740.00119 EW/11–2445: Telegram
The Ambassador in France (Caffery) to the Secretary of State
[Received November 26—9:45 a.m.]
6779. From Angell No. 80. Discussion of economic problems Ruhr-Rhineland separation on November 19 and 20 centered on effect of separation on rump Germany. On basis of OSS study we presented view that separation would have most serious consequences German balance of payments. We offered view informally that additional deficit would be between RM 1500 and 2000 million in 1936 prices even if pre-war exports of chemicals and machinery were maintained. We raised question whether this would not, in French view, involve radical revision of reparation program.
Reply was made that situation of rump Germany would certainly be serious but on basis French figures additional deficit would approximate RM 500 million and might be further reduced by exports of surplus electricity. In addition, French stress fact that potential Ruhr surplus will be available to aid rump Germany in transition period.
Difference in estimates due chiefly to French view that rump Germany will have food surplus for export. Discussion of figures leads us to conclude French estimates seriously in error.
Memorandum detailing French estimates reference rump Germany transmitted to us November 22 and airpouched to you. Additional French material with regard to Ruhr industry and trade promised and may be subject of another meeting.
General tenor of French statements consistent with that indicated in urtel 5429 (for Angell No. 42). In particular, French argue that separation need have no serious effect on reparation removals. Alphand, however, stated that French position is attempt to meet anticipated Russian insistence that Potsdam formula be strictly applied. French would be glad to see this formula relaxed, assuming Rhine-Ruhr separation, if other powers agree.
We concur in your conclusions that separation of Rhine-Ruhr area in terms conceived by French would be inconsistent with applications of Potsdam reparations formula to rump Germany [Angell.]