No. 46

862.19–Ruhr/2–2151: Telegram

The Ambassador in France ( Bruce) to the Secretary of State 1
secret   priority

4932. Attention Secretary and Byroade. I am in agreement with McCloy’s analysis of situation confronting us on deconcentration of Ruhr industry2 and endorse his request for your support.

At telephoned request of Hallstein, Monnet is sending Hirsch to Bonn today for separate conversations on this question with Federal Government and McCloy.3 Monnet wishes to be certain that [Page 94] McCloyErhard compromise on coal-steel integration represents maximum concession that he can successfully defend before French Government. His decision will depend on whether additional concessions to Ruhr industrialists would in effect establish an artificially-privileged Ruhr industry which would be inconsistent with Schuman Plan. The basic premise of the plan is that customers and resources in common market are open to every industry without discrimination and under terms which permit most efficient producers to draw maximum benefits from their efficiency. Coal-steel integration in Ruhr cannot be consistent with this premise if it goes to point where Ruhr industry can, by sole reason of its priority access to coking coal, expand at expense of other European industry and thereby regain its previous artificially predominant role in Europe.

However, French position on coal-steel tie-up is not nearly as clear as their position on dissolution of Ruhr coal-selling monopoly explained in Embtels 4213 and 4214, January 20.4 Under Schuman Plan even if Ruhr steel plants had ownership of coal mines limited to say even 100 percent of coking coal requirements for present production, French could expect that High Authority could make allocation of coal on some reasonably equitable basis in period of short supply. This assumes captive coal companies will be separately incorporated and managed, and will invoice deliveries to integrated steel units at market prices. Without Schuman Plan, Ruhr steel would eventually control coking coal requirements anyway, and French and European steel industry would not even have hope of equitable treatment. In addition, anti-trust provision (article 61) of Schuman Plan treaty as weakened in recent negotiations would almost certainly permit Ruhr steel industrialists to acquire control of coal production in addition to that permitted under McCloyErhard compromise. I frankly think, therefore, that Monnet would try to obtain acceptance by French Government for whatever deal can be worked out on coal-steel integration provided it does not reach point where it is inconsistent with Schuman Plan. He will, of course, meet difficulties and in any case, as McCloy points out, demands of Ruhr industrialists go well beyond this point.

Hirsch has also been instructed by Monnet to try once again to get general understanding with Germans on questions of future status of International Ruhr Authority, future of control groups under Law 27, restrictions on steel production and capacity in Germany, interim French-German agreement on coking coal, and status of Articles 60 and 61 of Schuman Plan as well as on questions of unit steel companies, the dissolution of coal-selling monopoly [Page 95] and coal-steel integration. I doubt whether he will be successful. A general understanding with Germans has supposedly been just on point of achievement for past two months but Germans have managed to keep questions open to their advantage by swinging back and forth between conversations in Germany on deconcentration and negotiations here on Schuman Plan. In Paris in the last few days, by using the unwitting Dutch as a front the Germans succeeded in reopening anti-trust provisions of Schuman Plan on which they previously had accepted a commitment to US and the French to support. In Frankfort Adenauer is seeking unreasonable concessions on coal-steel and next effort will probably be to use opportunity of expected opposition from British Government and German mining unions in order to reopen again question of dissolution DKV.

French are struggling to close conference before additional ground is lost. Monnet has issued ultimatum to conference that he will close one way or another this Sunday. He apparently hopes to face each delegate with a take it or leave it decision on Articles 60 and 61 before that time, in this way making it clear, if Germans or Belgians do not accept, that conference failed because of their opposition to anti-cartel provisions. If Germans again ask for more time to reach decision on Ruhr deconcentration program, Monnet states that he will postpone conference indefinitely, explaining publicly that it was necessary because of uncompromising attitude of Ruhr industrialists. These plans to conclude will be difficult to accomplish not only because of questions that may arise during Hirsch’s conversations, but also because no one has any idea of what Belgians might do. Sugjens, head of Belgian delegation, disappeared again into Belgium in middle of discussions on Articles 60 and 61. No one knows for certain if he will come back this week or what his instructions will be when he comes.

In my opinion the only real bargaining counter that French now have if the Germans remain intransigent is the threat of Monnet’s resignation from conference. This can only be done effectively when all channels of compromise are exhausted and issue is very clear. Ruhr industrialists are definitely of view that if they succeed in postponing decisions they will inevitably gain complete elimination of all restrictions and achieve preferred position that they seek. Events are already demonstrating this. The Germans know generally, for example, what US position is on PLI negotiations in London; thus terms of proposed letter from Schuman to Adenauer, which would have appeared generous on this issue a few months ago, will now appear almost grudging. The French have pretended for some time that they could pressure Germans by bringing issue of deconcentration to HICOMs for decision, but now that they are [Page 96] faced with this possibility, they realize that they have no assurance that HICOM would act quickly on this issue, that HICOM action would support French position, or that Adenauer would or could accept Schuman Plan if deconcentration were imposed in this way.

I agree with McCloy that every reasonable concession has been made to meet their views. Proposed size of unit steel companies are based on German proposals. Transitional period has been accepted for dissolution of DKV. No obstacles have been created which would prevent Federal Government from carrying out legitimate functions now performed by DKV. Percentage limits on coal-steel integration are actually generous. In addition, French and other delegates have agreed to inclusion of specific provision in Article 61 of Schuman Plan which is for express purpose of avoiding any possibility discrimination against Ruhr industry and which probably goes too far in sense that effectiveness of Article 61 is thereby weakened. Hirsch’s visit will give McCloy and Monnet another opportunity to determine whether there are any further concessions which can be reasonably and safely made. If after they have reached their decision, Adenauer is still not prepared to accept and to stick to the packaged deal, I suggest that you and McCloy carefully consider whether you are willing to place the deconcentration issue before HICOM for decision and to insist on quick action. If you are prepared to see the thing through, then Adenauer should be so informed and told to make his decision.5

Bruce
  1. Repeated priority to Frankfurt for McCloy and to London, Rome, Brussels, The Hague, and Luxembourg.
  2. Reference is presumably to McCloy’s views reported in telegram 6850 from Frankfurt, February 19, supra.
  3. In telegram 5021 from Paris, February 27, Ambassador Bruce summarized a conversation between French Deputy Commissioner Etienne Hirsch and Chancellor Adenauer on February 22 during which Hirsch pointed out that under the Schuman Plan the European countries would create a community among equal partners, which would discriminate against no one but which would also give no one a privileged position or means of dominance. Hirsch stressed that the Schuman Plan was only made possible by the existence of Law 27 and would be inconceivable if the structure of German industry were based on the old prewar industrial combinations. To restore these combinations to a privileged position, Hirsch added, by failing to carry out an effective deconcentration program such as that envisaged in Articles 60 and 61 of the Schuman Plan as well as by Law 27 would make creation of the Schuman Plan community “impossible.” All presently outstanding problems “simply required a decision,” Hirsch continued in response to a remark by Hallstein. “Adenauer closed with remarks that he considered early signing very important from political viewpoint and said that he would occupy himself personally with the outstanding questions in order to expedite a solution.” (862.19–Ruhr/2–751) No record of conversations between Hirsch and McCloy has been found in Department of State files.
  4. Neither printed.
  5. In priority telegram 4447 to Paris, February 23, Acting Secretary Webb informed Bruce that the Department was “very concerned at Schuman Plan developments reported urtel 4932.” Webb added that Byroade had telephoned Frankfurt to see whether McCloy had any recommendations as to further action that might be taken. McCloy had promised to telephone Byroade on February 24 “if he feels further action from this end wld be useful,” and Webb closed by urging Bruce to send any further recommendations he might have. (862.19–Ruhr/2–2151) No record of a McCloy telephone conversation on February 24 with Department officials on this topic has been found in Department of State files.