132. Memorandum From the Special Assistant to the President (Randall) to the Chairman of the Council on Foreign Economic Policy (Dodge)1
I have had an opportunity today to study the memorandum to the Council on Foreign Economic Policy, dated November 15,2 which deals with United States policy toward the European Coal and Steel Community, and hope it will not be inappropriate for me to make some comments.
From the very inception of the Schuman Plan, the questions covered by this memorandum have been of absorbing interest to me, and I have tried to follow them closely.
I see them from two points of view: first, in terms of my Government responsibility, and secondly, as a member of the American steel industry.
Actually, the American industry as such is singularly ignorant of this subject matter and displays little interest in it. Except for myself, I know of no one who follows these problems continuously, although there are signs that this may change.
And because of the personal relationships which I have both in Government and in industry in all of the countries that are involved, I receive from time to time many sidelights on the problems.
May I say, first of all, that the memorandum is admirable, in my opinion. It was prepared thoughtfully, and with meticulous care. Factually, I am sure it is correct as seen by our Government staff. But genuine competition is such a fragile plant that its growth cannot be judged merely by laboratory examination of the soil.
Actually, the men who are responsible for the administration of the steel companies in these six countries still have a low order of enthusiasm for competition, and are privately doing what they can to maintain cartel practices.
In the export field, they are quite brazen about it. It is their position that the treaty did not cover exports, and control of export prices and markets is still exercised out of Brussels in a way that is in conflict with the spirit of the Community and that of our American laws. Export control, thus operated, necessarily establishes a high degree of control over domestic prices, without there being any overt acts of agreement.
[Page 353]And let no one think that the cartel principle has been eliminated from the purchase of scrap. Actually, recent pressures from the American steel industry for export controls on scrap leaving this country were brought to pass in large measure by the operation of the Community’s intensive and centrally operated scrap-buying program. The man who controls all of the scrap buying in this country for the Community is Tony Rollman of Luxembourg, formerly of ARBED, and formerly of ECE in Geneva. The agency in this country is Luria.
And at the very time when through these agencies the Community was expressing dismay at the prospect of export controls from this country, they were themselves strictly limiting the export of scrap from the Community. It has for some time, for example, been impossible for any scrap dealer in the Community to sell to other than member countries scrap resulting from the breaking up of ships, which is a very desirable commodity. How this was done, I do not know, but the result has been obvious.
Contemporaneously, the imposition of price controls on scrap either by direct action of the Community or with its acquiescence, inhibited the collection of scrap, because the incentive was withdrawn. In this country we regard it as essential that prices on scrap rise with an increase in demand, for that brings self-interest to bear upon increasing the supply.
The ambiguous relationship of Britain with the Community has only one purpose, namely to be “constructive” with regard to markets. This will, of course, not be found in the documents, nor will it be developed by any legalistic approach to the subject. The British steel industry fears the Community, and this relationship is an effort to achieve the impossible, the preservation of freedom of action for Britain, while at the same time tempering the force of competition.
I am tremendously interested in the suggestion that a United States expert group be appointed to consult with the High Authority on the comparative organization and operation of steel markets in the United States and the Community. That group will have to be selected with great care. It must consist of those who understand steel merchandising, and yet must be made up of men who themselves believe firmly in the values of competition.
One difficulty with the problem is that the steel industry of the Community countries has never learned to sell as we do in the American industry. They do not have many specialists who study the needs of the consumer and secure business for the producer by outstripping competitors in service tailored to the special requirements of the consumer. They haven’t had to sell, because by their control of markets through the central agencies the buyer had to take what he could get. It has been common, for example, for the buyer [Page 354] not to be certain from what mill shipment would come until it reached his plant, thus restricting the close relationship of producer and consumer upon which our merchandising programs rest.
When such an expert group is set up, I should guess that the technical members could be secured by a request made by the State Department to the American Iron and Steel Institute. I am sure that such a request would receive friendly consideration by Mr. Fairless, who is now president of the Institute, and Mr. Max Howell, who is executive vice president. Both of these men now have an interest in foreign problems.
It is my understanding that in Europe the Community now falls within the area of responsibility of Mr. Butterworth.3 Since I have known the Ambassador for some years, I took the liberty of writing him, expressing interest in his assignment and offering to be of any assistance that I could, but I have had no acknowledgment of my letter.4
Mr. Rene Mayer is coming to this country late in January or early February, and it has been intimated that he would appreciate it if I would give a dinner for him in New York through which he might meet representative members of the American steel industry. This I shall be happy to do.
Clarence B. Randall
- Source: Department of State, Central Files, 850.33/11–2255. Secret. Copies were sent to Gabriel Hauge, Special Assistant to the President, and Thorsten V. Kalijarvi, Deputy Assistant Secretary of State for Economic Affairs.↩
- Reference is to Document 126.↩
- W. Walton Butterworth had recently been named U.S. Representative to the ECSC, with the personal rank of Ambassador; he officially took up his duties on February 1, 1956.↩
- No record of this letter has been found in Department of State files.↩