THE day before Foreign Minister Schuman proposed the pooling of the steel and coal industries of France and Germany any number of statesmen, experts and journalists would have explained why such an offer could not be made. Now they are explaining why it has been made--the greatest gesture toward French-German rapprochement and the economic integration of Western Europe since the end of the war. What seemed but "the shadow of desires of desires" has suddenly become a possibility of practical politics, the daily fare of civil servants and politicians in half a dozen capitals.

By this initiative France has renewed her claim to a position of leadership in European affairs. She has, at one blow, stored up credit for herself in the opinion of much of the western world. Much has already been said and written about the vistas of peace and prosperity opened by the thought of creating "a new community of interests" in Western Europe. Rather less has been said about the aura of ambiguity that surrounds the Schuman Plan. There is, of course, great uncertainty about the kind of economic arrangements that will result from the negotiations. But the ambiguity stems from other sources as well, from the nature of the proposal and the circumstances in which it has been advanced.

The Schuman Plan may provide an end of Franco-German rivalry that is satisfactory to France. It may provide the machinery by which Germany finally dominates France. It may mark the point at which the continent moves sharply toward economic integration without Britain or it may demonstrate that British caution has all along enabled Continental governments to avoid facing decisions they did not care to make. The Plan may increase or decrease the amount of competition in the European steel industry; it may promote the most efficient allocation of production or it may hinder such a development in the interest of high cost producers and their governments. Carrying out the Schuman Plan may weld Germany to the West or it may draw France into a neutral bloc. And so on. On the most elementary level this means that different people will support the Schuman Plan for different reasons, trying to turn it to their own ends. But it also means that enthusiastic slogans, justified as they may seem, are not the best guides to understanding where this project may lead.

When the results of the Paris negotiations are published we shall be able to discuss some of these possibilities more intelligently. Details are crucial. What the Schuman Plan may mean for the economy of Western Europe depends very largely on the "technical details" of the treaty or other conventions, and then on how these agreements are put into practice. Meanwhile, there may be value in speculating on some of the imponderables of the Schuman Plan. This is what is attempted here, and not a systematic or balanced discussion.

II

The origin of the Plan will make an interesting historical study. During the last war many official and unofficial planners hit on the idea of internationalizing the heavy industry of the Ruhr-Lorraine area. As early as 1942 the possibility was discussed in the "War and Peace Studies Project" of the Council on Foreign Relations as a means of controlling the Ruhr. From other sources came plans for international public corporations in coal and steel, as parts of a program of "functional coöperation" in Europe. Since the end of the war Barbara Ward and André Philip, among others, have recommended a similar approach. Many Socialist groups have studied a series of plans of this sort.

When the International Authority for the Ruhr was created, a number of Germans of widely differing political views reacted with a unanimity that was impressive--or suspicious. Much as they disliked foreign control of the Ruhr, they said, they would not actively oppose it provided this was the first step towards international control of the basic industries of all Western Europe. Perhaps this reflected a real desire for European union. Perhaps it was an attempt to combine present acquiescence, due to weakness, with a free hand for the future by postulating a condition that seemed impossible of achievement. No doubt the motives and their mixture varied from one group to another. This situation shows one of the advantages of the speed and surprise with which M. Schuman announced his proposal. Had there been time for the decision of the French Cabinet to be noised about, the chances are that either some of the Plan's enemies, or German groups bent on adding to their stature, would have begun describing M. Schuman's proposal as an acceptance of German demands. Had that view been widely accepted most of the political impact of the French initiative would have been destroyed.

It was not only the Germans who talked of extending the Ruhr Authority to a wider area. The idea has had some popularity in the United States. More important, it has been said that members of the American delegation at the Six Power Conference which drew up the Ruhr Statute in 1948 informally advanced a proposal of this sort. In October 1949, Mr. McCloy suggested the same idea in a speech in London.

There is no evidence, however, that the Schuman Plan was directly inspired from the United States. This is the Communist line, which appears also to be believed by some of the anti-Stalinist left in Europe. The indications are that American officials were as much taken by surprise as anyone else. Of course, in making its decision the French cabinet must have been strongly influenced by the good impression the Plan was expected to make in the United States. Truman, Acheson, Hoffman and others have made statements welcoming the French initiative. M. Monnet has called on some of his American friends for advice in working out the Plan. However, American officials have leaned over backwards to avoid intervening in the negotiations or putting forth prescriptions for the Plan, at least in its early stages. They consider it of major importance that this enterprise originated in Europe and is to be worked out, in a satisfactory manner they hope, by Europeans.

III

Finding possible sources for the idea of the Schuman Plan does not explain French policy. Although the Plan is being worked out by six governments, and may be open to others, it was launched primarily as a new policy in French-German relations. Adenauer was the first prime minister to endorse the Schuman Plan. The French got his agreement to the controversial communiqué announcing the opening of negotiations before they submitted it to the British or other governments.

For several years France has been on the defensive in matters of German policy. On one issue after another the Americans--and to a lesser extent the British--have pressed for action to speed the rehabilitation of Western Germany and to remove many of the restrictions imposed when Potsdam was policy. The French wanted a slower pace and differed from the Anglo-Saxons on the kind and number of safeguards needed against the ultimate danger of a revival of German aggression. The French had their way in the Saar and gained material advantages at the cost of some political embarrassment. The International Authority for the Ruhr looked to many Frenchmen like a cretin instead of the stalwart they had envisaged. As the cold war got hotter and Bonn gained increased independence, many Frenchmen must have recalled how the dreams of the '20s became the nightmares of the '30s. The choice may well have seemed either equal rights--or even a preferred position--for Germany, including virtually free disposition of the Ruhr's resources, or equal diminution of the freedom of action of national governments, the French as well as the German.

In this setting, the Schuman Plan looks like an attempt to cut French losses and establish a wholly new situation at one blow. "In the immediate situation," wrote Raymond Aron in Le Figaro of June 7, "the Schuman project means above all that France is proposing the dialogue with Germany that has been obstinately refused up to the present." The official presentation of the Plan also emphasizes this aspect. Creation of the steel and coal pool "will make it plain that any war between France and Germany becomes, not merely unthinkable, but materially impossible," said the original communiqué approved by the French Cabinet. "If . . . particular stress is laid on the Franco-German aspect of the scheme," Ambassador Massigli explained to Mr. Bevin, "this is in order to give to the grand idea which is the inspiration of the scheme as striking a form as possible, particularly with regard to German opinion."

The Schuman proposals seem to rely on three main elements to nullify, or at least diminish, the threat that the French feel is inherent in being neighbors of the Germans. First, there are the political and psychological results hoped for from treating Germany as virtually an equal and emphasizing that France and Germany together must be at the core of European unity because they are the natural leaders of the Continent and share many problems. Second, creation of a single market for coal and steel would increase and tighten Germany's economic ties to the west; the offer also mentions the prospect of German participation in African development. Third, the "common higher authority" may be relied on to prevent German heavy industry from being put on a war basis. Underlying this policy might be a reassessment of the German position, taking into account the difference between truncated Western Germany with its heavy dependence on imported foodstuffs, and the prewar or Bismarckian Reich. The French might also be counting on the maintenance of Allied security controls in Germany. It is hard to imagine the Schuman Plan being carried out without removal of ceilings on German steel production but the Plan might be compatible with continued prohibition of the manufacture of arms in Germany.

Obviously there are risks in the new policy--if this is the new policy-- but the French may feel they are no greater and perhaps less than those of the old policy, which seemed on the verge of bankruptcy. The Paris correspondent of the Manchester Guardian wrote: "The French Government is fully aware of the danger of an industrial union . . . in which the strongest single steel and coal industry would be Germany's. . . . But the French Government prefers this risk to that of a continued Western European division and the danger that Western Germany . . . should one day transfer her strength to the Eastern bloc, leaving France one vast Dunkirk beach."

If this is what the Schuman Plan means, there has been a radical change in dominant French thought about policy toward Germany. To discuss whether the change is a healthy one and the new risks well calcuated goes beyond the bounds of this article. Is there any significance in the fact that the Schuman Plan stems from the offices of the Monnet Plan in the Rue de Martignac rather than from around the corner on the Quai d'Orsay? It has been said that the Schuman Plan was made by Frenchmen who do not fear Germany. What about the rest of the Frenchmen?

Much depends on what foreign support the French feel they can count on. One reason the Schuman Plan caught the British unawares was that they had assumed, as had most other people, that the French would never go this far with the Germans without being sure of British support. What happened?

Did the French really expect the British to join in the negotiations? If that was a major aim it is hard to believe that the French would have insisted so strongly on formal acceptance of the high authority in advance of negotiations. Lord Brand offered a more plausible explanation to the House of Lords on June 28: "I should say that the French were more concerned to maintain their principle of the high authority in relation to Germany than to see the British taking part in the negotiations. They have the object, I am sure, of making the partnership with Germany very difficult to break."

Does this mean that the French are convinced the pool can be safely undertaken without British participation? Or do they expect that for commercial or political reasons the British will eventually have to come into the Plan on some basis? Foreign Minister Schuman has frequently mentioned this possibility and Sir Stafford Cripps told the Commons, ". . . we are prepared to do our utmost either to join in or to associate ourselves with any scheme that meets with the approval of the six countries now meeting in Paris." But if no such arrangement is made, what will the French think of their position? Will they judge it necessary to manœuvre within the terms of the agreement and take advantage of its "realistic precautions" mentioned by M. Schuman?

Might the French have wanted to keep the British out? The record of the negotiations published in the British White Paper could be read on that hypothesis. The French motive, in that case, might have been the desire to get the full psychological effect of the Schuman initiative by dealing directly with the Germans, or fear that the dragging of British feet during the negotiations would be more damaging to the success of the Plan than British exclusion. This would still leave the way open to ultimate British adherence. What might close the way, or at least narrow the possibilities, would be a French desire to make the pool the groundwork for a continental bloc operating quite independently of Britain. Do the French expect the Schuman Plan to start a chain of events that will lead to a real European union, and are they willing to transmute what now appear as French national interests into the interests of the new entity?

Alternatively, do the French believe that the pool can be constructed so as to minimize the risks of creeping German domination? Do they expect that they can in any case rely on British help in time of need? Is the new French policy based on the belief that the American commitment in Europe makes obsolete the need to depend on Britain for security against Germany?

Whatever answers to these questions may be in the minds of French policy makers, it remains to be seen whether they are acceptable to the French people. M. Schuman's presentation of the Plan was a coup at home as well as in foreign chancelleries. He created a situation which muted possible opposition to the Plan inside France--except, of course, on the part of the Communists. Doubts have been expressed with caution for fear of weakening the French initiative and undermining foreign policy. Industrial opposition has been restrained for fear of the consequences of appearing to put selfish interests before French security. By avoiding details and emphasizing that the means of achieving the Plan's purposes would have to be worked out, the Government reduced the opportunities for critics to support the "principle" while boggling at a "fatal flaw" in the details.

In the circumstances it is very hard to assess French opinion of the Schuman Plan. The bold and striking elements of the Plan's new hope for solution of the German problem and the fact that French diplomacy seems once again able to generate a head of steam call forth public support. In some quarters the fact that the British have been left behind increases the attractions. For others the possible long-run discrepancy between the effectiveness of an idée force and French economic inferiority to the Germans may be disturbing. Against the support to be gained from seeing France in the "rôle of champion of a united Europe," as M. Schuman's communiqué put it, must be set the doubts that may be raised by too radical a departure from the policy precepts of traditional nationalism.

Louis Marin, the aged conservative nationalist, attacked Schuman in the Assembly for having gone too far without consulting Parliament. The risks of inviting German collaboration--as well as constitutional practice--worried M. Marin. Earlier the Government had had a similar brush with right wing and Communist groups in the Foreign Affairs Committee of the Assembly when the chairman's vote was needed to defeat a motion that no decision regarding the Plan should be taken without Parliament's consent. Some French newspapers hinted that disagreement over the prospective terms of the Schuman Plan helped prolong the Cabinet crisis of June and July.

"After having conquered Germany we are offering her what she would have imposed on us if she had won. What did we fight the war for?" The opinion is not surprising, only its source: Pierre Etienne Flandin. General de Gaulle, who traded Jeanne d'Arc's standard for Charlemagne's sceptre some time ago, has been urging rapprochement of France and Germany. When the Schuman Plan was announced he quickly explained that only a reformed and reconstituted French government would be strong enough to meet the Germans on this ground.

The French Socialists have favored the Schuman Plan with some reservations. They fear that the high authority may become a private cartel and some of them, at least, are troubled by the absence of the British. They may also feel a certain chagrin that a good Socialist idea should suddenly become a political act that may bring added strength to the Catholic parties of Bidault, Adenauer and de Gasperi.

The views of individual Socialists undoubtedly vary greatly. The party's position was defined in mid-May by a resolution of the Executive Committee. Four conditions would have to be met if the Schuman Plan was to be successful, said this document. First, the negotiations should include a number of countries, not just France and Germany. Second, the high authority should have the power to impose its decisions on all the participating enterprises so that it could achieve real planning. Third, the members of the high authority should be chosen from people who have never had any financial connection with the private coal and steel industry. Fourth, "the high authority must be made responsible to a supranational political authority emanating from the Council of Europe and having limited but real powers."

The reaction of French steel-makers has been rather hushed but there appears to be a fair amount of opposition--or at least reserve--within the industry. Raymond Aron reports that the industrialists fear the Plan may lead to increased government control. He believes, however, that a more effective reason for industry opposition is that "the specialists are not convinced that the project, in the grandiose form indicated by the French statement, can be realized in the short run." Whether the industry keeps a united front remains to be seen since individual firms may be affected in very different ways. Instead of flatly opposing the Plan the French steel industrialists are more likely to try to turn the new situation to their own advantage. There may well be good opportunities to do so among the intricacies of the practical arrangements that have to be made to put the project into effect.

These reservations and qualifications in French attitudes do not mean that the Schuman Plan will have hard sledding when it is put in concrete form. That depends on events between now and then and the terms of the concrete proposals. What is clear is that a fundamental commitment of the French body politic to the new initiative does not yet exist. As M. Schuman told the Assembly, a treaty will be submitted for ratification, "and then you can say yes, or no, or yes with conditions."

IV

Many people in England were dissatisfied with their Government's handling of the Schuman Plan negotiations, but few of them would have taken a different final decision if they had been sitting in Whitehall. The French insisted that before entering into negotiations the British should accept "the fundamental objectives to be reached," namely, "pooling . . . coal and steel production and . . . the institution of a new higher authority whose decisions will bind" the signatory governments. This struck many British people as unreasonable and a little suspicious. Lionel Robbins hit the dominant note in a letter to The Times: "Like the public in the days of the South Sea Bubble, we are being asked to subscribe without reserve to an undertaking the nature of which shall hereafter be revealed." Or, as the question was put in the House of Commons, "Is the hon. Gentleman in favor of buying pigs in a poke when he does not even know if they are pigs?"

Jean Monnet and some of his advisers visited London to acquaint British officials with French ideas about the way the Schuman Plan might work. Afterwards the cliché, "There is no Schuman Plan," expressed the British impression that while the French had a lot of ideas, some of them were contradictory and there was no general agreement on what ought to be done. There was also some suspicion that the French were counting on the British to do the dirty work of devising workable arrangements and there was a corresponding Schadenfreude when it began to appear that French officials would have to sweat out the drafting in the hot Paris summer. (At the same time, however, British officials had to set to work under Sir Edwin Plowden to devise a counter-plan.)

There seems to be a paradox here: the British rejected the Plan because they knew it meant international control; they also rejected it because they didn't know what it meant. This is one of those apparent paradoxes that is also true. Acceptance of the high authority was a fixed part of the French proposal; what the high authority was to do was open to negotiation. Much play was made in Britain with the difference in national approach embodied in this issue. The French said, "Accept the principle and deduce the consequences;" the British said, "Let us see what we plan to do and then figure out what kind of agency should do it."

Still, many people were dissatisfied. Bevin's illness and the absence of Attlee and Cripps from London during much of the negotiations left an impression that the Government had not devoted its full energies to this crucial matter. "As sorry a piece of diplomatic muddling as the world has ever seen," The Economist called it. When the issue was debated in the House of Commons the most cogent opposition speeches were those arguing that British interests would be better served by participation in the negotiations than by abstention. But on what terms could Britain have participated? Most of the Conservatives and Liberals were careful to avoid saying they would have accepted the French formula; they recommended a reservation of the sort the Dutch had made. This the Government rejected as inadequate, and in any case unlikely to have been accepted by the French. With their brief in the hands of their most able advocate, Sir Stafford Cripps, the Government had the better of the argument. True, the statement in the French memorandum of May 30 that "there will be no commitment except by the signature of a treaty between the States concerned and its parliamentary ratification" may have been an invitation to regard the pledge given in advance more lightly than the British were willing to. But the next paragraph again stressed the great importance of "agreement between participating Governments on the fundamental objectives to be reached." On the face of the record it looks as if there could not have been real agreement between the British and the French, whatever formula was found. For neither side was British participation in itself the dominant objective.

The British Government would have escaped more easily had it not been for the appearance of "European Unity," a policy statement of the National Executive Committee of the Labor Party. The timing of this statement can only be explained either by fearful mismanagement within the Labor Party or by an insensitiveness of some of its leading figures to the climate of world opinion. Initial reactions to the "Dalton brown paper," as Churchill dubbed it, stressed (and to some extent exaggerated) its weaknesses while overlooking its redeeming qualities. The statement suffers from many things, such as lumps of undigested doctrine which sometimes seem inconsistent with other things the report says; treatment of dangers or part-truths or circumstances which may pass as present and permanent facts; and a considerable lack of imagination on some issues if the use of that faculty might lead to conclusions that would disturb some of the flat statements that appear in the text. General statements of support for Western European economic coöperation are somewhat offset by objection to specific measures and a failure to suggest further steps, except that the Strasbourg Assembly should discuss international action to promote full employment, an honest proposal also calculated to embarrass some of the strongest Continental supporters of the Council of Europe.

A major theme of "European Unity" is that to be democratic, coöperation must be intergovernmental and must permit democratic governments to practise Socialism. Some of the reasons for this view are very cogent but part of the bad impression made by the pamphlet came from the unimaginative, belligerent and unduly blunt application of the argument to the immediate circumstances in Europe. "No Socialist Party with the prospect of forming a government could accept a system by which important fields of national policy were surrendered to a supranational European representative authority, since such an authority would have a permanent anti-Socialist majority and would arouse the hostility of European workers." (Italics supplied.) This defeatism cannot read very well to Continental Socialists. There is a real issue here, but elsewhere in the report there is some evasion of the possible conflicts between the kinds of coöperation the Labor Party Executive approves and the "freedom . . . to apply the economic controls" it deems necessary to achieve Socialism.

The tone of much of the pamphlet (but not, on the whole, the section on basic industries) contrasts sharply with the Government's statement at the end of the negotiations which "welcomed the French initiative" and expressed the desire "to be associated with these discussions" and "to do their best to see whether a workable scheme could be produced." In the Parliamentary debate several Labor members showed a hankering after a more active British policy of continental coöperation. Behind these manifestations are conflicting forces that shape opinion in the Labor Party--and among other Britons as well. There is a great heritage of internationalism and a real desire for international coöperation. There are also real difficulties arising from some of the British Government's economic policies, many of which are not peculiarly "Socialist." There is also a reluctance, politically and historically natural, to consort too closely with continental conservatives and reactionaries. In a snappish and unedifying debate in July, the House of Commons quarreled about whether War Minister Strachey had called the Schuman Plan a "plot." What really mattered, as some members pointed out, was whether the attitude of mind that brought him even close to doing so and required him to tell the House, "I regret the tone of some of the expressions which I used about the Schuman Plan," was widespread in the Labor Party.

Because Western European coöperation offers some peculiar difficulties, an increasing number of Englishmen are seeking a larger framework in which to tackle their problems. There are some important statements along this line in "European Unity" that ought to have been loudly applauded in the United States. For instance: "Western Europe neither could nor should attempt to constitute a geographical Third Force. For some time to come its economic stability and strategic defense will depend on close coöperation with the U. S. A. . . . Neutrality is not a possible choice. . . . Outside Britain and Scandinavia there is no government with a more progressive domestic or foreign program than the present U. S. Administration. . . . Until the Soviet Union allows the United Nations to function, as it should, the first immediate aim of British foreign policy must be to construct an organic unity throughout the whole of the non-Communist world." Whether this line of thought is altogether consistent with the pamphlet's argument about Socialism and international cooperation is another question. In any case, much of the Labor Party statement coincides fairly closely with United States policy.

Against the background of these propositions, which are widely accepted in England, it becomes obvious that British caution with regard to the Schuman Plan is due to much more than Socialism. How completely dare Britain merge her basic defense industry with those of the relatively exposed Continent? Considering the tremendous importance of coal and steel in the British economy, can any government forego the right to control them? How would the Schuman Plan affect the perennial economic and political problems of the Commonwealth and the sterling area? Is there a conflict between increasing British commitments in Western Europe and playing a full rôle in world politics?

On the other side, the British can find arguments for going into the Schuman Plan. Even after the negotiations much could be done from the inside to shape the project. Should Britain try to "capture" the Plan and with it the leadership of Europe? There may be commercial advantages in the Plan, or at least disadvantages to being outside it. There is some concern in England about the continental consortium engrossing supplies of Swedish iron ore, and possibly those of Spain and North Africa also.

Fundamental political questions arise as well. So far the British have succeeded in pursuing what they conceive to be their interests on the Continent by more or less old-fashioned means: intergovernmental negotiations, and a holding back from major political and economic mergers. This time something sizeable has gone into motion without them. If it keeps going ahead, can the British afford to stay out? "I say deliberately," Anthony Eden told the House of Commons, "that in all its dreams of wedge-driving Russia could hope for nothing better than the reduction of Britain to the status of observer in Franco-German relations." If Britain goes in, should it be as a new means of furthering old ends, and continuing to be in a position of holding the balance between France and Germany? Or must it be a real step toward creating a new center of gravity in Europe?

V

Many Americans who have welcomed the Schuman Plan have assumed it would tie Germany effectively to the West. It may, but the possibility exists that it may strengthen the forces making for a Europe that tries to be neutral in the struggle between the United States and Russia. At this stage the issue cannot be judged with finality. The subject is a tricky one, especially for an American observer. The evidence is opaque; developments are likely to be ambiguous. There is often no sharp distinction between steps toward the desirable end of strengthening Europe, materially, politically and spiritually, and measures which increase the possibility that Western Europeans may try, however futilely, to disengage themselves from the main currents of world politics.

At a rally of his party in Cologne, after he had welcomed the Schuman Plan, Chancellor Adenauer said that there must be a united Europe which would be "a third power" strong enough to "decide in favor of peace." The statement is equivocal but with editorial changes it could have been used to describe past German policy when the Reich sought to swing between East and West.

French cabinet ministers have frequently rejected neutrality. Some weeks before the Schuman Plan was announced Prime Minister Bidault made one of the first bids for the strengthening of the North Atlantic Pact. But the coming drive for rearmament will increase political and economic strains, the French Government is democratic, and the neutrality idea is alive inside the country. Part of the support for the Schuman Plan may come from these quarters. General de Gaulle, who has sometimes wished away the Marshall Plan and whose antipathy for the British is well known, has argued for French-German rapprochement as the necessary basis for the creation of a separate European power.

If the Schuman Plan provides effectively for the most economic location of steel production in Western Europe, the time may come when Germany will heavily outweigh France in this field. If that happens, will the high authority suffice to nullify the political consequences or will such a community of interests have been created that one no longer speaks of Germany dominating France? If not, German rather than French ideas of foreign policy will prevail and the main issue may become the return of Eastern Germany. R. H. S. Crossman told the House of Commons, "A distinguished German diplomat over here said to me the other day, 'After all, we ran France for five years. We are not going to worry about the terms that are signed. We sign first and change after.'" One need not assume that this is a dominant attitude, or that influential Germans are not sincere in their desire for a western orientation and anxious for rapprochement with France. But the sentiment reflects a political possibility.

Mr. Churchill put the issue in the forefront of British policy. "The question . . . is whether British reluctance to assert herself within a movement towards European unity will not bring about just this very danger of a neutral geographical bloc, and whether we, by standing out, may not become responsible for bringing about the very situation the Socialist Executive in their pamphlet so rightly fear." But he added, "The unity of France and Germany, whether direct or in a larger continental grouping, is a merciful and glorious forward step towards the revival of Europe and the peace of the world."

This brief sketch is not meant to show that the Schuman Plan necessarily makes for a neutral Europe. But it is important that Americans, for whom the outcome is of great moment, should not be blind to that possibility and above all that they should not take it for granted that the Plan necessarily moves the other way.

VI

There is so much to be said about the economic potentialities of the Schuman Plan that this aspect of the question is better left until a more detailed product emerges. Whether the high aims of the Plan will be achieved--"the more rational distribution of production at the highest level of productivity . . . the fusion of markets and the expansion of production"--depends in the first instance on the detailed terms of the agreement.

Are the French prepared to expose their steel industry to substantial German competition? The question excites incredulity, yet that is the implicit or explicit assumption of those who take the Schuman Plan at its face value. It is supported by the official statements of the Plan. At the outset M. Schuman listed the trade barriers and discriminations that would be ended. The Monnet working paper published after the first week of negotiations says that the authority is "to set general rules designed to enable the price system to perform its real function." There are also some indications that the French industry may be in a stronger position than is generally supposed. There has been a substantial increase in French steel output while German capacity has been held down. Some of the new French plants are the most modern in Europe; there has been no significant moderization in Germany. The higher cost of production in France is due in part to the fact that the Germans charge a higher price for their export coal than for that sold domestically. In part the higher cost is due to higher wages and social security charges in France. The Plan would aim to "equalize" these, which must mean raising German wages or subsidizing the French producers. To the extent that these factors are effective, the Germans may be hesitant about too much competition, at least until they get more modern plants. On the other hand, the steel market inside France is tied up in price agreements aimed at protecting the least efficient producers. Many Frenchmen realize that their country would be stronger if these restraints on production and competition could be ended, or at least mitigated. Some of the authors of the Plan may be hoping that they have at last found a way to do this.

The widespread suspicion that the Schuman Plan will turn out to be a cartel, public or private, arises not only from the feeling that "skim milk masquerades as cream," but also from the fact that the history of European heavy industry offers little ground for supposing that a movement in this direction would be very dynamic or have a great appeal among industrialists, whatever their nationality. For some time conversations have been going on looking toward the resumption of restrictive arrangements, if not the full-fledged revival of the prewar cartel. (From the point of view of the French, Belgian and Luxembourg steel-makers this is a good time to begin because the Germans are weaker than they used to be.) Can an international board, instructed to pursue the public interest, impose competition on reluctant entrepreneurs?

It is not only European industrialists who regard competition as a questionable practice. Labor and government officials are not very fond of it either. Perhaps the Schuman Plan will create what Raymond Aron calls "semi-private, semi-public dirigisme." This would not be incompatible with a certain amount of competition which might be limited in type and scope. In any case, as Americans should know, competition among steel plants is not the same as competition among grocery stores. It will be progress if the Schuman Plan results in at least some arrangements that favor low-cost producers, burden the high-cost ones more than at present, and encourage more economic allocation of investment. The obstacles are obvious. For one thing it will take determination to move the Schuman Plan out of the initial stage during which there will be a complex of "transitional arrangements" designed to cushion the impact of the changed situation. Not least of the questions is whether governments will accept the political and social consequences of economic adaptation.

It is so much easier to see how the scheme might work to restrict production and prevent change than to provide for expansion that the burden of proof is on the proponents. However, critics must note that the alternative to the Schuman Plan is almost certainly not a high degree of competition and the most efficient allocation of production, but instead perhaps a private international cartel, or several national cartels with varying degrees of government backing. The result is likely to be a blend of somewhat conflicting tendencies. We shall know more about how they may balance when we see the specific terms of the project.

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  • WILLIAM DIEBOLD, JR., economist on the staff of the Council on Foreign Relations; author of "The Tariff Policy of the United States" and other works
  • More By William Diebold Jr.