In May 1950 French foreign minister Robert Schuman (Schuman, Robert) proposed the establishment of a common market for coal and steel for those countries willing to delegate control of these sectors of their economies to an independent authority. In drawing up what was called the Schuman Plan—which actually had been authored by Jean Monnet (Monnet, Jean), then head of the French planning agency—French policy makers were motivated by the belief that a new economic and political framework was needed to avoid future Franco-German conflicts. The first step was to be limited, but the ultimate objective was the creation of a “United States of Europe.” West Germany, Italy, and the three Benelux countries subsequently agreed to negotiate on the basis of this plan.

By 1954 the agency had removed nearly all barriers to trade between its members in coal, coke, steel, pig iron, and scrap iron. As a consequence, trade in these commodities rose dramatically in the 1950s. A set of common rules was established to control cartels and to regulate mergers. The central institution, the High Authority, fixed prices and set production limits or quotas and was authorized to impose fines on business firms that infringed treaty rules.

From the 1960s one of the ECSC's main tasks was to supervise its members' reduction of their excess production of coal as that mineral was replaced by petroleum as an industrial fuel. This involved the closing of inefficient or uneconomic coal mines in member countries. Similarly, in the 1970s the ECSC began to supervise the elimination of its members' excess steelmaking capacity when low-cost steel from Japan and other countries put western European steelmakers at a competitive disadvantage. Under the ECSC's aegis, an international group of steelmakers, the European Federation of Iron and Steel Industries (Eurofer), was formed in 1977 to rationalize the industry. The headquarters of the ECSC were in Brussels.