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

Conference files, lot 59 D 95, CF 237

No. 211
Summary Minutes of the First Meeting of the Coal and Steel Loan Negotiations, Washington, Thursday, April 8, 1954, 10:30 a.m.¹

limited official use

Washington, April 8, 1954, 10:30 a.m.

Participants:

• Mr. Dulles
• Mr. Humphrey
• Mr. Rand
• Mr. Merchant
• Mr. Monnet
• Mr. Potthoff
• Mr. Giacchero

Secretary Dulles opened the meeting by welcoming M. Monnet and his associates in the Coal–Steel Community. He stated that this meeting had important historical significance since it was the first time the United States has had the opportunity to deal with a sovereign Community representing more than national states. This Community was of profound significance to the United States, foreshadowing the unity of Europe.

The Secretary stated that the President of the United States personally takes a deep interest in European integration. The meeting today is an outgrowth of the President’s suggestion last year on the possibility of extending assistance to the Coal–Steel Community. He referred to the exchange of letters last year between the President and the Chairman of the Foreign Affairs Committees of the Congress,² from which this meeting developed. The United States, the Secretary emphasized, is happy to consider ways of extending tangible evidence of our interest in the Community.

The Secretary then suggested that M. Monnet present his thoughts on this subject and outline the basis on which to negotiate. This was important since the United States was not going into the banking business and was not invading the field of private banking operations. The United States accepted the principle of negotiating a loan to the Coal–Steel Community as an exceptional act. It could be explained only by the great interest of the U.S. Government in the Community and as an exceptional way of expressing U.S. faith in this activity.

M. Monnet expressed his thanks for the U.S. invitation and for the Secretary’s welcome. He appreciated this concrete way of implementing President Eisenhower’s recommendations for assistance to the Community and recognized the exceptional nature of this step to negotiate a loan.

He wished first to make some general remarks on the progress of the Community since last year’s meeting with representatives of the United States. The Coal–Steel Community, Mr. Monnet emphasized, was not only coal and steel, but was primarily the beginning of a united Europe. This was its original and main objective and it was only in this sense that the Community’s progress can be judged.

He stressed three main points in the progress of the Community. First, there has been progress in the establishment and recognition of the Community’s institutions, the High Authority, the Assembly, the Consultative Committee and the Court. The countries of the Community have accepted the existence of an Authority which transcends national authority, an Authority which makes decisions which are accepted by the national Governments. These Governments do not resist decisions they consider wrong, but instead appeal such decisions to the Court, which is, in fact, the beginning of the Supreme Court of Europe. The Court’s decisions are final and must be carried out.

The Assembly of the Community, M. Monnet stated, to which the High Authority reports publicly, has met several times and has become a living institution. The High Authority takes no decision without full consultation with member Governments and the Consultative Committee. The institutions of the Coal and Steel Community are the first European institutions with the power of decision extending beyond national frontiers.

The second element of progress in the past year has been the development of the common market of 160 million consumers. The High Authority is in the process of eliminating all barriers that prevent the free flow of coal and steel among the six nations of the Community. Although the job has not been finished, the High Authority is well on the way toward eliminating such barriers. For example, quotas, dual pricing, certain subsidies and transport rate discriminations have already been eliminated. By the end of the year the High Authority expects to have eliminated all barriers within the Community which have prevented the operation of the free common market in coal and steel.

M. Monnet noted as the third point the fundamental progress being made toward the creation of a dynamic economy. This is being accomplished through the elimination of inefficient producers instead of protection of such producers through a cartel system. In the case of steel this is being accomplished through the freeing of prices and the publication of price lists. Steel prices have been reduced and competition among producers has been introduced. There has also been an increase in the movement of coal and steel within the Community.

The High Authority is in the process of dealing with the cartel problem. A beginning is being made toward the elimination of coal cartels but this cannot be done overnight. The High Authority has already eliminated some cartels, for example, those in the field of scrap.

The changes described above, M. Monnet stated, require development which in turn requires investment and resources. The High Authority is now in a position to assist in the financing of production and in changing conditions in the capital market of Europe. The High Authority has now established its credit on the basis of its taxing power and is now in a position to borrow. The size of the loan from the United States must be determined by the United States. M. Monnet hoped, however, that the United States would take into account, in determining the size of the loan, the magnitude of the High Authority’s task and the importance of the new relationship between the United States and the High Authority. He closed by saying that he was not asking for a grant, but for a loan repayable on the basis of the High Authority’s credit.

Secretary Humphrey opened his remarks saying that he was thoroughly convinced of the soundness of the Coal–Steel Community. The High Authority was doing an effective job and making excellent progress. He stated, however, that he must be realistic in the negotiations regarding the size of the loan. He pointed out that the United States has not balanced the budget and that this represents an acute problem for this country. Further, there is a growing problem facing the coal and steel industry, although this is not to be attributed to the Coal–Steel Community. This difficult situation, however, does color the attitude of these industries toward a loan by the United States to the Coal–Steel Community. This does not mean, however, that the United States is not prepared to cooperate with the Coal–Steel Community since assisting the High Authority to become the capital banker for the Community will strengthen the CSC and be a powerful step toward European integration.

Mr. Rand, Deputy Director of the Foreign Operations Administration, declared that he was much impressed by the progress of the Coal-Steel Community. He hoped in later discussions that such problems as Belgian and German restrictions on U.S. coal imports and other issues related to the proposed loans would be discussed.

Mr. Potthoff, a member of the High Authority, spoke of the active support and participation of workers and free trade unions in the program of the CSC. Workers are represented on the Consultative Committee and through this organ have opportunities to discuss social and economic problems of special interest to them. He noted that worker interests have expressed the hope that investments in the CSC will lead to a reduction in production costs and lower prices.

Mr. Giacchero, a member of the High Authority, stated that the proposed loan was of the highest importance for it represented a new bond between a resurgent Europe and the United States. It would prove to the European peoples that the United States was interested in raising living standards in Europe and in European political integration. In the case of Italy, the common market for steel has already resulted in lower steel prices and in substantially increased steel consumption in the past year.

Mr. Dulles suggested as a basis for future discussions the negotiating group first take up some of the major problems involved in the loan and that after these first questions were settled, the United States would be prepared to submit a draft text of the loan agreement. He then read a draft press release which was accepted by all parties. (Press Release attached.³) He then turned the meeting over to Mr. Merchant.

Mr. Merchant began by emphasizing the desirability of bringing the negotiations to a successful conclusion as rapidly as possible. For future discussion he suggested certain broad subjects which he felt should be considered prior to the discussion of the text of any agreement. These problems included: (1) terms of the loan, amount, rate of interest, currencies, and amortization; (2) general purposes to which the loan funds would be made available and categories of investments; and (3) references in the agreement to objectives of the CSC Treaty such as the establishment of a broad competition market free from public and private restrictions. The United States would also like to raise with the High Authority certain other questions in connection with the proposed loan, such as (1) assurances that enterprises will be able to make purchases on the basis of competitive considerations without obstacles being imposed by Governments; (2) commitments by the High Authority to ensure the re-transfer of such dollar amounts as are necessary for the servicing of the loan; (3) elimination of restrictions by CSC member Governments on imports of U.S. coal; and (4) the High Authority program for action against cartels.

The meeting adjourned at 11:55 and scheduled another meeting for 3:00 p.m. that afternoon.

1. information concerning the preparations for these negotiations and the arrangements for the meetings, see Document 209.

   No list of participants was provided in the source text; the names listed here were taken from the text of the summary minutes.

2. For information concerning the exchange of correspondence under reference here, see Document 172.
3. Not printed here. For the text of this press release which announced the opening of the loan negotiations, see Department of State Bulletin, Apr. 26, 1954, p. 622.