ECSC – What kind of result?

Treaty of Paris (1951) European Coal and Steel Community Common Market in Coal and Steel Competition Policy (anti-Cartel) High Authority

Factors involved Political-diplomatic

Resolution of World War II Global politics: Cold War

Economic Reconstruction – immediate The Ruhr – long-term

The “European Movement” and Its Visionaries

Relevant Prior Histories

France and Germany Enemies since 1870 Alsace and Lorraine as locus of conflict Political history vs. economic history

World War I and Its Resolution A mess and a failure: absence of cooperation The Ruhr as a focal point (1923) USA as a non-player or mini-player

The Depression of the 1930’s Economic nationalism: from free trade to intense

protectionism – multiplication of barriers and restrictions Attitude towards “Restraint of Trade” changes Lesson: economic welfare requires cooperation

The Elements of the Story

Reconstruction Germany The USA

Leadership International cooperation Vision and action: the Marshall Plan

The Ruhr: a particular and complex problem

The Visionaries and their “Bold Steps”

Reconstruction

General situation Different national concerns

Britain: “enough money” (dollars) Currency and payments priorities Place in the world The Empire

France: modernization Germany: ?

Common goals and interdependencies Export trade Favorable currencies Welfare state: full employment especially Supply and demand for each other’s recovery goods

The central importance of coal Aims and role of the USA International economic cooperation

IMF, ITO/GATT

Reconstruction: the French case A new economic faith: modernization The method of choice: planning The First Plan and the First Planner

Planning goals: heavy focus on iron and steel, hence need for coal

Top-down approach: “modernization commissions” Dirigisme, dirigiste

A small elite of technical “experts” The man at the helm: Jean Monnet

Implications of the Plan re: USA Implications of the Plan re: Germany

Reconstruction: the French casePithy quote (from Gillingham, Coal, Steel and the

Rebirth of Europe, p. 144)“Rapid German revival threatened both general

French security and the specific investment programs of the plan. Monnet did not want to prevent a Ruhr recovery … and he recognized that without one European prosperity would not return. He did, however, intend to regulate the recovery process, slowing it down when necessary to protect French security, speeding it up when necessary to threaten French Malthusians.”

Germany

Postwar division of Germany- 4 zones Ideology of “Reducing Germany”

Dismantling and Reparations Decartelization as a “substitute” Extremism of the Morgenthau Plan for Germany

Problems with this ideology German revival necessary for European revival –

crucial role of German industry Multiple risks/dangers of Communism in the West Looming Cold War

Soviet vs. USA/UK policy: Bizonia (Jan. 1, 1947)

Germany (cont’d)

Dramatic shift in USA policy towards Germany From Morgenthau to Marshall (1947) Germany as the centerpiece of USA Cold War strategy

A “New Germany” in the Making (1949 official) Creation of Federal Republic under American “eyes”

German Laender as crucial to its “federalism” Basic Law (not a constitution)

The Deutschmark (1948) The “Economic Miracle” Konrad Adenauer

The Security Problem: Lingering French concern Highlights the issue of the Ruhr (American) Threat of German re-armament

NATO Korean War (1950)

The USA

Leadership Striking contrast to post World War I Economic leadership: immediate legacy of the prosecution of World

War II Lesson (to Monnet) of procurement strategy (accent on purchasing as setting

the needs) Political leadership: an unsought role “thrust upon” the USA (the

alternative to 4-power collaboration) Emergence into a superpower

International cooperation International trade: liberalization goal International payments and currency: convertibility goal Peace and security: United Nations, NATO

Vision and action: the Marshall Plan (1947) The radical nature of this initiative The motives (Truman Doctrine) The impact on policy towards Germany The European effect: OEEC, EPU

The Ruhr

What is it, what does it mean? Legacy from the past: a thorny issue

Base of industrial power Core of war-making capacity Point of conflict between France and Germany Tendency towards “association”

Vertical integration (coal and steel) Cartels: “market-sharing agreements”

Rise of Hitler Legacy from the past: an early model of “integration”?

Germans take the lead in steel (1924) 4 nations (Germany, France, Belgium, Luxembourg)

form the International Steel Cartel (1926-1931, 1933-) International business cooperation during Depression

The Ruhr (cont’d)

The Ruhr as a post-WW II problem Economic centrality for European revival

Need for Ruhr coal (by French especially) Fears of German revival (industrial power,

war-making capacity) Focus of Allied policy towards Germany

Dismantling, decartelization, production limits Level of Industry Agreement (1946) International Ruhr Authority (1949)

Sidenote: 1949 – IRA, NATO, FRG

The Story of Integration

Change of Plans at High Levels - 1947 Towards Germany (Bizonia) Towards reconstruction (long, needs help) Towards “Europe”: Marshall Plan

“Integration” becomes USA “cause” What it means to the Americans Condition of acceptance of Marshall Aid

Britain drops the ball Different priorities than others Concern for national sovereignty

Intergovernmental preference for international organizations

Conclusion: USA-Britain cooperate very well politically and not so well economically

The Story of Integration (cont’d-1) France (Jean Monnet) and USA “discover” one

another Monnet’s personal ties with the “Anglo-Saxons”

(notably in Washington DC) Monnet (head of French Plan) needs investment

funds Washington needs a European advocate for trade

liberalization/integration The obstacle for both: French weakness towards

Germany The danger of substituting a Franco-German for a

Franco-British partnership

The Story of Integration (cont’d-2) Moves towards European unity

Economic: Benelux, OEEC, EPU Political: Council of Europe (The Hague) Defense: Western European Union (WEU)

The Big Move: Schuman Plan Context: Several matters come to a head

French need for, yet fear of, German revival intensifies – furor in Paris in June 1948 over raising steel production quotas

Cold War pressures: fear of an American-imposed settlement based on Cold War priorities

Founding of the Federal Republic of Germany and the demands of its citizens for respect and jobs

The abdication of the British The continuing problem and untenable status of the Ruhr

Monnet and Schuman – 2 very different personalities find a common vision and cause

The Story of Integration (cont’d-2) Monnet’s Ingenious Idea

An international authority in “one” (actually two inter-related) industrial sector, rather than an international protectorate over one territory: functionalism replaces territorialism in resolving problem of Ruhr

Make war forever impossible between the contracting parties (sold to the public as such) – peace

Complete freedom for German (coal, steel) industry, but within a guaranteed “free-market” (not cartelized) economic space

Adequate supplies for French modernization and export markets for iron and steel products in high-demand areas

Conclusion

ECSC – Treaty signed 1951, begins 1952 The Six: France, Germany, Italy, Belgium,

Luxembourg, Netherlands High Authority: Monnet’s strong dirigiste

approach Monnet as first president of HA (resigned in

1954) “The success of a failure” – launching pad for

European integration From economics (ECSC) to “high” politics

(EDF) and back to economics (EEC)

“The Success of a Failure”

Source: Gillingham, p. 299“The European Coal and Steel Community made good only one

promise, the most important one: It advanced the process of integration. This success grew out of failure. Little remained of Monnet’s ambitious plans when he decided to step down as president of the High Authority in November 1954. Decartelization had given way to reconcentration. The High Authority, designed as suggested by its exalted and forbidding title to convey orders from above for execution from below, was beset by paralysis. The common markets created to discipline heavy industry had become its common property. Yet the disappointments of the ECSC did not result in a reversion to the nationalist-protectionist order of the 1930s. The “relaunching of Europe”…aimed at something far more ambitious than the common administration of a single sector of West European industry; the statesmen of the Six now sought “complete integraton” … --- the eventual creation of a single communitywide environment for economic activity.”