rHI3^0CUM&NT-4S-T-HETRO
S E C R E T
C.P.(51) 108
COPY NO.
^1
1 3 T H A P R I L , 1951
'
CABINET
SCHUMAN
PLAN
ALLIED CONTROL O F GERMAN HEAVY
INDUSTRY
M e m o r a n d u m b y t h e S e c r e t a r y of S t a t e f o r F o r e i g n
*
Affairs
J
A t t h e m e e t i n g of t h e I n t e r - G o v e r n m e n t a l S t u d y G r o u p o n 1 0 t h
A p r i l , a n i m p o r t a n t s t a t e m e n t of p r o p o s e d p o l i c y t o w a r d s G e r m a n i n d u s t r y
w a s m a d e u n o f f i c i a l l y o n b e h a l f of t h e F r e n c h G o v e r n m e n t .
F i r s t , the
F r e n c h Government intends to propose that as soon as the Schuman Treaty
is signed there should be discussions between the three Occupying P o w e r ?
and, to the extent that they a r e concerned, the Benelux c o u n t r i e s , about the
c o n f l i c t of j u r i s d i c t i o n b e t w e e n t h e S c h u m a n T r e a t y i n s t i t u t i o n s o n t h e o n e
hand and Allied c o n t r o l s over G e r m a n coal and steel and the International
A u t h o r i t y for the R u h r (I.A.R.) on the o t h e r .
Second, during these dis­
cussions the F r e n c h G o v e r n m e n t p r o p o s e s to take the line that as soon a s
p r a c t i c a b l e after the S c h u m a n T r e a t y c o m e s into force through ratification
i n t h e P a r l i a m e n t s of m e m b e r c o u n t r i e s t h e f u n c t i o n s o f t h e I . A . R . a n d o f
t h e H i g h C o m m i s s i o n i n r e s p e c t of G e r m a n c o a l a n d s t e e l s h o u l d c e a s e , a n d
t h e p r e s e n t l i m i t a t i o n s on G e r m a n s t e e l p r o d u c t i o n a n d c a p a c i t y u n d e r t h e
A g r e e m e n t on Industrial C o n t r o l s should be r e m o v e d ,
(cf. C . P . ( 5 1 ) 8 9 ,
p a r a g r a p h 1 7 of A n n e x , p e n u l t i m a t e s e n t e n c e ) .
T h i r d , the F r e n c h G o v e r n ­
m e n t will, at the t i m e when the T r e a t y is signed, inform the G e r m a n
G o v e r n m e n t of t h e i r i n t e n t i o n s a n d p r o p o s a l s a s s u m m a r i s e d a b o v e .
2.
C o n s i d e r a t i o n of t h e a t t i t u d e of H i s M a j e s t y ' s G o v e r n m e n t t o w a r d s
these proposals is urgent.
T h e d i s c u s s i o n s p r e c e d i n g t h e s i g n a t u r e of
the S c h u m a n T r e a t y s t a r t e d on 12th A p r i l in P a r i s , and the T r e a t y will
probably be signed very soon.
W h e t h e r o r not the F r e n c h give publicity
t o t h e i r d e c l a r a t i o n of i n t e n t i o n s , w e m a y b e s u r e t h a t i t w i l l n o t r e m a i n
a secret.
T h e F r e n c h n o d o u b t a n t i c i p a t e t h a t D r . A d e n a u e r w i l l find
t h e i r d e c l a r a t i o n a u s e f u l m e a n s of i n f l u e n c i n g G e r m a n o p i n i o n i n f a v o u r
of t h e S c h u m a n P l a n , a n d t h e y m a y w e l l w i s h t o g a i n s o m e c r e d i t i n G e r m a n y
a t t h e e x p e n s e of t h e i r A l l i e s .
R a t i f i c a t i o n of t h e T r e a t y b y t h e P a r l i a ­
m e n t s of a l l m e m b e r G o v e r n m e n t s i s n o t l i k e l y t o o c c u r f o r a c o n s i d e r a b l e
p e r i o d t h e r e a f t e r (if a t a l l ) .
The F r e n c h p r o p o s a l s will not therefore take
effect for s o m e t i m e , b u t t h e i r intention to a n n o u n c e t h e i r policy in a d v a n c e
m e a n s that the o t h e r Occupying P o w e r s c a n n o t afford to h e s i t a t e in m a k i n g
u p t h e i r m i n d s o n t h e q u e s t i o n s a t i s s u e , a n d i n i n f o r m i n g t h e G e r m a n s of
their views.
The United S t a t e s G o v e r n m e n t c a n be e x p e c t e d fully to
e n d o r s e the F r e n c h p r o p o s a l s .
3.
In t h e s e c i r c u m s t a n c e s , M i n i s t e r s will no doubt w i s h to d e t e r m i n e
t h e i r p o l i c y on the m a i n p o i n t s r a i s e d b y t h e F r e n c h , i . e . t h e n e c e s s i t y
f o r t h e c o n t i n u e d e x i s t e n c e of I . A . R . , t h e C o m b i n e d C o a l a n d S t e e l C o n t r o l
G r o u p s , and the need to m a i n t a i n l i m i t s on G e r m a n s t e e l production and
capacity.
4.
I n t e r n a t i o n a l A u t h o r i t y for the R u h r .
A s t u d y of t h e d r a f t S c h u m a n T r e a t y c o n f i r m s t h e e x p e c t a t i o n
t h a t i t s o b j e c t s a n d t h e f u n c t i o n s of t h e p r o p o s e d H i g h A u t h o r i t y o v e r l a p
t o a v e r y l a r g e e x t e n t w i t h t h e o b j e c t s of t h e R u h r A g r e e m e n t a n d t h e
f u n c t i o n s of t h e I . A . R ,
The only important task actually p e r f o r m e d by
the I.A.R. h a s b e e n to d i r e c t G e r m a n coal p r o d u c t i o n b e t w e e n d o m e s t i c
p u r p o s e s and export.
I t i s d o u b t f u l w h e t h e r , i n f a c e of i n c r e a s i n g
opposition f r o m the G e r m a n s , it could continue effectively to p e r f o r m this
t a s k , a n d i t i s d e s i r a b l e t h a t t h e m a i n i m p o r t e r s of G e r m a n c o a l , w h o a r e
a l s o p a r t i c i p a n t s in the S c h u m a n s c h e m e , should have their n e e d s satisfied
underftiat s c h e m e , in which the G e r m a n s will join m u c h m o r e r e a d i l y .
I
c o n s i d e r t h a t o n t h i s g r o u n d a l o n e t h e a b o l i t i o n of t h e I . A . R . i s i n e v i t a b l e .
M o r e o v e r , t h e f u n c t i o n s of t h e I . A . R . w h i c h a r e n o t c o v e r e d b y t h e S c h u m a n
P l a n High Authority a r e those which o v e r l a p m o s t noticeably with the
p o w e r s of t h e H i g h C o m m i s s i o n .
The I.A.R. cannot be r-egarded as an
e f f e c t i v e i n s t r u m e n t f o r m a i n t a i n i n g c o n t r o l o v e r t h e r e - c a r t e l i s a t i o n of
G e r m a n i n d u s t r y o r t h e n a t u r e of i t s o w n e r s h i p o r m a n a g e m e n t .
The
High C o m m i s s i o n h a s b r o k e n down the R u h r c o n c e n t r a t i o n s and in the
p o l i t i c a l c i r c u m s t a n c e s of G e r m a n y t o d a y w e m u s t r e l y o n t h e G e r m a n s
to m a i n t a i n the i n d u s t r i a l p a t t e r n s which the Occupying P o w e r s will have
established before they s u r r e n d e r their r e s e r v e d powers (see paragraph 6
below).
F u r t h e r , t h e r e a r e g e n e r a l a r g u m e n t s of a p o l i t i c a l c h a r a c t e r i n
f a v o u r of d i s s o l v i n g I . A . R . a t t h i s s t a g e .
T h e a b o l i t i o n of I . A . R . w o u l d b e
popular in G e r m a n y a s r e m o v i n g what the G e r m a n s have always r e g a r d e d
a s a s e r v i t u d e i m p o s e d u p o n t h e m a n d a n o b s t a c l e t o e q u a l s t a t u s in t h e
Western European community.
F o r o u r p a r t , it will be r e c a l l e d that we
a g r e e d t o t h e e s t a b l i s h m e n t of t h e I . A . R . l a r g e l y b e c a u s e w e w i s h e d t o
o b t a i n F r e n c h a g r e e m e n t t o t h e e s t a b l i s h m e n t of a G e r m a n F e d e r a l
G o v e r n m e n t ; if t h e F r e n c h , i n v i e w of t h e e s t a b l i s h m e n t of t h e S c h u m a n
P l a n H i g h A u t h o r i t y , a r e w i l l i n g t o c o n t e m p l a t e t h e a b o l i t i o n of t h e I . A . R . ,
we m a y r e g a r d o u r s e l v e s as honourably discharged from that b a r g a i n ,
5.
I t h e r e f o r e r e c o m m e n d t h a t , i n v i e w of t h e o v e r l a p of f u n c t i o n s
between the I.A.R. and the Schuman P l a n High Authority and the other con­
s i d e r a t i o n s m e n t i o n e d i n p a r a g r a p h 4, w e s h o u l d t a k e p a r t i n d i s c u s s i o n s
r e g a r d i n g t h e f u t u r e of t h e L A . R , a n d s h o u l d a g r e e t o i t s d i s s o l u t i o n a s
soon a s it can be r e p l a c e d b y m a c h i n e r y s e t up under the S c h u m a n P l a n .
6 .
The Allied High C o m m i s s i o n ^ p o w e r s over G e r m a n coal and
steel.
T h e p o w e r s of t h e A l l i e d H i g h C o m m i s s i o n a r e e x e r c i s e d t h r o u g h
the Combined (Tripartite) Coal and Steel G r o u p s , and a distinction m u s t be
d r a w n b e t w e e n the m a c h i n e r y (which might well be abolished) and c e r t a i n
of t h e p o w e r s ( w h i c h m i g h t s t i l l h a v e t o b e e x e r c i s e d ) .
Subject to the
v i e w s of t h e U n i t e d K i n g d o m H i g h C o m m i s s i o n e r , i t m a y b e s a i d t h a t t h e
f u n c t i o n s of t h e G r o u p s i n r e s p e c t o f i n c r e a s i n g G e r m a n c o a l a n d s t e e l
production a r e outdated.
T h e c o n t r o l of i n v e s t m e n t h a s c o m p a r a t i v e l y
s m a l l i m p o r t a n c e i n r e s p e c t of t h e c o a l i n d u s t r y .
In r e s p e c t of s t e e l , t h e
c o n t r o l of i n v e s t m e n t i n v o l v e s s e c u r i t y f u n c t i o n s w h i c h w o u l d b e s u p e r ­
f l u o u s if t h e l i m i t a t i o n o n c a p a c i t y w e r e r e m o v e d i n a c c o r d a n c e w i t h t h e
F r e n c h p r o p o s a l ( s e e p a r a g r a p h s 8 t o 12 b e l o w ) .
In a n y c a s e a n y r e m a i n ­
ing c o n t r o l function m i g h t be e x e r c i s e d a s well by the M i l i t a r y S e c u r i t y
B o a r d a s by the Steel Group.
B y f a r t h e m o s t i m p o r t a n t f u n c t i o n of t h e
G r o u p s i s t o s u p e r v i s e t h e r e o r g a n i s a t i o n o f t h e c o a l and- s t e e l i n d u s t r i e s
under Allied High C o m m i s s i o n L a w 27.
T h e m a i n t a s k - t h e f o r m a t i o n of
n e w c o m p a n i e s - s h o u l d b e c o m p l e t e d b y t h e e n d of t h e y e a r , i . e . p r o b a b l y
before the F r e n c h p r o p o s a l for abolishing the High C o m m i s s i o n e r s p o w e r s
could take effect.
It i s , h o w e v e r , e s s e n t i a l t h a t , i r r e s p e c t i v e of t h e
m a c h i n e r y by which this task is c a r r i e d out, the High C o m m i s s i o n should
r e t a i n p o w e r s t o s u p e r v i s e t h e c o m p l e t i o n of t h e r e o r g a n i s a t i o n of t h e
coal and steel industries.
o..
7.
In t h i s c a s e t h e r e f o r e I r e c o m m e n d t o m y c o l l e a g u e s t h a t w e should a g r e e to join the talks after the T r e a t y is signed r e g a r d i n g the f u t u r e f u n c t i o n s of t h e A l l i e d H i g h C o m m i s s i o n i n r e s p e c t of t h e G e r m a n
i r o n a n d c o a l i n d u s t r i e s , a n d t h a t s u b j e c t t o t h e v i e w s of t h e H i g h C o m m i s s i o n e r which a r e being sought, we should a g r e e during these d i s c u s s i o n s t o t h e a b o l i t i o n of t h e G r o u p s , p r o v i d e d t h a t t h e f u n c t i o n s n o w p e r f o r m e d b y t h e m in c o n n e c t i o n w i t h L a w 27 s h o u l d be c a r r i e d out
b y t h e H i g h C o m m i s s i o n u n t i l t h e r e o r g a n i s a t i o n of t h e G e r m a n c o a l a n d
steel industries is completed, or until we have s o m e guarantee or con­
t r a c t u a l a r r a n g e m e n t with the G e r m a n F e d e r a l G o v e r n m e n t to c a r r y out
Allied p o l i c i e s and p r o g r a m m e s in this field. 8.
R e m o v a l of p r e s e n t l i m i t a t i o n s o n s t e e l p r o d u c t i o n a n d c a p a c i t y .
T h e p r e s e n t p o s i t i o n is t h a t t h e r e is a n o m i n a l l i m i t a t i o n on
G e r m a n c r u d e s t e e l p r o d u c t i o n of 1 1 . 1 m i l l i o n t o n s p e r a n n u m , b u t s t e e l
u s e d o r e x p o r t e d f o r t h e p u r p o s e s of W e s t e r n D e f e n c e i s p e r m i t t e d o u t s i d e
this quota.
This control, which was instituted as a t e m p o r a r y s y s t e m
a f t e r t h e N e w Y o r k m e e t i n g of F o r e i g n M i n i s t e r s i n S e p t e m b e r , 1 9 5 0 , a n d has
b e e n m a i n t a i n e d i n t h e A g r e e m e n t o n I n d u s t r i a l C o n t r o l s of M a r c h , 1 9 5 1 ,
a t t h e i n s i s t e n c e of t h e F r e n c h , i s m o r e n o m i n a l t h a n r e a l a n d i s l a r g e l y
unworkable.
G e r m a n steel production h a s been fluctuating between annual
r a t e s of 1 3 . 3 a n d 1 2 . 0 m i l l i o n t o n s i n t h e l a s t s i x m o n t h s .
The controls
on s t e e l p r o d u c t i o n and finishing c a p a c i t y in the A g r e e m e n t on I n d u s t r i a l
C o n t r o l s a r e o p e r a t e d on a l i c e n s i n g s y s t e m w h i c h p e r m i t s a d d i t i o n s and
m o d e r n i s a t i o n s p r o v i d e d t h e y d o n o t s u b s t a n t i a l l y i n c r e a s e t h e c a p a c i t y of
the plant in q u e s t i o n .
9.
Under the Schuman P l a n a r r a n g e m e n t s now proposed by the
F r e n c h , there wotild be no limitation on production as such, but any
e x t e n s i o n of c a p i t a l p l a n t r e q u i r i n g n e w i n v e s t m e n t i s l i a b l e t o s c r u t i n y
b y t h e r e l e v a n t o r g a n s of t h e H i g h A u t h o r i t y .
Approved projects may
r e c e i v e direct or indirect financial a s s i s t a n c e f r o m the Authority.
P r o j e c t s w h i c h a r e n o t a p p r o v e d w i l l b e e n t i r e l y d e p e n d e n t o n t h e f u n d s of
the e n t e r p r i s e concerned.
T h e t e x t of t h e r e l e v a n t A r t i c l e 5 4 of t h e
S c h u m a n P l a n T r e a t y is attached (Annex ). .
It i s d i f f i c u l t t o s a y h o w t h i s
p r o v i s i o n will w o r k o u t in p r a c t i c e but it i s safe to a s s u m e t h a t , a t l e a s t
in the initial p e r i o d , the F r e n c h will u s e e v e r y m e a n s open to t h e m to
p r e v e n t a r a p i d i n c r e a s e in G e r m a n c a p a c i t y for c r u d e steel production o r
for s t e e l finishing.
10.
Under the p o l i c y , approved b y the t h r e e F o r e i g n M i n i s t e r s in
B r u s s e l s a n d n o w b e i n g w o r k e d o u t i n d e t a i l , of p l a c i n g u p o n a c o n t r a c t u a l
b a s i s all r e s e r v e d p o w e r s now e x e r c i s e d by the High C o m m i s s i o n except
t h o s e which m u s t be r e s e r v e d for a P e a c e T r e a t y , t h e r e will be little
p r o s p e c t of r e t a i n i n g e f f e c t i v e c o n t r o l s o v e r G e r m a n s t e e l p r o d u c t i o n o r
capacity.
It i s , m o r e o v e r , o u r avowed intention t o b r i n g W e s t e r n G e r m a n y
f u l l y i n t o t h e c o m m u n i t y of w e s t e r n n a t i o n s a s a n e q u a l p a r t n e r w i t h o u t
d i s a b i l i t i e s s a v e t h o s e i m p o s e d b y t h e a b s e n c e of a f o r m a l P e a c e T r e a t y ,
t h e o c c u p a t i o n of G e r m a n y i n t h e i n t e r e s t s of W e s t e r n D e f e n c e a n d t h e
m a i n t e n a n c e of o u r p o s i t i o n i n B e r l i n .
F r o m t h i s p o i n t of v i e w t h e r e i s
e v e r y t h i n g to be s a i d for r e m o v i n g e x i s t i n g c o n t r o l s on p r o d u c t i o n and
capacity at an early date.
T h e s e controls w e r e instituted for s e c u r i t y
purposes.
T h e C h i e f s of S t a f f a g r e e d a t a m e e t i n g o n 1 2 t h F e b r u a r y , 1 9 5 1 ,
t h a t the s e c u r i t y r i s k involved in waiving r e s t r i c t i o n s on s t e e l - m a k i n g
capacity was acceptable.
T h e y added that t h e r e would be definite
a d v a n t a g e if t h e l i f t i n g of r e s t r i c t i o n s w e r e t o r e s u l t i n a n i n c r e a s e i n t h e
a v a i l a b i l i t y of s t e e l f o r W e s t e r n r e a r m a m e n t a s a w h o l e .
E v e n in the
a b s e n c e of a G e r m a n m i l i t a r y c o n t r i b u t i o n , G e r m a n i n d u s t r y , w i t h s t e e l
a s i t s c o r e , c a n b e of s u b s t a n t i a l a s s i s t a n c e t o W e s t e r n D e f e n c e p r o g r a m m e s
a n d t h e p r o l o n g a t i o n of c o n t r o l s c a m o t f a i l t o d i s c o u r a g e t h e G e r m a n s
f r o m p r o v i d i n g s u c h a s s i s t a n c e . M o r e o v e r , it i s v e r y doubtful w h e t h e r ,
i n t e r m s of o u r G e r m a n p o l i c y , w e c a n a f f o r d t o s t a n d o u t f o r l o n g
a g a i n s t F r a n c o - A m e r i c a n a g r e e m e n t t o r e m o v e t h e s e c o n t r o l s , e v e n if
we w i s h to do s o .
11.
I f u l l y r e a l i s e t h e n e e d t o m a x i m i s e i m p o r t s of s t e e l s c r a p f r o m
G e r m a n y if o u r s t e e l i n d u s t r y i s t o m a i n t a i n i t s p r o d u c t i o n .
The French
p r o p o s a l , b y s u b s t i t u t i n g a l o o s e c o n t r o l b y a n e w a n d u n t r i e d b o d y of w h i c h
we a r e not m e m b e r s , for a c l o s e c o n t r o l b y the High C o m m i s s i o n , m a y be
t h o u g h t l i k e l y t o r e s u l t in s u b s t a n t i a l i n c r e a s e s in G e r m a n s t e e l c a p a c i t y
a n d thus f u r t h e r r e d u c e the s c r a p a v a i l a b l e for e x p o r t .
I would not
pretend that this danger does not exist.
But our p r o s p e c t s , which a r e in
a n y e v e n t p o o r , of o b t a i n i n g a d e q u a t e q u a n t i t i e s of s c r a p f r o m G e r m a n y
­
depend, in m y view,far m o r e on G e r m a n efforts to i n c r e a s e s c r a p p r o d u c ­
t i o n t h a n on t h e l e v e l of p r o d u c t i o n i n t h e G e r m a n s t e e l i n d u s t r y .
If
a n y t h i n g c o u l d i n c r e a s e G e r m a n s c r a p p r o d u c t i o n , t h e r e m o v a l of e x i s t i n g
c o n t r o l s on G e r m a n s t e e l c a p a c i t y m i g h t do s o .
Our i n s i s t e n c e on t h e i r
m a i n t e n a n c e i n t h e f a c e of o u r A l l i e s c o u l d o n l y r e d u c e o u r p r o s p e c t s of
obtaining G e r m a n s c r a p .
Insofar a s o u r difficulties in obtaining s c r a p lead
u s , a s I believe they m a y , into p u r c h a s i n g semi-finished steel in G e r m a n y
i n i t s s t e a d , t h e r e m o v a l of e x i s t i n g c o n t r o l s o n s t e e l p r o d u c t i o n a n d
capacity should operate to our advantage.
12.
In v i e w o f t h e c o n s i d e r a t i o n s s e t f o r t h i n p a r a g r a p h s 1 0 a n d 1 1
a b o v e , I r e c o m m e n d t h a t w e s h o u l d p a r t i c i p a t e in t h e d i s c u s s i o n s p r o p o s e d
b y the F r e n c h c o n c e r n i n g the p r e s e n t l i m i t a t i o n s on the G e r m a n s t e e l
industry and should a g r e e to their r e m o v a l when the Schuman P l a n Treaty
t a k e s effect.
13.
. D e c l a r a t i o n of P o l i c y .
Given the F r e n c h intention to a n n o u n c e t h e i r policy in a d v a n c e
( p a r a g r a p h s 1 and 2 a b o v e ) , it s e e m s e s s e n t i a l that we should be in a
position to do the s a m e .
A failure to do so would be i n t e r p r e t e d b y the
G e r m a n s a s indicating a m o r e restrictive policy towards G e r m a n industry
t h a n t h a t o f t h e F r e n c h , a n d m i g h t b e u s e d b y t h e G e r m a n o p p o n e n t s of t h e
S c h u m a n P l a n a s e v i d e n c e of o u r o p p o s i t i o n t o i t a n d t h u s u s e d t o d e l a y
ratification.
T h i s c o u l d b e v e r y d a m a g i n g t o o u r r e l a t i o n s with W e s t e r n
E u r o p e and with the United States.
14,
If t h e r e f o r e w e a r e p r e p a r e d t o a s s o c i a t e o u r s e l v e s e v e n t u a l l y
w i t h t h e F r e n c h p r o p o s a l s , I r e c o m m e n d t h a t we s h o u l d l e t t h i s b e known
t o the G e r m a n s a t a n e a r l y d a t e , a n d s h o u l d b e p r e p a r e d to give p u b l i c i t y
t o o u r v i e w s if t h e F r e n c h o r A m e r i c a n s d o s o t o t h e i r s ,
15,
Recommendations,
I a s k m y c o l l e a g u e s to a p p r o v e the r e c o m m e n d a t i o n s that we
s h o u l d a g r e e t o t h e d i s a p p e a r a n c e of t h e R u h r A u t h o r i t y ( p a r a g r a p h 5) of
t h e C o a l a n d S t e e l G r o u p s ( p a r a g r a p h 7 ) , a n d of t h e e x i s t i n g c o n t r o l s o n
G e r m a n s t e e l p r o d u c t i o n and capacity (paragraph 12), to take effect a s
soon as practicable after the Schuman Plan Treaty becomes operative.
16.
I also a s k m y c o l l e a g u e s to a g r e e that we should be r e a d y to
a n n o u n c e this p o l i c y a t s h o r t n o t i c e in the c i r c u m s t a n c e s d e s c r i b e d in
p a r a g r a p h 14.
H.M.
F o r e i g n O f f i c e , S . W . 1 ,
13TH APRIL, 1951.
ANNEX
ARTICLE
54
T h e H i g h A u t h o r i t y m a y f a c i l i t a t e t h e c a r r y i n g o u t of i n v e s t m e n t
p r o g r a m s b y g r a n t i n g loans to e n t e r p r i s e s or b y giving its g u a r a n t e e to
loans which they m a y obtain e l s e w h e r e .
W i t h t h e c o n c u r r e n c e of t h e C o u n c i l a c t i n g b y u n a n i m o u s v o t e ,
the High A u t h o r i t y m a y a s s i s t b y the s a m e m e a n s in f i n a n c i n g w o r k s a n d ­
installations which contribute directly and principally to i n c r e a s e p r o d u c ­
t i o n , l o w e r p r o d u c t i o n c o s t s o r f a c i l i t a t e m a r k e t i n g of p r o d u c t s s u b j e c t
to its jurisdiction.
I n o r d e r t o e n c o u r a g e a c o o r d i n a t e d d e v e l o p m e n t of i n v e s t m e n t s ,
t h e H i g h A u t h o r i t y m a y , i n a c c o r d a n c e w i t h t h e p r o v i s i o n s of A r t i c l e 4 8 ,
r e q u i r e e n t e r p r i s e s to submit individual p r o g r a m s in a d v a n c e , either by
a s p e c i a l d e m a n d a d d r e s s e d to the e n t e r p r i s e c o n c e r n e d or b y a d e c i s i o n
d e f i n i n g t h e n a t u r e a n d t h e s i z e of t h e p r o g r a m s w h i c h m u s t b e s u b m i t t e d .
W i t h i n t h e f r a m e w o r k of t h e g e n e r a l p r o g r a m s d e s c r i b e d i n
A r t i c l e 46, the High Authority m a y , after having given the i n t e r e s t e d
p a r t i e s an opportunity to p r e s e n t t h e i r v i e w s , i s s u e an opinion on such
p r o g r a m s , accompanied by a justification.
It i s o b l i g e d t o i s s u e s u c h a n
opinion when so r e q u e s t e d by an e n t e r p r i s e .
T h e High A u t h o r i t y shall
n o t i f y t h e e n t e r p r i s e of i t s o p i n i o n a n d s h a l l b r i n g i t t o t h e a t t e n t i o n of
the government concerned.
T h e l i s t of o p i n i o n s s h a l l b e m a d e p u b l i c .
If t h e H i g h A u t h o r i t y r e c o g n i s e s t h a t t h e f i n a n c i n g of a p r o g r a m
o r t h e o p e r a t i o n of t h e i n s t a l l a t i o n s w h i c h i t e n t a i l s w i l l r e q u i r e s u b s i d i e s ,
a s s i s t a n c e , protection or d i s c r i m i n a t i o n c o n t r a r y to the p r e s e n t T r e a t y ,
t h e u n f a v o r a b l e o p i n i o n t a k e n b y v i r t u e of t h i s j u s t i f i c a t i o n s h a l l h a v e t h e
f o r c e of a d e c i s i o n a s d e f i n e d i n A r t i c l e 1 4 , a n d s h a l l h a v e t h e e f f e c t of
prohibiting the e n t e r p r i s e concerned from r e s o r t to r e s o u r c e s other than
its own funds to put s u c h p r o g r a m into effect.
The High Authority m a y impose fines not exceeding the s u m s
u n d u l y d e v o t e d t o r e a l i s a t i o n of t h e p r o g r a m i n q u e s t i o n o n e n t e r p r i s e s
w h i c h v i o l a t e t h e p r o v i s i o n s of t h e a b o v e p a r a g r a p h .
THIS DOCUMENT IS THE
PROPERTY
OF HIS
BRITANNIC MAJESTY'S
GOVERNMENT
Printed for the Cabinet. April 1951
SECRET
"*
CP. (51) 109
16th April, 1951
Copy No.
CABINET
VISIT BY THE SECRETARY OF STATE FOR COMMONWEALTH
RELATIONS TO THE UNION OF SOUTH AFRICA, SOUTHERN
RHODESIA AND THE THREE HIGH COMMISSION TERRITORIES
OF BASUTOLAND, THE BECHUANALAND PROTECTORATE AND
SWAZILAND
MEMORANDUM BY THE SECRETARY OF STATE FOR COMMONWEALTH RELATIONS
I am circulating this report for the information of my colleagues. I am afraid
it is long, but I visited three different and difficult areas. I have sub-divided the
report as follows: —
(i) Southern Rhodesia (paragraphs 3 to 11).
(ii) High Commission Territories (paragraphs 12 to 21).
(iii) Union of South Africa (paragraphs 22 to 34).
(iv) Problems of Policy (paragraphs 35 to 55).
Some of my colleagues may prefer to read only the conclusions I have formed.
These are in section (iv).
2. I spent six weeks in January and February this year travelling in the Union
of South Africa and Southern Rhodesia as the guest of the two Governments and
in the Bechuanaland Protectorate, Basutoland and Swaziland. In that time I
travelled by air, road and rail some 17,000 miles.
(i). Southern Rhodesia
3. Southern Rhodesia is still in many ways like an enlarged County Council.
Its white population is 129,000. The general level of Ministers and Civil Servants
and business men is not high: but there are a few outstanding exceptions in all
these classes. Trade Union and Labour leaders are. not impressive. The Labour
Party is small and split. The Trade Unions are extremely colour-conscious and
enforce a rigid colour bar in the fields they control (particularly housing). They
seek to exclude Africans from all skilled and semi-skilled building labour (and
indeed from what we would here classify as unskilled labour) in the towns. Through
training schools, African builders are becoming quite good though they cannot yet,
in any numbers, work as well as the whites and they l a c k persistence. Nevertheless,
I saw some excellent African-built houses, schools and hospitals. Their cost is
about half as much as similar buildings put up by European labour. With the
exception of the small Labour element the whole of Southern Rhodesia seems to
be pro-Churchill and conservative in British politics, in which they are very
interested. Even many of the Labour people think the British Labour Party has
innocent and U t o p i a n ideas about race-relations. In their own internal affairs they
are, however, quite radical and readily create State industries in fields such as iron
and steel and railways in which they think we are stupid to have done so.
4. In general Southern Rhodesia is a happy and prosperous country. It has
very considerable resources (doubtless much more than have yet been discovered).
The population is pretty vigorous and virile. The country is suffering now from the
40458
.
B