862.51/3943: Telegram (part air)

The Chargé in the Netherlands (Wilson) to the Secretary of State

27. Department’s telegram No. 21, April 11, 5 [6] p.m. Minister for Foreign Affairs has just handed me an aide-mémoire of which a brief summary follows:

The point of view of the Netherlands Government is broadly speaking identical with the position taken by the representative at Basel of the Netherlands bondholders particularly as to the consistently maintained opinion that treatment extended to the Netherlands creditors linked with the system of extra purchases by the Netherlands of German goods does not in reality constitute preferential treatment in the pejorative sense of discrimination. Attitude of the Netherlands Government determined by following considerations:

The situation of Germany cannot be compared to that of a bankrupt who may not be allowed to make different arrangements with different creditors.
It being an economic truism that no country can transfer payments to another country unless enabled to do so by exporting goods or services, Germany is legally speaking at liberty and obliged to make the measure of her transfers to the various creditor countries dependent on the volume of her exports to them.
The Netherlands Government feels certain that Germany would be willing to make similar agreements with other countries as well as with the Netherlands and Switzerland.

These agreements far from being detrimental to the interests of third parties leave intact the amount of exchange available to satisfy their claims. If Germany were precluded from making them the Netherlands and presumably also Switzerland would reduce in great measure their imports from Germany to the detriment in particular of the United States who are not only a creditor of Germany but also an important purveyor of raw materials to Germany.

Furthermore, the Netherlands Government does not admit that these agreements cause the erection of barriers in the way of any [Page 354] equitable settlement or that they ignore the invisible items of trade or that they will deteriorate the German credit situation and work to the disadvantage of all creditor countries. The Netherlands Government on the contrary are firmly convinced that settlements enabling the debtor to discharge his obligations tend to enhance his credit, at the same time reenforcing same conceptions in international intercourse with regard to the relations between creditors and debtors.

Finally, the Netherlands Government calls attention to the importance of full German payments to the national economy of the Netherlands for the Government with 123,000,000 inhabitants is entitled to 44 percent of the total amount of German interest payments and the Netherlands with only 8,000,000 inhabitants is entitled to 18 percent.

The resulting relation is as six to one.

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