As to the others: Youngstown Sheet & Tube Co. National Steel Co. Armco International Alan Wood Steel Co. Pittsburg Steel Co. the delegation was so positive about their promise of obtaining their agreement that their engagement could almost be taken for granted. In fact, during the following months, we were repeatedly informed that the negotiations were drawing to a close. But they never reached confirmation of the Companies' agreement in respect to whom a reservation which appeared to be merely proforma had been made, and it had to be resolved that a further European delegation should be sent to the States in October 1938. The latter stated quite accurately, in a letter to Mr. Todd dated October 18th (Enclosure 3)2 the conditions under which the European Group were negotiating. A letter from Mr. Todd, dated October 27th informed us of the final adhesion of the following Companies to the American Group of heavy products (barring plates) and black sheets: Armco International Corporation Bethlehem Steel Export Corporation Great Lakes Steel Corporation Jones & Laughlin Steel Corporation Newport Rolling Mill Company Pittsburg Steel Company Republic Steel Corporation U. S. Steel Products Company Weirton Steel Company Wheeling Steel Corporation Youngstown Sheet & Tube Company. With regard to Plates the position remained uncertain owing to the difficulties raised by the Lukens, Alan Wood, Worth, Central Iron, Companies. Now, we received a Memorandum (17th November)' once again questioning points of principle which are absolutely capital. Our point of view is that the bases of the arrangement of February 1937 such as they have been confirmed in February and June 1938, are intangible. No discussion on the principles, the periods of reference, the nomenclature of the controlled products, the starting date for the accounts can any longer take place. The American Group's pretensions constitute innovations which are in opposition to the engagements subscribed. It is not possible to discuss those principles. If the American Group, duly engaged, holds the view that they can ask for modifications to the agreements, this can only be for modalities of application. In order that the Joint Co-ordinating Committee may take a decision based on thorough information, it is essential that the extent of those proposals should be expressed in figures. These modifications would, of course, only be valid if they met a unanimous agreement. We hold the view that the Companies enumerated in the agreement of June 14th are responsible for their exports as from June 15th, the starting date. If one or the other of them asks for this responsibility being made operative as from November 1st only, it is essential that the Joint Co-ordinating Committee should be acquainted with: (1) the share held by that Company in the quota apportioned to the States, (2) the figure of its exports in various products for the period 15th June1st November. It is also essential that the demands regarding "alloy bars," "drainage products" and "sheets & breakdowns shipped to England" should be stated more See exhibit S-78C, supra, pp. 149-150. See exhibit S-81, infra, pp. 156-157. accurately by the indication of the tonnages coming in consideration, and for the "drainage products" by the additional indication of the Companies interested. The Joint Co-ordinating Committee will never consent to take a decision without knowing the figures and these additional particulars. EXHIBIT S-81 MEMORANDUM With the completion of the American Group on all products except Plates, on which we are still hopeful of securing a complete group with the exception of Central Steel, there are several points which must be cleared up if the American Group is properly to function and cooperate as it is their desire to do. These points are: (1) New starting date. Since only Bethlehem Steel Export Corporation, United States Steel Products Company, and Republic Steel Corporation were definitely committed as at June 15th, and the other companies, that is: Armco International Corporation Inland Steel Company Jones & Laughlin Steel Corporation National Steel Company (Weirton Steel Company & Great Lakes Steel Corporation) Newport Rolling Mill Company Wheeling Steel Corporation Youngstown Sheet & Tube Company Pittsburgh Steel Company only finally agreed to sign as members of the Heavy Steel and Sheet Groups of the Steel Export Association of America on October 18th and object to a starting date earlier than that period we must ask for a new starting date for the entire group not earlier than October 18th. However, for accounting purposes, in view of the fact that no opportunity has been afforded any of the members to book tonnage, it might be well to consider the new starting date as November 1st. (2) Alloy Bars.-The American Group cannot agree to include Alloy Bars in the agreement either as to price or quantity. We consider as this is a new business in consuming countries, it is new business for export. We are willing, however, to form a new group on Alloy Bars with negotiated quota. (3) Sheets & Breakdowns shipped into England.—This refers to the question of accounting followed on shipments of these products to the United Kingdom. We believe that our shipments of sheets and breakdowns to England should not be reported, but if reported should not be debited to us. In our discussions before the writer left New York, the following was developed: In June or July 1936, Lord Dudley, Sir Andrew Duncan, and Mr. Elliott arrived in the United States on the maiden voyage of the s/s QUEEN MARY. At that time first negotiations were entered into in an endeavor to bring the Americans into the Cartel. During those negotiations sample copies of the Agreements were given to the Steel Export Association of America. There was no Sheet Agreement included among those sample copies, due to the fact that the Sheet Agreement had not been signed before these gentlemen left England. The sample agreements that were left had the following to say regarding protection of the home markets of the Cartel members: "The contracting parties undertake to respect each other's interior markets, as far as possible barring special or previous agreements." We interpreted this to mean that any substantial interchange of tonnages between countries would have to be the subject of special agreements, but that any small tonnages into Cartel countries would be ignored so far, or as long as, they represent the irreducible minimum of the interchange of such goods between these countries. It was understood by us, of course, that substantial tonnages would not be involved. We had expected to be debited with any of these small shipments which might be made from America to the Cartel countries. In February 1937 Messrs. Bash & Mundle were in London and at that time signed a preliminary agreement which became the magna carta of our later negotiations. When they signed the memorandum of agreement in February 1937 they did not learn that the Sheet Agreement was different from the sample agreements which had been delivered to them. It was only in the Spring of 1938 we obtained a copy of the Sheet Agreement which included the paragraph quoted above regarding protection of internal markets, but added to it was the following: "It is expressly stipulated that in the event of any group effecting deliveries on any other group's interior markets, its quota, as defined in Article 6 shall be debited with these deliveries." This would be satisfactory to us if it represented the interpretation which we have given above regarding small shipments into each other's interior markets, and that may be the meaning of the paragraph, but if this paragraph should require us to take debit for substantial deliveries under special agreements, then we think it would be a great hardship and entirely wrong. We believe that wherever there is a natural flow of goods into one of the interior markets, then that flow should be controlled under special agreements. We think that sheets and breakdowns for England come within this category and, therefore, should be the subject of a special agreement. If it is the subject of a special agreement it should not be necessary to take debit for the tonnage involved. It is our intention to form a sheet group nationally for the control of our sales into that territory. (4) International Quotas.-We seem to be in agreement with the figures supplied with the exception of the bar quota. As finally calculated, the bar quota is 1.48%, but this is so far below the original estimate of February 1937, based on figures supplied by all parties at that time, that we cannot accept the great divergence in results. Originally we estimated a quota of 2.80% on 1936 figures. This was very low, but in the spirit of taking the good with the bad we accepted. Now, however, with only 1.48% we are in a very difficult position and we feel that we must request a revision upward of this international quota. Such procedure will, of course, violate all established rules and regulations, etc., but in this case we are faced with an utterly impossible situation. We have, of course, a technical right to ask for a bigger quota. Due to the fact that the large difference in the figures submitted by the Continentals in 1937 when our estimates were made, and the final figures as now submitted, it seems to us that we cannot be expected to accept any such large errors even in estimates and hence have a right to ask for larger quota within "gun shot" of the original estimates. (5) Skelp.-Exact Skelp position to be established. We understand that the creation of a separate Skelp Group will require a modification of the quotas on Hoops & Strip. This because Skelp shipments were originally included with Hoops & strip. If we deduct Skelp we shall have to modify Hoops and Strip accordingly. Final figures should be agreed upon as soon as possible. We have never formally agreed to membership in a separate Skelp Group but will do so if final figures and details are satisfactory to us. (6) Elimination of Iron Sheets for drainage products.-Suitable definitions and result of our discussions are in hands of Mr. Summers with whom we will discuss this question. (7) London committee & Control machinery to be set up in London.It is essential this be done at earliest possible opportunity, and established very much on the basis of the London Tinplate Committee. This would give representation to each country party to the agreement. (8) South African situation.-Clarification of this and opportunity of consultation before definite action taken against American competition, to the end that the American Group may not be eliminated from participation in this market. Position to be based on 1936 figures. 17.11.1938 EXHIBIT S-82 between: and: AT A MEETING HELD IN PARIS, ON JUNE 14TH 1938 THE JOINT COORDINATING COMMITTEE OF THE ENTENTE INTERNATIONALE DE L'ACIER a Delegation representing THE STEEL EXPORT ASSOCIATION OF AMERICA, IT WAS AGREED to put into force, as from June 15th 1938, the proposed agreement, dated February 26th 1937, between the ENTENTE INTERNATIONALE DE L'ACIER, the BRITISH IRON & STEEL FEDERATION, and certain U. S. STEEL MANUFACTURERS, subject to the following modifications: I The Groups of U. S. Steel Manufacturers foreseen in the said Agreement to include all the Manufacturers enumerated in the attached schedule. II The period of the Agreement to be from June 15th 1938 to December 31st 1940. III The STEEL EXPORT ASSOCIATION OF AMERICA accepts full responsibility under the Agreement for all exports by its members. IV The responsibility of the STEEL EXPORT ASSOCIATION OF AMERICA under the Agreement in respect of exports of U. S. Steel Manufacturers no parties to the Agreement is defined as follows: (a) The STEEL EXPORT ASSOCIATION OF AMERICA accepts responsibility for outsiders' exports in full up to a tonnage not exceeding 10% (ten per cent) of member shipments up to quota; (b) For outsiders' exports over 10% (ten per cent), but less than 20% (twenty per cent) of member shipments up to quota, the responsibility to be 50% (fifty per cent); (c) For outsider shipments above 20% (twenty per cent), no responsibility accrues. V In the event, however, that the American outsider shipments exceed a figure which, in the opinion of any of the three signatory parties or of the London Committee, renders the continuance of the Agreement impracticable, any signatory party may give notice to terminate the Agreement within such period as may be unanimously agreed not exceeding six months. VI Any tonnage of "breakdowns" exported by any signatory member to be included provisionally in such member's sheet quota and to be subject to the regulation of the International Sheet Comptoir. Any excess resulting from such exports to bear an intermediate penalty between the rates applicable to Semis and Sheets; the actual rate of such penalty to be fixed by the International Sheet Comptoir according to the circumstances. This arrangement to be reviewed from time to time in the light of members' experience. VII The acceptance by the STEEL EXPORT ASSOCIATION OF AMERICA of the clauses and conditions of the existing main Agreement between the ENTENTE INTERNATIONALE DE L'ACIER and the UNITED KINGDOM "BRITISH IRON & STEEL FEDERATION," referred to in Clause 6 of the Agreement dated February 26th 1937, is now confirmed and comes into operation as from June 15th 1938. The following companies, their subsidiaries and associated companies, as members or prospective members of the STEEL EXPORT ASSOCIATION, constitute the list referred to in Clause I of the attached Memorandum: I. U. S. STEEL PRODUCTS COMPANY. II. BETHLEHEM STEEL EXPORT CO. III. REPUBLIC STEEL COMPANY. The above three firms accept the Memorandum of Agreement unconditionally. IV. YOUNGSTOWN SHEET & TUBE CO. V. JONES & LAUGHLIN STEEL CORPORATION, VI. WHEELING STEEL CO. VII. NATIONAL STEEL Co. VIII. LUKENS STEEL Co. IX. NEWPORT ROLLING MILLS. X. OTIS STEEL CO. XI. ARMCO INTERNATIONAL. XII. ALLEN WOOD STEEL CO. XIII. PITTSBURG STEEL CO. The above ten firms have not yet been consulted, and their acceptance is still to be secured. EXHIBIT S-82A1 ACCORDS AVEC LE GROUPE AMERICAIN. L'accord négocié avec le Groupe américain au cours d'une séance particulière en Comité restreint est repris à la note annexée. La lecture de cette note provoque les commentaires suivants: (1) Mr. ELLIOTT explique le jeu de la clause IV: la responsabilité que le Groupe américain accepte pour les dissidents n'affecte pas le calcul des droits eux-mêmes; les 10% et 5% seront calculés sur le tonnage revenant au groupe américain, soit le pourcentage contractuel calculé sur les exportations de l'ensemble des usines qui sont partie à la convention, abstraction faite complètement des livraisons des dissidents. (2) Relativement au paragraphe VI (breakdowns), M. POENSGEN estime qu'il est indispensable que l'on fixe pour les breakdowns un prix raissonable, largement inférieur à celui des tôles fines; les Américains les vendent á 10 £ alors que le prix correspondant à celui des tôles fines est de l'ordre de 17 à 18 £. M. MEYER s'associe à ce point de vue. Mr. SUMMERS aurait préféré que l'on dise, au premier alinéa "until otherwise determined" au lieu de "provisionally"; Sir A. DUNCAN admet cette interprétation, qui est conforme à ce qui a été dit le matin, mais estime qu'il est préférable de ne plus modifier la rédaction afin de ne pas rouvrir une discussion, maintenant que les Délégués américains ont quitté la séance et sont sur le point de s'embarquer. Au surplus, la possibilité d'une revision périodique est donnée par le dernier alinéa de cet article.M. POENSGEN déclare n'accepter le principe du débit des "breakdowns" sur tôles fines que s'il est formellement entendu que les Groupes européens pourront appliquer entre eux une autre solution. Il se référe à ce sujet à ses déclarations antérieures (voir plus haut). M. de WENDEL estime qu'il est absolument indespensable que, pour la fixation de la soulte applicable aux "breakdowns," la Comptoirs des tôles fines se mette d'accord avec le Comptoir des demi-produits. Mr. SUMMERS donne toutes assurances à ce sujet. EXHIBIT S-83 MISSION AUX ETATS-UNIS.-RAPPORT CONFIDENTIAL À MONSIEUR LE PRÉSIDENT AL. MEYER Notre bateau ayant été retardé par le mauvais temps et le brouillard, nous ne sommes arrivés à New-York que le vendredi 4 février au matin. J'avais retrouvé à Southampton Lord Dudley et Messieurs Elliot de Summers; en cours de route, nous avons discuté la marche à suivre dans nos négociations et établi le texte d'une série de suggestions que nous nous proposions de présenter aux Américains, dès que nous trouverions le moment favorable. Le texte de ce memorandum est annexé au présent rapport. En vue d'éviter les surprises qui se sent multipliées en ces derniers temps et d'assurer un contrôle permanent des situations d'avances et retards, nous envisagé la création d'un comité rédui siégeant à Londres, dont la mission serait de suivre la position des Groupes et d'ordonner souveraninement les mesures propres à rétablir l'équilibre dès qu'il serait troublé. En composant ce comité d'un délégué pour le Groupe américain, un délégué pour le Groupe britannique un délégué pour l'ensemble des Groupes continentaux at un délégué neutre, à voix prépondérante, on donnera à chacun les garanties d'impartialité qu'il peut réclamer. Notre mémorandum indiquait aussi certaines règles susceptibles 1 Extract from minutes of Joint Coordinating Committee, June 14, 1938. 96347-50-ser. 14, pt. 4b-12 |