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A Small Nation in the Turmoil of the Second World War

Money, Finance and Occupation (Belgium, its Enemies, its friends, 1939-1945)

Herman Van der Wee (Author), Monique Verbreyt (Author),

Series: Studies in Social and Economic History 35

Category: Economy, History, History 1800-present

Language: English

DOI: 10.11116/SNTSWW

ISBN: 9789461660527

Publication date: March 20, 2013

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Based on intensive research in the archives of six countries, this monograph presents an in-depth analysis of Belgium’s monetary and financial history during the Second World War. Exploring Belgium’s financial and business links with Germany, France, The Netherlands, Great Britain, the United States, and the Grand Duchy of Luxembourg, the study focuses on the roles played in this complex wartime network by the Central Bank and private bankers in Brussels, by the Belgian government in exile in London, and by the Belgian minister plenipotentiary in New York. Among the many subjects arising in the course of the analysis are: German attempts to plunder Belgium and Belgian resistance strategies; the peripeteia of the Belgian gold reserve, given in custody to the central banks of France and Great Britain; the role of the Belgian Congo; Belgium’s participation in the discussions leading up to the Bretton Woods conference; and the negotiations for creating a Customs Union, the so-called Benelux, blueprint for the 1958 Treaty of Rome. The final part of the book analyzes the famous monetary reform devised by Belgian Minister of Finance Camille Gutt at the liberation of the country in September 1944. A Small Nation in the Turmoil of the Second World War is a magisterial contribution to European history, Belgian history, and the history of the Second World War.

Ebook available in Open Access.

Contents

Preface

Chapter 1
Prelude to a new world conflict
The policy of neutrality under discussion
The problem of governing under occupation
Getting the gold stock to safety

Chapter 2
The Blitzkrieg and the Banque nationale de Belgique
The German invasion
Rising war panic
Ostend, a confused episode
The peregrination through France

Chapter 3
France and the monetary crisis
The capitulation and its monetary consequences
The search for scapegoats
Emotion and frustration among the Belgian refugees
The Bank under tutelage

Chapter 4
A rudderless Belgian government
The evacuation of Belgian gold from France
The dramatic discussion of 18 June 1940 at Bordeaux
A Belgian government in its death throes
The Bank’s return to Brussels

Chapter 5
In the aftermath of Belgium’s war drama in France
Ingenbleek’s ‘finest hour’
Theunis’s despair 82
Final efforts to evacuate the gold
The cost of the peregrination in France

Chapter 6
The installation of the German administration
Dislocation and the ‘new order’
‘Le temps des notables’
The bankers’ initiative for a bank of issue

Chapter 7
The Establishment of the Banque d’Emission
The decisive negotiations
The Bank and the Banque d’Emission
The principal actors of the two banks

Chapter 8
The politics of accommodation in daily reality
The distribution of responsibilities
The challenge to legal competence
The economic, social and political context in 1940 and 1941
Money circulation
The costs of occupation and their financing

Chapter 9
The policy of accommodation put to the test
The commandeering of gold and foreign currency
The fraudulent clearing system
The first crisis of the clearing system
Janssen and the German occupier

Chapter 10
The looting of gold
The prelude
Janssen misled
The Wiesbaden Convention (29 October 1940)
The supplementary protocol of 11 December 1940
The aftermath of the repatriation
The restoration of Luxembourg’s gold

Chapter 11
In the shadow of Janssen’s death
The problem of the succession
A new administration
The first great disillusions
Occupation and economy (May 1940-May 1942)

Chapter 12
The gold cover and the clearing system
under discussion
The dilemma concerning cover for the note issue
Towards a confrontation with the Ministry of Finance
The clearing system in discredit
The motion of 24 September 1941
The motion of 7 January 1942
The mission to Berlin (24-28 March 1942)

Chapter 13
The installation of the Banque Nationale de Belgique
in London
The establishment of a Belgian government in London
The financing of the Belgian government in London
The Bank in London and its protagonists
Baudewyn’s difficulties at his installation in London

Chapter 14
The Banque Nationale de Belgique in London in the
maelstrom of war
The loan of gold to Great Britain
The decrees of 27 November 1941
The reactions in Belgium
Goffin’s appointment and the outside world

Chapter 15
The proceedings against the Banque de France
in New York
The cause
The French attempts to achieve an amicable solution
The problem of the Luxembourg gold
The legal proceedings: worth the candle?

Chapter 16
The payment orders ‘Laut besonderer Mitteilung’
Incorporation into the German war economy
Towards the agreement of 5 May 1942
The reappearance of the Reichskreditkassenscheine
Cracco’s memorandum and its consequences

Chapter 17
The creation of a united front
The resolutions of 16 October 1942
The dramatic interview with Reeder
Reeder’s order for immediate payment

Chapter 18
The rupture of the united front
Preparations for the negotiations of 18 November 1942
The negotiations of 18 November 1942
The arrangement of 25 November 1942
The question of successors for Berger and Van Nieuwenhuyse

Chapter 19
Towards the end of the occupation
The turn of the tide in military affairs
The Belgian economy at the end of the occupation
Anxious years for the staff and for the Bank
Cracco’s Emissiebank certificates

Chapter 20
The liberation in sight
The final skirmishes with the Bankaufsichtamt
The export of banknotes to France
Monetary differences and disputes with the Netherlands and Germany
The preparations for post-war monetary reform
The final days of the occupation

Chapter 21
Preparation in London for post-war Belgium
The establishment and start of the CEPAG
Baudewyns’ proposal becomes the Gutt plan
The Belgian discussions about the exchange rate and currency reform

Chapter 22
The build-up to post-war international cooperation
From the Dutch-Belgian-Luxembourg monetary agreement to BENELUX
The Franco-Belgian and the Anglo-Belgian monetary agreements

Chapter 23
Belgium and the new economic world order
Belgium and the Bretton Woods agreements of 22 July 1944
The banknotes for the army of liberation and for the currency reform
The organization of the Bank’s return to Belgium

Chapter 24
The return from London
The great settling of scores
Governor Theunis in Brussels
The closure of the Belgo-French gold dossier
12 Contents

Chapter 25
Back to normality
The completion of the Belgo-French reconciliation
The Gutt Operation (6 October 1944)

Chapter 26
The end of an era
The currency reform in action
Criticism and evaluation

Chapter 27
The commission of enquiry and the Legal investigation
Installation and start
The Commission’s report
Reactions
The prosecutor’s decision and its aftermath

Epilogue

Sources
1. Public Archives
2. Private Archives
3. Interviews

Bibliography

List of abbreviations

index

Herman Van der Wee

Monique Verbreyt

Monique Verbreyt is a legal historian and a former business manager.

'The authors tell an important -; and fascinating story of the Belgian central bank and the Belgian government in Brussels and in London during the hazardous years of the Second World War.
It is authoritative,widely-ranging, objective, putting the Bank and the government in their full context of international relations.'

Peter Mathias, former Chichele Professor of Economic History at Oxford, Emeritus Professor at Cambridge University.

The book is thus likely to be of interest to all researchers working on the Second World War and on war economy. It provides a clear and focused analysis of the functioning of the National Bank of Belgium during the war. This leads the authors to also discuss the problems related to the occupation costs and economic exploitation (notably via the clearing system imposed upon defeated Belgium). The book gives also a fascinating account of the means devised by the Belgian administration to finance the country's occupation.

Published by EH.NET (October 2010), Reviewed for EH.NET by Kim Oosterlinck, Faculté de Philosophie et Lettres and SBS-EM, Université Libre de Bruxelles.

Of interest to students of Belgian history and researchers studying banking or other socio-political mechanisms, this volume is meticulously researched and provides a start to finish snapshot of a complex system in crisis.
Reference & Research Book News February 2011

In showing how Belgium managed it, this magisterial survey presents a model history of finance during the Second World War which other countries would do well to follow: dispassionate yet fully committed, wide-ranging without being exhaustive, giving fair criticism but not picking every bone. If only we all possessed such powers of composition.
Joost Jonker, The Low Countries, 2011 nr 19

Van der Wee and Verbreyt offer a well-researched and well-written account of a fascinating episode in the history ofthe National Bank of Belgium. True, the title of the book is somewhat misleading, as it suggests an all-encompassing history of Belgium during the war, not just of its central bank. Even so, there are good reasons why this book should appeal to a broader audience than only students of Belgian central banking history.
This is a universal theme. Van der Wee and Verbreyt go to great lengths to explain and understand the behaviour of the main protagonists in this drama - paying close attention to the complex context and highlighting the often incomplete information on the basis of which people had to make their decisions - and then they leave it to the reader to judge. This is one oft he great strengths of this book.

Piet Clement, Financial History Review, Volume 18, Part 1, April 2011

Par l'ampleur de la documentation originale mobilisee, par l'objectif, largement atteint, de démêler l'écheveau d'une situation très complexe, et par la qualité de son écriture, l'ouvrage d'Herman Van der Wee et Monique Verbreyt s'est déjà imposé comme un classique.
Eric GEERKENS (Université de Liège), Revue Belge de Philologie et d'Histoire, 2013

'The authors tell an important -; and fascinating story of the Belgian central bank and the Belgian government in Brussels and in London during the hazardous years of the Second World War.
It is authoritative,widely-ranging, objective, putting the Bank and the government in their full context of international relations.'

Peter Mathias, former Chichele Professor of Economic History at Oxford, Emeritus Professor at Cambridge University.

The book is thus likely to be of interest to all researchers working on the Second World War and on war economy. It provides a clear and focused analysis of the functioning of the National Bank of Belgium during the war. This leads the authors to also discuss the problems related to the occupation costs and economic exploitation (notably via the clearing system imposed upon defeated Belgium). The book gives also a fascinating account of the means devised by the Belgian administration to finance the country's occupation.

Published by EH.NET (October 2010), Reviewed for EH.NET by Kim Oosterlinck, Faculté de Philosophie et Lettres and SBS-EM, Université Libre de Bruxelles.

Of interest to students of Belgian history and researchers studying banking or other socio-political mechanisms, this volume is meticulously researched and provides a start to finish snapshot of a complex system in crisis.
Reference & Research Book News February 2011

In showing how Belgium managed it, this magisterial survey presents a model history of finance during the Second World War which other countries would do well to follow: dispassionate yet fully committed, wide-ranging without being exhaustive, giving fair criticism but not picking every bone. If only we all possessed such powers of composition.
Joost Jonker, The Low Countries, 2011 nr 19

Van der Wee and Verbreyt offer a well-researched and well-written account of a fascinating episode in the history ofthe National Bank of Belgium. True, the title of the book is somewhat misleading, as it suggests an all-encompassing history of Belgium during the war, not just of its central bank. Even so, there are good reasons why this book should appeal to a broader audience than only students of Belgian central banking history.
This is a universal theme. Van der Wee and Verbreyt go to great lengths to explain and understand the behaviour of the main protagonists in this drama - paying close attention to the complex context and highlighting the often incomplete information on the basis of which people had to make their decisions - and then they leave it to the reader to judge. This is one oft he great strengths of this book.

Piet Clement, Financial History Review, Volume 18, Part 1, April 2011

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