Chapter XXIII: Part 7: Wiesbaden 23 October 1940

Armistice Commission for Economic Affairs

The President of the French Delegation for Economic Affairs French Delegation

To Monsieur Hemmen
Minister Plenipotentiary
President of the German Armistice
Delegation for Economic Affairs.

No. 6318/DE
[Rubber Stamp]
German Armistice Delegation for Economic Affairs Wiesbaden
24 October 1940
No. 1532
Enclosures

Sir:

By order of my government I have the honor to communicate the following to you:

In a note dated the 12th of October, the German government answered a note of the 26th of August in which the French government had made a formal protest against the payments demanded from her to cover the expenses of the German occupation troops in France. The German government refuses all discussion, both on the distinction between “occupation troops” and “operational troops”, and on the rate of exchange between Reichsmarks and francs.

It further refuses or denies the French government the right to watch and receive information about the way in which the sums paid for the costs of occupation are used, as well as about the requisitioning of lodgings and economic requisitions.

The French government profoundly regrets this reply. It considers, in fact, that events have fully justified the position it took up.

After having recalled once more the essential distinction which it makes between “occupation troops” and “operational troops”, the French government pointed out to the government of the Reich the two considerations which, in its opinion, make a fresh examination of the problem necessary.

1. Facts have shown that the rate of exchange fixed for the conversion of the Reichsmark into francs was too high. This rate of exchange did not take into account the respective levels of prices in France and Germany at the time when it was fixed. It anticipated a very considerable rise in French prices, which the German authorities considered inevitable. Actually this rise did not take place and the buying power of the franc remains much higher, than that implied by the maintenance of the present parity.

The French government is all the more surprised at its protest against the rate of exchange between francs and Reichsmarks not having had any results, as it had itself suggested, in case the rate were modified, a formula allowing the pay and allowances received by the German troops for their expenses in France to remain at the figures at present paid in francs.

An immediate consequence of the rate of exchange of 20 francs to the mark is that the sum demanded on account, for the maintenance of the occupation troops, which is reckoned in Reichsmarks, is out of all proportion to the real expenses of these troops. As a matter of fact, the credit balance of the account opened by the Bank of France for the German military administration is enough to cover the costs of occupation for a long time to come.

2. It is obvious that the payments demanded by the government of the Reich should be reduced in proportion to the number of German troops in France. But it is clear that this number has diminished considerably since the daily payment was fixed.

The French government is all the more justified in arguing from the above facts, as it is faced by an extremely serious economic problem, owing to a lack of raw materials and insufficient means of transport, which have led to considerable unemployment. The result is that, if the level of the costs of occupation fixed in August is persisted in, the burden will become more and more difficult to bear as time goes on.

The French government therefore has to make a formal request for a revision of the present daily payment. This reduction is amply justified, both by the real needs of the occupation troops and by France’s economic capacity. If it does not take place soon, the French government will inevitably be unable to continue its payments.

The French government, anxious to carry out the Armistice Convention which it signed, wanted to give the government of the Reich this loyal explanation of the position it is forced to take up. It appeals to the feeling of great comprehension of the German government and hopes that this sincere explanation will induce the latter to grant the revision requested in this note.

I am, sir,

/S/ Yves de Boisanger.

[Rubber Stamp]
THE PRESIDENT
French Armistice Delegation
For Economic Affairs.

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