Memorandum by the Adviser on International Economic Affairs (Feis)20
It is now possible to present a fairly complete and reliable account of the Dutch financial situation and the requests they have put before the various branches of the Government. A report setting these matters forth is attached.21
It is recommended that the reply to the Dutch Government take the following lines:
- That the Lend-Lease Administration be requested to extend such additional aid as can be arranged by technical adjustments within the limits of present Lend-Lease policy. (This may amount to as much as five or six million dollars out of an estimated dollar-area expenditure [Page 464]of approximately thirteen million dollars for the current fiscal year.)
- That the Netherlands Government be advised to find in discussion with Great Britain, a solution for its budget expenses in the sterling area.
- That the Netherlands Government be informed that if its official dollar balances (approximately fifteen million dollars) are inadequate for budget expenditures in the dollar area, gold of the Netherlands Bank may be made available to the extent necessary through the certification procedure provided by the Federal Reserve Act.
- That no objection be made to the granting by RFC of a loan in
the requested amount of 300 million dollars to the Netherlands
Government for purposes of post-war rehabilitation and relief of
the Netherlands in Europe provided the following conditions are
- No funds be spent for supplies without the agreement of this Government.
- Safeguards satisfactory to this Government would be provided for the protection of residents of this country having interests in or claims against the assets required as security for the loan; no assets owned by persons other than Netherlands subjects-would be pledged as security and the Netherlands Government would hold harmless the United States and its nationals for liabilities arising out of employment of assets for this purpose.
- Any assets other than gold of the Netherlands Bank used as security would remain subject to the financial and property controls of this Government, except as to the RFC’s security interest therein.
- That negotiations be undertaken by the Lend-Lease Administration with representatives of the Netherlands Government looking toward the development of a more precise understanding with regard to reciprocal Lend-Lease arrangements in connection with military operations in the Pacific as and when the Netherlands Indies are reoccupied.
The following agencies of the Government in addition to the State Department would be involved or directly interested in the execution of the program recommended above:
- The Treasury Department.
- The Lend-Lease Administration.
If these recommendations are approved by the Department it will be necessary for the Department to call together representatives of Treasury, Lend-Lease, OFRRO and the Secretary of Commerce to see whether there is general agreement on this line of action. I believe this cannot be done satisfactorily through subordinates but that either the Secretary or one of the Assistant Secretaries should meet [Page 465]with the heads of the Government departments named. At the same time it should be determined which of the Government Departments will resume discussions with the Dutch authorities for the purpose of conveying the decisions made and carrying forward any resultant negotiations.