Foreign Relations of the United States: Diplomatic Papers, 1943, General, Volume I

800.515/588

Memorandum by the Treasury Department ¹⁰

[ Washington ,] March 30, 1943.

Memorandum Regarding Invasion and Occupation Currencies

There is submitted for consideration the following Treasury recommendations and summary of the more important considerations governing these recommendations on some of the problems of invasion and occupation currencies.

1. In the invasion stage the United States armies should use regular United States currency with a yellow seal and some other minor distinguishing mark.

(a) No other type of currency can be expected to be as eagerly accepted by the local population.

(b) The additional expense of using regular dollar currency instead of special dollar currency would not necessarily be great. Part or most of the costs of occupation can in any case be shifted to the local population later if desired.

(c) A distinctive mark could permit the isolation of the currency should it fall into enemy hands and also prevent influx into the area of looted dollar currency already in the hands of the enemy.

(d) Were the United States to use a special currency with the word “dollar” on it which it did not intend to redeem eventually at par, it might seem to some people to be resorting to unethical and dishonorable practices unworthy of a great republic.

2. The best currency for the occupation stage is a currency designated in local units and as quickly as possible the shift should be made from regular United States dollar currency to local currency.

(a) Great inconvenience and probable increased economic disorder will result to the local populace and economy from having in use a local currency as well as currencies designated in dollars and sterling.

(b) The continued use of regular United States currency alongside local currency would result in black markets in which the market rates of exchange are likely to be more favorable than the decreed rate. Unless the exchange rate was repeatedly changed, the discrepancy between the decreed rate and the black market rate would confuse and irritate the soldiers and Army finance officers.

(c) The sooner the local currency is introduced, the less dollars will have to be spent by the invading armies and the subsequent problem of adjustment of costs made easier.

3. Steps should be taken immediately to provide adequate supplies of currencies designated in terms of local units to be available when needed.

(a) The Treasury should immediately prepare substantial stocks of specially prepared blank currency with the legend and denomination to be filled in immediately after the invasion has begun (for security reasons).

(b) Such currency should not resemble outstanding local currency and should bear the following legend “United States Military Authority”. The same basic design should be used for all countries with variations confined to color, denomination, etc.

(c) By means of the photo-offset process such blank currencies could be produced by the Treasury in sufficient quantities within a month or so after the Bureau is given the green light. The blank currency can then be completed and deliveries begun within a few days after the invasion has started.

4. The British should be urged to pursue the same procedure as the United States does, except that

(a) The British will use British Military Authority Sterling notes (B.M.A. notes) instead of U.S. yellow seal currency as their “spearhead” currency. B.M.A. notes will be tied to the dollar at the rate of 4 to 1 and made interchangeable with the dollar just as was the case in North Africa.¹¹

(b) A supply of local currency bearing the legend “British Military Authority” will be prepared for the British on the same basis as that described in paragraph (3) above.

5. No discussions should be held with the Allied governments preparatory to invasion dealing with either the supply of currency or rates of exchange, but each one of the Allied nations should be asked to submit a memorandum to the U.S. and British governments setting forth their views of an appropriate exchange rate to be adopted at the time of invasion of their respective countries.

British Views

The British strongly desire that we use a special military note instead of the yellow seal currency during the initial period of invasion and that local currencies of invaded areas already available in London, or in the process of being made available, should be used during the initial period of invasion wherever possible.

10. Copy transmitted to the Secretary of State by the Adviser on International Economic Affairs (Feis) in his memorandum of March 31, not printed.
11. A summary of instructions issued by the French North African authorities to banking institutions in French North Africa was submitted by the Commander in Chief, Allied Forces North Africa (Eisenhower) to the War Department from London, in his telegram No. 267 of November 24, 1942 (not printed), which stated in part: “American bank notes introduced in North Africa by the American authorities and the American troops are similar to those in circulation in the United States, except that the seal on the right-hand side of the note is yellow instead of being blue or some other color. It is specifically understood that American bank-notes bearing the yellow stamp, and special sterling notes BMA (British Military Authority) will be accepted by North African Banks of issue, against corresponding dollar or sterling credits in the United States or the British Empire.” (865C.5151/3). A public announcement of November 16 on this subject by the Secretary of the Treasury (Morgenthau) was printed in the New York Times, “Special Currency for Men in Africa”, November 17, 1942, p. 9.