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[MR. EDELMAN.] example of that is the horological industry, where a decision was taken in Wurttemberg to reduce capacity to some- thing like 50 per cent. of its 1938 value. The argument in favour of doing that was partly that the industry was well adapted for war purposes, and partly that the industry was likely adversely to affect the British watch and clock industry developed during the war years.

It is right to stimulate German industry in order that Western Germany may be able to live, but it is equally right on the part of British exporters and French exporters to have grave anxieties about increases in industrial capacity in Western Germany which may be a threat to both their economies. The question is how it is possible to achieve that integration of Western European industry, of which so much has been said, but about which so little has been done?

Three proposals have been put forward. First, there is the proposal for a federal settlement of Western Europe, a con- stitutional settlement, which would pro- vide a sovereign authority able to tell the countries concerned what they should produce and, in that way, rationalise and dovetail the industries of each country one with another. However desirable that may be--and I agree that it is de- sirable-it remains something remote. It is not something which can be done now to deal with our immediate problems and difficulties. The other attempted solu- tion, now being applied, is to set up various committees such as O.E.E.C. which are, in effect, Blueprint Committees concerned with planning and giving advice. But those committees have no executive power; they are committees in which experts participate; but when it comes to giving instructions which will smooth out the contradictions which exist in the Western European economy they have no power and, consequently, the difficulties remain.

There is a final possibility, that of plan- ning by consent and by means of the functional arrangements to which refer- ence was made today by my right hon. Friend the Chancellor of the Duchy. A cardinal necessity in the settlement of Europe is that there should be a settlement not simply of the Ruhr question but of the whole of Western European iron and steel industry. One

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of the great disasters of the past has bee that in the Ruhr there has been an intense concentration of industrial power, iron and steel, which has facilitated the mak- ing of war by the German Reich. The position today is that even if the iron and steel industry of Western Germany were to be nationalised I do not see that that would in any way diminish Ger- many's power to make war. Indeed, I believe that if the iron and steel industry of Western Germany had been national- ised at the time Hitler came to power, so far from making his task more difficult it would have made it considerably easier.

I agree with the French, that the nationalisation of the Ruhr in itself, how- ever desirable from a domestic point of view, is not enough to guarantee either French or European security. Were I in a position in which I had to choose between a nationalised German iron and steel industry without international con- trol, or a German iron and steel in- dustry with international control, but without nationalisation, I would, unhesi- tatingly in the interests of security, prefer to choose international control. I be- lieve the French, too, would be well satis- fied even if there were no nationalisation, provided international control was made effective. The major concern of the French is that that control should not be merely a paper control, but should be translated into practice.

The only way in which control of the iron and steel industry of the Ruhr can become effective is if the centre of gravity of the European iron and steel industry is shifted from the Ruhr to Lorraine. In the past, as Members know, it has been the custom for the iron ore of Lorraine to be taken to the coking coal of the Ruhr. I suggest that that process, should, as far as possible, be reversed. Instead of the iron ore of Lorraine going to the coke and coal of the Ruhr as much as possible of the coke and coal should go to the iron ore of Lorraine. In that way there would be a great shift of emphasis in Western Europe's iron and steel industry, and I believe that that would not only be of advantage to the European economy but would also be of the greatest strategic advantage. One of the major doubts which the Americans have had when contemplating aid to the industries of Western Germany has been the fact that they are relatively near to

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Foreign Affairs 10 DECEMBER 1948 the Russians. For that reason I believe it could do nothing but good to Western Union if the centre of iron and steel pro- duction were moved farther to the West.

The Chancellor of the Duchy, in refut- ing the charges made against him that he merely favoured what has been vaguely called a Socialist federation of Western Europe, pointed to the alternative which is, in effect, that in Western Europe, in order to achieve the economic integration in which most of us believe, certain functional arrangements should be made between Sovereign States so that projects for the common benefit could be entered into and completed. I want to suggest two or three such projects which, I believe, could be entered into quickly, and could be of the greatest benefit to Europe.

First, I would like to suggest that my right hon. Friend should work towards the creation of an Iron and Steel Authority not merely for the Ruhr but for Western Europe, in order to plan the iron and steel industry of the West as a whole. Sometimes when that has been advocated it has been suggested, in reply, that that would merely re-create pre- war cartels. I suggest that whereas pre- war cartels were primarily concerned with prices and, to a certain extent, with re- strictions, the object of a cartel, if it must be called a cartel, existing under an Iron and Steel Authority for Europe, would be not merely that various indus- tries, whether Socialist or private, could participate, but that Governments would participate, too. The Governments would ensure that the working of the authority would not be contrary to public policy, as so often has been the case in the past between the various private monopoly undertakings which compose cartels.

The second suggestion I would like to put forward is that my right hon. Friend might consider initiating a project for a Joint Authority in Western Europe for Fuel and Power. Towards the end of and after the war there was a European Coal Organisation, which has now been taken over by the Economic Commission for Europe. That organisation worked effi- ciently; it was run by experts and brought great benefits to all countries which took part. I believe for example that if there were a Western European Fuel and Power authority which could carry on the development of hydro-

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Foreign Affairs electric power in Southern Europe, of which my right hon. Friend has spoken in the past but which has not yet come to fruition, it would be an important in- strument for achieving the economic inte- gration of Western Europe.

To offer one final illustration, there is the question of the automobile industry and firms manufacturing agricultural machinery in Western Europe. One of the great problems of Western Europe has been to provide sufficient enough trans- port and agricultural machinery for its revival. It has been to a great extent dependent upon the American industry. One of the greatest things that could be done for Western European revival would be to revitalise those industries. They can be placed upon a sound basis through general consultation between the various countries concerned with the manufacture of motorcars, tractors, and agricultural machinery, in order to pro- vide for specialisation in manufacturing and to avoid wasteful competition. Finally, it could achieve standardisation, the lack of which has been one of the most heavy burdens of Western European industry.

Before concluding this theme I should like to say that if we are thinking in terms of Western European defence it is obvious that we must also think in terms of the standardisation of equipment and of production methods. While it is a desirable thing to obtain with America an agreement on standardisation, it would be of equal value if we combined with Western Europe in common defence matters and agreed on the standardisation of the various machine industries. How- ever, I do not want to develop this argu- ment any further.

I want to conclude by saying that I believe a functional approach is the most practical approach to Western European integration that can be made at the present time. If we are energetic in de- veloping new projects and seeing they are translated from paper to practice then indeed we can make a reality of Western Union. I believe also that having made Western Union a reality we can then use the technique of functional co-operation in order to knit together East and West which have been so widely divided. I believe that we can and must have a modus vivendi with the East if the dis- aster of a third world war is to be avoided. Even if we cannot agree with