ROYAL NETHERLANDS EMBASSY

WASHINGTON 9, D.C.

FA/160

February 4, 1953.

Sir:

I have the honor to refer to a number of unsettled claims affecting our two Governments which have been the subject of discussions between representatives of our two Governments. The following matters have been included in these discussions:

1. A deposit of 1,066,474.50 guilders in the De Nederlandsche Bank N.V., The Hague, in the name of a finance officer of the United States Army. These guilders have been blocked by the Netherlands Government and it has been the position of the United States Government that they should be freed for expenditure by the United States Government in the Netherlands.

2. A claim in the amount of 740,407.06 guilders for damages to seven river craft owned by nationals of the Netherlands Government. These craft were damaged in the Rhine River when they were requisitioned by the United States Army under the command of General Hodges in the spring of 1945 and used for the construction of a bridge across the Rhine River. The Netherlands Government's position has been that the United States Government should indemnify the owners of these craft while, on the other hand, the United States Government has taken the position that the claim was not payable by the United States under the principles of international law and under the terms of existing agreements between the two Governments.

3. A sale of 1,000 jeeps to the Netherlands Government. These jeeps were located in France and were sold under contract W-ANL (ETO-II)-327 between the Office of the Foreign Liquidation Commissioner and the Netherlands Government assignee of London Suburban and Commercial Vehicles, Ltd. Payment was made by the Netherlands Government in cash in the amount of 1,324,800 guilders. The suggestion has been made that the sale be placed under the applicable surplus property line of credit. Also, the jeeps actually delivered are alleged by the Netherlands Government to be different from those originally designated under the contract and to have been in materially poorer condition than called for in the contract. The contract was amended on February 11, 1948 to adjust the agreed purchase price to $ 365,270. This adjustment represented a reduction of $ 134,730 from the original purchase price of $ 500,000.

4. A lend-lease transaction involving certain textiles covered by requisition No. QN-5903 submitted under date of March 3, 1945 by the Washington agent of the Netherlands Government Food Purchasing Bureau to the United States Government under the provisions of the Act of March 11, 1941 (The Lend-Lease Act). This was a cash reimbursement requisition under which the Netherlands Government deposited the estimated dollar cost of the textiles. After a substantial quantity of the material had been shipped abroad, the Netherlands Government initially took the position that it was not of the quality requested, that the goods remaining undelivered would not be accepted, and that the entire amount paid, $ 250,000, should be refunded. The United States Government has taken the position that the goods had been accepted by the Netherlands Government with full knowledge of the quality and that a refund was not appropriate. By agreement between our two Governments, 265 bales of these textiles have been sold and the net proceeds in the amount of $ 4,861.91 has been paid by the United States Treasury to the Netherlands Ministry of Finance in The Hague.

To resolve these conflicts and without either Government recognizing any legal or binding responsibility for the claim of the other Government, the following compromise settlement has been proposed, and it is my understanding that the United States Government agrees:

a. The amount of f. 1,066,474.50 now in a blocked account with the De Nederlandsche Bank N.V. in the name of the United States finance officer will be unblocked by the Netherlands Government.

b. The United States Government will refund the sum of f. 1,324,800 representing the equivalent in guilders of the original purchase price of the jeeps, $ 500,000, converted at the rate of 2.65. The sum of f. 1,324,800 shall be made up of guilders out of the account styled „free account” and also the account styled „blocked account” as maintained by the United States finance officer with the De Nederlandsche Bank N.V.

c. The balance of the guilder funds remaining on deposit in the De Nederlandsche Bank N.V. in the name of the United States finance officer, after the refund referred to in “b” above, will immediately be made available to the United States Army for its use in the Netherlands in Europe. Notwithstanding the provisions of the letter of May 28, 1947 from Major General J. Richards, Budget Officer for the War Department (now the Department of the Army) to Mr. Ch. J. H. Daubanton, Netherlands Minister in Washington (P. 28 of TIAS 1750), the United States Army may use these funds for the payment of expenditures incurred by its offices in the Netherlands in Europe which includes payment for the salaries of the personnel employed in and payment for the costs of goods and services procured for its offices in the Netherlands in Europe. Such use does not include the use of these funds for procurement of goods and services for use outside the territorial limits of the Netherlands in Europe. It is further understood that the United States Department of the Army may convert these guilders into dollars up to an aggregate dollar value of $ 50,000. This new limitation of $ 50,000 replaces the limitation of $ 100,000 specified in the third paragraph of the letter dated May 28, 1947 from the Secretary of State to the Netherlands Ambassador which letter was acknowledged and agreed to by the Netherlands Ambassador on the same date (Page 25 of TIAS 1750).

d. Other claims of the Netherlands Government in connection with captured enemy funds are not covered by this settlement. It is understood that the Department of the Army will investigate such claims of the Netherlands Government as expeditiously as possible.

e. The remaining claims described in Part I of this note will be settled by adding $ 92,070.18 in United States dollars to the outstanding balance owed by the Netherlands Government under the surplus property line of credit of $ 30 million referred to in paragraph 5.A of the Agreement for Lend-Lease, Reciprocal Aid, Surplus Property, Military Relief and Claims dated May 28, 1947. The sum so added represents the original purchase price of the jeeps covered by paragraph 3 above, i.e. $ 500,000, less (i) the agreed allowance of $ 134,730 because of variations in condition; (ii) the sum of $ 156,199.82 representing an allowance of f. 593,559.34 converted at the rate of f. 3.80 to the dollar, for the damaged river craft referred to in paragraph 2 above, and (iii) a further allowance of $ 117,000 in settlement for the alleged unsatisfactory condition of the textiles referred to in paragraph 4 above.

If the contents of this note have the concurrence of your Government, your note of reply confirming that the foregoing is the understanding of your Government will constitute the agreement between our two Governments respecting the manner of settlement of the matters described herein.

Accept, Sir, the renewed assurances of my highest consideration.

(sd.) J. H. VAN ROIJEN.

The Honorable H. Freeman Matthews

Acting Secretary of State

Washington, D.C.