Jean Monnet, the first President of the High Authority, presented a detailed introductory report12 to the Committee meeting of 5 May 1953 describing the less than rosy situation in the sector and the measures the High Authority intended to take to tackle it.
Domestic production could not keep pace with the increased consumption of both coal (which at the time was the most important source of energy) and steel, an essential material in the manufacture of durable capital goods, then a growing sector13, making it necessary to import large amounts of coal from the United States; between 1946 and 1952 those imports amounted to 96 million tonnes and added some two billion dollars to balance of payments of the Six. The situation for steel was different, with exports from the Six of 33 million tonnes between 1949 and 1952 with a value of three billion European UA. These exports were essential to the European economy and had to be maintained and developed by making the Community steel industry more competitive.
In point of fact the European steel industry had lost market share in the previous forty years compared to the United States and the Soviet Union: in 1913 the amount of steel produced by the Six was slightly less than that of the USA and six times more than that of the USSR whereas in 1952 production by the Six was half that of the USA and only slightly greater than that of the Soviet Union14.
The basic objective over the next four or five years was to put European industry in a position whereby it could satisfy internal consumption by developing productivity, and to do so against a background where internal credit offered scant encouragement either to continuity of funding or cost of funding, a factor which impacts negatively on prices. Despite the circumstances, a High Authority survey showed that investments in undertakings amounted at the time to five billion dollars, two billion of which had
12 Annex to the analytical report of 5 May 1953.
13 The High Authority forecasts an increase in coal consumption over the five following years from 260 million tonnes in 1952 to 280
tonnes and for steel from 42 million tonnes to 50 tonnes in the same period.
14 According to the data supplied by Mr Monnet, in 1913 the Six had produced 25.2 million tonnes of steel, the United States 31.8 tonnes
and what was then Russia 4.4 tonnes; in 1952 the Six produced 41.8 tonnes, the United States 83.2 tonnes (despite hard-hitting strikes) and the USSR 34.5 tonnes, not counting production in the satellite States.
already been spent; this meant that the production objectives given by Monnet would be able to be exceeded in 1956, ahead of schedule. The Investment Committee called the accuracy of those data into question during meetings in May and June 195315 and in the report presented to the Chamber16.
According to Mr Monnet’s statements, the Community intended to pursue these objectives while avoiding authoritarian dirigisme. The President of the High Authority was in fact of the view that the identification of projects in which to invest should be left to the initiative of individual undertakings. Against that background investments eligible for Community subsidies would be selected solely on the criterion of the general objective laid down by the Treaty, namely to: progressively bring about conditions which will of themselves ensure the most rational distribution of production at the highest possible level of productivity17. The Committee on investments expressed reservations on this ‘managed economy’ approach, as it terms it in the report18, both on the principle per se and the likelihood of being able to monitor it in subsidised undertakings. As to the principle, the objection raised with the High Authority was that the Treaty provided for a consultative procedure on all investments by undertakings19; Paul Kapteyn20, supported by Pieter Blaisse21and Maurice Faure22, countered that objection, expressing the view that the High Authority did not have the power to control the approach to self-funding followed by undertakings, but could intervene only when investments received public monies in contravention of the Treaty. The discussion of the principle and the powers of the High Authority vis-à-vis self-funding undertakings did not, however, weaken the reservations expressed regarding the High Authority’s approach to the subsidised undertakings:
The managed economy system which, it would appear, is the system preferred by the High Authority, can clearly be reconciled with the
process of identifying general objectives, but it is not clear how it could be tailored to financing investments and distributing them among
undertakings23.
Another objective referred to by Mr Monnet relates more specifically to the powers of the Committee on Social Affairs: the construction of accommodation for workers in the coal and steel sector24. This was
15 Minutes of 5 May, 15 June and 16 June (both the morning and afternoon sittings). 16 INVE 1.
17 Annexed to the analytical report of 5 May 1953, p. 14. This is a quotation of Article 2 of the Treaty. Jean Maroger levies a criticism
at the principle set out therein in a note of 27 May 1953 (AC 198 - CARDOC AC AP PV/INVE.1953 INVE-19530505 0020), which was reiterated in his speech in the Chamber (AC Compte rendus in extenso des séances - séance du 20 juin 1953, p. 167-168). In a repeat of the criticisms made by the French Republican Council of the provision cited in the text, he asked what was meant by most rational distribution, since although it was easy enough to identify irrational outlay merely on the basis of cost analysis, it was more difficult to identify more rational outlay. In that regard Mr Maroger alluded to national interest although he made no express reference to it, by dint of which the Member States were unable to agree to the removal of other Member States’ less rational outlays. To his mind, the social and political circumstances, economic equilibrium and harmony between the Member States were as valid as costs of production when assessing the rational nature of the distribution of resources.
18 INVE 1.
19 Speech by Mr de Menthon - AC Compte rendus in extenso des séances - séance du 20 juin 1953, p. 160. The legal basis of the position
taken by the rapporteur was Article 54 of the Treaty, which reads as follows: In order to encourage coordinated development of investment, the High Authority may, in accordance with Article 47, require undertakings to inform it of individual programmes in advance, either by a special request addressed to the undertaking concerned or by a decision stating what kind and scale of programme must be communicated. The following paragraph provides for the opinion referred to by Mr de Menthon in his speech.
20 AC Compte rendus in extenso des séances - séance du 20 juin 1953, p. 161-162. The speaker based his reply on the fifth paragraph of
Article 54 which reads as follows: If the High Authority finds that the financing of a programme or the operation of the installations therein planned would involve subsidies, aids, protection or discrimination contrary to this Treaty, the adverse opinion delivered by it on these grounds shall have the force of a decision within the meaning of Article 14 and the effect of prohibiting the undertaking concerned from drawing on resources other than its own funds to carry out the programme.
21 AC Compte rendus in extenso des séances - séance du 20 juin 1953, p. 170-173. 22 AC Compte rendus in extenso des séances - séance du 20 juin 1953, p. 173-175. 23 INVE 1, p.12.
a measure requiring extensive investment as about 20% of workers in the sector, some 350 000 people, were living in inadequate housing. At the meeting of 5 May 1953, the Chairman of the Committee on Investments, Mr Togni, underlined the political importance also inherent in the measure as a means of countering anti-Community policy in some countries25. This was noted particularly forcefully in the Chamber by E.M.J.A. Sassen26.