220. Editorial Note
On August 24 the Indonesian Government adopted a series of monetary reforms, including devaluation of the rupiah, freezing of bank accounts, and the reduction of government employee salaries. Mein summarized these reforms in a memorandum of August 31 for Parsons. “As for the longer-range effects of these measures,” he observed, “we can expect both deflationary and inflationary results.” (Department of State, Central Files, 656D.13/8–3159) See Supplement. The Department of State’s classified periodical, Current Economic Developments, provided [Page 423]a more detailed analysis of the reforms. “These measures,” it noted, “may prove beneficial if they are followed by other economic reforms which add up to a meaningful stabilization program. The measures provide some indication that the Government at last has decided to move to correct the rapidly worsening economic conditions, even to the extent of making politically unpopular decisions. The real test will be the Government’s willingness and ability to institute and implement these and other necessary measures to deal with the serious inflation.” (Issue No. 580, September 15, 1959, pages 9–12; Department of State, Current Economic Developments: Lot 70 D 467) See Supplement.