The Representative on the Allied
Commission on Reparations (Pauley) to the Secretary of
My Dear Mr. Secretary: Mr. Clayton has given me an opportunity to review his memorandum to you of July 292 relative to reparations.
I note that Mr. Clayton estimates that the USSR zone contains 40% of the movable industrial capital equipment in Germany. The estimate I presented to you yesterday morning3 is approximately 45%. In other words my percentage includes about 200,000,000 Reichsmarks more of industrial equipment removables than the percentage used by Mr. Clayton.
The difference between the two estimates could arise from the following:
- My figures covered not only industrial equipment but also transportation and utilities.
- Mr. Clayton’s figures relate to total removables of capital equipment in the USSR zone while mine relate to equipment which it is believed should be removed if Germany is to be deindustrialized of its war potential.
- Mr. Clayton may not have included the entire areas considered in my figures.
- The data used in my estimate make some small allowances for the relatively greater amount of damage and destruction to industrial equipment in the west as compared to the east.
- Neither the Clayton figures nor my own make full allowances for the increase in industry in the eastern zone versus the western zone.
- Neither figure takes into consideration the increased value of the fee ownership of land acquired by Russia versus the value of this same area for reparations.
- Neither Mr. Clayton’s figures nor mine make provisions for any allowances that the USSR will remove more from their zone of occupancy than [will the?] U. S., U. K., or France.
Any dispute between Mr. Clayton and myself as to [figures?] seems to me irrelevant at the moment. The fact remains that the USSR have for all practical purposes approximately 50% of all things that are subject matters of reparations in their zone, and at least we are close enough to strike a bargain if one is to be made.