The Schuman Plan, as it was known, had been prepared in the French Planning Commission by Jean Monnet’s staff. It was launched on 9 May 1950, on the eve of talks with the Americans and the British on future controls of the Ruhr’s industry, and was clearly aimed at seizing the policy agenda. The British had been neither consulted nor informed of the proposals beforehand, but quickly ascertained that the organizational form implied too great a surrender of sovereignty, and that they required an entanglement in continental Europe of a nature that was inconsistent with their other foreign obligations. French attempts to persuade them to participate, the sincerity of which has been questioned, were quickly abandoned and, in the summer of 1950, negotiations began. The treaty of Paris, establishing the European Coal and Steel Community, was signed in March 1951 and came into effect in July 1952.18
The stated goal of the treaty was to rationalize the production and sale of coal and steel. To this end, all import and export duties, subsidies and other discriminatory measures on the trade of coal and steel were immediately abolished. Although rules for pricing were established, in ‘normal’ circumstances the market was supposed to be competitive. The Community also managed funds for subsidizing firms hurt by the creation of the ECSC and for retraining workers. These were aimed particularly at the Belgian coal industry, some sectors of which were penalized by a combination of thin seams and high labour costs. Over a transitional period, efficient producers paid a levy to enable Belgian mines to adjust to the lower prices. Moreover, because of the heavy weight of fixed costs, the industry was extremely vulnerable to fluctuations in demand and therefore many of the remaining provisions were intended to come into effect in ‘abnormal’ circumstances; namely, to mitigate the impact of price falls in times of recession. It is curious that although cartel practices were prohibited within the community, the ECSC’s marketing policy in the rest of the world was identical to those that would have been followed by a private cartel.
The innovation in the treaty, and the reason why it inspired such interest among proponents of deeper ‘integration’, lay not in the settlement of a potential political and commercial problem but in the manner of its resolution. The ECSC was administered by an organizational structure which bore many outward similarities to that of the future EEC. It was controlled by the High Authority (HA), a supranational organization comprised of nine independent members assigned by each of the participating nations, which was free to initiate reaction where it had competence and rights to do so at extremes of the business cycle.
The HA co-operated with a Consultative Committee recruited from producer, labour, consumer and distributive interests. It also worked closely with a Special Council of Ministers, in which each country would have one vote, whose role was designed to increase as decisions on coal and steel impinged on wider economic and security issues. The HA was ultimately responsible to the Common Assembly comprising 78 members drawn from national parliaments. Although the HA was the most powerful governing body, the Council could block certain decisions and the Assembly could force the resignation of HA members.19
It is hard to judge the immediate economic impact of the ECSC. The overnight removal of trade controls, without the transitional periods common to most European agreements, was certainly a success. However, for coal and steel, traditional barriers were less important as regulators of trade than they had been in the past or than they were for other sectors of the economy. The coal trade was covered by international agreements in which tariffs did not really play a role; Italy, with a rate of 15%, was something of an exception. For steel, both France and Germany had already suspended tariffs before the treaty was signed and the Benelux tariff had long been fairly low. Again, only in Italy, where an ad valorem tariff of 11–23% had been levied (and which was allowed to remain intact over a transition period) did tariffs have a protectionist intent.
More important was the impact of the ECSC on pricing. The ECSC eliminated the practice of dual pricing and created a base-point pricing system. Although price controls and subsidies were not fully abolished, even small progress on this front eased trade. Moreover, the discriminatory transport-pricing policies of ECSC members were eliminated. By volume, coal and steel were among the most important traded goods, so reduction of cross-border rates of about 30% made a major impact in deregulating transportation. The opening of the coal and steel trade also expanded imports of steel products into France and the Saar, which jumped from 27,700 tons in 1952 to 117,600 in 1953 – a period of low demand with trade barriers in effect for the first few months. In fact, throughout the 1950s, total intra-community trade grew much faster than production or trade with non-members; intra-ECSC trade in treaty products increased 171% from 1952–7, while production increased only 43% and extra-ECSC trade only 51%. In addition to these concrete effects, the ECSC defined the pace and structure of the debate over future initiatives undertaken by the Six. The next initiative took place in the area of defence and security policy.
Although they were soon to be overshadowed by the Cold War with the Soviet Union and its satellites, it is important to remember that security and defence policies had initially focused on the need to inhibit future German aggression. The Treaty of Dunkirk, signed in March 1947, was a long-term Franco-British alliance directed against Germany. When the Brussels Pact was signed a year later and the Benelux countries joined the alliance, they modified its exclusive orientation against Germany by a commitment to ward off aggression from whatever source.20 In the intervening twelve months, the announcement of the Truman Doctrine had highlighted a more immediate and dangerous threat to peace and security from the Soviet Union in the east. Yet the fact remained that had the Soviets invaded, the new alliances were ill-placed to stand in their way. Some have even argued that their very frailty was intended to demonstrate the necessity for American troops and equipment, backed by nuclear weapons if necessary, to be committed to Europe’s defence. Indeed, the secret so-called ‘Pentagon Talks’, which embraced the USA and Canada, started soon afterwards. These discussions came into the open in the summer of 1948 and were widened in their scope, culminating in April 1949 with the signature of the Atlantic Pact, forming the North Atlantic Treaty Organisation (NATO).21
American strategic planning in this period recognized that it would be impossible, even with US troops already on the ground, to defend Europe from Soviet aggression. In the event of an attack, the best scenario was a withdrawal behind the Pyrenees to Spain and across the Channel to the United Kingdom, from which points the reconquest of Europe could begin. A defence line at the Rhine or the Alps was not considered to be plausible before 1957 at the earliest. The only way to bring that date forward was to increase the European defence effort, and to employ the latent military strength of West Germany. Two events accelerated thinking in this direction: the victory of the Communists in China and, more importantly, the loss of the nuclear monopoly signified by the detection of the first Soviet atomic test in autumn 1949. These plans were made public in the crisis atmosphere surrounding the Communist invasion of South Korea which triggered the start of the Korean War. In September 1950, Acheson demanded the rearming of West Germany within NATO whilst pledging both an increase in the number of US troops stationed in Europe, and assistance for an arms buildup elsewhere.
The European reaction to events in eastern Asia was rather more sanguine than that in the USA, and few really saw any link between the Korean war and an increased threat to security in Europe. Given the fact that the rise in raw material prices which had accompanied the outbreak of war had undermined ECSC members’ balance-of-payments positions and weakened their recoveries, they were reluctant to undermine progress further by increasing defence budgets. Still less did they see any immediate necessity for German rearmament. In France especially, this reaction was acute. If the idea of facing a resurgent German industry had filled French policy-makers with dismay, their alarm at the prospect of a reconstituted German army was even greater. Since much of the French army was involved in Indo-China,