Memorandum by the Assistant Secretary of State (Berle)14

I reply to Dr. Feis’ memorandum15 relating to a request for a loan by the Netherlands Government, which reached me July 28.

The problem as to the Department’s handling the request will be academic if the conclusions of this memorandum are accepted.

The Netherlands authorities first made this proposal to the Export-Import Bank and the RFC. Mr. Pierson16 called me up as the Department representative on the Ex-Im Bank Board. I stated that this raised questions as much political as financial and suggested that they might tell the Netherlands Government representatives to present this matter first to the Secretary of State. This the Netherlands Ambassador did in conversation with the Secretary.17 I note that none of the regular financial divisions has had a look at it as yet.

In my judgment the proposal is one we need not consider at this time.

The Netherlands Government is not presently in need of any such sum as $300,000,000. They have available to them approximately $685,000,000 held either by the Government or by banks, exclusive of the assets of private individuals, held here. They have, one way or another, roughly $290,000,000 more in England and Canada. Under these circumstances I doubt if the Congress would take kindly to their getting a loan of $300,000,000 for post-war purposes.

Further, the desire of the Netherlands Government is to post as security for this loan property of Netherlands citizens held in the United States. The Netherlands Government claims title to this property under a decree of 1940 which requisitions such property. The Department has been cautious about giving extraterritorial effect to that decree. After thoroughly canvassing the situation some time ago, Mr. Hackworth18 and I came to the conclusion that it was dangerous to give unlimited recognition to such a decree since this might easily create an embarrassing precedent. At that time the Secretary agreed with this. The Treasury and the Alien Property Custodian19 did not agree.

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I fear that if we now lend money against such property we shall be forced to recognize a decree which we in general are worried about, and second, when, after liberation, Netherlands citizens seek their property, we shall be the demon who has acquired their property and declines to give it up. We might face this with reasonable equanimity if we were sure the present Netherlands Government would survive and that its people would accept all its acts during its period of exile. But we are not clear on this point. A post-war Netherlands Government might very easily take the position that a Netherlands Government in exile had no right to try to bind Netherlands citizens after the war; that it had assets with which it could have carried on and therefore there was no justification for mortgaging the overseas savings of Netherlands citizens; and that we were on notice of that fact because the Netherlands Government had indicated that its first act, on being restored to Dutch territory, would be to submit forthwith to a general election in the nature of a plebiscite.

Being under no great compulsion, I feel we can let the matter quietly ride, and suggest to the Netherlands Government that this is not a particularly appropriate time for post-war loans to be considered. Since apparently Mr. de Iongh has been discussing this with Mr. Acheson, it would seem appropriate that Mr. Acheson be authorized to state this to Mr. de Iongh. It might be intimated that if they wished to draw on their current assets or gold, this of course could be done.

A[dolf] A. B[erle], Jr.
  1. Addressed to the Secretary of State, the Assistant Secretary (Acheson), and the Adviser on International Economic Affairs (Feis).
  2. Missing from Department files.
  3. Warren Pierson, President of the Export-Import Bank.
  4. Apparently reference is to conversation between the Netherlands Chargé and the Secretary of State, as the Ambassador was absent from Washington from July 15 to August 4, 1943; for memorandum of conversation with the Chargé see supra.
  5. Green H. Hackworth, Legal Adviser.
  6. Leo T. Crowley.