Pauley Files

No. 937
United States Delegation Working Paper1

Valuation of Removables From the Ruhr Area

There has been a great deal of discussion as to the “value” of remova[ble] equipment in the Ruhr, and in particular as to the “value” of equipment which might be allocated to the Soviet Union from the Ruhr.

As is well known, there are various methods by which industries can be valued, depending upon the particular purpose for which the valuation is sought. These methods include cost less depreciation; replacement value; and the value of the industry as a going concern. Depending upon the method used, the valuations may differ substantially.

In addition to this difference in the methods of valuation, any attempt to place a value on industries in a country such as Germany becomes subject to even greater divergences of opinion if an effort is made to value such industries in terms of dollars. Assuming a reasonable valuation can be arrived at in marks for the particular purpose involved, at what rate should such marks be converted into dollars for that purpose?

It is submitted that for the purpose with which we are concerned, any attempt to place a valuation, whether in marks or dollars, on the equipment to be removed is meaningless and can only lead to needless debate in arriving at a decision on that basis. Even assuming a decision could be arrived at, such a decision would necessarily be subject to varying interpretations in its implementation.

What we are trying to determine is how much of the removable industrial equipment in the Ruhr should be allocated to the Soviet Union? The only realistic approach to this problem, and the only approach which can have any definitive meaning to the parties concerned, is to arrive at a percentage of the removable industrial equipment in the Ruhr to be so allocated.

To illustrate. Assume that it were decided that X percentage of the removable equipment in a certain industry in the Ruhr was to be allocated to the Soviet Union. Assume that under some method of valuation, and conversion into dollars, used by the United States the [Page 887]value of this equipment were placed at $100,000; and that under some other method used by the Soviet Union the value were placed at $500,000. It must be obvious that the fact that the United States and the Soviet Union place widely divergent values on such equipment is immaterial for our purpose.

  1. Authorship not indicated.