Foreign Relations of the United States, 1952–1954, Western Europe and Canada, Volume VI, Part 1

Bruce Mission files, lot 57 M 38, “U.S. Policy”

No. 171
Memorandum of Conversation, Prepared by the Executive Secretariat of the Mutual Security Agency¹

Washington, June 5, 1953.

Participants:

• Jean Monnet, President, CSC High Authority
• Franz Etzel, Vice President, CSC High Authority
• Dirk Spierenburg, CSC High Authority
• Mr. Uri, Chief, Economic Division, CSC
• Mr. Wellensteyn, CSC
• Mr. Rand
• Mr. Bellows—SRE
• Mr. Craig—AD/S
• Mr. Hinrichs—AD/S
• Mr. Whittet—IND
• Mr. McNaron—IND
• Mr. Harlan—PTAD
• Mr. Hopkinson—AD/E
• Mr. Stettner—AD/E
• Mr. Coppock—CA/E
• Mr. Hulley—ERS
• Mr. Kaplan—ERS
• Mr. Bissell—MSA
• Mr. Moore (State)
• Miss Camp (State)
• Mr. Vernon (State)
• Mr. Boochever (State)

Mr. Rand said that the purpose of this discussion was to ask some questions about productivity in the European Coal Steel Community. Earlier discussions at the State Department had dealt with the need for new investment, but MSA officials were now interested in the High Authority’s views on the possibility of a productivity program, and the role the High Authority might play in it.

M. Monnet emphasized that the CSC is, in itself, a productivity program. He agreed with Mr. Uri that the problem of productivity must be tackled on a broad scale, and that the first problem is the creation of an environment favorable to the changes which increased productivity requires: anti-trust legislation, modernization of mines and steel mills, improved housing, and increased use of electric power in the mines so as to conserve coking coal. Mr. Uri described the Schuman Plan program in terms of four features (1) provision of incentives for increased productivity through increased competition and the creation of a wide market; (2) providing investment to facilitate the means for competition and to increase and improve the means of production; (3) association of all people, especially the workers, in the benefits of productivity; and (4) readaptation clauses, which provide for a (a) grant aid to displaced workers to help them look for a new job, change their place of work, or get new training in another occupation and (b) loan aid to enterprises needing to modernize or convert. M. Monnet emphasized the particular importance for increased productivity of the readaptation aid to workers and producers, and of housing. Mr. Uri described the lack of adequate miners’ housing as specifically diminishing production in the Ruhr, and in Belgium, and as delaying the opening of new mines in Lorraine and the North of France. A long-term housing program is also needed, he said, to attract new labor to the steel industry. He suggested that these basic obstacles must be overcome before a productivity program on the technical level can be undertaken.

In response to a question from Mr. Rand, M. Monnet said the community would welcome efforts to increase American private investment in Europe.

Mr. Bissell noted that there is little the U.S. can do to help with the housing problem, which is largely a matter of capital rather than the provision of technical assistance or additional machinery. He inquired, however, whether it was actually necessary that improved housing must precede other efforts to increase productivity.

M. Monnet agreed that improved housing is only a part of the problem. Productivity, he said, depends on many things: the general conditions, antitrust legislation and enforcement, and on housing. In the Ruhr, productivity can be helped largely by housing, modernization of existing pits, and the construction of electric power plants at the pits so as to release the coking coal now being used for power. He reiterated that the CSC’s objective—which cannot be achieved without increased productivity—is to provide, through increased production and through increased availability of resources, some 20–25 million additional tons of coking coal over the next four years in order to (a) eliminate the present dollar imports of coking coal, which have been representing 20% of Europe’s total dollar deficit and (b) provide coking coal for increased production of steel. To reach this goal, he said, progress must be made not only in increased productivity, but also in increasing production and increasing availability of coking coal.

The CSC, he said, will encourage productivity programs by encouraging, and to the extent funds are available, helping to finance, programs proposed by the industries. But he emphasized that development must be by the producers themselves.

Under the Treaty, the High Authority’s mission is to encourage the general objective of productivity, modernization and investment; the High Authority’s method will be to come before the Council and discuss a proposed general program. These discussions can produce an understanding of the general trend, and of the possibilities of the market, he said, but the enterprises themselves must then draw their own conclusions on what action they will take. When the producers have proposals, for which they take responsibility, then the High Authority would decide whether to help finance projects aimed at more production and productivity.

In response to a question from Mr. Rand, M. Monnet stated that the goal of increasing the Community’s steel production from the present 40–42 million to 50–52 million tons over the next five years is based on an expected 8 million tons increase in the Community’s steel consumption over the next five years.

Mr. Rand asked whether there is an opportunity for technical assistance in the industries which depend on steel, in order to increase the demand for steel.

M. Monnet replied that the High Authority would be greatly interested. While the High Authority has no specific power in the field of steel consumption, he said, there are increasing indications that the consumers will be interested. He expected that, resulting from a forthcoming conference of steel users, the consumers will begin to seek the High Authority’s cooperation. He would be especially interested, he said, in hearing what MSA would be willing to do in such a situation, and what kind of technical assistance could be offered.

Mr. Rand replied that the emphasis would be on the fabrication of steel, especially small steel fabrication. Mr. Craig noted that Europe lags far behind the U.S. in the use of flat rolled steel. Mr. Bellows indicated that there is great possibility for technical assistance in the field of product design; the need, he said, is to develop the production of small steel products such as wastebaskets, kitchen cabinets, toys, etc; there would be no need for further investment. A consulting service in market analysis, new product and design possibilities, would help to bring down the unit cost and hence increase the use of sheet metal.

M. Monnet agreed that there are many ways that European steel consumption could be increased without large investment. He said he now believed that the industry would welcome a move by the High Authority to take the initiative in this field, and that such a program would fall within the High Authority’s functions. While it would be necessary to discuss the matter in Luxembourg first, he was anxious to take the initiative. He urged that some people from the U.S. visit Luxembourg to give the representatives there the benefit of discussions with Washington people. The question of market analysis, he said, is very interesting, and there is much knowledge that the CSC must acquire. He said he was most anxious to get some information on the type of program that might be proposed, because he expected the situation to move very rapidly in Europe, and that requests from the industry would soon be received. He proposed further discussions here on Monday, at which MSA might present some examples of what is proposed.

Mr. Rand agreed to arrange a further meeting for Monday,² and said that further conversations in Europe could be continued through Messrs. Bruce and Hughes.

1. The drafter of this memorandum of conversation was not identified in the source text. The memorandum was circulated to the participants as document SN/50 of June 10 along with a covering memorandum and a memorandum of conversation for the subsequent meeting on June 8 (see footnote 2 below). The meeting took place in the offices of the Mutual Security Agency.
2. On June 8 a meeting was held at the Mutual Security Agency of representatives of the Agency, the Department of State, and three officials of the High Authority (excluding Monnet) concerning a proposal by the Mutual Security Agency that the European Coal and Steel Community sponsor a marketing and technical consulting service. A memorandum of this conversation was circulated along with the one printed here as document SN/50 of June 10 (see footnote 1 above).