Chapter XXXV: Part 36: Dir. Ha Pol 379 Berlin, 8 December 1942

Note re French occupation costs

Following the note dated 27 November--Dir. Ha Pol 371

According to instructions, I submit in the annex a note of delegate Hemmen about the financial capacity of the French to pay the increased expenditure rates of the occupation as well as about the dangers threatening French finances arising from the payments of occupation costs and about the methods to meet these dangers. Delegate Hemmen comes to following conclusion.

1. The increased payments of 25 million RM daily (yearly 182 billion francs) are bearable and by no means dangerous for the French finances. The yearly French national income amounted to 432 billion francs for 1942. The daily per capita war expenses are at present in Germany 2.90 RM and thus 6 times as high as in France with 0.40 RM.

2. The danger point for the French finances lies in the fact that the French government has done nothing until now to counteract the threatening inflation which is due to the war expenditures, so that a price increase of 50-60 per cent and a devaluation of the franc of about one third took place.

3. Therefore it is necessary to raise simultaneously with the demand for increased occupation costs the demand for effective French financial, monetary and price regulations and to secure their strictest execution under German guidance and control.

This result on the whole corresponds to the decisions of the HPA which were laid down in my former note. As suggested there, it can be demanded from the French to increase the daily part-payments from 15 to 25 million RM; however, as it has been also suggested there, it is to be insisted that the measures which are needed against further price increase should be carried out without delay and in an absolutely effective way. The investigations which were conducted by the OKW and by the Reich Ministry for Finance come to the same conclusion.

In doing so, it is not sufficient to leave this to the French government alone, but we ourselves have to intercede. The nomination of a special commissioner with similar tasks as in Greece will at present not be necessary and not even feasible in France, for the simple reason that it would be unwise to entirely unburden the French government of its own responsibilities to maintain the order of economics and finances. But it seems necessary to persuade the French government to accept a collaboration with one or more German advisors in order to introduce and carry out the necessary measures. This function could be assigned to the delegate Hemmen and to his delegation in such a manner that the negotiations they have conducted until now would be changed into a collaboration with the corresponding French governmental agencies. The necessity for this could be presented to the French government with the double motivation that, as an occupying power, our interest is not only in that further inflation should be prevented in France and that we can demand this in our capacity as receiver of the occupation costs on the basis of the armistice contract, but that we also have the same interests on account of the far-reaching interweaving of the French and German industries which was achieved through mutual free negotiations.

Furthermore, the German side has to do its share that nothing should happen in the further course which would enhance the inflationary tendencies in France. I have agreed with State Secretary Koerner that the Foreign Office and the Four Years’ Plan should most closely follow further development in this respect and intervene as soon as necessary. State Secretary Koerner has told me that the Reich Marshal announced his decision to curb and, if necessary, to stop the black market action if it should become apparent that it has undesirable consequences in this respect. Also, further liaison will be maintained by the Foreign Office with the OKW which has already taken provisions to reduce the military expenditures to the absolutely necessary minimum in order to observe permanently this point of view.

In this way both on French as well as on German sides everything will be done to prevent the possible dangers of the payment of increased occupation costs.

Herewith submitted via the State Secretary to the Reich Foreign Minister with the request to approve the planned procedure.

signed Wiehl

Copies to:

Buero Reich Foreign Ministry
St. S
U. St. S. Pol
Dir. Ha Pol
Dg. Ha Pol
Delegate Hemmen
Ha Pol Frie
Ha Pol II a

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