862t.01/495
Memorandum by the Secretary of State of a Conversation with the German Ambassador (Wiedfeldt), December 12, 1922
2. Reparations. The German Ambassador referred to the breakdown in the London Conference and a conversation ensued in which the Secretary asked a number of questions which the Ambassador answered very readily and candidly.
The Ambassador’s statements may be summarized as follows:
It had been supposed by the German Government until recently that the French Government would not demand more than the administration of the left bank of the Rhine and the taking over of the one government mine on the right bank. It now appeared, however, that Poincare was determined to occupy the Ruhr. This was France’s last card; the Ambassador had been over the matter a long time ago and had almost hoped that the Germans [French?] would take the Ruhr and that they would have this over.
The population of the Ruhr valley was of a stolid sort and with the French military on hand to prevent strikes it was quite possible that they would be able to continue production for two or three months; that then there might be difficulties; that it was almost impossible [Page 187] to get along with the French; that there would be some trouble, a workman might assault a French soldier, et cetera, and before a year was over the French would find that the experiment was a failure.
It was supposed that the French intended to take over the coal trust in the Ruhr; that this naturally meant the selling of the coal and there had been developed a system of distribution with which it was difficult to interfere. Of course the occupation of the Ruhr would make it possible for the French to refuse coal to industries that absolutely depended upon it. This occupation would give the French a domination of German industry and also would enable them to control necessities of particular districts. They could say for example that they would not sell coal to the Krupp Works or to other designated works, or that they would not send it to Bavaria. If, however, the occupation was used to ensure a pecuniary return, that is for the purpose of obtaining reparations, the results would be relatively small. France was getting now all the coal that it could use. If France was to get money from the output of the coal and this output was maintained, it would have to sell it. It could not increase profits on sales unless it either reduced wages or increased prices. It would be difficult to maintain efficiency on reduced wages. Prices might be increased but the price in Germany would be paid in marks and the taking of the Ruhr and an effort to make an economic readjustment of this sort would doubtless further depreciate the mark. The present profits were not very large. Germany had investigated the operations of the coal trust sometime ago and found the prices to be reasonable. It was estimated that the present profits on sales of about 9,000,000 tons of coal a month amounted to about 500,000 gold marks. This would mean that in a year the profits would be 6,000,000 gold marks or a $1,250,000. In all probability the French administration would be more expensive if anything than the German and the profits would not be likely to be increased unless they succeeded in putting up prices.
The conclusion was that in occupying the Ruhr the object was not to get reparations but to dominate German industry and prostrate Germany.