800.515/785
Memorandum of Conversation, by the Adviser on International Economic Affairs (Feis)
| Participants: | Mr. T. K. Finletter,20 Mr. Herbert Feis, State Department. |
| General Hilldring;21 Mr. van den Broek, Minister of Finance, Netherlands; Mr. de Iongh,22 Netherlands Govt. |
The meeting was arranged as a result of the Minister of Finance’s desire, as expressed to Assistant Secretary Acheson, that he have the opportunity to discuss certain urgent monetary matters with General Hilldring. It was held in Mr. Finletter’s office.
The Minister of Finance stated that he had had meetings with the Minister of Finance of Belgium, and that they had agreed on identical lines of policy as regards exchange rates, the provision of currency for use in the event of reoccupation, etc. He was desirous of explaining his program to the American Government, with the view of securing agreement and of working out any arrangements that were necessary.
The Minister of Finance presented his prospective policy on three main matters:
1. He stated that of course during the German occupation the quantity of guilder currency in circulation in the Netherlands had tripled, or more. He said that his Government intended, upon securing control, to exchange new government bonds for a large part of this currency, in order to reduce its quantity greatly and thereby forestall any marked inflation. Later on, in response to Mr. Feis’ quizzing, he made clear that the Dutch Government, before giving bonds for currency, intended carefully to examine the means by which people in the Netherlands had come into increased possession of it. (Incidentally, the same investigation is apparently planned as regards bank balances and securities). He was informed by Mr. Feis that the Netherlands policy in this regard would be regarded by the State Department as the business of the Dutch Government. The Minister incidentally stated that he estimated that with these new bond issues the total debt burden of the Dutch Government would be about one-fifth of their budget.
2. He said that the Dutch Government was undertaking to have printed (I believe in the United States23) guilder currency for both the Netherlands and the Netherlands East Indies. They intended to place this in use upon reoccupation.
It was pointed out to him that in the event that reoccupation in the Netherlands was carried out by American or British armed forces, or both, the necessity would present itself to secure advance agreement between the Netherlands Government and the Governments of the United States and Great Britain as to the many questions which would arise in regard to the use of this currency, such as (a) whether it should be used immediately upon the entry of armed forces; (b) whether it should be used by the armed forces; (c) whether the Netherlands would expect payment for this currency, etc.
[Page 1042]A discussion ensued as to how the Minister of Finance could best proceed to clarify these questions. It was agreed that they would properly be decided by the Army, State, Treasury Committee that has been meeting under the Chairmanship of Assistant Secretary of War McCloy to discuss similar matters in other areas. It was further decided, with General Hilldring’s full approval, that in order to expedite the conclusions of this Committee on these matters, the Secretary of Finance might well discuss them direct with the Treasury, which in turn would bring them before the Committee through General Hilldring.
3. The Minister of Finance pointed out that at the time when this new guilder currency was issued it would be necessary to determine an exchange rate vis-à-vis the pound and dollar. He said that the Netherlands Government desired to set that rate at 12½ guilder to the pound24—which would roughly reestablish the dollar-guilder relationship in terms of their old gold value.
Mr. Feis stated that subject to any opinions that the Secretary of State might have, he believed this would be acceptable to the State Department. There was general agreement, however, that this matter of exchange rate was one of primary interest to the Treasury, and that therefore it was essential that the Dutch Government reach agreement with the Treasury.
It was suggested and approved that, in order to facilitate prompt advancement of these discussions the State Department would make a memorandum of this discussion and transmit it to the Secretary of the Treasury,25 with a short covering note stating that it was expected that the Minister of Finance of the Netherlands would very shortly seek to enter into discussion with the Treasury as regards to the matter covered by this memorandum.
- Thomas K. Finletter, Special Assistant to the Secretary of State.↩
- Maj. Gen. John H. Hilldring, Chief of the Civil Affairs Division of the War Department.↩
- D. Crena de Jiongh, Financial Adviser to the Netherlands Government.↩
- Mr. van den Broek stated in his letter of July 30, 1943, to Mr. Feis (not printed) that the banknotes were being printed in Ottawa, Ontario, Canada.↩
- In his letter of July 30, 1943, the Minister of Finance indicated that the rate of exchange should have been 10.50 guilders to the pound (instead of 12.50 guilders as mentioned) and that the rate of 10.50 corresponded to a dollar-sterling crossrate of 4, about with the old gold parity of the dollar and the guilder of approximately 2.50 guilders for a dollar.↩
- Letter of July 27, not printed.↩