Chapter XXXVIII: Part 46: Konzept/Ss No. 2318

Paris, 11 July 1944

1. To the Foreign Office Berlin Teletype-C7-(only from to in secret
cipher)

[In handwriting] “Citissime”
No. 87 of 11 July 1944
after cabled order of 8 July No. 71.

I ask for the consent of the Reich Minister for Foreign Affairs to enter negotiations with the French government on the following basis:

1. The OKW demands an increase of the French occupation cost payments from 25 million RM a day or 750 million RM a month plus 50 million RM for Italian occupational costs to 33.3 million RM a day or 1 billion RM per month and proposed to the Foreign Office to instruct my delegation to enter negotiations with the French Government to that effect. The RFM (Reich Finance Ministry) and the Four Year Plan agreed to that demand.

The expenditures for occupational cost have since the beginning of the year constantly exceeded the income because of the increasing preparations on the Atlantic coast, made necessary by the war. Those excess expenditures were covered by using the remaining credits on the account of occupational costs and by a payment of one month of occupational costs in advance which we demanded a short time ago.

These expenses increased to an even larger extent during the last few months, especially since the beginning of the invasion. While they still amounted to 900 million RM in May, they increased to 950 million RM in June and will reach 1100 millions in July. All reserves which were available up to now will be exhausted by the middle of August at the latest. New means for the conduct of war in France must therefore be procured until then according to the demand of the OKW.

2. The income of the French Government from Tax-Sources, and mainly the raising of money through loans and short term bills of exchange has on the other side decreased considerably since the extensive paralyzation of the economic life, the industries and the transportation system in France. The French Government consequently has been forced for the last few months to use the _advances of money_ of the Bank of France at an ever-increasing rate. Those advances increased from _about 10 billions_ of F. Frs. to 18 billions of F. Frs. _in May_ and _25 billions_ F. Frs. in June. The newly demanded payments will also have to be raised through the use of the bank-note credit, that means, through the printing of bank notes.

The French Government can on the other hand hardly be surprised, considering the actual circumstances, if we approach them with the demand for increased payments.

We know from confidential sources that Laval and Finance Minister Cathala already expect such a demand.

3. Considering, however, the political necessities and the already mentioned difficult financial situation of France, and in appreciation of the fact that the French Government has kept its financial obligations for 4 years without interruption, I propose the following:

1. to designate the new increase of payments which has now become necessary, as _temporary_ and to leave open the possibility of our readiness to reopen negotiations for an eventual re-diminution, as soon as the military situation in France permits.

2. _Not_ to designate that new demand as an increase of the occupational costs in the spirit of the Armistice treaty, because that demand, which was explicitly motivated by the OKW, as to cover the increased expenses for our conduct of war in France, could only with difficulty be reconciled with the obligation to pay the “_cost for the maintenance of our occupation troops_”, as based on the Armistice-treaty. I recommend rather to present it _as special contribution of the French Government and the French people_ for the repelling of Bolshevism (original version reads: “repelling of the Anglo-Saxon invasion of Europe” but it has been changed in pencil to read as above) and the defense of Europe. Such a formulation lies in the political line of Laval and his repeated declarations. This does not change the fact, that those payments, like the previous increase, will also be made through the account of occupational costs and will thus continue to be treated as such.

3. In order to provide _also an exterior character_ to that idea, I propose to negotiate about a single additional effort of _1 billion RM_ to be paid in _monthly installments_ of 200 million RM each. At the expiration of 4 months a further contribution by France could eventually be negotiated again, according to the then prevailing military situation.

With the consent of the embassy.
signed: Hemmen.

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