740.00119 EW/11–1845: Telegram
The Secretary of State to the Ambassador in France (Caffery)
5429. For Angell, No. 42. On basis of OSS70 study reurtel 667671 from Angell 64 we estimate additional deficit imposed by Ruhr-Rhineland separation of order of RM 1645 million at 1936 prices. We feel French proposals in fact require either scrapping Potsdam reparations formula or rapid if not simultaneous rebuilding with foreign capital of rump Germany. Only industries in rump area capable of providing exports for long run independence envisaged are machinery and chemicals. Russian removals from that area have almost certainly compromised already necessary long-run level. Although discussions here have not been concerned with economic detail, French appear to underestimate role of Ruhr as capital export area within Altreich which position was normally balanced by internal invisible items (e.g., government and banking services) which would be denied under proposed scheme. This is for your information in technical exchanges and is not to be given the French as Dept view, which has not been formulated on this issue.
Discussions here have been in broad terms with French tendency to admit existence of difficulties but to regard them as soluble and of secondary importance as compared with alleged security advantages. U.S. role in discussions has been purely exploratory designed to elicit basis for report to Secretary. For your guidance head-on meeting of views is reserved for later meeting of major powers.