The Belgian Ambassador presents his compliments to the Honorable the
Secretary of State and has the honor to draw the attention of His
Excellency to the attached Memorandum on the situation existing in
Belgium as of December 31st, 1944 in relation with Mutual Aid, and on
the repercussions arising from the carrying out of this Agreement on the
financial situation of Belgium.
This Memorandum embodies the views of the Belgian Government on this
matter, to which it attaches the utmost importance.
The Belgian Ambassador should be grateful if the Secretary of State would
kindly submit this question to a careful consideration and inform him of
the attitude taken by the American Government in this respect.
Additional copies of the above-mentioned Memorandum are enclosed herewith
for transmission to other interested agencies of the American
Government.
[Enclosure]
Memorandum on the Situation Existing in Belgium
as of December 31st, 1944 in Relation With Mutual Aid, and on the
Repercussions Arising From the Carrying Out of This Agreement on
the Financial Situation of Belgium
1. As of December 15th, the value of goods, services and currency
delivered under the Mutual Aid Agreements to the Allied Military
Forces in Belgium amounts to:
|
a) |
currency |
*7. 000. 000.
000 |
|
b) |
orders placed through the office of Mutual Aid |
1.070.000.000 |
|
c) |
contracts for prompt delivery |
400.000.000 |
|
d) |
contracts for delivery 5/7 months |
300.000.000 |
|
Total |
8.770.000.000 |
Are to be added to this amount the values of the:
-
a)
- requisition of premises—real estate—billets.
-
b)
- goods and services locally procured.
-
c)
- transport by railroad—inland transport.
-
d)
- requisitioned labor.
-
e)
- stevedoring and unloading expenses—Antwerp, Brussels,
Ostend.
-
f)
- deliveries of coal.
-
g)
- purchases of fruit and vegetables.
A rough monthly estimate can be made for items a,
c, e, f, and g, which may total
together up to 700 to 800 million francs a month (a, estimated 100 millions; c, 150
millions; e, 150 millions; f, 100 millions; and g, 200
millions).
Considering that items under b and d have to a great extent been paid with the
currency put at the disposal of the armies and, at the same time,
that part of the 7.000.000.000 of currency was still held,
unexpended, by the armies, we are led to believe that for a period of four months extending up to
December 31st, a total at least equal to:
10.000.000.000 Belgian francs
has been spent under the aforesaid agreements, or an
amount roughly equal to Belgium’s annual prewar budget.
Of this amount, only a small portion shall be reimbursed in Pounds
Sterling of Dollars as payments for the currency used by the armies
for the pay of the troops, the reimbursement of the cost of those
supplies calling for reimportation, or of those purchases made in
Belgium and which do not fall under the terms of the above-mentioned
agreements.
[Page 86]
For the future, a monthly rate of expenditure by the Belgian
Government under the Mutual Aid Agreements of:
2.000.000.000
francs seems a reasonable approximation.
It is to be noted in this connection that no figures were available
on December 20th, in Brussels, allowing for a division of the amount
quoted under 1 between the United States and United Kingdom
Forces.
These figures do not include the financing of orders placed or
requisitions made in the Grand Duchy of Luxembourg.
2. Whilst the Belgian Government is putting services, goods and
currency at the disposal of the Allied Forces, Belgium, up to the
present time, has not benefitted under lend-lease of imports of any
kind (with the exception of a very small amount of war material
delivered during the war to the Belgian Congo).
3. The Belgian Government, by the laws it has enacted in October and
November 1944, has tried to restore health to its monetary system
and balance the means of payment available in the country with the
needs of its economy.
The means of payment existing as of October 9, 1944, amounted to:
183.000.000.000 Belgian francs.
The means of payment existing as of November 15th, 1944 amounted
to:
59.000.000.000 Belgian francs
The difference between these two figures gives the measure of the
drastic effort made by Belgium in carrying out a sound financial
policy.
4. With respect to the more specific aspect of banknote circulation,
the latter which on October 9, 1944 was of 100.000.000.000, and as
of October 12, decreased to 25.000.000.000, has increased since then
and reached 33.000.000.000 on December 18, 1944. Of this amount,
7.000.000.000 or 22% has been put at the disposal of the Allied
Forces.
5. The financing of the expenses made or to be made in Belgium under
Mutual Aid shall result:
- —in an increase of the means of payment put at the
disposal of the Belgian economy while no consumer goods are
available in the country and while industrial production is
at its lowest ebb due to lack of raw materials, thus
precipitating an inflation at the very moment when the
Belgian Government had checked by stringent monetary laws
the inflation created during the occupation of the country
by the enemy.
- —in an unbearable burden for the country exhausted by a
four-year enemy occupation and partly destroyed by the war,
by the building
[Page 87]
up
in Reverse Lend-Lease of a credit situation of abnormal
importance towards the United States, the settlement of
which is postponed to the future and subject to the terms of
Article VII of the Mutual Aid Agreement,7 while at
the same time it is put under the obligation of using its
reserves of gold and foreign exchange, badly needed for its
rehabilitation and its reconstruction† to finance the importation of food
and raw materials—a large part of which shall allow for more
services and goods being placed at the disposal of the
Allied Forces‡.
6. The figures quoted under (1) above show to what extent Belgium is
at the present time contributing to the common war effort. Given raw
materials and essential machinery, the Belgian economy is capable of
playing a still more effective and important role in the prosecution
of the war effort of the United Nations in Europe. Its coal mines,
given pit props, can produce the coal needed to put back to work its
basic industries. Imports of ore, oil, wool, cotton and other
essential raw materials would allow the resumption of work in the
following industries:
- Steel (3 million tons of finished steel a year)
- Glass (window and pane)
- Cement
- Chemicals
- Engineering (repairs of rolling stock, locomotives,
railroad bridges, etc …8)
- Textiles (wool, cotton, rayon …8)
Using the Belgian productive capacity would mean supplying from a
country in Europe many of the essential products that now have to be
shipped from overseas. It would lead to an economy in shipping and
inland transportation; it would help solving the problem of the lack
of manpower in the United States and the United Kingdom. It would
have a far-reaching influence on the social situation in that
liberated country.
7. In view of the fact that considerable amounts of currency, goods
and services are put at the disposal of the Allied Forces and that,
under the present application of the Mutual Aid Agreement, no
deliveries are made to Belgium under Lease-Lend; considering the
extensive contribution of the civilian population to the war effort,
and that Belgium’s productive capacity can be used to a greater
extent for the
[Page 88]
prosecution
of the war, the Belgian Government requests the American Government
to consider the possibility of deciding that consumer goods such as
food, clothing, medical supplies, etc., and machinery and raw
materials, for civil and military uses, delivered or to be delivered
to it, shall be supplied as Reciprocal Aid under the terms of the
Mutual Aid Agreement.
8. The figures quoted under (1) above are global figures, the break
up of which into the categories mentioned in the Supplementary
Letter of January 30th, 194310 to the Mutual Aid Agreement, has not been made.
Neither has the Belgian Government exercised in this respect its
right of final decision in the light of its potentialities and
responsibilities.
