A Steel Man Looks at the Schuman Plan

by CLARENCE B. RANDALL

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So MANY mad things have happened in this troubled world in recent months that the Schuman Plan for pooling the steel and coal industries of Western Europe has been shoved to one side by the weary minds and hearts of the American people. It was on May 9 that the French Cabinet made its courageous and revolutionary proposal that a new authority be established, transcending national boundaries, to control the production of coal and steel of all countries in Europe that might wish to join.

I am torn between admiration and anxiety when I reflect on this proposal. I happened to be on the Continent renewing friendships with the steel leaders of France and Luxemburg on the 9th of May, so that I actually saw this diplomatic bomb explode. Since then I have followed each new development with the keenest interest. I am not only concerned for the welfare of Europe, but I sense in the proposal much that may strike home to us in the American steel industry, and affect the w hole fabric of our social and political life. Chicago is not as far from the Ruhr as some people think.

Mark you first that the French proposal was in fact no plan at all. It was merely a gleam in M. Robert Schuman’s eye, but a gleam so powerful that it brightened the world. Until it does become a plan, we cannot appraise it intelligently even though we applaud its author, and that is one of the things that trouble me.

Overwhelming admiration for France’s distinguished Foreign Minister was the initial and universal reaction throughout Europeon that first day. Overnight M. Schuman became the first statesman in Europe, and France recaptured diplomatic leadership. It was the compelling integrity of the thing that awed people everywhere. This was no ordinary politician speaking. Here was a man big enough to rise not only above party but above nationalism, and in the name of peace invite his ancient enemy to the council table. Peace-loving people everywhere were stirred with new hope.

But while the man in the street cheered, governments bumbled. Only Germany struck out boldly with quick and unqualified approval. And the reason for that would not be difficult to guess. Her steelmasters chafe under the limitation of 11.1 million tons of permissible annual ingot production imposed by the Allied military control. Her plants have already exceeded that rate in some months. German leaders want that limit raised, and here, sent from Heaven, was a new forum of public opinion before which they might plead their cause.

The British coughed and sputtered and tried to be both for and against the proposal for several days until their faces were very red indeed. To cap Mr. Attlee’s misery, his Labor Party chose that moment to declare to the world that it would be time enough to talk about partnership in Europe when the governments on the Continent had rationalized their basic industry, whatever that may mean, and had reached the high level of social maturity already attained in Britain. At length, as a sequel to her own ineptitude, England decided to stay out for the present. And that probably is the best possible portent for M. Schuman’s success. There is fundamental disunity that cannot, be resolved between the socialist regime in England, which is committed to the nationalization of basic industry, and the governments of France, Belgium, Holland, and Luxemburg, under which free enterprise thrives vigorously. Steelmakers over there are rugged individualists, as they are here. This disunity has plagued the Allied control in the Ruhr from the beginning, and its disruptive force would probably cause M. Schuman’s conferences to blow apart from the inside. Without England there may be a chance for agrccmenl, but there would be little if she were in. Once a plan is established, however, and results that seem permanent are recognizable, it may be assumed either that Britain will come in or that she will make some side agreement with the new authority as she did with the old steel cartel.

To the extent that we are entitled to an opinion, I am sure M. Schuman will have full American support. Distilled to its essence, the Marshall Plan is simply this: we are over there to make Europe strong that America may be secure. We have gone far toward that objective under Paul Hoffmans gifted leadership. But never since General Marshall‘s speech launched the Marshall Plan has there been any single step that took us as iar toward the desired end as this magnificent gesture from Prance.

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WHY then do I say I am troubled? Why must doubts keep coming back to my mind that all is not well with the Schuman Plan? How can any thoughtful citizen fail to go all out for this inspiring act of statesmanship ?

It is simply that I am a typical American freeenterpriscr who believes in private ownership, private investment, and private management, one who respects the force of competition as the public’s safeguard against price gouging, and one who thinks that production flows and efficiency advances under the hope of gain and the fear of loss.

Will these things survive under the Schuman Plan? Or are we at another crossroads where a false step taken now will lead all Europe ultimately into socialism? In the warm glow of the good will which France has so boldly engendered, will hearts rule heads until statesmen make commitments that cannot be fulfilled without surrendering values which we in America have sought for nearly two centuries to preserve?

When one is disquieted by such thoughls, and turns to the language of the Schuman declaration itself, he finds unhappily that none of his questions are answered. The language is broad and general, as perhaps It must always be in great state documents, and particular sentences which may have carried clear meaning to the author seem inconsistent to the reader.

On the one hand, for example, it says: The setting-up of the high authority in no way prejudices the question of ownership of the enterprises. But on the other hand, it uses throughout the unexplained phrase “the pooling of coal and steel production.” I confess that I am completely baffled as to how you pool things that are unrelated at present and still preserve their separate entities. Certainly if I were the president of a French steel company I should be disturbed to read the following: “The French government proposes that the entire French-German production of coal and steel be placed under a joint high authority, within an organization open to the participation of other European nations.” If the production of my company should “be placed under a joint high authority‘" what functions would they assume, and what would be left, with us? Since we now have complete freedom of action, it seems clear that whatever powers they receive must be taken from us, leaving us less free than we are at present. Shall we have to ask them for permission to make additions to our plant ? If we have been smart in acquiring low-cost rawmaterial, will they tax us to subsidize the less fortunate, as is done in England? Will they tell us what wages we must pay? Will they limit the profit we may make, as though we were a public utility?

And what about prices? How shall the world be assured that M. Schuman is not leading the European steel industry straight into the greatest cartel the world has ever seen, with agreed prices, assigned quotas for production, allocation of territories, and all the familiar trappings of managed markets? Businessmen on the other side of the Atlantic lean that way rather readily, and would not offer the same resistance to that sort, of program that we would here in the United States.

Moreover, the methods of selling steel which prevail on the other side, and which seem so strange to us, form a perfect background for the development of a cartel. In France, for example, all selling is done through the Comptoir des Produits Sidérurgiques. This is a particularly close and restrictive organization which holds steel consumers completely at its mercy. The buyer when he places an order docs not know by what mill it will be filled. The Comptoir decides that, and the power thus created brings automatically the support of prices and the allocating of tonnages.

Governments have done little to upset these practices. They accept them as natural. A politician who demanded vigorous competition might find that he had threatened the existence of an inefficient plant upon which, nevertheless, a community depended for employment.

And politicians whose constituencies touch the German border have a further reason for shutting their eyes to the evils of an international cartel. Germany‘s potential for either war or peacetime competition is still feared by her neighbors, and they would feel more comfortable if her prices and her costs were equalized with theirs. As lovers of freedom these apprehensive industrialists would resent having to get a certificate of necessity from the authority before they could build a new blast furnace, but they might not be hard to persuade that manipulated prices handled under what they would hope would be friendly supervision would be the least of all of the evils. In fact, the circumstances are so favorable to the formation of a new and powerful cartel that in my opinion it can be avoided only by the most vigorous and positive action. And so far there is little evidence that such measures will be devised.

Here again M. Schuman‘s proposal leaves one unhappy. True he says at one point that the new authority will be “unlike an international cartel, whose purpose is to divide up and exploit national markets through restrictive practices,”but at another he says that the transitional period will require “the institution of a mechanism for equalizing prices.” Nowhere is there a positive declaration in favor of vigorous competition and the play of those forces that keep American industry tough, strong, and modern.

This is the special point of danger for the steel industry in the United States. Europe west of the iron curtain has 50 million tons of ingot capacity, just half what we have. But if that 50 million should be controlled by five men sitting around a table in Brussels, they will dominate world markets and set the price for every ton of steel bought by a consumer anywhere in any country on the globe. I doubt if anyone here wants that to happen.

But what to do about it? First of all, can or should the United States have any part in these discussions? The plan was M. Schuman’s idea, not ours. He regards it as his show, and we have all along urged Europe to work out her own problems in her own way. That was why the Organization for European Economic Coöperation was organized. We have not attached conditions to our dollars in terms of social policy, knowing full well that our position would become intolerable overnight if we did. We might hope that our opinion would be asked, but if it were not, what could we do about it?

And if we were asked, who would answer in our behalf? Would it be the State Department or the ECA? Steel production in Europe is almost adequate now, and modernization must be gradual from here on. On the other hand, when you talk about European unite and the partial delegation of sovereignty to a new international agency, it is certainly political. Fortunately, this is no particular problem, for the State Department and Paul Hoffman’s men are working smoothly together.

But whether or not we belong at the conference table, I suspect that in the long run it will be impossible for us to stay away. When our present administration finds time to think about it, it will find itself in a quandary. After all the dollars that we have poured into rehabilitating the European steel industry, wouldn’t the White House find it pretty embarrassing to acquiesce over there in practices which the Attorney General would jail us for at home? Can they permit price agreements there and prohibit them here?

Clearly not, and the remedy is fairly obvious. The basic document by which the authority is to govern must impose the proper safeguards in explicit terms. Private ownership, private investment, and private management must be protected in clear language, monopolistic practices must be forbidden, and a positive obligation must be created to enforce competition.

M. Schuman avoided these problems at the outset by saying that France had no program to impose on Europe, and that all he had asked was that men of good will should gather promptly in Paris, there to ask and there to answer these and other questions. Representatives of Germany, the Benelux nations, and Italy are now in Paris. Meetings June been going forward steadily, but attention has centered on the political questions raised by the proposal for partial surrender of sovereignty to the authority, through which its orders could be carried out without reference back to the respective parliaments. There seems to be a consensus that protective checks and balances must be attached to this phase of the proposal, and that has not been easy to accomplish to the satisfaction of all concerned.

As complexities developed, it came tacitly to be accepted that these other problems would be postponed, possibly even referred to the authority itself for solution. that, of course, would be fatal. No such vital considerations should be left to the accident of the social viewpoint of the men chosen to constitute the new board. If the first men were honest and wise, their successors might be pliable and mediocre. No, these questions need to be settled, and settled now.

I recognize, however, that I am in business and not in government. If I were at a desk in Washington or Paris, instead of in Chicago, I might feel differently. For example, here is a point of view that might be urged. It might be said that it is all very well to take a strong free-enterprise line when dealing with Americans, but that these are Europeans. Their ways are not our ways. They lean on each other and on government far more readily than we do. Steel has been made over there far longer than over here, and their traditions are as old as some of their plants. Would it be wise to jeopardize the whole noble ideal and possibly defeat the economic unity which is so urgently required by pounding the table and demanding that they do it our way? Might it not be better to roll with the punch, and to compromise a bit here and there, if by so doing we could advance our principal objective?

Frankly, I do not share that point of view, but I can understand that it could be held by reasonable and patriotic men in our government service.

Personally, I would make no compromises that would be at variance with the best traditions in American industry, or the fabric of our American laws dealing with monopolistic practices. And I would further safeguard these principles by making sure that if we do go to the Schuman conference table, we place these critical negotiations in our behalf in the hands of men who themselves believe in and understand free enterprise.