Ottawa, May 3, 1949.
1. In pursuance of the discussions between representatives of our two governments concerning settlement for the remaining claims of the Government of Canada against the Government of the Royal Kingdom of The Netherlands, arising out of the war, I have the honour to propose full settement of these claims in the manner and terms set forth in the following paragraphs.
2. The Government of Canada agrees to accept an amount of $ 8,105,203.89 partially in guilders and partially in deferred dollar payments, as further specified in paragraph 6 below, in full settlement of the claims described in paragraphs 3 and 4, and in connection with this settlement agrees to take the action described in paragraph 5.
3. The settlement described in paragraph 2 shall cover the claim of the Government of Canada to payment of $ 13,839,170.60 for reimbursement in respect of Canada's share of the value of supplies distributed to the civilian population of The Netherlands by the combined military authority under the Supreme Allied Command. In arriving at this settlement the Government of Canada has taken note of the exceptional hardships suffered by The Netherlands' population in the last months of prolonged enemy occupation and the particularly valuable services rendered by these civilians in support of military operations at this time, as well as the serious long-term effects of the war upon The Netherlands economy.
4. The settlement described in paragraph 2 shall also cover the claim of the Government of Canada to the release for expenditure for general purposes of the agreed amount of 6,290,892.27 guilders, as of October 16, 1948 (equivalent to $2,371,237.19 Canadian at current rates of exchange), acquired after the monetary reforme of September, 1945, in The Netherlands, and held by Canadian Army authorities in bank accounts from which payments have, by arrangement, been permitted only for the purpose of meeting the very limited requirements of the Canadian Army in The Netherlands.
5. In consideration of the settlement of the claims described above and in view of the fact that in September, 1945, the Government of the Royal Kingdom of The Netherlands found it necessary to carry through a general measure of demonetization of its currency then outstanding as an essential part of a program of monetary and fiscal reform, and also in view of the circumstances under which before this reform guilders were accumulated by Canadian Army authorities beyond the amounts advanced and later repaid in accordance with pre-arranged plans, the Government of Canada will relinquish its claim in respect of an amount of 40,707,251.74 guilders held by the Canadian Army authorities in the form of guilder notes and bank accounts at the time of the demonetization of such guilder notes and the stoppage of payment of such guilder bank accounts by The Netherlands Government as a result of the aforesaid.
6. The Government of Canada agrees to accept the amount of $ 8,105,203.89 specified in paragraph 2 above to the extent of $ 2,371,237.19 in the form of the release, as from October 16, 1948, of the amount of 6,290,892.27 guilders held in the account described in paragraph 3 above, for expenditures in The Netherlands by the Canadian Government for general governmental purposes or for expenditure in The Netherlands by Canadians for cultural or educational purposes. The Government of Canada will accept payment of the remainder of the amount of settlement agreed upon, being an amount of $ 5,733,966.70, in the form of 10 equal, annual payments of $ 573,396.67. The first of these instalments will be payable on December 31, 1952, and the remaining instalments on December 31 in each of the 9 succeeding years. Such payments are to be made in Canadian dollars obtained from sources from which Canadian dollars may be obtained for the purpose of payments under the financial agreement dated February 5, 1946, and supplementary agreements dated January 29, 1947, and May 20, 1947, between the Government of Canada and the Government of the Royal Kingdom of The Netherlands.
7. If the Government of the Royal Kingdom of The Netherlands accepts these proposals, it is suggested that this Note and your reply should be regarded as constituting an agreement between the two governments.
A. D. P. HEENEY
for External Affairs.