PROPOSED MERGER

Otago Daily Times, Issue 27390, 16 May 1950, Page 5

PROPOSED MERGER

Franco-German Industries POSSIBLE EFFECTS ON BRITAIN NZPA Special Correspondent LONDON, May 14. Although British political reactions to M. Robert Schuman’s proposal that French and German coal and steel production should be pooled under an international authority have, on the whole, been favourable and even enthusiastic, British industrialists, who are concerned with the possible effect of the proposed “merger” upon their own activities, are understandably more reserved. They are inclined to believe that the motives behind the French proposal are not predominantly political, but economic. At present the Ruhr is producing coal much more cheaply than the French can produce it, and French steel makers believe that cheap German coal brought to the smelters of Lorraine will enable them to produce steel much more competitively. This would, moreover, have the effect of making the Germans their partners rather than their competitors, and would make German industry dependent upon France for a proportion of its raw materials —thus providing the French with an effective and muchdesired check upon German industrial expansion. At the moment the British iron and steel industry is not greatly concerned at the prospect of the French-German merger, for British steel is being produced and sold on the Continent more cheaply than Continental steel can be produced and sold to Britain. The long-term prospect, however, is by no means so reassuring. Recent investigations show that if steel production on the Continent continues to rise there may be a surplus by 1953, and in that case Britain would face very much stronger Continental competition.

Neither British industrialists nor the British Government can be expected to regard this possibility with enthusiasm, and it is therefore considered likely that British reactions to M. Schuman’s scheme will be cautious. Industrialists do, however, hope that if the Germans and the French decide to co-operate some arragements will be made on Governmental level about market areas and prices. British steel makers have noted with interest that M. Schuman’s proposal, shorn of its political implications, is very similar to the scheme which they have themselves advocated for the control and direction of the British iron 'and steel industry—that is to say, the establishment of an independent governing authority to direct general policy while still preserving individual ownership. The crux of the matter, if M. Schuman’s plans are adopted, it is believed, will be whether the Germans or the French become the effective senior partners in the proposed association.