Treaty of Paris was the only way to commence their national rehabilitation as an independent sovereign state. For Adenauer too the stated federalist objective underpinning the scheme

(regardless of whether motivated by idealism or dissimilation) was politically useful. He wanted Germans to avoid what he called ‘bad thoughts’ and come to think of themselves as Europeans. Although initially much of the German and French steel industry was

opposed to a common market and Belgium’s coal industry was hostile (Milward, 1984, p. 419), experience soon proved it to be very much in their economic interests. There was opposition from the SPD in Germany which suspected that the

ECSC was not an idealistic internationalist plan but a Catholic, conservative and capitalist plot. (Schuman, Adenauer and de Gasperi, Italy’s Prime Minister, were Roman Catholics and Christian Democrats, and had German as their first language.) However, Hans Boekler, President of the DGB and German trade unions generally, did not share the SPD’s view. In France, Guy Mollet and the SFIO had reservations: they were disappointed at the British Labour government’s absence and considered that Monnet and the French government were wrong to require Britain’s prior acceptance of a common High Authority before the talks began. Like the SPD, the SFIO suspected a Catholic plot to keep Protestants out. But Monnet had close links with French trade-union leaders and kept them well informed, ensuring that they were represented on the national delegation and dispelling such fears. Why did Britain not join the scheme? Britain excluded herself from the

talks leading to the ECSC as they were unwilling to sign, prior to the start of negotiations, a communiqué: with the other governments agreeing in advance to the ‘pooling of coal and steel production’ and accepting the transfer of national control to a High Authority. For Schuman and Monnet the supranational aspect was vital to French national interests and so non-negotiable. They feared that the UK would work to undermine this essential element of the Plan if it was open for discussion. So Schuman and Monnet made Britain an offer they were sure would be refused. In fact it would have been surprising if the UK had accepted French terms to join the talks as in January 1949 an

Plan (1950) and the

interdepartmental meeting of the Foreign Office, Board of Trade and Treasury had decided to revert to ‘limited liability’ with Europe and prioritise the UK’s relations with the US and Commonwealth, relegating European links to secondary status. The Labour government had nationalised coal in 1946 and the National

Coal Board’s long-term plan was only published in 1950. Neither the government nor the NCB were prepared to relinquish control to a supranational High Authority eventually based in Luxembourg. Herbert Morrison, Acting Prime Minister, is supposed to have said in the Cabinet discussion: ‘It’s no good, we cannot do it, the Durham miners won’t wear it.’ Britain’s rather condescending, aloof, introverted response towards the Schuman Plan had much to do with the fact that UK production far outstripped Western Europe’s. In iron and steel, which the government was preparing to nationalise in 1949-50, UK crude steel output (16m tonnes) was approximately half that of the whole of Western Europe. Europe took only 25 per cent of UK trade, while the Sterling Area took 50 per cent. Only 5 per cent of UK steel exports went to Europe. The instinctive reaction of cautious British officials to the Schuman Plan was not to take any risks with Britain’s steel exports. Why complicate current arrangements by joining the scheme? Moreover, unlike France, Britain relied on her Commonwealth and US connections for access to scarce resources and raw materials. The Foreign Office paid much attention to negotiations for more US steel by arranging to ‘swap’ aluminium and nickel ‘loaned’ from Canada and minerals from Rhodesia for American steel. Even so, some officials like Edwin Plowden, Chairman of the Economic

Planning Board 1947-53, thought there might be economic advantages in it for Britain and Sir Stafford Cripps, Chancellor of the Exchequer 1947-50, also thought that the UK should join but fell ill and could not argue his case. The Foreign Office opposed the plan. Ernest Bevin was enraged when he first heard of Schuman’s announcement in early May 1950, because of the lack of consultation, advance warning and the preconditions attached. On 1 June 1950 the French government gave Britain a 24-hour ultimatum to accept the terms or the talks would proceed without them. Interestingly, when the talks started, without Britain, the objective had altered. Instead of referring to ‘pooling coal and steel production’ as in the 9 May 1950 announcement, the French working paper on the scheme of 27 June 1950 emphasised the High Authority’s role as ‘to contribute to a policy of economic expansion, of full employment, and of a rising standard of living for the workers … it should ensure that the needs of the member countries would be satisfied and exports would be developed without discrimination’. This would be achieved under the best possible economic conditions through the establishment of a broad single market. This appeared both more moderate and attractive as a communal objective.

Nevertheless, the Foreign Office viewed the Schuman process not simply as economic integration but as a move towards the political federation of Europe – Schuman had referred to the ‘starting point for a United Europe’.