The Wanganui Chronicle MONDAY, JUNE 12, 1950 INTEGRATING EUROPEAN INDUSTRY

Wanganui Chronicle, 12 June 1950, Page 4

The Wanganui Chronicle MONDAY, JUNE 12, 1950 INTEGRATING EUROPEAN INDUSTRY

TTIE proposal advanced by France to integrate the coal and A iron industries of western Europe while in line with what might be termed inevitable developments, or long-range, probabilities, is nevertheless fraught with considerable difficulties. The large-scale domestic market of the United States is due to the absence of tariff barriers within the American Union and to satisfactory transportation facilities throughout the whole of the North American Continent. Besides the great waterways of America and the Lakes system of Canada which provide cheap means of transporting bulk products such as coal and ore, the railways are all of the same gauge. Thus a railway truck loaded at Churchill on the shores of the Hudson Bay can be railed right through the territory of the United States and delivered to any railway depot in Mexico. Unloadings and reloadings such as impede Wanganui or the States of Australia are unknown to the people of North America. It follows that when the people of the United States view the chaotic conditions now prevailing in the European continent their first reactions are to suggest bringing about a unification of transport facilities and an integration of the production efforts of the people of Europe. It is natural for those countries which have hitherto been under a handicap in international trade to be more in favour of the integration or pooling proposals than those countries which have, for various reasons, been advantageously placed. It comes as no surprise, therefore, to find that the United Kingdom is cautious in its approach and that the iron-masters of Germany, at the moment out of the picture to a large extent, should also bt guarded in their words and actions when dealing with the. French proposal. If the German Government can endorse proposals fot the co-operation of the German and the French industries then the chances are improved of the iron-masters returning to the control of their industry. Hence they are reported to be favourable to the political move while cautious not to commit themselves too far. The door is to be left open so they may depart from the pooling scheme and remain in control of the industry. Such strategy on their part is understandable. The British attitude springs from more than one cause. First there appears to be no prospect of a quid pro quo which would be sufficiently attractive coming to the United Kingdom from the pooling arrangement. The United Kingdom buys much of its ore from Spain and much high-grade ore for special steels from Sweden and there does not appear at the moment any prospect of the United Kingdom being outbidden for the supplies required by her industries. Where, then, is the prospective advantage? It would probably be averred that the greatest advantage would come to the United Kingdom by reason of the proposal to arrange orderly marketing. This would imply the usual technique being applied. Such technique is well understood today and comprises a regulation of prices for ore and coal and coke, plus a quota system for each country in respect to sales. Orderly marketing such as was attempted in New Zealand a few years ago depends in toto upon the character of the control which is to be exercised. When an industry is organised for orderly marketing within the confines of one country it can assemble men of the same nationality, their past records can be scanned and their conduct criticised. They must also obey the law of the country in which they are operating and as the law usually puts some restraints upon the operations of monopolies the orderly marketing of a monopoly is to some degree held in some subjection to public welfare. But when a business becomes internationalised some problems arise which require to be studied and for the solution of which problems there is as yet insufficient experience available. What country’s law is to apply to the operations of an Inter-European coal and iron and steel pool directorate? That is a difficult enough problem, but it is a small problem compared with the problem of enforcing whatever law is to be deemed to apply. For instance, if the Spanish Government determines to sell more iron ore to Germany than the international pool agreement stipulated what then? This could be to the disadvantage of the industry in the United Kingdom, but what could the United Kingdom Government do to enforce the terms of the agreement save by withdrawing from the pool? Withdrawal may not be as easy as at first appears, for those countries that remained in the pool might be required to make a surcharge on supplies to any country seceding from the pool. Further, the cost of raw materials would tend to be a matter of great importance to the country that was exporting metal products that required few man-hours to produce per unit of selling price, but for a country that carried fabrication to a high level the cost of metal would be of less vital importance. The manufacture of metal products such as steel rails and sheet iron for galvanising and corrugating would require a constant watch upon the cost of raw materials to see that_they did not move up too much, but the manufacturer of adding machines and aeroplane engines would be freer to ignore price rises. The country with the more advanced industries, therefore, would be able to combine with the supplier countries to lift the level of prices for iron and steel to the detriment of the countries with crude product industries. As the United Kingdom is interested both in the steelrail industry and in the machine making and tool industries it would have to look at both ends of the bargaining. In the pull and tug of bargaining between the different countries that were members of such a pool horse trading arrangements would inevitably occur. France could, for instance, secure large quantities of Swedish steel ore at a high price provided she could obtain from the Ruhr low-priced coke for her ovens. France and Sweden ■would therefore join together to vote an upward price for steel and ore and a low price for coal and coke. While, therefore, the pooling arrangement is attractive at first glance and in line with looked for developments in the European economy and American expectations the inherent difficulties in the proposal merit the caution now being exercised bv the United Kingdom Government today.