DUTCH EAST INDIES

Evening Star, Issue 23724, 4 November 1940, Page 9

DUTCH EAST INDIES

FACILITATION OF TRADE HGKETARY AGREEMENT [Feu United Press Association.] WELLINGTON, November 4. In view of inquiries received by the Netherlands Consulate, Wellington, regarding the significance and consequences of the monetary agreement between the Netherlands hast Indies and Britain in relation to the development of trade with the Netherlands East Indies, tho following statement has been issued by the Consulate:— Immediately following the invasion of the Netherlands the question was considered as to how the military alliance with Britain and France could be extended to the economic field, and more particularly how the Netherlands East Indies could contribute to the common cause through their economic strength. It soon became apparent in this respect that monetary relations, which had been hampering the development of trade between the Netherlands East Indies and Britain and France, would have to be stabilised if the free flow of vital foodstuffs and raw materials from the Netherlands East Indies to the Allies was to bo secured. This stabilisation was achieved by an agreement between Britain, France, and the Netherlands which, owing to the course of the war in France, amounts in practice to an agreement between the pound sterling (and the currencies related to it) on the one side and the Netherlands guilder on tiie other. It may be added that similar arrangements were made by the Netherlands Government in regard to other free parts of the Kingdom—namely, Surinam and Curacao. As a result of the agreement the rate of exchange between the pound sterling and the Netherlands-Indian guilder was fixed at 7.60, and dealings in free sterling were prohibited in the Netherlands East. Indies. In addition it had been stipulated, by means of the Netherlands Indian currency regulations, that exports from the Netherlands East Indies to sterling countries are to be paid for in sterling currencies, and in the monetary arrangements it had been agreed that the export surplus which trade between the Indies and these countries normally yields will remain in London in sterling until a final adjustment after the war. This provision is very tangible proof of tho strong desire of the Netherlands East Indies to assist Britain, since the export surplus can be placed at about 100,000,000 guilders annually. This monetary agreement greatly facilitated, trading between the Netherlands East Indies and the sterling area. Before the agreement was made various exchange measures were taken by British countries adversely affected by imports ■ from the Netherlands East Indies, but many of these obstacles have now been removed.

It is important, however, to mention that the foregoing has no bearing upon oil imports. The reasons for this have already been stated by the Now Zealand Government, and amount, in short, to the fact that part of the oil imported from the Netherlands East Indies is produced by companies belonging to non-sterling countries, which necessitates the transfer of certain funds to those countries; and, further, that the total oil needs of sterling countries cannot be satisfied by the countries of the sterling bloc and the Netherlands East Indies alone, which means that any economy in the use of ml by the sterling countries makes possible a corresponding reduction in their imports from non-sterling sources. Finally, it may be of interest to mention —and it will bo readily understood—that the Netherlands East Indies, while safeguarding the needs of their allies, are continuing to promote exports to non-sterling countries, notably to the United States and Japan, as from these countries a great number of goods are being obtained which previously came from European sources of supply. The demand of these countries has also increased, but the productive canacity of the Indies make it possible fully to meet their requirements.