856D.13/5–151: Telegram
The Ambassador in Indonesia (Cochran) to the Secretary of State
1519. ANETA thirtieth carried report director Indo Foreign Exchange Institute announced restrictions on possession and sale gold had partly been lifted to permit possession and sale of gold in maximum quantity of 100 grams per person. Transport of gold within country would be permitted but existing controls on export and import would be maintained.
At Neth High Commissioner’s reception night thirtieth I mentioned this report to Pres Houwink of Java Bank. Latter said this step being taken to combat inflation. He added sale of gold internally not contrary rules Internatl Monetary Fund. I remarked difficulty in Indo of keeping gold out of internatl smuggling trade but did not get into argument since I was unaware to what extent Roem or Djuanda may have indicated my interest this subject (see Embtels 1454 and 1456,1 Deptel 1149 and Embtel 1497).
Houwink asked in turn if I had read statement to press by New Fin Min Wibisono that one objective his administration would be nationalization Java Bank. Houwink much perturbed and said was giving his own statement to press. ANETA this morning quoted Houwink that announcement by Wibisono was completely new to management his bank. Houwink pointed out article 19 of financial and economic agreement RTC provides that long as Indo is indebted to Neth any intended changes of Java Bank Act and any new monetary laws connected with circulation bank will be discussed with Neth beforehand.
Talked informally with Djuanda this afternoon. He said former Fin Min Sjafruddin had presented plan for gold sales as fait accompli to other Cabinet members. Djuanda referred to conversation we had on question gold sales (Embtel 1497). He said he had brought this matter to attention new Trade Min Sujono Hadinoto. Learned that one of principal advisors in Trade Ministry had almost simultaneously presented memo to Sujono protesting against proposed plan. Djuanda and Sujono had then jointly approached Fin Min Wibisono with result all steps toward putting gold sales proposal into effect are postponed pending review and consideration by financial economic comite of new govt at its next meeting. Djuanda anxious to avoid any move likely to lead to difficulty with US.
With respect to nationalization Java Bank Djuanda thinks this will come within first ten years of sovereignty but insisted this matter has not been subj of discussion by new govt and that Wibisono statement to press was entirely gratuitous and personal. Djuanda volunteered [Page 645] that tendency several new members govt to give statements as to their policies had already embarrassed govt and led to sharp criticism by press of Ministers concerned.