European Coal and Steel Community Is Established Summary

  • Last updated on November 10, 2022

Established by the Treaty of Paris on the basis of a proposal by French foreign minister Robert Schuman, the European Coal and Steel Community was Europe’s first major attempt at economic integration. France, Germany, Italy, Belgium, the Netherlands, and Luxembourg combined to coordinate their coal and steel industries under one common administration.

Summary of Event

Following the collapse of the European economy in the aftermath of World War II, when Germany was occupied by the victorious armies of Russia, the United States, Great Britain, and France, the creation of the European Coal and Steel Community (ECSC) was the first major effort by the states of Western Europe to create a federal structure. Because this action involved a sacrifice of some of each nation’s sovereignty, the decision was not made lightly. [kw]European Coal and Steel Community Is Established (Apr. 18, 1951) [kw]Coal and Steel Community Is Established, European (Apr. 18, 1951) [kw]Steel Community Is Established, European Coal and (Apr. 18, 1951) European Coal and Steel Community Paris, Treaty of (1951) Coal industry, European Steel industry;Europe European Coal and Steel Community Paris, Treaty of (1951) Coal industry, European Steel industry;Europe [g]Europe;Apr. 18, 1951: European Coal and Steel Community Is Established[03510] [g]France;Apr. 18, 1951: European Coal and Steel Community Is Established[03510] [c]Trade and commerce;Apr. 18, 1951: European Coal and Steel Community Is Established[03510] [c]Diplomacy and international relations;Apr. 18, 1951: European Coal and Steel Community Is Established[03510] [c]Economics;Apr. 18, 1951: European Coal and Steel Community Is Established[03510] [c]Manufacturing and industry;Apr. 18, 1951: European Coal and Steel Community Is Established[03510] Schuman, Robert Monnet, Jean

A number of events laid the groundwork for the ECSC. The first was the widespread humanitarian suffering in the aftermath of war, particularly in Germany. The United States came to realize that its occupation of Germany would be extremely difficult if the German economy, and the economies of the nations adjoining it, were not resuscitated, so it proposed a plan of economic revival that bore the name of U.S. secretary of state General George Marshall.

The Marshall Plan Marshall Plan would provide some $4 billion in aid to those European countries that would guarantee to contribute to their own economic redevelopment. The Soviet Union refused to participate, but the countries of Western Europe joined this reconstruction scheme. To do so these countries had to overcome their fear that German economic revival could lead to the revival of Germany’s military ambitions; France’s foreign minister, Robert Schuman, proposed that the economic revival be controlled by an international agency to ensure that Germany’s former industrial might would be used for peaceful purposes in concert with the industrial base of its neighbors.

The Schuman Plan, Schuman Plan made public by Robert Schuman on May 9, 1950, to an astonished Europe, was in large measure the brainchild of Jean Monnet, a French civil servant who had worked in the 1930’s with the administration of President Franklin D. Roosevelt in the United States and who envisioned applying some of the Roosevelt administration’s economic techniques to Europe. The central concept proposed opening the market of Europe—hitherto tightly controlled by cartels administered by the leaders of the coal and steel industry—to fully competitive bidding; all tariffs on trade on coal and steel among the members would be abolished. Monnet (who became the first president of the High Authority, the administrator of the coal and steel agreement) believed that requiring the elimination of the various special rebates, transport preferences, and other devices used in the prewar era to control the markets for coal and steel would prevent domination of the industry by any one firm or nation.

The proposal, ardently supported by a small movement of Europeans advocating federalism as the answer to the destructive nationalistic wars that had plagued Europe for a century, entailed intensive diplomatic negotiations. The Germans, led by their inspired political leader Konrad Adenauer, saw the ECSC as a way to end the military occupation of western Germany and get a western German government up and running. The French saw the ECSC as a way to free their own steel industry from the domination of the German coal and steel cartels—especially the former, which controlled most of the coal used in making steel in France. The Belgians saw the ECSC as a way to protect their own high-cost iron and steel industry. The Dutch saw it as a way to ensure the future of their own industry in competition with the French and the Germans. Luxembourg, the tiny country whose economy rested almost wholly on its steel production, saw it as a means of survival. The Italians, whose steel producers were generally small and had no domestic sources of coal, saw it as protection for their small, high-quality manufactures.

It took almost a year to negotiate the terms of the treaty that would establish the ECSC. Representatives of all six nations met in Paris and finally, in March of 1951, completed drafting a treaty with one hundred clauses that, when agreed to, would launch the ECSC. This involved the difficult task of shepherding the agreement through six parliaments in the face of strong opposition from politicians on both the Right and the Left. Those on the Right feared the loss of national sovereignty; those on the Left, subservient to the Communist leadership in Russia (which saw the proposal as a kind of mutual-aid treaty among potential diplomatic and military opponents in Western Europe), also opposed the treaty. However, the treaty was signed on April 18, 1951, and during April and May all six parliaments agreed to the terms of the Treaty of Paris of 1951. The treaty entered force on July 25, 1952.

The treaty established four international institutions to control the coal and steel industries of Western Europe. First, the High Authority would run a small, international administration that would establish rules under which the largely privately owned coal mines and steel factories would operate. The High Authority would be supervised by a Council of Ministers, with representatives from all six of the participating governments. Popular views would be represented by delegates from the parliaments of the six members, meeting in a Common Assembly. Finally, legal issues would be decided by a High Court modeled on the U.S. Supreme Court.

The High Authority, led by Monnet as its first president, created a set of rulings under which the products of the European coal and steel industry could be sold. It ended special deals designed to favor particular purchasers. It abolished transport pricing, which had been used in the past to favor particular industries (for example, special taxes levied at the French border on trains bringing coal and iron ore to the French industry had raised costs above those of German competitors). The High Authority also administered a number of loans designed to modernize outmoded mines and steel plants, providing special financial aid and training for displaced workers. It even built worker housing for those workers forced to move because their workplaces either downsized or closed.

The administrative structure of the ECSC was paid for by a tax of 1 percent of the value of the product sold by the coal and steel industries of Western Europe. The revenues thus generated financed not only administrative costs but also loans given out by the High Authority to the private firms to help pay for the modernization of the industry. The U.S. government also supplied funds on loan. The object was to create, insofar as possible, uniform costs across the industry, a goal that necessitated some special arrangements for Belgian steel firms and coal mines (many of which were old and deep) and for the Italian steel industry, which relied heavily on steel scrap for its raw material. The transition period, to last five years, was intended to prod these high-cost producers to bring their costs into line. Special arrangements governed the market in steel scrap, used to some degree by most of the firms but central to the Italian industry.

Significance

The European Coal and Steel Community proved to be the first step in the creation of the European Common Market, European Common Market established in 1957. The institutions of the latter body absorbed those of the ECSC in the 1960’s; the ECSC formally dissolved in 2002, after fifty years’ existence prescribed in its founding treaty of 1951. By tackling just a portion of the economies of the six founding members—albeit one that was central to their prosperity—the ECSC showed all Europeans that economic federalism could work and could lay the foundation for the political federation of which its founders dreamed. European Coal and Steel Community Paris, Treaty of (1951) Coal industry, European Steel industry;Europe

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Bok, Derek C. The First Three Years of the Schuman Plan. Princeton, N.J.: International Finance Section, Department of Economics, Princeton University, 1955. This small work by the later president of Harvard University provides a concise summary of the problems involved in the creation of the ECSC.
  • citation-type="booksimple"

    xlink:type="simple">Gillingham, John. Coal, Steel, and the Rebirth of Europe, 1945-1955. New York: Cambridge University Press, 1991. Based on exhaustive study of diplomatic and other documents, this is a detailed account of the conditions prevailing in the European coal and steel market before the establishment of the ECSC and the complex negotiations leading to its establishment.
  • citation-type="booksimple"

    xlink:type="simple">Lister, Louis. Europe’s Coal and Steel Community: An Experiment in Economic Union. New York: Twentieth Century Fund, 1960. A solid account by an economist who served with the U.S. delegation to the ECSC; the work is based on public documents.
  • citation-type="booksimple"

    xlink:type="simple">Monnet, Jean. Memoirs. Translated by Richard Mayne. Garden City, N.Y.: Doubleday, 1978. Although suffused by his own certainty of his analysis, Monnet’s memoirs do give a useful background to the evolution and the early years of the ECSC, when he was president of its High Authority.

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