Economic factors involved in Britain’s participation in a Western European Union

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ECONOMIC FACTORS INVOLVED IN BRITAIN’S PARTICIPATION IN A WESTERN EUROPEAN UNION

A Thesis Presented to the Faculty of the Department of International Relations University of Southern California

In Partial Fulfillment of the Requirements for the Degree Master of Arts

by Theodore A. Tremblay September 1950

UMI Number: EP59903

All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion.

Dissertation P~bl,shjng

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Si

7 -7 % $

T h is thesis, w r it t e n by

...... The o dor©.. A ♦.__Tr©mb 1 ay u n d e r the g u id a n c e o f and a p p ro ve d

by a l l

F a c u l t y C o m m itte e , its

m em b ers, has been

p resen ted to a n d accepted by the C o u n c i l on G ra d u a te S t u d y a n d R e search in p a r t i a l f u l f i l l ­ m e n t o f the re q u ire m e n ts f o r the degree o f ..............

H.

J. DEUEL, JR. DEAR'........ ....

F a c u lty C om m ittee

...... Chairman

TABLE OP CONTENTS CHAPTER I.

PAGE

INTRODUCTION ................................. The problem . . . . . . . . . . . . . . . Statement of the problem

..............

Importance of Britain*s position

• . •

Definitions of terms used • • • • • • • • Union and Federation

. . . . . . . . .

1 2 2 2, 4; i 4'

Western U n i o n ............

5

Commonwealth and Empire * • ...........

5

Sterling Area ...........

8

. . . . . . .

Organization of remainder of the thesis *

11 (

II.

RECENT DEVELOPMENTS LEADING TO CLOSER WESTERN EUROPEAN COOPERATION

...........

13

Relationship of Western Union to the League of Nations and the United N a t i o n s .........................

. . .

Post-World War II cooperation • • • • • • Benelux

............... ..

European Coal Organization

• • • • • •

13 15 15 16'

European Central Inland Transportation Organization

• • • • * • •

........

16

Emergency Economic Committee for Europe

• ♦ .........

. . . . . . . .

17

ii PAGE

CHAPTER Economic Commission for Europe • • •

17

Economic and Social Council of the United Nations • • • •

...........

i

17

Committee of European Economic Cooperation

.....................

Treaty of Dunkirk Brussels Pact

.................

.....................

20

22

.................

24

British financial agreements • • . .

26

Intra-European Payments Scheme

• ••

27

Intra-European Payments Union

♦ ••

28.

Private organizations encouraging union III.

19! i

• • • • • • • •

North Atlantic Pact Council of Europe

18

CONDITIONS AND ATTITUDES IN GREAT BRITAIN

30

33

l

Conditions prior to World War II

. .•

33

Problems created by World War II

• .•

34:

British attitude towards a customs union

# . ♦ ♦ .....................

Dollar shortage

.............

• . . •

37| 38t !

• •

42|

• • . • •

46^

Devaluation of the pound sterling Choice of approach to union Attitude of Labor Party

49

Attitude of Conservative Party • • • ♦

51

iii CHAPTER

IV.

PAGE Commonwealth considerations ...........

52

Progress towards economic recovery

54

. *

PRESSURE PROM THE UNITED S T A T E S .........

56

Bretton Woods Agreement ...............

56

Financial and Trade Agreement ........

58

Marshall Plan . .......................

60

American motives

63

Creation of new economic problems • •

64

,

Economic cooperation within the North Atlantic Pact .......................

67

United States attitude towards proposals for European union

. . . .

Council of Europe .....................

68 69

Possible ramifications of American pressure

............................

69 i

Influence of threat of Russian a g g r e s s i o n ............. ............ V.

PRESSURE PROM STATES OF WESTERN EUROPE . .

i 70

i 71 I

France

................................

711

Belgium ................................

73

Netherlands • *

.......................

74

;

Italy ..................................

74

;

Denmark ................................

74i

iv ■CHAPTER

VI.

PAGE O t h e r s ....................................

75

Attitude of the Soviet U n i o n .............

75

PRESSURE PROM MEMBERS OP THE COMMONWEALTH. Ottawa A g r e e m e n t s ................. ..

.

77

. •

77

First British Commonwealth Relations Conference, Toronto, 1933

81;

Imperial Preferential System after World War I I ............................ Commonwealth and European union

........

83

Attitudes of various Commonwealth members Eire

•

84:

..................................

Union of South Africa

82

84

• * .............

85

A u s t r a l i a ..............

86'

New Z e a l a n d ............................

89'

Canada • • • • • •

91,

s

.....................

!

! ! VII.

India and P a k i s t a n .............. THE SCHUMAN PLAN .

. . .

.....................

.

94 96i I

Statement by Robert Schuman .

...........

Essentials of the p l a n ...................

96 97 i

I

Advantages for P r a n c e ...................

98'

Advantages for G e r m a n y ..........

99j

I

j

i

i

i

Obstacles to Implementation of plan

• • •

i

?

|

99;

Western European a t t i t u d e s ...............

102|

V

CHAPTER

PAGE British reaction . ............ ..........

103

Ramifications for B r i t a i n ....

103

Labor Party a t t i t u d e ..........

105

Conservative Party attitude. . . . . .

105

Liberal Party attitude .................... Attitude of Continental Socialists . • •

•

Attitude of the United States• • • • • • Political implications of the

Economic implications of the plan

!

Changed British attitude since 1945

VIII.

107. 107

plan • . .

;

105;

.

108

• . . •

108

...

109.

C O N C L U S I O N .........................

112

B I B L I O G R A P H Y .............................

119

A P P E N D I X ..................................

127

CHAPTER I INTRODUCTION From time to time Europe has had its good dreams of getting together and forming a cohesive community.

There

was the ”Grand Design” of Henry IV of France, while through­ out the seventeenth and eighteenth centuries the vision of a i united Europe occurs in the writings of Montesquieu, iRousseau, Kant, St. Simon, and others.

Attempted implemen­

tation in the form of the ”Holy Alliance” was unsuccessful. Similarly, M. Aristide Briand*s scheme for a European econ­ omic union died at birth some twenty years ago. While the precursory attempts at union are of historical interest, this paper will deal primarily with the move­ ment for European integration following World War II.

t t


j

123 B.

BOOKS

Boyd, Andrew, Western Union, Trend Toward European Unity* Washington, D. C .; Public.Affairs Press, 1949, 183 pp. ______ , British Commonwealth Relations Conference * Oxford University fress, 1645. 266 pp. Dietrich, Ethel B., World Trade * Company, 1939. 458 pp.

London:

Hew York: Henry Holt and

Frisoff, V., The Unity of Europe; Realities and Aspirations.; London: L. Drummond, 1647. 305 pp. Frost, Richard, The British Commonwealth and the World. London; Royal Institute of International Affairs, 1945. 74 pp. ( Gross, Feliks, European Ideologies. Hew York: The Philo­ sophical Library, 1948. 1675 pp. Hawtrey, Ralph George, Western Union, Implications for the United Kingdom. London: Royal Institute of Interna11on al Affairs, 1649. 126 pp. Hylkema, Edgar, Benelux, Le Chemin vers l*Unite Economique. 1 Paris: A. Pedrone, 191F. 206 pp. Mackay, Ronald, You C a n 1t Turn the Clock Back. Chicago: Ziff-Davis PuBTishing Company, 1948. 367 pp. Russell, Frank M., Theories of International Relations. York: D. App1eton-C©ntury Company, 1936. 651 pp.

Hew

Sickesz, W. C., Sovereignty, The Right of the Hations to Commit Suicide Unhindered. Amsterdam: Holdert and Company, 1948. 209 pp. Strausz-Hupe, Robert and Possony, Stefan T., International Relations. Hew York: McGraw-Hill Book Company, Inc., 1950. 647 p p . , The British Empire. Press, 1938. 342 pp.

London: Oxford University:

; j 1

;

Walker, Eric A., The British Empire, Its Structure and | Spirit. London: Oxford University fress, 1943. 250 pp.j

124 Ward, Barbara, The West At Bay. New York; W. W. Norton and Company, Inc., 1948. 288 pp. C.

PERIODICAL ARTICLES

Alexandrowicz, C., TfThe Economic Commission for Europe,” World Affairs, 3:43-54, January, 1949. Anderson, Karl L., "Currency Devaluation and the Pound Sterling,” Foreign Commerce Weekly, 37:3-5, November 28,' 1949. i Bareau, Paul, "Devaluation: A British View,” The Virginia Quarterly Review, 26:20-7, Winter, 1950. Bevin, Ernest, "Organization of the Post-War World,” Vital Speeches, 14:226-34, February 1, 1948. , "British Commonwealth and Western Union,” The Roundtable, Limited, 38:631-42, June, 1948. , "British White Paper,” Political Science Quarterly, 64:161-67, June, 1949. Carey, June Perry Clark, "Western European Union and the Atlantic Community,” Foreign Policy Report, 26:66-80, June 15, 1950. ! Comstock, Alzada, "Commonwealth and Empire,” Current History, 16:162-66, March, 1949.

i

Courtin, Rene, "French Views on European Union," Internation­ al Affairs, 25:8-22, January, 1949. i _______ , "Does Uniscan Mean Business?," The Economist, 157: [ 1281,.December 10, 1949. ;

, "European Payments Scheme: TCcTay, 5:328-38, August, 1949.

New Version," The World

Fay, Sidney B., "Union for Western Union," Current History, 16:156-61, March, 194 9. ; ,

, "First Fruits of Devaluation,” The Economist, 158:33-34, January 7, 1950.

:

I i

125 Gary, Howard C., "French Steel Plan Opens Debate on Europe's Economy,” Foreign Policy Bulletin, 29:4, May 19, 1950* Kayser, Elmer Louis, f,The Council of Europe,” World Affairs, 112:7-8, Spring, 1949* , Knorr, Klaus, "Problems of a Western European Union,” Review of Politics, 11:131-52, April, 1949. Mansergh, Nicholas, "Britain, the Commonwealth, and Western . Union," International Affairs, 24:491-504, October, 1948* 1 " ■ I McClellan, Grant S*, "British and Western European Union,” j Foreign Policy Report, 24:122-32, October 15, 1948. ' ,

, "M. Schuman Sets the Pace,” The Economist, 158:1206, June 3, 1950.

i

, "Next Steps for 'United Europe'," The Roundtable, Limited, 38:742-48, September, 1948. ________ , "Prices Since Devaluation," The Economist, 158:92-4; January 14, 1950. , "Ripples from the Schuman Pool," The Economist, 15^:1374, June 24, 1950. Salter, Sir Arthur, "After Devaluation: The Common Task," Foreign Affairs, 28:216-230, January, 1950. r"

‘

f-

"

!

"■ -

Schuman, Robert, "Franco-German Coal and Steel Pool,”Vital ■ Speeches, 16:482-83, June 1, 1950. I I

Strange, Susan, f,The Council of Europe," World Affairs, 3:246-58, July, 1949. , "The Onus of the Minus,” The January 1, 1949. ,

onomist, 156:3-4,

j i j

, "The Schuman Scheme," The Economist, 158:1108, May 20, 1950.

i .

, "The United States of Europe," The World Today, 3TT55 t 69, April, 1947. _ *

! ! i i

, "Towards a Parliament of Europe,” The Roundtable, Limited, 39:15-20, December, 1949. .

!

126 ;Ward, Barbara, ”Britain*s Economic Crisis,” The Commercial and Financial Chronicle, 170:8, November 16, 1949. Ward, Barbara, ’’Decide or Drift,” Contemporary International Relations, 1949-50, 1:94-97, _ld'4§« Ward, Barbara, ’’Keystone of a Western Union is Britain,” New York Times Magazine, May 16, 1948* , ’’Western Union,” The World Today, 5:170-83, April, 1949• D.

PAMPHLETS

Healy, Denis, ’’Feet on the Ground,” Labour Party Pamphlet, 1948. ~ ;

E.

NEWSPAPERS

New York Times, September 3, 1948. |New York Times, September 28, 1948. New York Times, February 22, 1950. New York Times, May 14, 1950. New York Times, June 4, 1950.

^— -T

.

■New York Times, June 25, 1950. Stringer, William H., ”The Commonwealth Does It Again,” ! Christian Science Monitor, April 30, 1949.

APPENDIX

APPENDIX A* POPULATION FIGURES EUROPE AND HER DEPENDENCIES !•

Five Nations In the "Brussels" Group: Britain 48.631.000 France 40.600.000 Belgium 8.388.000 Netherlands 9.600.000 Luxembourg 285,000 Total 10*7,504,000

II.

Dependencies »r

183.071.000 Grand Total

290.575.000

Dependencies

10,875,000

Other E. R. P. Nations: 6.908.000 Austria Denmark 4.102.000 Eire 2.950.000 Greece 7.450.000 Iceland 132,000 Italy 50,675,000 Norway 3.105.000 Portugal 8.400.000 Sweden 6.719.000 Switzerland 4,265,000 Turkey 18,632,000 Total 115,338,000

Grand Total III.

124,213,000

Germany: American, British, and French Zones -

; IV. i

66.420.000 67.823.000 13.814.000 35,014,000**

48,000,000

Total Populations for E. R. P. Nations: In Europe: 268,842,000

Dependencies: 213,946,000

• Grand Total: 482,788,000

* Andrew Boyd, Western Union, Trend Toward European Unity (Washington, D. C.: Public Affairs Press, 1949), pp. 165-66. Not including Indonesia.

128

APPENDIX B* COMPONENT PARTS OP THE BRITISH COMMONWEALTH I#

Sovereign States; a. b. c. d. e. f.

II.

United Kingdom of ureaii Great Britain a n t a m ana and Northern Ireland Canada Australia New Zealand South Africa Ceylon

Area

Population.

94,291 3,466,882 2,977,600 103,935 472,550 25,000

50,015,000 12,582,000 7,580,800 1,802,640 11,391,950 6,660,000

26,959 628,808 236,638

2,953,450 231,400,000. 69,000,000:

Special Status; a. b. c.

Eire India Pakistan

# r,The Component Parts of the British Commonwealth and Empire,” British information Services, Reference Division* jjED_704 (Revised), August, 1948, pp.' 1-2.__________ ________

129 APPENDIX C* OPINION IN BELGIUM, NETHERLANDS, AND LUXEMBOURG CONCERNING THE BENELUX UNION. I*

Belgique--Chambre des Representants

93 pour l funion 12 contre 21 abstentions

135 pour 1'union 5 contre 21 abstentions II.

Pays-Bas— Deuxieme Charabre des Stais-Generaux

Senate

Premiere Chambra des Stats-Generaux

Unanimite sans appel nominal III.

Luxembourg--Charabre des Deputes 45 pour 1»union 0 contre 5 abstentions

IV.

In 1947, there were held polls by f,L fInstitut beige d ’Opinion Public11 and the Institut Gallup neerlandais.r? The question asked was nCroyez-vous q u fune collaboration economique etroit entre la Belgique, les Pays-Bas, et le Grand-Duche de Luxembourg soit un bonne chose ou non?ff The results of these polls follow: Belgium:

69$ favored the economic collaboration 7$ opposed

Netherlands: 83$ favored the economic collaboration 5$ opposed

* Edgar Hylkema, Benelux, Le Chgyin vers 1 *Unite Economique (Paris: A. P e dr one, 1948), p p . 115-16.

130 APPENDIX D# PERCENTAGES OP MERCHANDISE TRADE OP THE UNITED KINGDOM WITH OTHER BRITISH COUNTRIES IMPORTS 1930

1931

1932

1933

1934

1935

1936

United Kingdom

29.1

28.7

35.3

37.0

37.1

37.6

39.2

Canada

22.6

25.6

29.6

32.4

30.0

31.6

29.5

Australia

53.3

52.1

54.9

56.9

58.2

57.4

56.2

New Zealand

68.6

70.2

71.8

74.0

73.5

73.2

73.0

South Africa

57.8

56.7

57.4

59.8

58.6

58.7

55.7

British India

46.2

44.8

44.7

50.1

49.4

48.8

49.2

EXPORTS 1930

1931

1932

1933

1934

1935

1936

United Kingdom

43.8

43.7

45.3

44.5

46.8

48.0

49.2

Canada

36.8

38.0

46.9

48.1

51.8

52.5

50.3

Australia

56.4

54.4

58.6

56.5

55.3

62.5

59.2

New Zealand

91.4

93.2

93.9

91.4

87.5

89.5

85.9

South Africa

59.7

62.4

57.7

52.4

55.7

55.4

53.1

British India

39.4

43.7

45.0

46.3

45.4

i —i . to

45.3

* , The British Empire (London; Oxford University Press, 1938), £)• 285.

131 APPENDIX E* THE CHANNELS OP BRITISH TRADE This is an analysis by area, giving monthly averages 'in millions of pounds sterling. IMPORTS INTO BRITAIN (from)

1938 1946 1947 1948 1949 Jan. 1950 Peb • 1950 Mar. 1950 i

Sterling^ Cos. 23.9 35.5 46.5 62.4 72.7 77.4 71.8 88.8

Br. Cos. & Irish Rep. 30.2 52.3 66.2 81.0 90.5 96.3 82.5 102.6

Europe 25.7 19.4 30.8 42.9 53.6 58.9 50.6 63.0

North America 16.6 35.9 44.7 33.9 37.3 37.7 27.5 31.1

EXPORTS PROM BRITAIN (to)

1938 1946 1947 1948 1949 Jan. 1950 Peb. 1950 Mar. 1950

Sterling^ Cos. 17.6 34.4 46.1 65.5 77.2 83.1 78.4 86.5

Br. Cos. & Irish Rep. 19.2 35.4 46.9 69.0 82.4 89.4 85.2 94.1

Europe 14.4 29.1 32.3 43.0 45.6 59.4 51.5 66.0

North America 3.7 5.7 7.7 11.5 11.4 15.2 14.3 16.3

** Monthly Digest of Statistics, Number 55, (London: iHis Maje sty *s Stations r y U f f i c e , 1956), May, 1950, . pp. 90-91.

; I

*Hf i British Countries, except Canada and Anglo!Egyptian Sudan, together with the Irish Republic, Burma, ;Iraq, and Iceland.

[ ! !

132 APPENDIX E (continued) IMPORTS INTO BRITAIN (f^om) Irish India, New So. Rep. Prance Pakis. Aust. Zealand Canada Afr. Swed. Den. 1938

1.9

2.0

4*2

6.0

3.9

6.8

9.8

2.0

3.2 ,

1946

3.1

1.2

5.7

5.6

6.2

16.7

19.1

2.7

1.7

1947

2.9

2.6

7.9

8.1

7.5

19.9

24.8

3.5

2.2 j

1948

3.4

3.9

9.0

14.1

9.1

18.6

15.4

4.6

3.5

1949

4.6

6.3

9.5

17.7

9.7

18.8

18.5

4.6

6.5

1950 Mar.

5.2

9.3

10.4

16.9

17.5

11.1

20.0

5.2

7.5

EXPORTS PROM BRITAIN (to) New So. Irish India, Rep. Prance Pakis. Aust. Zealand Canada Afr. Swed. Den. 11938

1.7

1.3

2.8

3.2

1.6

2.0

1.7

1.3

1.8

1946

3.3

2.9

6.6

4.6

2.3

2.8

3.0

3.9

4.8

1947

4.7

2.0

7.6

6.0

3.6

3.7

4.0

2.1

5.4,

f1948

5.3

2.8

9.6

12.1

4.4

6.0

5.5

2.6

6.9

1949

6.4

2.8

12.5

15.7

5.4

6.6

4.8

4.1

7.4 i

1950 ;Mar.

8.5

5.0

10.8

21.6

7.1

9.2

7.0

6.0 12.8 ’ i

APPENDIX F# WORLD OUTPUT OP GOAL AND LIGNITE (excluding Russia) Relative Share In World Output

1957 Index= 100 1946

1947

1937

1947

91

102

100

100

TJ. S.

120

137

35

48

Europe

74

82

52

42

Asia

60

69

9

5

132

125

4

4

World Total

Others

RATIONS OF DOMESTIC OUTPUT TO TOTAL CONSUMPTION OF SOLID FUEL (in per cent)

Belgium France Germany Italy Luxembourg Netherlands Great Britain Australia New Zealand India & Pakistan South Africa

1937

1946

1947

99 61 121 9 0 85 122 103 88 104 105

91 83 111 19 0 75 103 101 100 101 115

87 75 107 15 0 75 101 101 100 101 115

* Post-War Shortages of Food and Coal (Lake Succes New Yorks United Nations Department of Economic Affairs, 1948), July, 1948, pp. 19-22.

134 APPENDIX G*

COAL, STEEL, AND IRON PRODUCTION OP EUROPE AND THE UNITED STATES Coal Production-Monthly Average (Thousands of Metric Tons) Belgium Prance 1938 1945 1946 1947 1948 1949 1950 Jan.

2,465 1,319 1,898 2,033 2,223 2,321 2,483

5,074 3,065 4,588 4,647 4,655 5,456 6,018

Trizone Ger. Italy Neth. Nor. 11,413 2,957 4,495 5,927 7,253 8,603 9,327

123 63 97 114 81 92 97

1,124 425 693 842 919 975 1,051

25 .5 8 28 36 38 29

U. K.

U.S.A.

19,220 15,475 16,093 16,718 17,730 18,215 17,273

29,835 47,820 44,938 51,998 49,643 36,111 31,018

Iron Ore Production-Monthly Average (Thousands of Metric Tons)